Fitch Rates Edinburg, TX Utility System Revenue Bonds 'A'.
AUSTIN, Texas -- Fitch assigns its 'A' rating to Edinburg, TX's $12.3 million utility system revenue bonds, series 2006, which are scheduled to sell via negotiation to a syndicate led by Estrada Hinojosa & Co. during the week of Dec. 4. In addition, Fitch has affirmed the 'A' rating on the city's outstanding $11 million utility system revenue bonds. The Rating Outlook is Stable.
The bonds are special obligations of the city payable solely from and secured by a first lien on and pledge of the net revenues of the city's combined waterworks waterworks: see water supply. and sewer system Noun 1. sewer system - facility consisting of a system of sewers for carrying off liquid and solid sewage
sewage system, sewage works
facility, installation - a building or place that provides a particular service or is used for a particular industry; "the . Proceeds will be used to finance water and sewer system improvements and to pay costs of issuance.
The 'A' rating reflects the water and sewer system's solid financial operations, strong debt service coverage, rapidly growing customer base, and competitive rates. The rating also incorporates Edinburg's low but improving wealth levels, large capital improvement plan (CIP (1) (Common Isochronous Packet) The packet format used in time-based (real time) FireWire transmission. See FireWire, IEC 61883 and mLAN.
(2) (Common Industrial P ), and uncertainty in its long-term water supply. The city's plan to lease or acquire additional water rights from local irrigation irrigation, in agriculture, artificial watering of the land. Although used chiefly in regions with annual rainfall of less than 20 in. (51 cm), it is also used in wetter areas to grow certain crops, e.g., rice. districts hinges Hinges may refer to:
1. Advantageous; helpful: favorable winds.
2. Encouraging; propitious: a favorable diagnosis.
3. . Once secured, the additional water rights will provide the city sufficient water through the mid-term before additional supplies are needed.
Located 20 miles from the U.S.-Mexico border, Edinburg (general obligation bonds rated 'A+' by Fitch) is the seat of Hidalgo County Hidaldo County is the name of several counties in the United States:
Study beyond the level of secondary education. Institutions of higher education include not only colleges and universities but also professional schools in such fields as law, theology, medicine, business, music, and art. , and tourism are components of the local economy that have developed in recent years to complement the distribution, trade, and agricultural sectors that have been historically present. As a result, the city's unemployment rate has steadily trended downward, declining below 5% in 2005, despite rapid labor force growth of 5%-6%. However, resident wealth levels remain substantially lower than that of the remainder of the state and nation, although the below-average cost of living somewhat offsets these conditions.
Most of the current offering will fund construction of a new water treatment plant. The city's five-year CIP, including the current offering, totals $39 million, almost two-thirds of which will be debt financed. The bond ordinance requires debt service coverage on the priority lien bonds to equal 1.25 times (x) or greater; however, the city maintains an internal goal of 1.50x, which it has exceeded in recent years. Solid financial management has enabled solid debt service coverage for its prior lien bonds, equal to 3.6x based on fiscal 2005 net revenues. Coverage of maximum annual debt service (MADS), including the current offering, is 2.2x. All-in coverage of junior lien debt and certificate of obligation debt still results in satisfactory coverage of MADS by 1.6x. Liquidity levels are also sound, totaling 265 days cash on hand in fiscal 2005. Principal amortization for senior lien senior lien n. the first security interest (lien or claim) placed upon property at a time before other liens, which are called "junior" liens. (See: mortgage, deed of trust, lien, UCC-1) debt, previously very rapid, has declined with the current offering but is still solid at almost 50% in 10 years.
Edinburg serves almost 20,000 water customers with a city-owned and operated water treatment plant and distribution system. The city purchases raw water on a wholesale basis from two Hidalgo County irrigation districts, which are supplied by reservoirs on the Rio Grande Rio Grande, city, Brazil
Rio Grande (rē` grän`dĭ), city (1991 pop. , for the bulk of its water needs. In addition, treated potable potable /pot·a·ble/ (po´tah-b'l) fit to drink.
Fit to drink; drinkable.
fit to drink. water is purchased from two area private water supply corporations and the City of McAllen. To gradually eliminate its reliance on wholesale providers, the city's water master plan calls for almost doubling its water rights for raw water from the irrigation districts which the city would treat with the new facility to be financed by the current offering. As agricultural land is developed for residential use, the irrigation districts are poised to allow the associated water rights to convert to municipal use. Once secured, either by long-term lease or purchase, the city believes that its water supply will be sufficient to meet its mid-term needs through 2014, requiring the city to further develop its future water resources.
The city's customer base has grown by a rapid annual average of 8.5% over the past five years for water customers and 9.5% for wastewater customers, enabling the city to minimize rate increases. The city's monthly residential water and sewer charge of $40.55 for 10,000 gallons of water and 10,000 gallons of wastewater is below the state median and very competitive with surrounding municipalities. Modest 5% water and sewer rate increases are planned every 3 years, starting in fiscal 2008. The customer base of the combined system is well diversified, with the top 10 largest customers, mostly stable institutions, accounting for 18.4% of fiscal 2005 revenues.
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