Fitch Rates Palm Coast, Florida's $50.7MM Utility System Revs 'A-'; Rating Watch Positive.
NEW YORK New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings
An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. assigns an 'A-' rating to Palm Coast, Florida's $50.7 million utility system revenue bonds, series 2007 and places the bonds on Rating Watch Positive. The bonds are scheduled to price Jan. 4, 2007 through competitive sale. First Southwest Company currently serves as the city's financial advisor. Bond proceeds will fund the design and construction of an additional water treatment plant (WTP WTP Web Tools Platform (Eclipse)
WTP Willingness To Pay
WTP Water Treatment Plant
WTP We the People
WTP Waste Treatment Plant
WTP Wireless Transaction Protocol
WTP Winnie The Pooh
WTP Washington Transportation Plan ), the implementation of additional wells, land acquisition and various capital improvements to the utility system's wastewater facilities. In addition, Fitch affirms the 'A-' rating on approximately $93 million of outstanding utility system parity bonds Parity Bond
Two or more bond issues with equal rights to bond payments.
Also referred to as "part passu" or "pari passu" bonds, these types of fixed-income securities are commonly issued by municipalities as a way to gather finance capital. . The bonds are secured by a 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) on net revenues and legally available capital facility fees.
The 'A-' rating is based on the city's conservative financial management, low rate structure relative to area providers, solid debt service coverage from pledged revenue, and adequate legal provisions. The rating also considers a demonstrated trend of sound financial operations leading to ample liquidity, and proactive capital planning efforts that will ensure water and wastewater capacity to a rapidly expanding service area. The Rating Watch Positive reflects Fitch's expectation that the utility system will maintain solid coverage and liquidity levels as it embarks on a large growth-driven capital plan, requiring a nearly 13% rate increase in fiscal 2009. As the first proposed rate increase as a municipally-owned system, successful adoption of the rate increase is considered key to the system's ability to keep pace with its sizeable infrastructure needs on sound financial footing. Board consideration of the rate increase is scheduled for Dec. 19, 2006. Implementation of the rate increase will likely have a positive impact on the utility system's current rating.
Palm Coast was incorporated in 1999 and is located in Flagler County, equidistant e·qui·dis·tant
equi·distance n. to St. Augustine and Daytona Beach Daytona Beach (dātō`nə), city (1990 pop. 61,921), Volusia co., NE Fla., on the Atlantic coast and Halifax River (a lagoon); inc. 1876. Center of a rapidly urbanizing area, in a region settled by Spanish Franciscans in the 17th cent. . Originally platted as a residential community, the city's population increased to an estimated 61,000 in 2005, nearly twice the number of residents as recorded in the 2000 census. The city's population represents approximately 75% of the county's total population. Following incorporation in 1999, the city purchased water and wastewater assets from Florida Water Services Corporation (FWS) in 2003. The transaction was financed with a series 2003 utility system revenue bond issue, which also funded capacity expansion and system upgrades. The system serves the city of Palm Coast as well as neighboring neigh·bor
1. One who lives near or next to another.
2. A person, place, or thing adjacent to or located near another.
3. A fellow human.
4. Used as a form of familiar address.
v. unincorporated areas In law, an unincorporated area is a region of land that is not a part of any municipality. To "incorporate" in this context means to form a municipal corporation, i.e., a city or town with its own government. of the county. Income levels in the city measure below the state and nation, and historical unemployment rates have compared favorably fa·vor·a·ble
1. Advantageous; helpful: favorable winds.
2. Encouraging; propitious: a favorable diagnosis.
3. to state and national averages. Since the acquisition, Fitch believes the city has demonstrated a sound ability to operate and manage the utility system.
Despite very strong growth in customer connections that averaged 11% for water users and 13% for wastewater payers over the last five years, sufficient treatment capacity remains. The city's water system serves approximately 38,796 customers. The city operates two water treatment plants with a combined treatment capacity of 12.38 millions of gallons per day (mgd) versus an average daily demand of 8.2 mgd and a peak demand of 10.2 mgd in fiscal 2006. A planned 1.8 mgd expansion of an existing facility in fiscal 2007 coupled with the construction of an additional WTP with an initial treatment capacity of 3.0 mgd is expected to provide sufficient capacity through 2011. The wastewater system provides service to about 30,500 customers and maintains treatment capacity of 6.8 mgd versus an average daily flow of 4.8 mgd in fiscal 2006. An additional wastewater treatment facility with an initial treatment capacity of 2.0 mgd is expected to come online by fiscal 2009.
Financial operations since the acquisition are sound, generating solid debt service coverage and good liquidity. The system finished fiscal 2005 with 239 days cash on hand, and unaudited fiscal 2006 revenues together with legally available impact fees covered annual debt service on parity debt by a solid 2.9 times (x). Excluding capital facilities fees, debt service coverage is projected to decline to a range of 1.4x to 1.7x through fiscal 2011. The system's rate structure is low relative to area competitors due to a 2003 acquisition agreement that held rates constant for a five-year period. Financial projections include a 12.5% rate increase in fiscal 2009 and annual price index rate increases for fiscal 2010 and 2011.
Given its recent purchase from a private corporation, the system is highly leveraged with a debt to net plant ratio at 115% in fiscal 2005. Additional capital needs, totaling $151 million over the next five years, are needed to address its fast growing service demands. The 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 ) includes funding for the expansion of one of the WTPs and the construction of a third WTP and a second wastewater treatment facility. Dedicated CIP funding sources include the current bond offering, along with additional subordinate borrowings of $17 million and $22.5 million from the state revolving fund revolving fund
A fund established for a certain purpose, such as making loans, with the stipulation that repayments to the fund may be used anew for the same purpose.
Noun 1. planned for fiscal years 2007 and 2009, respectively. Remaining funding sources will be derived from impact fees and renewal and replacement funds.
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