Fitch Rates Lewisville, Texas' $11.9MM Waterworks & Sewer Revs 'AA'; Outlook Stable
Source: Business Wire
Proceeds from the series 2009 bonds will be used to finance system improvements and extensions to the city's waterworks and sewer system and to pay issuance costs. Scheduled to price on June 1, 2009, the bonds will be sold via negotiation.
While the original ratings to the following bonds were assigned on May 9, 2008, the ratings were not reflected on Fitch's website:
--Waterworks and sewer system revenue bonds, series 1998;
--Waterworks and sewer system improvement and refunding revenue bonds, series 1999;
--Waterworks and sewer system revenue refunding and improvement bonds, series 2005.
With this affirmation the full rating histories are now available on Fitch's website.
The 'AA' rating reflects the City of Lewisville's waterworks and sewer system substantial liquidity and adequate debt service coverage, manageable capital improvement plan (CIP), willingness to raise rates as necessary, and stable service area with healthy economic underpinnings. The rating also reflects management's conservative financial policies, which offset the somewhat below average covenants, including rapid amortization, annual rate review and adjustments, and priority to make use of surplus utility funds for capital outlays. Maintenance of its favorable financial performance combined with a baseline senior lien coverage trend exceeding 2.0 times (x) would provide additional strength to the credit.
Debt service coverage has ranged from 1.5x to 2.1x, on an all-in basis, in the last five fiscal years. Financial projections through fiscal 2012 indicate a decline of this trend, averaging 1.2x all-in and 1.3x senior lien coverage. However, the city's financial forecast has been conservative in the past with coverage levels exceeding projections. For fiscal 2008, debt service coverage was strong at 2.1x all-in and 2.3x for the senior lien. Liquidity is substantial with just under three years' cash-on-hand available for operations at Sept. 30, 2008. Given the city's policy of reviewing the adequacy of rates and adopting necessary rate increases, liquidity is projected to remain solid despite the use of available reserves for capital improvement projects.
Totaling $48.3 million, the system's five-year CIP is manageable. Approximately 75% is expected to be debt financed with the balance of projects completed with available system resources. Water system improvements total $11.8 million of the CIP with sewer system projects accounting for the majority of the capital plan at $36.5 million. Major projects include water reuse, water pump station transmission, a wastewater treatment plant, sewer meters and a lift station. The city anticipates returning to the market in fiscal 2010 with about $9.4 million of parity system revenue bonds. Debt amortization is rapid with approximately 80% of the revenue bonds maturing within ten years. The city's policy with regard to debt repayment is to amortize over a maximum of 16 years.
The city provides water and wastewater services to approximately 95,000 residents of the City of Lewisville which is located about 20 miles northwest of Dallas. About 88% developed, Lewisville is currently experiencing in-fill growth and is estimated to reach a population of 111,000 upon build-out, currently projected by 2030. Lewisville's wealth indicators as measured by median household income and per capita income compare favorably to the MSA, state, and national levels. The unemployment rate of 5.6% in February 2009 is also better than the unemployment rates reported for the MSA, state and nation.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Contact:
Fitch Ratings, New York
Julie Seebach, +1-512-215-3740 (Austin)
Jose Acosta, +1-512-215-3726 (Austin)
Media Relations:
Cindy Stoller, +1-212-908-0526
cindy.stoller@fitchratings.com
