NEW YORK, NY, Jan. 23, 2001 (BUSINESS WIRE) Fitch rates Tampa, FL's approximately $67,240,000 water and sewer systems refunding revenue bonds, series 2001A 'AA'.
The bonds are expected to sell on or about the week of Feb. 12 through a syndicate led by Morgan Stanley Dean Witter. The 'AA' rating on the city's $166.9 million in outstanding water and sewer systems revenue bonds is affirmed.
The 'AA' rating on the city of Tampa's water and sewer systems revenue bonds reflects its healthy financial results, low rates, growing service area, and strong pay-as-you-go capital efforts. The city continues to develop water sources to insure adequate supplies to meet growth-related needs and to improve water quality.
Recent drought conditions have put pressure on resources, but water conservation programs and good planning have mitigated their effects. Excess wastewater treatment capacity remains strong, reserves are substantial, and recent water system efficiency initiatives are significant. An upcoming bond issue will fund a portion of the first phase of a water reclamation program. While security provisions are average, the utilities regularly surpass them and will likely continue to do so.
The initiation of the regional water supply authority, Tampa Bay Water (rated 'AA-' by Fitch), is generally a positive development for water and sewer credit in this fast-growing region, but Tampa's position differs from that of some other nearby municipalities. The city is fortunate in having its own surface water supply from the Hillsborough River, which it did not relinquish for regional use in the interlocal water supply agreement.
Therefore, while Tampa must purchase a minimal amount of Tampa Bay Water product, it has so far been, and will likely continue to be, spared major rate impact from the aggressive regional water supply development effort.
With no increases in water rates projected, and an upcoming $12.5 million bond issue for the water reclamation project later this year, coverage is projected to remain at least 2.32 times (x) annually, with just a modest contribution from growth-sensitive capacity fees. Repayment obligations to Florida's state revolving funds (SRFs), payable from a junior lien, total $119 million with interest at about 60% of the market rate.
The bonds have a senior lien on net revenues.
The utilities' service area includes Tampa, but about one-third of the territory's population resides in adjacent Hillsborough County. Economic diversification has been ongoing in the county recently, as service and trade sectors have expanded. The city has enjoyed good concurrent growth, though its economy is among the more mature in the region. Per capita personal income has been slightly below the national average in the county (general obligations rated 'AA-'), with residential wealth in the city (some tax-supported obligations of which are rated in the 'A' category) remaining somewhat lower.