Moody's assigns Aa2 rating to City of Naples, Fla., water and sewer revenue bonds

Funding for upcoming water and sewer projects in the City of Naples, Fla., has drawn a high approval rating from Moody's Investors Service.

NEW YORK, May 21, 2001 — Funding for upcoming water and sewer projects in the City of Naples, Fla., has drawn a high approval rating from Moody's Investors Service.

The service assigned an Aa2 underlying rating, with a stable outlook, to the $7,385,000 Water and Sewer Revenue Refunding Bonds Series 2001, and a Aa2 underlying rating to the $12,530,000 Water and Sewer Revenue Refunding Bonds Series 2002.

The service expected the funding to be insured by an insurer Moody's highest rating category with a financial strength rating of Aaa. The Aa2 underlying ratings will be maintained. The bonds are secured by a pledge of the net revenues of the water and sewer system and will be used to finance the refunding of outstanding bonds for savings.

Although city officials have recently made changes to allow for annual water and sewer rate increases at a minimum of 3% pegged to the Florida Public Service Commission Deflator Index, Moody's said that utility rates still are competitive with other local utilities.

The water and sewer system serves the city of Naples and portions of Collier County. Naples is a residential community with well above average wealth and housing values and an established retired and semi-retired component.

Broad-based wealth lessens to some extent, concern over the narrow, service-oriented nature of the economy. While the city is mostly built-out, the total service area, which includes contiguous unincorporated areas, is reportedly about 75-80% developed.

While this leaves room for continued growth, it makes potential capital requirements more manageable and reduces any dependency in the system on growth-related revenues. The system has no large users and roughly about 85% of revenues are derived from the residential sector. The system serves a total of 16,973 water customers and 8,616 sewer customers.

Water is supplied from 51 wells in two well fields with a combined 32.6 MGD capacity (28 MGD in draught). Source of water supply for the well fields is the Tamiami Aquifer which is recharged primarily by rainfall and has capacity to treat 30 MGD. Average usage is 19 MGD with peak consumption of 25 MGD.

Sewage is collected and treated at the City's 10.0 MGD advanced secondary activated sludge wastewater treatment plant. Average flow is about 6.5MGD. Effluent is spray irrigated with excess discharged to the Gordon River. Dewatered sludge is hauled by private contract and land applied.

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