Moodys.com
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
New Issue:

MOODY'S ASSIGNS INITIAL A2 RATING TO FLORIDA GOVERNMENTAL UTILITY AUTHORITY'S $124 MILLION UTILITY REFUNDING REVENUE BONDS (ALOHA UTILITY SYSTEM), SERIES 2010

24 Sep 2010

Water/Sewer
FL

Moody's Rating

ISSUE

RATING

Tax-Exempt Utility Refunding Revenue Bonds (Aloha Utility System), Series 2010A

A2

  Sale Amount

$4,905,000

  Expected Sale Date

10/01/10

  Rating Description

Revenue

 

Taxable Utility Refunding Revenue Bonds (Aloha Utility System), Series 2010B (Federally Taxable - Build America Bonds - Direct Subsidy)

A2

  Sale Amount

$119,410,000

  Expected Sale Date

10/01/10

  Rating Description

Revenue

 

Opinion

NEW YORK, Sep 24, 2010 -- Moody's Investors Service has assigned an initial A2 rating to Florida Governmental Utility Authority's (FL) $124 million Utility Refunding Revenue Bonds (Aloha Utility System), Tax-Exempt Series 2010A and Taxable Utility Refunding Revenue Bonds, Series 2010B (Federally Taxable-Build America Bonds-Direct Subsidy). The bonds are secured by net revenues, connection fees and any federal direct subsidy payments of the Aloha Utility System, which includes the Aloha Gardens and Seven Springs water and sewer subsystems.

RATING RATIONALE

The A2 rating is based on the essential service being provided by the existing system to a moderately-sized, primarily residential service area, satisfactory net debt service coverage based on adopted rate increases and reasonably conservative projections, the highly-leveraged nature of the system given acquisition costs as well as cash funding of a debt service reserve and no additional borrowing anticipated in the next five years.

The bonds are used to refund a $106.7 million outstanding bank loan, fund the $2.5 million termination cost of a swap associated with the bank loan, fund $5.1 million in capital improvements and establish a $7.86 million debt service reserve and pay the costs of issuance. Legal provisions include the debt service reserve, a closed-loop flow of funds, and an additional bonds test and rate covenant requiring net revenue coverage of 120% of maximum annual and average annual debt service, respectively. Also, it is expected that the Series 2010B bonds will be issued as Build America Bonds, and the federal subsidy, defined as part of revenue, will be applied to monthly set-asides for debt service after it is received. Finally, the documents provide for potential system acquisition by Pasco County (Water & Sewer Revenue Bonds Rated Aa2), which could change bondholder security and trigger a rating review.

SYSTEM TRANSFER FROM INVESTOR-OWNED UTILITY TO PUBLIC-OWNED UTILITY

Florida Governmental Utility Authority (FGUA) is a legal entity and public body created pursuant to an Interlocal Agreement and managed by a governing board, with members appointed by local governments which are party to the Interlocal Agreement, including Pasco County. The Authority was established to acquire private regional utility systems in order to facilitate capital improvements and oversee operations to ensure satisfactory water quality and regulatory compliance. FGUA acquired the Aloha System on February 19, 2009. FGUA does not have any employees and will operate the system on a contractual basis. A management agreement with Government Services Group (GSG) will provide management services for an annual fee for five years from the date of acquisition (with extension terms) and an operations and billing agreement with US Water/Wade Trim, LLC (similar contract length and extension terms) will provide basic operations and customer service. The bond indenture also provides for potential acquisition of the system by Pasco County either through debt retirement or issuance of a county bond which would be equally secured with the county's senior lien bonds. The latter scenario requires a rating review pursuant to the Indenture.

STABLE, PRIMARILY RESIDENTIAL SERVICE AREA LOCATED NEAR TAMPA; SYSTEMS HAVE SUFFICIENT CAPACITY

The Aloha Utility, including the Aloha Gardens and Seven Springs subsystems, serves a population of roughly 28,000 residents in southwest Pasco County. The resident socioeconomic profile is average and the system projects annual customer growth of less than 1% in the medium term, although long-term growth potential exists in the Seven Springs service area. Aloha's top 10 customers accounted for a modest 5.5% of revenue in fiscal 2009, and primarily represent multi-family residential developments and small commercial and institutional users. The number of Aloha water customer accounts grew at an average annual rate of 0.62% from 2005-2009, although total water demand (sales) growth declined on average during the same period by 0.34% annually, primarily due to the 6.5% decline experienced in 2009. Absent this decline in 2009, total water demand (sales) increased on average by 1.8% annually. Wastewater accounts grew 0.73% from 2005-2009, with a decrease in flow similar to the water demand decline experienced in 2009. Total ERC's in 2009 were 17,002 and 16,063 for water and wastewater, respectively, and the utility is projecting 0.4% annual ERC growth through 2015 with no material change in billed wastewater sales.

Aloha Gardens and Seven Springs have separate water sources and delivery systems. Aloha Gardens is supplied primarily by Pasco County, which provides finished potable water, provided to the county by Tampa Bay Water (revenue bonds rated Aa2), pursuant to a bulk water agreement which expires in 2029 but is expected to be renewed. Aloha Gardens meets a portion of its annual water supply needs (approximately 12% of total demand) with a single well. The Seven Springs system includes eight wells and treatment plants, however a 2002 consent order (issued by the Southwest Florida Water Management District prior to acquisition by the FGUA) resulted in an agreement with Pasco County to purchase potable water to relieve chronic over-pumping and establish a sufficient future water supply. Interconnections with the Pasco County system are currently underway and water purchases are expected to begin in the latter part of Fiscal Year 2011.

Wastewater treatment is provided separately by the two subsystems. The Aloha Gardens system transmits its wastewater on a wholesale basis to Pasco County under a bulk wastewater agreement, which is expected to expire in 2016 but is expected to be renewed. Wastewater from the Seven Springs subsystem is treated at an FGUA-owned plant, currently permitted at 2.1 MGD; usage is projected at roughly 84% through 2015. FGUA also owns a small water reclamation system associated with the Seven Springs service area, which supplies reclaimed water for irrigation to customers which primarily serves golf courses and residential developments.

ADOPTED RATE INCREASES DRIVE RELATIVELY HIGH RATE STRUCTURE; SATISFACTORY DEBT SERVICE COVERAGE PROJECTED

After previously approved rate increases were imposed upon acquisition and on October 1, 2009, financial assumptions, predicated on minimal growth, future rate increases and typical expenditure patterns appear reasonable. Debt service coverage after fiscal 2010 is expected to remain in excess of 1.3 times with pledged revenues, which include very modest connection fees. After the implementation of the final increase (6.75% for Seven Springs and 5% for Aloha Gardens) of the three-year phased increase, effective October 1, 2010, an 8.29% increase is projected for fiscal 2012 (effective October 1, 2011) with more reasonable 2.75% rate increases expected through fiscal 2015. The FGUA's rate resolution also allows for indexed rate increases, based on the consumer price index and included in the annual budget, of up to 5% annually without further FGUA Board approval. Rates for each subsystem are high relative to similar systems in the Tampa area, although it is likely that some of the systems are also facing significant rate increases in the medium term. Average monthly residential water and sewer bills (based on 5,000 gals. per month) are currently above average although not the highest in the comparison group. Monthly billing for water and wastewater in the Aloha Gardens subsystem is projected at $70.22 and in the Seven Springs subsystem at $75.61; the regional averages is $57.87. The Aloha system's cash position is satisfactory, with roughly 259 days' operations on hand at fiscal 2009 year-end. The system is required to transfer 5% of annual operating revenue to the renewal and replacement (R&R) fund for future capital needs and system maintenance and plans to fund an annual amount greater than the minimum 5% for ongoing capital needs.

HIGHLY-LEVERAGED SYSTEM, SLOW PAYOUT BUT LIMITED BORROWING NEEDS

The system is highly leveraged due to significant acquisition costs and cash funding of the debt service reserve. The system's modest five-year $14.7 million capital needs are largely met through this issuance and system revenues. While debt ratios are expected to remain high for some time, some moderation should occur in light of increasing capital assets and a lack of borrowing needs for the next five years. The CIP incorporates costs for Pasco County interconnections, water treatment plant improvements and related transmission mains, and effluent system expansion as well as smaller water and wastewater system upgrades. The bonds are structured for a 30-year payout with more than one-half of principal repaid within the last ten years of the scheduled amortization.

COUNTY EXPERIENCING HOUSING MARKET CORRECTION AND HIGH UNEMPLOYMENT

Pasco County's regional economy, which had been expanding at a rapid pace, has slowed markedly and recovery is expected to be protracted. The county's population, which had increased 22.6% in the last decade and another 34.2% from 2000 to 462,714 in 2009, had grown rapidly and the tax base had more than doubled to $29 billion in fiscal 2008 from $14 billion in fiscal 2004. However, significant declines of 10% and 14% were experienced in fiscal 2009 and 2010, respectively, due largely to declines in the residential real estate market. has begun to moderate. Unemployment remains high at 12.9% in June 2010, above state and national rates of 11.6% and 9.6%, respectively. Pasco County's near-term economy will continue to be stressed, primarily due to consumers' strained finances. However, an upturn has begun in the labor market and while initial recovery may lag the national recovery the region's long-term economic prospects are strong as its coastal location and proximity to Tampa will continue to attract development.

WHAT COULD MOVE THE RATING UP:

*Multi-year trend of stable operations and solid debt service coverage

*Lower debt ratio

WHAT COULD MOVE THE RATING DOWN:

*Failure to meet projected debt service coverage

*Increased debt ratio

The principal methodology used in rating Florida Governmental Utility Authority was Analytical Framework for Water and Sewer System Ratings rating methodology published in August 1999. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website.

KEY STATISTICS:

Security: Net revenues, connection fees and any federal direct subsidy payments of the purchased Aloha Utility water and sewer system

Type System: Water treatment and transmission, wastewater collection in the Aloha Gardens subsystem; water treatment and transmission and wastewater collection, treatment and reclamation in the Seven Springs subsystem

Customers (ERC's),

Water: 15,255 (97% residential)

Wastewater: 14,612 (97% residential)

Population Served: approx. 28,000

Top 10 Customers as % Revenues: 5.5%

Account Growth (2005 to 2009),

Water: 2.5%

Wastewater: 2.9%

Expected FY 2010 Operations,

Operating Ratio: 52.4%

Projected Debt Service Coverage: 1.48 times

Projected Debt Service Coverage, excluding Connection Fees: 1.46 times

Post Sale Bonds Outstanding: $124 million

Bond Payout,

10 years: 18.1%

20 years: 50.2%

30 years: 100%

Five-Year Borrowing Expectations: None.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service's information and confidential and proprietary Moody's Analytics' information.

Moody's Investors Service considers the quality of information available on the credit satisfactory for the purposes of assigning a credit rating.

MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Susan Kendall
Analyst
Public Finance Group
Moody's Investors Service

John Incorvaia
Backup Analyst
Public Finance Group
Moody's Investors Service

Julie Beglin
Senior Credit Officer
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S ASSIGNS INITIAL A2 RATING TO FLORIDA GOVERNMENTAL UTILITY AUTHORITY'S $124 MILLION UTILITY REFUNDING REVENUE BONDS (ALOHA UTILITY SYSTEM), SERIES 2010
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR  PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​​​
Moodys.com