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 A3 RATING TO FLORIDA GOVERNMENTAL UTILITY AUTHORITY'S $6 MILLION UTILITY REFUNDING REVENUE BONDS GOLDEN GATE UTILITY SYSTEM), SERIES 2010

23 Nov 2010

Golden Gate Utility System
Water/Sewer
FL

Moody's Rating

ISSUE

RATING

Utility Refunding Revenue Bonds (Golden Gate Utility System), Series 2010

A3

  Sale Amount

$6,000,000

  Expected Sale Date

12/01/10

  Rating Description

Utility Refunding Revenue Bonds

 

Opinion

NEW YORK, Nov 23, 2010 -- Moody's Investors Service has assigned an initial A3 rating to Florida Governmental Utility Authority's (FL) $6 million Utility Refunding Revenue Bonds (Golden Gate Utility System), Tax-Exempt Series 2010. The bonds are secured by net revenues and connection fees of the Golden Gate Utility System.

RATING RATIONALE

The A3 rating is based on the essential service being provided by the existing system to a relatively small, primarily residential service area; adequate legal provisions; weak historical debt service coverage with improvement expected, 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 issued to refund a $3.8 million outstanding bank letter of credit and to provide $1.15 million in funding for capital improvements, establish a $600,500 debt service reserve and pay the costs of issuance. Adequate legal provisions include the debt service reserve (at lesser of MADS, 125% average debt service or maximum allowed under the Code), a closed-loop flow of funds and an additional bonds test and rate covenant requiring net revenue coverage of 110% of maximum annual and average annual debt service, respectively. Finally, the documents provide for potential system acquisition by Collier County (Water & Sewer Revenue Bonds rated Aa2), which could change bondholder security and trigger a rating review.

SYSTEM GOVERNANCE PROVIDED BY FGUA BOARD

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 Collier 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 Golden Gate System in April, 1999. 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 through 2014 and an operations and billing agreement with Severn Trent Environmental Services, Inc. to provide basic operations and customer service through September 2011. FGUA expects to negotiate a new operating agreement through fiscal 2015. The bond indenture also provides for potential acquisition of the system by Collier 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.

RESIDENTIAL SERVICE AREA LOCATED IN COLLIER COUNTY; SYSTEMS HAVE SUFFICIENT CAPACITY

The Golden Gate Utility serves roughly 6,000 equivalent residential connections in western Collier County. The resident socioeconomic profile of the service area 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 service area. Golden Gate's top 10 customers accounted for a reasonable 11.23% of revenue in fiscal 2009, and primarily represent single family residential developments and small commercial users. The number of Golden Gate water customer accounts grew since acquisition in 1999 until 2006, but under recessionary pressure have since declined by over 9% through 2009. Total water demand (sales) growth declined on average during the same period by 0.88% annually, reflecting the decrease in active accounts, water restrictions and shifts in individual water use due to improved conservation. Active wastewater accounts have also followed a similar pattern, with an overall decline of 1.76% annually from 2004 through 2009. Billed flow declined 2.97% annually in the same time frame. The utility is projecting minimal annual ERC growth of 0.28% through 2015 with continued modest declines in average monthly water use.

Water is supplied to Golden Gate by eight groundwater wells, which are governed by a water use permit granted by the South Florida Water Management District (SFWMD) and expiring in 2030. Water treatment capacity is ample at 2.09 million gallons per day (MGD), and average demand in 2009 was 1.38 MGD. Wastewater treatment capacity is also sufficient at 1.5 MGD, relative to average flow of 1.024 MGD in 2009. System capacity is expected to remain sufficient in the medium term as very limited growth is projected.

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

A significant 14% rate increase, imposed on July 1, 2010, is expected to improve financial performance and provide sufficient revenues to cover operations, debt service and system maintenance in the near term. Additional rate increases of 1%-2% annually are expected to maintain satisfactory operations, assuming minimal growth and reasonable future expenditure and maintenance projections. Debt service coverage has fluctuated recently, with a very narrow 1.19 times recorded in fiscal 2009, down sharply from a more ample 1.38 times in fiscal 2007. Coverage of 1.33 times (unaudited) is projected in fiscal 2010 and pledged revenues are expected to provide debt service coverage in excess of 1.3 times, including very modest connection fees, through fiscal 2015. Golden Gate's rates are high relative to similar systems in southwest Florida (topping the list in each comparison group), although it is likely that some of the systems are also facing significant rate increases in the medium term. Average monthly residential water and wastewater bills (based on 6,000 gallons per month) are projected at $133.34, 151% of the regional average of $88.49. Golden Gate's cash position is relatively slim, with net working capital representing roughly 142 days' operations at fiscal 2009 year-end. The system increased its renewal and replacement transfer and is required to transfer 5% of annual operating revenue to the renewal and replacement (R&R) fund for future capital needs and system maintenance.

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 $3.9 million capital needs are largely met through this issuance and projected system revenues. While debt ratios are expected to remain very 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 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 UNDER STRESS BUT SHOWING RESILIENCE THROUGH RECESSION

Collier 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 experienced explosive growth of with 32% in the last decade, 65% in the 1990's and another 77% in the 1980's. Population is now estimated at 333,032 in 2009, a nearly ten-fold increase from the 38,040 population in 1970. The county's tax base had tripled to $82 billion in fiscal 2008 from $27 billion in fiscal 2001. However, significant declines of 5% and 11% were experienced in fiscal 2009 and 2010, respectively, due largely to declines in the residential real estate market. Unemployment remains high at 13.6% in August 2010, above state and national rates of 12.4% and 9.5%, respectively. Collier 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 the vibrant local economy in Naples will continue to attract development.

What Could Make the Rating Go UP:

- Improved debt service coverage and liquidity

- Significantly improved economy

What Could Make the Rating Go DOWN:

- Continued declines in cash and debt service coverage

- Further economic decline

KEY STATISTICS:

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

Type of System: Water treatment and transmission, wastewater collection and treatment in the Golden Gate system

Customers (accounts),

Water: 3,337 (88% residential)

Wastewater: 2,139 (86% residential)

Top 10 Customers as % Revenues: 11.23%

Account Growth (2005 to 2009 annualized),

Water: -0.91%

Wastewater: -1.76%

FY 2009 Operations,

Operating Ratio: 54.5%

Debt Service Coverage: 1.19 times

Debt Ratio: 138.9%

Expected FY 2010 Operations,

Operating Ratio: 47.2%

Projected Debt Service Coverage: 1.33 times (unaudited)

Post Sale Bonds Outstanding: $42 million

Bond Payout,

10 years: 23%

20 years: 60%

30 years: 100%

Five-Year Borrowing Expectations: None.

PRINCIPAL METHODOLOGIES

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.

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 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 A3 RATING TO FLORIDA GOVERNMENTAL UTILITY AUTHORITY'S $6 MILLION UTILITY REFUNDING REVENUE BONDS GOLDEN GATE 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