Clearwater, Florida $6.9 Million Stormwater Revenue Refunding Bonds Receives "A" Rating

Fitch Ratings assigns an 'A' rating to the city of Clearwater, Florida's $6,885,000 stormwater revenue refunding bonds, series 2005. The bonds are expected to sell competitively on or about April 20 pending market conditions.

Fitch also affirms the 'A' rating on the city's approximately $38.8 million in outstanding stormwater parity debt, net the current refunding. Bond proceeds will redeem the city's stormwater system revenue refunding bonds, series 1999, for an estimated present value savings of 5% of the refunded par. The Rating Outlook is Stable.

The 'A' rating is based on the city of Clearwater's stable service area, approved stormwater rate increases though fiscal 2008 contributing to improvements in the unrestricted cash position and debt service coverage levels, and inclusion of stormwater rates in the monthly utilities bill along with water and sewer rates (the city's water and sewer revenue bonds are rated 'A' by Fitch).

The rate increases that led to financial improvements have also resulted in well above-average rates, and potentially limited future rate-raising flexibility. While the system's capital plan is manageable, leveraging of the existing assets is high. Still, projected debt service coverage levels through 2008 are well above the 1.15 times legal minimum requirements.

Clearwater, the county seat of Pinellas County, is located in the middle of the west coast of Florida on the Gulf of Mexico, approximately 22 miles west of Tampa and 16 miles north of St. Petersburg. The service area includes a permanent population of nearly 109,000 and an estimated additional 20,000 winter residents, as of 2000. The stormwater utility system (the system) serves a monthly average of approximately 94,800 equivalent residential units, corresponding to approximately 30,620 customers. The 10 largest customers represent only 4% of total revenue receipts. The city's largest employers include mostly services and some retail businesses. Unemployment was 4% in January 2005, lower than the 4.6% recorded during the same month in 2004. While income levels are to some extent below the county's, they are above the state and national averages.

The system consists of approximately 120 miles of storm sewers, nine square miles of open water, and more than 14,400 structures such as culverts, flumes, weirs, and catch basins. Its operation and maintenance are funded through a stormwater utility fee levied against all developed property within the service area, which is included in the city's monthly utility bill. The city was in litigation with both the Pinellas County School Board and St. Peters Junior College over their payment exemption status as public institutions. The city settled with St. Peters Junior College but has appealed a Circuit Court decision that found in favor of the School Board. In the interim the city has taken conservative measures to mitigate any financial impact.

Source: WWD