Carrollton Earns 'AAA' Bond Rating
The City of Carrollton received “AAA” ratings from Fitch Ratings Inc. for $5.9 million in waterworks and sewer system revenue bonds, series 2005 and 2007 as well as $8.2 million in waterworks and sewer system revenue bonds, series 2012.
Contributing factors to the “AAA” rating are strong financial performance and planning, low debt/modest capital plan, affordable user rates, and a mature economy with high wealth levels and low unemployment.
“They were very thorough and I am pleased to report Fitch confirmed our AAA-Stable rating,” said Bob Scott, Assistant City Manager for Finance. “This is literally as good as it gets rating wise. A “AAA” rating is only possible through a team effort that starts with our elected officials, appointed leadership, and especially Public Works, Engineering, and Utility Customer Service Departments that ensure safe, reliable water is given to our customers.”
The bonds represent senior lien obligations of the City’s combined water and sewer system, payable from net system revenues. Carrollton provides retail water and sewer service to more than 38,000 residential and commercial customers. And because the City does not own any treatment facilities, Carrollton purchases treated water on a wholesale basis from Dallas Water Utilities (DWU) and wastewater treatment services from Trinity River Authority (TRA).
“Financial operations over the past five fiscal years have been characterized by positive margins,” the report states. “Financial management is very strong as evidenced by stringent fiscal policies and conservative budgeting.”
The City has anticipated growing wholesale costs from both DWU and TRA and built those forecasted increases into the budget for fiscal 2016.
“Despite the rising wholesale costs, user rates are very affordable,” the report states. “The city council has historically approved rate hikes to ensure financial health and proper system maintenance. The average monthly residential bill totals a relatively modest $56 (based on 9,500 gallons water consumption) and registers at a low 1 percent of [median household income].”
Fitch stated it views the Carrollton’s pricing rate structure as a credit positive due to sizable base charges which account for 42 percent of water charges and 58 percent of sewer charges, providing a good deal of stability in operating revenue.
“Sound financial management is not exciting, but is the backbone of a well-run city,” said Mayor Matthew Marchant.
Fitch Ratings is a global leader in financial information services with operations in more than 30 countries. The company provides credit ratings, expert commentary, and market research.
For more information, visit fitchratings.com or cityofcarrollton.com