Fitch Ratings Inc. has reaffirmed its “AAA” rating to the City of Carrollton for more than $8.4 million outstanding in waterworks and sewer system revenue refunding bonds, series 2012 and 2019. The rating outlook is Stable.
According to the Fitch report, contributing factors in receiving the “AAA” score include Carrollton’s exceptionally strong financial profile, low risk capital plan focusing primarily on renewal and replacement, affordable user rates, and a stable, mature economy with above-average income levels, and average growth and unemployment.
“Fitch’s analysts conducted a very thorough review, and I am pleased to report Fitch confirmed the City’s AAA-Stable rating,” Carrollton Chief Financial Officer Diana Vaughn said. “This is literally the highest credit rating that can be achieved, and 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 provided to our customers.”
Highlights of the report include the City’s “AAA” rating and exceptionally strong financial profile focusing on the amount of cash on hand at the close of Fiscal Year 2021 which was in excess of the amount necessary to cover water and sewer utility obligations.
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 36,000 residential and commercial customers. Because the City does not own any treatment facilities, it purchases treated water on a wholesale basis from Dallas Water Utilities (DWU) and wastewater treatment services from Trinity River Authority (TRA).
Carrollton’s system has some of the lowest rates in the region according to the report, and as of Fiscal Year 2021, rate flexibility is very strong. The combined monthly utility bill of approximately $63 (using Fitch’s standard usage of 7,500 gallons of water and 6,000 gallons of sewer flow per month) is considered to be affordable for the vast majority of customers (almost 92 percent). The City suspended rate increases for Fiscal Years 2021 and 2022, but resumed a rate increase in Fiscal Year 2023, and the system plans to fund its capital spending with a combination from Pay As You Go funding, new debt, federal funds, and a loan from the general fund.
“An efficient and successfully-run City like Carrollton has a long-standing foundation of strong financial management, robust forecasting, and frequent budget monitoring,” Mayor Steve Babick said. “The City Council regularly reviews rolling capital improvement plans, budgetary status reports, and quarterly investment reports supplied by City management. These practices, along with fiscally responsible budgeting and strong financial leadership, allow the City of Carrollton to weather storms such as the recent pandemic and ensure the City is primed for future growth.”
Fitch Ratings Inc. 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 on Carrollton’s fiscal status, visit cityofcarrollton.com/finance.
