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HomeMy Public PortalAboutExhibit MSD 11C Fitch 2011 Water and Wastewater MediansExhibit MSD 11C FitchRatings Public Finance Revenue Special Report 2011 Water and Wastewater Medians Analysts Doug Scott +1 512 215-3725 douglas.scott@fitchratings.com Kathy Masterson +1 415 732-5622 kathy.masterson@fitchratings.com Adrienne Booker +1 312 368-5471 adrienne.booker@fitchratings.com Christopher Hessenthaler +1 212 908-0773 christopher.hessenthaler@fitchratings.com Gabriela Gutierrez, CPA +1 512 215-3731 gabriela. gutierrez@fi tchrati ngs. com Andrew DeStefano +1 212 908-0284 andrew.destefano@fitchratings.com Shannon Groff +1 415 732-5628 shannon.groff@fitchratings.com Julie Seebach +1 512 215-3740 julie.seebach@fi tchratings.com Andrew Ward +1 415 732-5617 andrew.ward@fitchratings.com Teri Wenck, CPA +1 512 215-3742 teri.wenck@fi tch rati ngs.com Inside Page Summary 1 Overview 1 Appendix A: Water and Wastewater Median Definitions 4 Appendix B: Utilities Included in 2011 Water and Wastewater Medians 7 Appendix C: 2011 Regional Medians 11 Appendix D: 2011 Medians Relative to System Size 12 Appendix E: Year -Over -Year Sectorwide Medians Comparison 13 Appendix F: 2011 Medians Relative to Rating Category 14 Stu m1'1121177 The 2011 medians continue Fitch Ratings' effort to provide transparency to market participants by giving a clear understanding of certain statistical ratios used in its review of sector revenue bond credits and quantitative results, particularly as they pertain to retail systems. For the most part, the key findings for 2011 continue trends Fitch has observed over the past several years and that contribute to the key issues discussed in Fitch Research "2011 outlook: Water and Wastewater Sector," dated Jan. 18, 2011, available on Fitch's Web site at www.fitchratings.com. The medians continue to point to ongoing capital pressures, but perhaps more importantly in the current economic climate, they highlight the sector's sustained, albeit slightly weakened, fiscal health. Certainly, particular regions and classes of utilities are facing greater near term stress than their counterparts, and Fitch anticipates that the cumulative effect could lead to additional erosion in future median results. Nevertheless, water and wastewater utilities overall appear well positioned to continue generating solid financial performance to bondholders as the nation's economic recovery continues. Overview Key Findings National Medians • Annual debt service (ADS) coverage remained strong on both a senior lien and all -in basis, but 2011 marked the third straight year of declining coverage levels. • Cash flows weakened significantly from 2010 (about 20%) as expenditures outpaced revenues, keeping surplus revenues well short of the amount needed to fund annual depreciation on a pay-as-you-go basis. • Despite the weak cash flows, utility balance sheets continued to be very healthy, with major liquidity ratios continuing to post close to one year of operating expenditures. • Planned annual capital spending rose nearly 9%, but remains well below pre - recession highs. • Key debt ratios jumped around 15% from 2010's, and issuers are forecasting additional borrowing that will increase their system leverage further over the next five years. • With the increased borrowing over the last year and slower growth than in prior years, utilities were able to address some deferred maintenance and reduce the age of their water/wastewater infrastructure. • Forecast annual rate hikes over the next several years continue to be higher than expected inflation amounts. Regional Medians • The Far West region's financial performance continued to exceed the national medians from a debt service coverage, liquidity, and cash flow perspective. However, debt levels, which were already well above the nation's, jumped www.fitchratings.co nn January 18, 2011 Fitchfiatings Public Finance Related Research Applicable Criteria • Revenue -Supported Rating Criteria, Oct. 8, 2010 • Water and Sewer Revenue Bond Rating Guidelines, Aug. 6, 2W8 Other Research • 2011 Outlook: Water and Wastewater Sector, Jan. 18, 2011 significantly from last year's levels. Nevertheless, this has not adversely impacted utility costs to customers given much of the region's debt is back -loaded. • The Midwest region posted among the weakest financial performance in all areas. On the positive side, rates are moderate and debt levels are low, with future borrowings not expected to materially change the region's debt profile. • The Northeast region generated similar financial results as those of the Midwest, although utility charges within the region are typically higher and utility debt is greater. • The Southeast region posted similar financial results as the Far West's, but maintained less debt and forecasts fewer capital needs. • The Southwest region also fared well financially. But of the three Sun Belt Regions, the Southwest utilizes less debt and has by far the most rapid repayment of debt. Medians Relative to System Size • Large systems continued to have the greatest amount of debt and produce the lowest financial margins for the most part, which could make it challenging to absorb future capital requirements. • Midsize systems continue to generate stronger financial performance than other utilities, while having the lowest debt burden and some of the lowest rates. • Small systems continued to maintain a solid financial profile, but the debt profile of this class of utilities weakened from 2010 results. Nevertheless, principal amortization for small systems gained ground relative to their peers, providing future flexibility in the out years. Limitations of Medians Analysis in the Rating Process While the medians serve as a useful tool for market participants by allowing for broad assessments and comparisons of credit quality, Fitch maintains that the data are a complement to the rating process rather than a substitute. Thus, when evaluating the medians in relation to the rating process, certain distinctions between them should be noted, as follows: • Medians largely provide a point -in -time snapshot of the rating category, region, class size, or sector as a whole, whereas the rating process focuses more on trends at the issuer and specific rating level. • Only a portion of the factors covered in Fitch's rating process are reflected in the medians — in particular, qualitative aspects such as management, policies, and legal provisions are excluded, although other quantitative ratios are also omitted. • The medians within each table present a composite of the range of credits and do not delineate offsetting strengths or weaknesses at the individual credit level that may affect a rating. New Information and Changes for 2011 With each round of medians, Fitch continuously seeks to refine the data presented to provide information that is timely and useful to market participants regarding the sector. For 2011, the following changes have been made to the medians report: • First, Fitch has included the debt to equity ratio within the 2011 published medians as a direct result of discussions with issuers, consultants, and investors since publication of the 2010 medians. • Second, the debt to funds available for debt service (FADS) ratio has ceased to be reported as a key ratio. This change was made because the ratio has not been as significant a determinant of individual ratings as the remaining key ratios. Having 2011 Water and Wastewater Medians January 18, 2011 FitchRatings Public Finance said this, debt to FADS continues to be a reported median with this report. • Finally, in order to limit the amount of text historically associated with this report and provide a greater focus to the statistical information, Fitch has limited its discussion of the actual medians results to the key findings above. Recalibration Based on Fitch Research "Recalibration of U.S. Public Finance Ratings," dated March 25, 2010, available on Fitch's Web site at www.fitchratings.com, water and wastewater sector ratings were recalibrated April 30, 2010, with limited exception. Data presented in this report at the categorical rating level, specifically Appendix F (see page 14), have been adjusted to reflect the statistical results based on the recalibrated ratings where the rating action occurred prior to the recalibration date. Methodology and Data Fitch first published its water and wastewater medians in 2004 to provide issuers, consultants, analysts, investors, and others with a quantitative framework of ratios used in Fitch's water and wastewater rating process. To this end, Fitch historically has grouped the medians according to their respective area within the criteria review process, and the 2011 medians continue this practice. This report also continues Fitch's presentation of key ratios used in the rating process to give the market a better understanding of the priority in weighting certain ratios. To allow a comparison with prior statistics, Fitch also has included historical information from the 2007-2010 medians (see Appendix E, page 13); the 2004 medians were excluded, given that the methodology for selection of credits was revised following its release. It is Fitch's anticipation to add subsequent information annually to this table as ensuing medians are published to allow readers to follow long-term trends. As with Fitch's prior medians, those for 2011 cover only wholly or predominantly retail systems for which Fitch has taken rating actions on senior lien debt. The data include water and wastewater revenue bond credits rated between September 2009 and August 2010. Certain credits have been excluded for various reasons, as outlined below (for a complete list of issuers included in the 2011 medians, see Appendix B, pages 7-10). In cases where the same issuer was rated multiple times, only data from the most recent rating were incorporated into the medians. In the 2011 medians, combined water and wastewater utilities accounted for 77 credits (48% of the total), individual water systems numbered 52 (32%), and individual wastewater systems were 33 (20%). Excluded for median -reporting purposes from the 2011 data set are certain credits with ratings of `BBB+' or below (after the April 2010 recalibration) because Fitch traditionally has viewed these issuers as outliers with extenuating circumstances. Also excluded were issuers for which the majority of system revenues were derived from other utility (i.e. electric power) revenues. In both these cases, the data have a tendency to skew median results. 2011 Water and Wastewater Medians January 18, 2011 3 FitchRatings Appendix A: Water and Wastewater Median Definitions Median Definition Significance Provides an overview of the scope of operations in the service area Indicates the overall wealth of average residential customers and their ability to pay for services Population Median Household Income ($) Estimated population of the service area Median household income for the primary municipal entity served by the utility based on the most recent year as reported by the U.S. Census Bureau Most recent water customer accounts total, if applicable Total Water Customers Provides an overview of the scope of operations in the service area Indicates the pressures a utility may be facing to meet customer demands Provides an overview of the scope of operations in the service area Indicates the pressures a utility may be facing to meet customer demands Indicates revenue concentration levels Water Customer Annual Growth (%) Percentage of historical average annual customer accounts growth rates Most recent wastewater customer accounts total, if applicable Total Wastewater Customers Wastewater Customer Annual Growth (%) Percentage of historical average annual customer accounts growth rates Total annual receipts from the 10 largest customers divided by total operating system revenues for the year Total accumulated depreciation divided by annual depreciation Percentage of permitted treatment capacity remaining above most recent production level Percentage of permitted treatment capacity remaining above most recent production level Total projected capital needs in the CIP divided by the number of years of the CIP, divided by total number of customers (for a combined utility, the aggregate number of water and wastewater accounts are used) Percentage of issuer's total CIP expected to be debt financed Total amount of utility long-term debt divided by the net asset value of the plant Total amount of utility long-term debt divided by the total funds available for debt service Total amount of utility long-term debt divided by unrestricted net assets Total amount of utility long-term debt divided by the total number of utility customers (for a combined utility, the aggregate number of water and wastewater accounts are used) Total amount of utility long-term debt divided by total population served by the utility Top 10 Customers as % of Revenues Age of Plant (Years) Water Treatment Capacity Remaining (%) Wastewater Treatment Capacity Remaining (%) Average Annual CIP Costs Per Customer ($) CIP Debt Financed (%) Total Outstanding Debt to Net Plant Assets (%) Debt to FADS (x) Indicates potential deferred plant maintenance Indicates the pressures a utility may be facing to meet customer demands Indicates the pressures a utility may be facing to meet customer demands Indicates effect of the CIP on ratepayers (principal only) Indicates future debt leverage of capital assets Indicates existing debt leverage of capital assets Debt to Equity (x)a Total Outstanding Long -Term Debt Per Customer ($)b Total Outstanding Long -Term Debt Per Capita ($)b 10 -Year Principal Payout (%) 20 -Year Principal Payout (%) Projected Debt Per Customer —Year Five ($)b Projected Debt Per Capita — Year Five ($)b Individual Water/Wastewater Utility Average Monthly Residential Bill ($) Individual Water/Wastewater Utility Average Annual Bill as % of Median Household Income (MHI) Combined Water/Wastewater Utility Average Monthly Residential Bill ($) Combined Water/Wastewater Utility Average Annual Bill as % of MHI New with 2011 medians. bindicates key ratio. Percentage of principal amortizing within 10 years Percentage of principal amortizing within 20 years Total projected outstanding system debt (existing debt less scheduled amortization plus planned issuances) divided by total outstanding projected customers five years from the date of the rating (for a combined utility, the aggregate number of water and wastewater accounts are used and are inflated by anticipated growth) Total projected outstanding system debt (existing debt less scheduled amortization plus planned issuances) divided by total projected population served by the utility (population is inflated based on anticipated growth) Average monthly residential bill for individual utilities; when billing was not calculated on a monthly basis, it was converted to a monthly amount for standardization Average monthly residential bill for individual utilities times 12, divided by the most recent yearly MHI as reported by the U.S. Census Bureau Average monthly residential bill for combined utilities; when billing was not calculated on a monthly basis, it was converted to a monthly amount for standardization Average monthly residential bill for combined utilities times 12, divided by the most recent yearly MHI as reported by the U.S. Census Bureau Indicates existing debt leverage relative to existing funds available for debt service Indicates existing debt leverage relative to system equity Indicates the existing debt burden attributable to ratepayers (principal only) Indicates the existing debt burden of an utility attributable to each person served by the utility (principal only) Indicates longevity of system debt Indicates longevity of system debt Indicates the total debt burden to ratepayers five years from the date of the rating (principal only) Indicates the total debt burden of an utility to each person served by the utility five years from the date of the rating (principal only) Indicates the monthly cost of service to residential customers Indicates the annual burden for cost of service to ratepayers Indicates the monthly cost of service to residential customers Indicates the annual burden for cost of service to ratepayers 2011 Water and Wastewater Medians January 18, 2011 FitchRatings Public Finance Appendix A: Water and Wastewater Median Definitions (continued) Median Average Annual Projected Water Rate Increases (%) Average Annual Projected Wastewater Rate Increases (%) Three -Year Historical Average Senior Lien ADS Coverage (x)a Definition Sum of planned annual rate increases divided by the number of years over which increases are forecast Sum of planned annual rate increases divided by the number of years over which increases are forecast Most recent three-year historical average of annual revenues available for debt service divided by respective senior lien debt service for the year Current -year revenues available for debt service divided by current -year senior lien debt service Significance Indicates the future expected burden for cost of service to ratepayers Indicates the future expected burden for cost of service to ratepayers Indicates the historical trend in senior lien ADS coverage Senior Lien ADS Coverage (x)a Indicates the financial margin to meet current senior lien ADS with current revenues available for debt service Indicates the financial margin to meet current senior lien ADS with current revenues available for debt service, excluding one-time revenues such as connection fees Indicates the financial margin during the year in which future senior lien ADS coverage is projected to be the lowest Senior Lien ADS Coverage Excluding Connection Fees (x) Current -year revenues available for debt service, excluding one-time revenues such as connection fees, divided by current -year senior lien debt service Minimum Projected Senior Lien ADS Coverage (x)a Minimum debt service coverage projected typically over the ensuing five-year period, based on revenues available for debt service in any given fiscal year, divided by the respective senior lien debt service amount for that fiscal year Current -year revenues available for debt service divided by projected senior lien MADS Senior Lien MADS Coverage (x) Senior Lien Debt Service as % of Gross Revenues Three -Year Historical Average All -In ADS Coverage (x)a All In ADS Coverage (x)a All -In ADS Coverage Excluding Connection Fees (x) Current -year senior lien debt service divided by current - year gross revenues Most recent three-year historical average of annual revenues available for debt service divided by respective total debt service for the year Current -year revenues available for debt service divided by current -year total debt service Current -year revenues available for debt service, excluding one-time revenues such as connection fees, divided by current -year total debt service Indicates the financial margin to meet projected senior lien MADS with current revenues available for debt service Indicates the level of annual senior lien debt service burden on system operations Indicates the historical trend in total ADS coverage Indicates the financial margin to meet current total ADS with current revenues available for debt service Indicates the financial margin to meet current total ADS with current revenues available for debt service, excluding one-time revenues such as connection fees Indicates the financial margin during the year in which future total ADS coverage is projected to be the lowest Minimum Projected All -In ADS Coverage (x)a Minimum debt service coverage projected typically over the ensuing five-year period, based on revenues available for debt service in any given fiscal year, divided by the respective total debt service amount for that fiscal year Current -year revenues available for debt service divided by projected total MADS All In MADS Coverage (x) All -In Debt Service as % of Gross Revenues Operating Margin (%) Operating Cash Flow Ratio (x) Operating Revenue Growth — Current Year (%) Operating Revenue Growth —3 Year Average (%) Operating Expenditure Growth — Current Year (%) Operating Expenditure Growth —3 Year Average (%) Current -year total debt service divided by current -year gross revenues Operating revenues minus operating expenditures plus depreciation, divided by operating revenues Cash flows from current operations divided by current liabilities Most recent audited operating revenues divided by the immediately prior year operating revenues minus 1 Average of operating revenues divided by the immediately prior year operating revenues minus 1 for the three most recent audited fiscal years Most recent audited operating expenses divided by the immediately prior year operating expenses minus 1 Average of operating expenses divided by the immediately prior year operating expenses minus 1 for the three most recent audited fiscal years Current unrestricted accounts receivable divided by operating revenues, divided by 365 Indicates the financial margin to meet projected total MADS with current revenues available for debt service Indicates the level of annual total debt service burden on system operations Indicates financial margin to pay operating expenses Indicates the strength of existing cash flows to meet near -term obligations Indicates revenue gains Indicates revenue gains Indicates expenditure pressures Indicates expenditure pressures Days of Operating Revenues in Accounts Receivable Indicates key ratio. Indicates rate at which customer revenues are received 2011 Water and Wastewater Medians January 18, 2011 • FitchRatings Appendix A: Water and Wastewater Median Definitions (continued) Median Definition Significance Indicates financial flexibility to pay near -term obligations Days Cash on Hand' Current unrestricted cash and investments plus any restricted cash and investments (if available for general system purposes), divided by operating expenditures minus depreciation, divided by 365 Current unrestricted assets plus any restricted cash and investments (if available for general system purposes), minus current liabilities payable from unrestricted assets, divided by operating expenditures minus depreciation, divided by 365 Current cash plus current receivables divided by current liabilities Current assets divided by current liabilities Days of Working Capital' Indicates financial flexibility to pay near -term obligations Quick Ratio Indicates financial flexibility to pay near -term obligations Indicates financial flexibility to pay near -term obligations Indicates annual financial capacity to maintain facilities at current level of service from existing cash flows Current Ratio Free Cash as % of Depreciation' Current surplus revenues after payment of operating expenses, debt service, and operating transfers out divided by current year depreciation 'Indicates key ratio. 6 2011 Water and Wastewater Medians January 18, 2011 FtchRatings Public Finance Appendix B: Utilities Included in 2011 Water and Wastewater Medians Alaska Anchorage (Wastewater) Anchorage (Water) Date of Senior Lien Rating Long -Term Rating Rating Outlook 7/22/10 11/20/09 AA Stable AAa Stable Arizona Chandler 2/23/10 AA -Fa Negative Gilbert Water Resources Municipal Property Corp. (Wastewater) 11/9/09 A+a Stable Gilbert Water Resources Municipal Property Corp. (Water) 11/9/09 A+a Stable Oro Valley 10/20/09 AA— Stable Peoria 5/4/10 AA Negative Pima County 5/19/10 AA Stable Pima County Metropolitan Domestic Water Improvement District 12/9/09 AA —a Stable Scottsdale 3/5/10 AAAa Stable Surprise Municipal Property Corp. 10/6/09 A —a Stable Tucson 5/20/10 AA Negative California Anaheim 3/31/10 AAa Stable Atwater (Wastewater) 10/1/09 A —a Stable Atwater (Water) 10/1/09 A —a Stable Beverly Hills (Wastewater) 5/25/10 AAA Stable Beverly Hills (Water) 5/25/10 AAA Stable Contra Costa Water District 6/7/10 AA+ Stable Diablo Water District 10/1/09 AA —a Stable East Bay Municipal Utility District (Water) 1/25/10 AA+a Stable Fresno 1/5/10 AAa Stable Glendale Water and Power 6/24/10 AA Negative Helix Water District 9/24/09 AA+a Stable Hillsborough 11/23/09 AAA' Stable Imperial Irrigation District 2/18/10 AA —a Stable Irvine Ranch Water District 1/26/10 AAAa Stable Jurupa Community Services District (Wastewater) 2/9/10 AAa Stable Jurupa Community Services District (Water) 2/9/10 AAa Stable Lake Arrowhead Community Services District 11/5/09 AAa Stable Lodi 2/11/10 A+a Stable Los Angeles 7/20/10 AA+ Stable Los Angeles County Sanitation District #14 12/18/09 AA —a Stable Los Angeles County Sanitation District #20 12/18/09 AA —a Stable Los Angeles Department of Water and Power 11/10/09 AA+a Stable Millbrae 12/3/09 AA_a Stable Modesto Irrigation District 1/22/10 AA —a Stable Moulton Niguel Water District 11/18/09 AAAa Stable Napa 4/19/10 AA+a Stable Olivenhain Municipal Water District 10/15/09 AA+a Stable Orange County Sanitation District 8/23/10 AAA Stable Otay Water District 4/1/10 AAa Stable Palmdale Water District 11/13/09 AA —a Stable Pasadena 5/7/10 AA+ Stable Rancho California Water District 6/4/10 AA+ Stable Redwood City 12/22/09 AA Stable Riverside 11/19/09 AA+a Stable Sacramento Area Sewer District 7/16/10 AA Stable San Diego (Wastewater) 3/29/10 AAa Stable San Diego (Water) 6/4/10 AA Stable San Luis Obispo 5/5/10 AA Stable South Coast Water District 5/13/10 AA+ Stable South Tahoe Public Utility District (Wastewater) 4/28/10 AA+a Stable South Tahoe Public Utility District (Water) 4/28/10 AA+a Stable Susanville 8/12/10 A— Stable Yorba Linda Water District 4/21/10 AAa Stable Colorado Aurora (Wastewater) 7/30/10 AA Stable Aurora (Water) 7/30/10 AA Stable Westminster 5/5/10 AAA Stable aRating after April 2010 recalibration. 2011 Water and Wastewater Medians January 18, 2011 7 FitchRatings Public Finance Appendix B: Utilities Included in 2011 Water and Wastewater Medians (continued) Date of Senior Lien Rating Long -Term Rating Rating Outlook Connecticut Greater New Haven Water Pollution Control Authority 5/24/10 A+ Stable District of Columbia District of Columbia Water and Sewer Authority 7/28/10 AA Stable Florida Cape Coral 5/27/10 A+ Negative Clay County Utility Authority 1/4/10 AA —a Stable Coral Springs 3/18/10 AAAa Stable Deltona 8/6/10 A+ Stable Florida Community Services Corp. 10/21/09 AA —a Stable Fort Myers 10/30/09 AA —a Stable Fort Walton Beach 9/18/09 AA a Stable Hollywood 12/29/09 A+ a Stable Key West 11/18/09 AA —a Stable Manatee County 9/23/09 AA+ a Stable Marco Island 2/12/10 A+a Stable Martin County 9/30/09 AA —a Stable Melbourne 10/14/09 AA —a Stable Miami -Dade County 2/11/10 AA —a Stable Nassau County 10/21/09 A+a Stable North Port 7/29/10 A+ Negative Oakland Park 8/5/10 AA— Stable Okaloosa County 12/17/09 AA_a Stable Orlando 10/27/09 AAA a Stable Polk County 8/19/10 AA— Stable Port St. Lucie 12/17/09 AA —a Stable Sarasota 8/11/10 AA— Stable Sarasota County 6/30/10 AA Stable Seacoast Utility Authority 9/9/09 AA_a Stable Sebring 9/28/09 AA —a Stable Sunrise 8/9/10 AA Stable Tallahassee 8/27/10 AA+ Stable Tohopekaliga Water Authority 5/26/10 AA Stable West Palm Beach 1/27/10 AA —a Stable Winter Haven 10/13/09 AA —a Stable Georgia Albany Water, Gas and Light Commission 9/11/09 A+ a Stable Atlanta 10/2/09 A Stable Fulton County 10/15/09 AA —a Stable Harris County 11/10/09 AA —a Stable Hawaii Honolulu Board of Water Supply 7/22/10 AA+ Stable Illinois Springfield Metro Sanitary District 3/29/10 AA -a Stable Kentucky Louisville and Jefferson County Metropolitan Sewer District 5/7/10 AA- Stable Louisiana East Baton Rouge Sewerage Commission 5/3/10 AA Stable Waterworks District No. 1 of Ward One of Calcasieu Parish 9/15/09 A a Stable Massachusetts Boston Water and Sewer Commission 12/30/09 AA+a Stable aRating after April 2010 recalibration. 8 2011 Water and Wastewater Medians January 18, 2011 FitchRatings Public Finance Appendix B: Utilities Included in 2011 Water and Wastewater Medians (continued) Michigan Kalamazoo Date of Senior Lien Rating Long -Term Rating Rating Outlook 12/8/09 AA_a Stable Missouri Metropolitan St. Louis Sewer District 1/6/10 AAA a Stable North Carolina Brunswick County 5/17/10 AA— Stable Buncombe County Metropolitan Sewerage District 9/14/09 AA+a Stable Cary 4/22/10 AAA Stable Charlotte 11/9/09 AAA Stable Durham 2/9/10 AAA Stable Henderson 5/5/10 AA— Stable High Point 6/2/10 AA+ Stable Orange Water and Sewer Authority 12/18/09 AA+a Stable Raleigh 3/17/10 AAA Stable Wilson 12/23/09 AA Stable New Hampshire Manchester 5/17/10 AA+ Stable New Mexico Santa Fe 10/28/09 AAA Stable Nevada Truckee Meadows Water Authority 6/25/10 A+ Negative New York Erie County Water Authority 6/28/10 AA+ Stable Nassau County Sewer and Storm Water Authority 6/17/10 AA— Stable New York City Municipal Water Finance Authority 6/17/10 AA+ Stable Suffolk County Water Authority 10/26/09 AAAa Stable Western Nassau County Water Authority 2/23/10 AA —a Stable Ohio Columbus 12/18/09 AA+ a Stable Oregon Clean Water Services of Washington County 8/11/10 AA Stable Eugene 6/24/10 AA+ Stable Pennsylvania Philadelphia 7/12/10 A+ Stable South Carolina Greenville 7/6/10 AAA Stable Tennessee Clarksville 1/21/10 AA —a Stable Memphis 11/6/09 AAa Stable Texas Arlington 6/8/10 AAA Stable Bexar Metropolitan Water District 10/15/09 A+ a Stable 'Rating after April 2010 recalibration. 2011 Water and Wastewater Medians January 18, 2011 9 FitchRatings Public Finance Appendix B: Utilities Included in 2011 Water and Wastewater Medians (continued) Texas (continued) Carrollton Corpus Christi Edinburg El Paso Fort Worth Garland Greenville Houston Killeen Laredo Mansfield McAllen Mineral Wells San Antonio Victoria Date of Senior Lien Rating Long -Term Rating Rating Outlook 4/28/10 AAAa Stable 7/19/10 AA— Stable 2/24/10 AA —a Stable 1/14/10 AA+ a Stable 4/21/10 AA+ a Stable 2/12/10 AA+ a Stable 12/7/09 AA_a Stable 8/12/10 AA Stable 12/17/09 AA a Stable 12/2/09 AA_a Stable 12/2/09 AA —a Stable 1/21/10 AA+ a Stable 11/19/09 AA —a Stable 2/3/10 AA+ a Stable 8/12/10 AA— Stable Utah Cedar Hills 10/5/09 AA_a Negative Clearfield City 12/22/09 AA_a Stable Eagle Mountain 1/12/10 AA_a Stable Midvale 4/8/10 AA_a Stable North Salt Lake 5/13/10 A+ Stable Orem 8/3/10 AA+ Stable St. George 9/11/09 AAa Stable Virginia Chesapeake 3/19/10 AAa Stable Fairfax County Water Authority 3/10/10 AAA Stable Hampton Roads Sanitation District 10/21/09 AA+ a Stable Henrico County 12/2/09 AAA Stable Hopewell 12/4/09 AA —a Stable Loudoun County Sanitation Authority 4/1/10 AAA Stable Spotsylvania County 7/30/10 AA— Stable Virginia Beach 6/8/10 AAA Stable Washington Tacoma 11/25/09 AA+a Stable Wisconsin De Pere 12/30/09 AAa Stable Milwaukee 5/20/10 AA Stable 'Rating after April 2010 recalibration. 10 2011 Water and Wastewater Medians January 18, 2011 FitchRatings Fina ce Appendix C: 2011 Regional Medians All Far West Midwest Northeast Southeast Southwest Credits Community Characteristics/Customer Growth and Concentration Population 142,198 150,000 1,200,000 137,746 226,596 150,142 Median Household Income ($) 57,974 43,791 48,155 47,709 47,319 50,146 Total Water Customers 25,348 18,937 181,622 44,410 60,519 40,755 Annual Growth (%) 0.9 2.3 0.3 1.7 2.4 1.4 Total Wastewater Customers 23,848 202,882 540,005 39,801 65,959 48,949 Annual Growth (%) 1.4 0.9 0.4 1.7 2.4 1.7 Top 10 Customers as % of Revenues 8 10 11 6 5 7 Capacity Age of Plant (Years) 14 19 13 12 12 12 Water Treatment Capacity Remaining (%) 41 78 67 52 57 53 Wastewater Treatment Capacity Remaining (%) 40 44 23 46 37 42 Capital Demands and Debt Policies Average Annual CIP Costs Per Customer ($) 394 209 206 290 256 297 CIP Debt Financed (%) 37 78 50 60 46 49 Total Outstanding Debt to Net Plant Assets (%) 43 21 54 44 41 44 Debt to FADS (x) 7.6 5.2 11.0 6.4 5.1 6.4 Debt to Equity (x)a 2.8 1.3 5.1 3.8 3.8 3.2 Total Outstanding Long -Term Debt Per Customer ($)b 1,747 501 1,565 1,446 1,367 1,527 Total Outstanding Long -Term Debt Per Capita ($)b 509 173 334 400 463 425 Ten -Year Principal Payout (%) 33 46 30 37 55 38 Twenty -Year Principal Payout (%) 70 82 71 81 99 79 Projected Debt Per Customer -Year Five ($)b 2,144 1,492 1,519 2,123 1,494 1,877 Projected Debt Per Capita - Year Five ($)b 677 452 442 532 450 531 Charges and Rate Affordability Individual Water/Wastewater Utility Average Monthly Residential Bill ($) 39 37 25 21 32 35 Individual Water/Wastewater Utility Average Annual Bill as % of Median Household Income (MHI) 0.9 0.9 0.5 0.7 0.9 0.8 Combined Water/Wastewater Utility Average Monthly Residential Bill ($) 44 35 56 65 60 61 Combined Water/Wastewater Utility Average Annual Bill as % of MHI 0.8 1.0 1.9 1.6 1.3 1.4 Average Annual Projected Water Rate Increases (%) 5.7 7.5 5.6 5.0 4.5 5.0 Average Annual Projected Wastewater Rate Increases (%) 6.4 6.7 8.6 5.4 5.0 5.8 Coverage and Financial Performance/Cash and Balance Sheet Considerations Three -Year Historical Average Senior Lien ADS Coverage (x) b 3.0 2.7 2.0 2.3 3.0 2.7 Senior Lien ADS Coverage (x)b 2.8 2.0 1.7 2.1 2.3 2.3 Senior Lien ADS Coverage Excluding Connection Fees (x) 2.2 2.0 1.7 2.0 2.2 2.1 Minimum Projected Senior Lien ADS Coverage (x) b 1.9 2.0 1.8 1.7 1.9 1.8 Senior Lien MADS Coverage (x) 1.8 1.7 1.4 1.8 2.1 1.9 Senior Lien Debt Service as % of Gross Revenues 14 7 20 19 18 17 Three -Year Historical Average All -In ADS Coverage (x)b 2.7 2.0 1.4 2.1 2.3 2.3 All -In ADS Coverage (x) b 2.2 1.3 1.3 1.9 1.9 1.9 All -In ADS Coverage Excluding Connection Fees (x) 1.8 1.3 1.3 1.7 1.8 1.7 Minimum Projected All -In ADS Coverage (x) b 1.6 1.3 L3 1.5 1.5 1.5 All -In MADS Coverage (x) 1.7 1.7 1.1 1.7 1.7 1.7 All -In Debt Service as % of Gross Revenues 16 12 24 22 23 20 Operating Margin (%) 29 14 31 34 36 33 Operating Cash Flow Ratio (x) 0.7 1.1 0.5 1.3 1.2 1.0 Operating Revenue Growth - Current Year (%) 4.3 0.5 (0.7) 2.0 6.8 3.6 Operating Revenue Growth - Three -Year Average (%) 6.7 3.0 2.6 3.8 4.8 5.3 Operating Expenditure Growth - Current Year (%) 5.2 (1.6) 3.8 3.9 7.2 4.3 Operating Expenditure Growth - Three -Year Average (%) 9.0 4.2 5.8 7.0 8.6 8.1 Days of Operating Revenues in Accounts Receivable 46 108 53 52 43 46 Days Cash on Handb 339 52 236 357 289 328 Days of Working Capitalb 398 160 150 302 322 331 Quick Ratio 3.0 4.1 1.8 3.0 2.8 2.9 Current Ratio 3.6 4.1 1.7 3.4 3.1 3.3 Free Cash as % of Depreciationb 98 41 45 78 81 83 'New with 2011 medians, blndicates key ratio. 2011 Water and Wastewater Medians January 18, 2011 11 FitchRatings Public Finance Appendix D: 2011 Medians Relative to System Size System Size Classification Large All Medium Small Credits Community Characteristics/Customer Growth and Concentration Population 1,325,029 195,310 38,078 150,142 Median Household Income ($) 48,610 50,939 47,613 50,146 Total Water Customers 237,376 55,575 13,876 40,755 Annual Growth (%) 0.5 1.7 1.2 1.4 Total Wastewater Customers 336,290 57,851 10,207 48,949 Annual Growth (%) 1.2 1.9 1.2 1.7 Top 10 Customers as % of Revenues 7 7 8 7 Capacity Age of Plant (Years) 14 13 12 12 Water Treatment Capacity Remaining (%) 55 54 51 53 Wastewater Treatment Capacity Remaining (%) 36 47 44 42 Capital Demands and Debt Policies Average Annual CIP Costs Per Customer ($) 287 332 296 297 CIP Debt Financed (%) 69 42 34 49 Total Outstanding Debt to Net Plant Assets (%) 50 42 41 44 Debt to FADS (x) 9.2 5.8 5.4 6.4 De Debt to Equity (x)a 4.0 2.9 3.2 3.2 Total Outstanding Long -Term Debt Per Customer ($)b 1,755 1,479 1,446 1,527 Total Outstanding Long -Term Debt Per Capita ($)b 418 341 482 425 Ten -Year Principal Payout (%) 27 37 45 38 Twenty -Year Principal Payout (%) 69 79 93 79 Projected Debt Per Customer -Year Five ($)b 2,394 1,943 1,562 1,877 Projected Debt Per Capita - Year Five ($)b 497 504 584 531 Charges and Rate Affordability Individual Water/Wastewater Utility Average Monthly Residential Bill ($) 34 33 39 35 Individual Water/Wastewater Utility Average Annual Bill as % of Median Household Income (MHI) 0.7 0.8 1.0 0.8 Combined Water/Wastewater Utility Average Monthly Residential Bill ($) 55 56 65 61 Combined Water/Wastewater Utility Average Annual Bill as % of MHI 1.9 1.2 1.7 1.4 Average Annual Projected Water Rate Increases (%) 5.7 5.1 4.9 5.0 Average Annual Projected Wastewater Rate Increases (%) 6.5 5.8 4.6 5.8 Coverage and Financial Performance/Cash and Balance Sheet Considerations Three -Year Historical Average Senior Lien ADS Coverage (x)b 2.4 3.0 2.5 2.7 Senior Lien ADS Coverage (x)b 2.2 2.7 2.0 2.3 Senior Lien ADS Coverage Excluding Connection Fees (x) 1.9 2.3 1.9 2.1 Minimum Projected Senior Lien ADS Coverage (x)b 1.8 1.9 1.6 1.8 Senior Lien MADS Coverage (x) 1.6 2.1 1.8 1.9 Senior Lien Debt Service as % of Gross Revenues 19 15 17 17 Three -Year Historical Average All -In ADS Coverage (x)b 1.8 2.4 2.4 2.3 All -In ADS Coverage (x)b 1.6 2.0 1.9 1.9 All -In ADS Coverage Excluding Connection Fees (x) 1.5 1.9 1.7 1.7 Minimum Projected All -In ADS Coverage (x)b 1.4 1.6 1.5 1.5 All -In MADS Coverage (x) 1.4 2.3 1.8 1.7 All -In Debt Service as % of Gross Revenues 27 18 18 20 Operating Margin (%) 35 32 32 33 Operating Cash Flow Ratio (x) 0.9 0.9 1.0 1.0 Operating Revenue Growth - Current Year (%) 3.1 3.5 4.0 3.6 Operating Revenue Growth - Three -Year Average (%) 3.9 5.9 5.0 5.3 Operating Expenditure Growth - Current Year (%) 3.1 5.3 4.1 4.3 Operating Expenditure Growth - Three -Year Average (%) 6.9 8.4 8.1 8.1 Days of Operating Revenues in Accounts Receivable 52 45 42 46 Days Cash on Handb 256 362 290 328 Days of Working Capitalb 217 361 302 331 Quick Ratio 2.1 3.2 3.1 2.9 Current Ratio 2.3 3.6 3.6 3.3 Free Cash as % of Depreciationb 58 95 74 83 'New with 2011 medians. 'Indicates key ratio. 2011 Water and Wastewater Medians January 18, 2011 FitchRatings Appendix E: Year -Over -Year Sectorwide Medians Comparison 2007 2008 2009 2010 2011 Community Characteristics/Customer Growth and Concentration Population 119,037 234,103 162,338 144,162 150,142 Median Household Income ($) 40,656 45,733 45,820 47,179 50,146 Total Water Customers 37,299 61,076 50,410 37,264 40,755 Annual Growth (%) 2.5 2.4 1.6 1.7 1.4 Total Wastewater Customers 32,903 64,039 48,000 40,306 48,949 Annual Growth (%) 2.8 2.5 1.9 1.5 1.7 Top 10 Customers as % of Revenues 9 8 8 7 7 Capacity Age of Plant (Years) 13 13 12 13 12 Water Treatment Capacity Remaining (%) 53 50 50 54 53 Wastewater Treatment Capacity Remaining (%) 32 35 35 38 42 Capital Demands and Debt Policies Average Annual CIP Costs Per Customer ($) 266 348 356 273 297 CIP Debt Financed (%) 62 63 66 60 49 Total Outstanding Debt to Net Plant Assets (%) 40 39 39 43 44 Debt to FADS (x) - - 4.9 5.5 6.4 Debt to Equity (x)a - - - - 3.2 Total Outstanding Long -Term Debt Per Customer ($)b 1,012 1,185 1,454 1,297 1,527 Total Outstanding Long -Term Debt Per Capita ($)b - - 379 375 425 Ten -Year Principal Payout (%) 40 30 40 39 38 Twenty -Year Principal Payout (%) 87 70 82 80 79 Projected Debt Per Customer -Year Five ($)" 1,599 1,808 2,036 1,774 1,877 Projected Debt Per Capita - Year Five ($)b - - 607 446 531 Charges and Rate Affordability Individual Water/Wastewater Utility Average Monthly Residential Bill ($) 23 29 28 28 35 Individual Water/Wastewater Utility Average Annual Bill as % of Median Household Income (MHI) 0.6 0.7 0.8 0.7 0.8 Combined Water/Wastewater Utility Average Monthly Residential Bill ($) 47 56 56 59 61 Combined Water/Wastewater Utility Average Annual Bill as % of MHI 1.4 1.4 1.3 1.5 1.4 Average Annual Projected Water Rate Increases (%) 4.1 4.4 4.9 5.3 5.0 Average Annual Projected Wastewater Rate Increases (%) 5.0 5.1 5.9 5.9 5.8 Coverage and Financial Performance/Cash and Balance Sheet Considerations Three -Year Historical Average Senior Lien ADS Coverage (x)" - 2.7 3.0 2.9 2.7 Senior Lien ADS Coverage (x)b 2.3 2.8 2.9 2.6 2.3 Senior Lien ADS Coverage Excluding Connection Fees (x) 2.0 2.3 2.3 2.4 2.1 Minimum Projected Senior Lien ADS Coverage (x)b 1.8 1.9 1.9 1.9 1.8 Senior Lien MADS Coverage (x) 1.9 2.0 2.1 2.4 1.9 Senior Lien Debt Service as % of Gross Revenues 18 16 15 16 17 Three -Year Historical Average All -In ADS Coverage (x)b - - 2.1 2.4 2.3 All -In ADS Coverage (x)" 2.2 2.3 2.2 1.9 All -In ADS Coverage Excluding Connection Fees (x) - - 1.8 1.9 1.7 Minimum Projected All -In ADS Coverage (x)" 1.7 1.6 1.5 All -In MADS Coverage (x) - 1.8 2.0 1.7 All -In Debt Service as % of Gross Revenues - 20 21 18 20 Operating Margin (%) 34 36 33 32 33 Operating Cash Flow Ratio (x) - - 1.1 1.0 1.0 Operating Revenue Growth - Current Year (%) 5.4 8.0 7.1 4.5 3.6 Operating Revenue Growth -Three-Year Average (%) - - 6.5 6.0 5.3 Operating Expenditure Growth - Current Year (%) 5.0 8.4 7.3 6.2 4.3 Operating Expenditure Growth - Three -Year Average (%) - - 7.5 7.7 8.1 Days of Operating Revenues in Accounts Receivable 45 45 47 48 46 Days Cash on Hand" 266 313 331 344 328 Days of Working Capital" 279 316 345 361 331 Quick Ratio - - 2.9 3.3 2.9 Current Ratio 3.3 3.8 3.3 Free Cash as % of Depreciation" - - 122 107 83 aNew with 2011 medians. blndicates key ratio. 2011 Water and Wastewater Medians January 18, 2011 13 FitchRatings Public Finance Appendix F: 2011 Medians Relative to Rating Category Rating Category AAA AA A All Credits Community Characteristics/Customer Growth and Concentration Population 259,015 150,000 84,264 150,142 Median Household Income ($) 67,858 48,772 47,319 50,146 Total Water Customers 84,466 38,053 33,723 40,755 Annual Growth (%) 1.1 1.4 1.7 1.4 Total Wastewater Customers 77,363 42,883 24,042 48,949 Annual Growth (%) 1.2 1.6 2.5 1.7 Top 10 Customers as % of Revenues 5 8 8 7 Capacity Age of Plant (Years) 13 13 8 12 Water Treatment Capacity Remaining (%) 51 55 50 53 Wastewater Treatment Capacity Remaining (%) 40 44 40 42 Capital Demands and Debt Policies Average Annual CIP Costs Per Customer ($) 335 309 225 297 CIP Debt Financed (%) 41 50 36 49 Total Outstanding Debt to Net Plant Assets (%) 29 44 70 44 Debt to FADS (x) 5.5 6.7 8.2 6.4 Debt to Equity (x)a 1.8 3.5 6.0 3.2 Total Outstanding Long -Term Debt Per Customer ($)b 1,223 1,502 2,341 1,527 Total Outstanding Long -Term Debt Per Capita ($)b 375 410 563 425 Ten -Year Principal Payout (%) 36 39 32 38 Twenty -Year Principal Payout (%) 79 81 74 79 Projected Debt Per Customer - Year Five ($)b Projected Debt Per Capita -Year Five ($)b 1,524 1,830 2,175 1,877 471 532 599 531 Charges and Rate Affordability Individual Water/Wastewater Utility Average Monthly Residential Bill ($) 28 39 24 35 Individual Water/Wastewater Utility Average Annual Bill as % of Median Household Income (MHI) 0.6 0.9 0.7 0.8 Combined Water/Wastewater Utility Average Monthly Residential Bill ($) 54 61 68 61 Combined Water/Wastewater Utility Average Annual Bill as % of MHI 1.0 1.5 1.7 1.4 Average Annual Projected Water Rate lncreases (%) 6.0 5.0 6.0 5.0 Average Annual Projected Wastewater Rate Increases (%) 5.8 5.0 7.7 5.8 Coverage and Financial Performance/Cash and Balance Sheet Considerations Three -Year Historical Average Senior Lien ADS Coverage (x)b 3.1 2.7 2.0 2.7 Senior Lien ADS Coverage (x)b 2.6 2.3 1.8 2.3 Senior Lien ADS Coverage Excluding Connection Fees (x) 2.3 2.1 1.7 2.1 Minimum Projected Senior Lien ADS Coverage (x)b 2.0 1.8 1.5 1.8 Senior Lien MADS Coverage (x) 3.3 1.8 1.4 1.9 Senior Lien Debt Service as % of Gross Revenues 15 17 21 17 Three -Year Historical Average All -In ADS Coverage (x)b 2.6 2.3 2.0 2.3 All -In ADS Coverage (x)" 2.1 1.9 1.8 1.9 All -In ADS Coverage Excluding Connection Fees (x) 1.9 1.7 1.7 1.7 Minimum Projected All -In ADS Coverage (x All -In MADS Coverage (x) 3.1 1.7 1.8 1.7 All -In Debt Service as % of Gross Revenues 17 20 26 20 Operating Margin (%) 29 34 35 33 Operating Cash Flow Ratio (x) 0.8 1.0 0.9 1.0 Operating Revenue Growth - Current Year (%) 1.5 3.6 5.0 3.6 Operating Revenue Growth - Three -Year Average (%) 4.4 5.3 7.4 5.3 Operating Expenditure Growth - Current Year (%) 7.5 3.8 2.2 4.3 Operating Expenditure Growth - Three -Year Average (%) 8.2 7.9 8.4 8.1 Days of Operating Revenues in Accounts Receivable 53 44 52 46 Days Cash on Handb 625 292 231 328 Days of Working Capital° 532 330 123 331 Quick Ratio 3.2 3.0 2.0 2.9 Current Ratio 3.2 3.5 2.0 3.3 Free Cash as % of Depreciationb 94 80 85 83 'New with 2011 medians. blndicates key ratio. 1.8 1.5 1.5 1.5 2011 Water and Wastewater Medians January 18, 2011 FitchRatings Public Finance ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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