City of Goodyear, Arizona
For Immediate Release: March 6, 2011
S&P boosts Goodyear's bond rating to "A+"
GOODYEAR, ARIZ. (March 6, 2011) Thanks to a strong financial position, Goodyear's bond ratings received a boost last week when Standard & Poor's raised its underlying ratings on the city's senior-lien and subordinate-lien revenue bonds outstanding by two notches to "A+," up from "A-." S&P's also assigned its "A+" long-term rating and stable outlook to the city's series 2011 subordinate-lien water and sewer revenue obligations.
"The upgrade was based on our view of the strong financial capacity of the city's water and sewer utility for all its obligations, including allocable general obligation (GO) debt that the system fully self-supports," according to Standard & Poor's credit analyst Ted Capman.
Factors that continue to support the rating include S&P's opinion of the city's:
- Demonstrated willingness to adjust rates, including pre-approved rate increases through fiscal 2013;
- Ample and diverse long-term water supply; and
- Limited additional debt needs, five-year capital improvement program of $39.2 million through fiscal 2015 expected to be funded on a pay-as-you-go basis beyond the series 2011 bond sale.
Bond proceeds are used mainly to prepay a lease between the city and the Gila Nation which permits Goodyear to take a portion of Gila Nation's share of Central Arizona Project (CAP) raw water, and to also provide long-term funding for identified system projects.
For fiscal 2010, net revenues available for debt service provided coverage of over 3.5x on all revenue bond liens. With approximately $7 million in unrestricted cash (about 155 days) management was well ahead of its target of maintaining at least two months' cash reserves in the fund. Part of the robust financial position has been driven by the willingness of Goodyear's city council to adjust rates to improve working capital levels and ensure that the utility is fully self supporting its allocable share of GO debt issued on the utility's behalf, which was the case for fiscal 2010. Even with a four-year program of pre-approved rate increases in place, the typical single family residential water and sewer bill would be $89.39 in 2013. Access to CAP water and the groundwater to which the city already has access essentially assures that Goodyear will have a secure long-term water supply, easing future rate pressures and operational risk.
Standard & Poor's views Goodyear's wealth measures as strong, with median household effective buying income at 142 percent of the national average. Goodyear's $123,075 market value per capita is viewed by S&P's as very strong, as full cash market value has risen at an annualized rate of 25 percent in the past four years.
To read Standard & Poor's rating summary, please visit www.standardandpoors.com/ratingsdirect.