DALLAS — Moody's Investors Service has downgraded $156 million of water and sewer debt issued by the city of Beaumont, Texas, citing diminishing reserves and aging infrastructure.
Analysts said the falling reserves "are inconsistent with the Aa3 rating category."
"The A1 rating also incorporates the system's sizable and stable service area that includes the City of Beaumont and industrial customers outside the city, adequate legal provisions, and adequate debt service coverage levels," analysts said.
Among the city's challenges, the report cited "elevated water loss due to aging infrastructure."
Standard & Poor's rated the city's water and sewer debt AA-minus in 2012 ahead of a $20 million bond issue.
With a population of 118,296, Beaumont is the county seat of Jefferson County, about 90 miles east of Houston, along Interstate 10. The metro area that includes Port Arthur and Orange County — known as the "Golden Triangle" — has a population of more than 400,000.
Beaumont provides about 10% of U.S. refining capacity. In addition, the health care, medical equipment, electronics, and manufacturing sectors also have experienced growth in recent years.
The median household effective buying income is about 80% of national levels, according to S&P.
Beaumont's water and sewer system serves about 42,400 water customers and 40,400 sewer customers. The water system derives its supply from Neches River surface water and three groundwater wells. The surface-water filtration plant has a capacity of 40 million gallons per day.
