Standard & Poor's Ratings Services said it raised its rating on The Indianapolis Local Public Improvement Bond Bank, Ind.'s existing stormwater system senior-lien revenue bonds to AAA from AA-plus.
At the same time, it assigned its AAA rating to the bond bank's series 2015H refunding bonds. The outlook is stable.
"The upgrade is due to additional certainty related to how the city will fund the large $320 million stormwater capital plan," said Standard & Poor's credit analyst Scott Garrigan.
Effective July 1, 2015, a new stormwater rate structure was put into place which allows for automatic increases through 2019 and then until 2034 unless modified by council.
From now on, the rate will be based on a monthly rate of $1.10 per 1,000 square feet of impervious surface area. Management has indicated that, together with planned bond issues, the revenues generated through the new rate structure will be sufficient to fund the entire $320 million capital plan through 2034.
Initially, 60% of the annual funding will initially arise from bonds, but eventually the city will fund 60% from cash on hand. As a result, the city currently projects that about 50% of its capital plan will be funded with debt during the 20-year period from 2015-2034.
"The rating also reflects our assessment of the stormwater system's large and diverse service base," said Garrigan, "and low stormwater rates."
Bond proceeds will refund the bond bank's 2011H stormwater bonds.
