The James City Service Authority plans to sell $27 million of Series 2008 water and sewer system revenue bonds in a competitive deal today, just as the agency grabbed upgrades from Standard & Poor’s and Moody’s Investors Service.
Standard & Poor’s upgraded the authority to AA-plus from AA based on continued strong debt coverage ratios, a consistently strong liquidity position, and strong fiscal management oversight, the rating agency said.
Moody’s upgraded the agency to Aa3 from A1, noting the authority’s service base growth, an improved operating ratio, and very strong liquidity. The Aa3 also incorporates the authority’s minimal debt burden and moderately-sized customer base, Moody’s said. Both ratings come with stable outlooks.
Fitch Ratings does not rate the authority.
Bond proceeds will help the authority secure a long-term water supply source. The authority entered into a project development agreement with Newport News, which has obtained permits to build the King William Reservoir. The James City agency will purchase four million gallons per day of the reservoir’s expected 20 million gallons per day capacity. The total estimated project cost is $250 million with a scheduled completion date by 2020.
Under the agreement, the authority will pay the city $50 million in two installments of $25 million, each with the first payment due by Dec. 31, 2008, and the final payment due by June 30, 2019. The authority will be responsible for 20% of the project’s annual operating and fixed costs.
The financial adviser on the deal is Davenport & Co. Bond counsel is Troutman Sanders LLP.