BRADENTON, Fla. - Tampa Bay Water, a regional multi-governmental agency on Florida's west coast, is planning to price $104 million of utility system improvement revenue bonds next week on the heels of two rating upgrades.

Bond proceeds will fund capital improvement projects designed to enhance the region's potable water supply and to meet demand in the growing region through 2017.

Raymond James & Associates Inc. will be book-runner on the upcoming 30-year, fixed-rate deal. Much of the repayment will be back-loaded to structure around existing debt and help the agency keep water rates lower in the early years, Tampa Bay Water finance director Koni Cassini said Friday.

The agency won two rating upgrades in advance of the sale, which may factor into whether the bonds are insured.

Standard & Poor's upgraded Tampa Bay Water's approximately $1.06 billion of outstanding bonds to AA-plus from AA-minus on Friday. Fitch Ratings last Wednesday upgraded the debt to AA from AA-minus. The higher ratings and stable outlooks also were assigned to the Series 2008 bonds. Moody's Investors Service assigned its existing Aa3 rating to the new debt.

Insurance bids are being evaluated, according to Cassini.

"We have the luxury of going either way," she said. "We're an agency that can still issue cost effective debt with or without insurance."

Cassini said the agency lobbied for higher ratings and pointed to recent completion of a significant amount of programs in presentations. The agency also stressed that "regional solutions are really important" to providing good and timely water services, she said.

Tampa Bay Water is Florida's largest wholesale water provider. It serves the public utility systems of Hillsborough, Pasco, and Pinellas counties, as well as the cities of New Port Richey, St. Petersburg, and Tampa, which in turn serve 2.5 million people. In fiscal 2007, the agency produced 186.68 million gallons per day.

The agency treats and distributes drinking water from well fields, a reservoir, and a seawater desalination facility that recently began operations. The desalination plant originally began producing drinking water in 2003, but encountered design deficiencies that required lengthy remedial repairs.

Today, the plant produces up to 25 million gallons per day and can be expanded up to 35 million gallons per day. It is currently the largest facility of its kind in the United States, according to the agency.

"What we're basing the upgrade on is three things, basically," Standard & Poor's analyst John Sugden-Castillo said on Friday. "Those are the fact that they've completed most of their capital improvement plan and with this issuance funding the remainder of the CIP for the next five years, and the fact that they are serving six member governments that have very strong credit quality."

"They have good coverage, good liquidity, and have been operating as an authority under the same structure for some time now," Sugden-Castillo said. "They've faced some difficult challenges but surpassed them."

Cassini said the authority's board focuses on bringing facilities on line to meet demand and, after the upcoming debt sale, does not anticipate selling more debt until 2014. New home growth has slowed somewhat in the Tampa Bay area, which should give the agency "a nice window of time" to choose future projects, said Cassini.

"We're hoping [the 2008 bonds] are received well," Cassini said. "We've demonstrated the financial strength of the organization and the board's commitment to water. We're hoping to lock in low rates because of that."

Tampa Bay Water's financial adviser is UBS Securities LLC. Bond counsel is Nabors, Giblin & Nickerson PA. Disclosure counsel is GrayRobinson PA.

Others in the syndicate for the upcoming sale are Banc of America Securities LLC, Bear, Stearns & Co., Citi, Merill Lynch & Co., Morgan Stanley, RBC Capital Markets, and Wachovia Bank NA.

 

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