LOS ANGELES — Standard & Poor's gave a Washington state water wholesaler an upgrade to AA from AA-minus on its wastewater revenue and refunding bonds based on strong liquidity and debt service coverage.
The bonds were issued by Washington Economic Development Finance Authority, an independent agency that acts as a conduit issuer for the executive branch of Washington government, on behalf of LOTT Clean Water Alliance.
The outlook is stable.
"The raised rating is based on our view of LOTT's continued strong debt service coverage and strong liquidity position, as well as the solid and stable financial performance of the three retail wastewater agencies it serves," said Standard & Poor's credit analyst Robert Hannay.
LOTT, which was incorporated in 2000, is a wholesale provider of wastewater treatment and discharge services for the cities of Lacey, Olympia, and Tumwater, all in Thurston County. These cities, along with the county, are the four LOTT partners. LOTT's service area economy is anchored by the state capital and state government, Hannay said.
LOTT has $105 million in outstanding debt, which includes the $29.5 million owed on the 2011 bonds and several loans, according to its comprehensive annual financial report for the year ended Dec. 31, 2013. Its loan coverage ratio is 5.97.
As of December 31, 2013, the Alliance had an unrestricted net position balance of $35.3 million. Of this total, $9 million is reserved for emergencies, and with the remainder slated for debt reduction, future capital improvements and system upgrades, according to financial reports.
In the next six years, LOTT has more than $27.6 million in new investment to the Bud Inlet Treatment Plant planned that will be financed through connection charges and monthly charges.
