City to sell $200 million in "Green" Bonds to aid Spokane River
Marlene Feist, Utilities Communications Manager, (509) 625-6505
Thursday, November 6, 2014 at Noon
Spokane Mayor David Condon announced today that Moody’s and Standard & Poor’s, the two major bond-rating agencies in the U.S., have granted high ratings to the City’s planned Water Wastewater Utility revenue bonds.
Moody’s provided an “AA2” rating to the bonds, while Standard & Poor’s provided an equivalent rating of “AA.” The agencies have different labels for their rating scales.
“These are excellent ratings for these bonds. I am very pleased,” says Mayor David Condon. “Our strong financial position in the utilities, combined with our comprehensive plan to meet water quality standards and achieve significant environmental benefits for the Spokane River and our aquifer, led to these results.”
“Among other things, the rating agencies pointed to the support of our ratepayers for our plans to improve the health of the Spokane River as a strength,” says Council President Ben Stuckart. “As a community, we have rallied around the river, and that is being recognized.”
“These ratings will help assure lower interest rates on our bonds when we sell them next week,” says the City’s Chief Financial Officer Gavin Cooley. “This strong performance, along with the appeal of our environmentally beneficial projects, should attract investors to our issue.”
The bonds will pay for a series of projects that are designed to improve the health of the Spokane River and protect our aquifer. The bonds are designated as “green” bonds because they will be used to finance “green” projects that will provide environmental benefits. The work will improve water quality, protect water resources, and save energy, among other things.
The projects include those that are detailed in the City’s Integrated Clean Water Plan. Those projects will manage overflows from combined sewers, address untreated stormwater going to the river, and add a new level of treatment at the City’s Riverside Park Water Reclamation Facility.
The City’s plans are also financially responsible. The Mayor and City Council have committed to completing the work needed for the river while limiting utility rate increases to inflation. Later this month, the Council is expected to consider a three-year utility rate proposal that would limit annual increases to 2.9 percent.
In its report, Moody’s said, “The Aa2 rating reflects solid liquidity and debt service coverage levels, adequate water supply and treatment capacity for the stable and predominantly residential customer base, and a manageable multi-year capital improvement plan with limited future borrowing planned.”
Moody’s cited the following strengths:
Meanwhile, Standard & Poor’s, cited the Water Wastewater Utility’s strong financial position, including cash on hand and coverage to pay debt service on the bonds, as well as a diverse customer base as high points. It also pointed to the community’s role as the center of the regional economy as a strength.
The City expects to sell the bonds on Nov. 18. The Council approved their sale during its Oct. 27 meeting. The bonds will be paid back over 20 years, and utility rates – not general taxes – will be used to pay them. Mayor Condon, Council President Stuckart, and Council Member Candace Mumm presented information about the City and the Water Wastewater Utility to the rating agencies last month.
The releases from Moody’s and Standard & Poor’s are attached.
