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News Review
City of Carrollton Receives "AAA" Bond Rating
Posted Date: 3/13/2014 1:00 PM
The City of Carrollton received a “AAA” rating from the Fitch Group, the highest score group awards, on February 27, 2014 for $7.4 million in waterworks and sewer system revenue bonds, series 2005 and 2007, and for $9.7 million waterworks and sewer system revenue refunding bonds, series 2012. The bonds represent senior lien obligations of the combined water and sewer system, payable from net system revenues. Contributing to the “AAA” rating are strong financial performance and planning, low debt and modest capital, affordable user rates, strong financial metrics, rate flexibility, and a stable rating outlook.

While the City does not have their own wastewater treatment plant, they are able to provide retail water and sewer systems to over 35,000 residential and commercial customers in Carrollton through contracted services. By purchasing treated water supplies at wholesale costs from Dallas Water Utilities (DWU), and contracting wastewater treatment services with the Trinity River Authority (TRA), the City is able to cut the costs of owning and operating a facility of their own.

The Fitch Group report states, “Despite the rising wholesale costs, user rates are very affordable. The City Council has historically approved rate increases in order to offset rising wholesaler costs and to ensure financial health and proper system maintenance. The average monthly residential bill totals a relatively modest $54 (based on 9,500 gallons water consumption) and registers at a low 0.9% of median household income (MHI). Fitch views the City's rate structure as credit positive due a sizable base charge which accounts for 42% of water charges and 54% of sewer charges, providing a good deal of stability in operating revenue.”

Funded entirely from surplus revenues and cash reserves, the 2014-2019 Capital Improvements Plan totals $19.5 million to renew the system in order to fulfill the City’s continued commitment to asset performance. Low debt levels will continue to decline due to the “rapid amortization of existing debt (over 85% of principal amortizes within 10 years), and lack of additional borrowing,” as explained by the Fitch Group report.

The report describes Carrollton as “relatively mature, with a favorable economic profile characterized by high wealth levels and relatively low unemployment. Carrollton is located northwest of Dallas along Interstate 35 East, in parts of Dallas, Denton, and Collin counties in the Dallas-Fort Worth metroplex. Fitch rates the City's general obligations 'AAA' with a Stable Outlook. The 2010 census population totaled approximately 119,000, a 9% increase from 2000 census levels. The City is home to a number of manufacturing, distribution, and service businesses, and serves as national or regional headquarters for several companies. The unemployment rate for the City historically has been lower than state and national levels. City wealth indicators are favorable, with median household income 36% higher than the state, and 32% higher than the nation.”