Fitch Ratings, one of the nation’s top bond rating agencies, has upgraded the City of Mansfield’s water and sewer, as well as the drainage utility system revenue bonds to AAA from AA+ and AA respectively, citing the system’s strong revenue growth and low operating risk.
Fitch assigned the Standalone Credit Profile (SCP) of the water and sewer system at AAA, upgrading approximately $34.3 million in revenue bonds. The same was issued for $2.7 million in drainage utility system revenue bonds.
In the agency’s water and sewer rating summary, Fitch said “the strength of the system’s revenue defensibility is rooted in the system’s very strong revenue-raising ability, supported by very strong rate flexibility from a growing, and mostly residential, service territory in the Dallas-Fort Worth metro area.”
The key drivers cited by the analysts were “very favorable service area characteristics, affordable rates, very low cost burden, moderate life-cycle investment needs and very strong financial profile.”
In the agency’s drainage utility system rating summary, Fitch cited similar characteristics as the water and sewer system and said “The cost of utility assets provides the system with a high degree of operating and financial flexability,” and said the system’s low net leverage “is expected to remain low over the next five years and thus, remain supportive of the strong rating.”
City Manager Joe Smolinski, who at one time served as the director of water utilities for the City, said the rating upgrade reflects the strong focus the council, management team and staff have placed in strategic planning all phases of city operations, including the water and sewer system.
“We are dedicated to providing our residents with the best city services each and every day,” Smolinski said. “At the same time we look to the future and evaluate our infrastructure needs based on where Mansfield will be 10, 20 and even 30 years from now.
“The rating upgrades in both enterprise funds can be attributed to a total team effort,” Smolinski continued. “The City Council has routinely supported a rate structure that provides for long-term rate stability and funds our capital improvement plan, which is critical to supplying our residents with safe drinking water and sanitation. I would be remiss if I did not also commend the men and women that treat our water, keep our sewers flowing and maintain our drainage ways. As I said, it takes a total team effort to achieve a AAA bond rating.
“As it pertains to our water and sewer system, we have put the mechanisms in place, from new pipelines to expansion of our water treatment plant, to ensure more than adequate water resources for our growing population,” he said. “This rating upgrade represents the confidence the bond markets have in the growth of our community and our strategic planning efforts.”
This is the second AAA bond rating for the City. In 2018 Standard & Poor’s, upgraded its general obligation bonds to AAA from AA+, the first time in the city’s history it received a AAA rating.
Mayor David Cook said, “This nation’s top rating agencies continue to recognize the strong financial profile of our city. Their confidence in Mansfield, in the form of rating upgrades, is important as we continue to grow and build.”