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Economy


FINANCIAL MANAGEMENT/Utility is recognized for sound finances

FINANCIAL MANAGEMENT/Utility is recognized for sound finances

Cobb County, Ga., water system's bonds have received upgrades from two rating companies this year. The independently funded water and wastewater system
  • Written by Gary Witte
  • 1st December 2000

Cobb County, Ga., water system’s bonds have received upgrades from two rating companies this year. The independently funded water and wastewater system was the first water and sewer utility to receive a Aaa rating from Fitch ICBA, and the only water and sewer utility in the country to receive an unenhanced Aaa rating from Moody’s Investors Service.

Cobb is one of the nation’s fastest growing counties. The water system delivers 21 billion gallons of water annually to more than 450,000 people in the unincorporated portions of Cobb County and Acworth. It also treats 30 billion gallons of wastewater at four facilities. The water system has an annual budget of about $96 million.

Working in conjunction with the county’s water supplier, Cobb-Marietta Water Authority, water system officials have made plans to maintain the water supply until 2050, despite challenges to the region’s water supply. Their long-term planning has improved the water system’s financial position by ensuring that it will not have to seek outside water sources and issue more debt, says John Incorvaia, analyst and vice president of the southeast region for Moody’s.

Cobb County’s average residential rate for both water and sewer is about $46 per month. That rate, average for the Atlanta metropolitan region, remains affordable, and is not expected to increase significantly in the near term, Moody’s says.

The water system maintains a strong financial position, with the net revenue producing four times debt-service coverage, allowing the utility to fund its capital program with cash. According to Moody’s, the system’s general-fund transfer is 5 percent of revenue, and between 1997 and 1999, its long-term debt fell nearly $20 million to $123.7 million.

An integral reason for the improved rating is a multi-year capital improvement program designed by managers, superintendents and employees, and approved by the board of commissioners. Additionally:

– The employees survey the water system on a regular basis and provide rate reviews, cost-of-service studies and long-range financial planning models. Water system officials analyze the projections in five- to 10-year increments, with a long-term plan of 40 years. (The three main projects cited in the current plan are a $113 million, 9.5-mile sewage tunnel; a $50 to $60 million plant expansion; and the $115 million replacement of a water reclamation facility.)

– The water system has reduced its staff of 120 by 33 people over 18 months. The plants also have implemented two 12-hour shifts instead of three eight-hour shifts.

– The county has a preventive maintenance program. It monitors infiltration/inflow, and water system authorities determine which water transmission facilities need upgrades. The board of commissioners must approve rate and operation maintenance needs.

The water system has a customer base that consists of 95 percent residential customers and 1.1 percent large retail customers. The number of residential customers makes the water system less likely to lose a large percentage of revenue at one time.

The Aaa rating brings the system’s outstanding revenue bonds up from a previous Aa1 rating. The new designation will not lower the existing interest rates on outstanding bonds but will affect the rates for any future bond issues. Cobb County has not issued water or sewer bonds since 1988, and the current system debt will be paid off by 2008 says Bob Brice, director of the Cobb County water system.

“This is not just about finances,” Brice says. “This is about management, operation of a water and sewer system and being diligent in providing the most dependable service for the short and long range.”

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