Moody’s Investor’s Service announced on Tuesday, December 5, 2017 that it has upgraded two of the Town of Erie’s bond ratings. The bonds issued by the Town’s Water Enterprise, as well as the bonds issued by the Town’s Wastewater Enterprise, were both assigned a new rating of “Aa3”, reflecting an upgrade in credit quality from the previous rating of “A1”.
Moody’s identified several credit strengths which factored into their decision to the upgrade the bond ratings. The financial reserves of each Enterprise are considered to be strong. The continued growth in the customer base is cited as a credit positive, and the strength in Erie’s local and regional economy is also viewed positively by Moody’s.
Moody’s also commented positively on the conservative budget approach used by the Town in its financial management of the Enterprises, and on the proactive steps taken by management to handle the overall growth in the utility systems while maintaining stable finances. The Water Enterprise has approximately $48.2 million of outstanding debt overall, while Wastewater Enterprise debt stands at approximately $18.2 million. The debt of the Enterprises is repaid solely by the revenues of each system, without any tax support.
According to Town Administrator A.J. Krieger, watching the market’s growing confidence in Erie over the years has been gratifying. “These things don’t happen overnight. Which is why we’ve engaged in responsible debt management practices that have taken Erie from the rating agency’s negative outlook in 2014 to a very strong outlook in 2017,” Krieger said.
“These favorable ratings are in no small measure attributable to the overall economic health of Erie and the Town’s financial stewardship,” Krieger said.
BACKGROUND: During the period between 2004 and 2009 the Town issued over $100 million in debt to finance in part the purchase of water rights, expand the water treatment facility, construct major waterline improvements and construct the North Water Reclamation Facility.
“Responsible debt financing can be an effective and strategic way to fund necessary community improvements while reducing the burden on today’s residents. Our management team remains focused on building stronger capacity for the Town to meet its ongoing financial obligations,” Krieger said. “Moody’s upgraded ratings are the latest example of how we are in fact doing just that,” he said.