Sarasota’s Investor Rating Upgraded; Housing Strength Cited


The New York and London-based Fitch Ratings Corporation in August upgraded to “AA+” its rating for the outstanding utility system revenue bonds amounting to nearly $190 million that Sarasota County issued in 2013. When these financial instruments were launched last year, they received an “AA” rating from Fitch, one of the three nationally recognized statistical rating organizations (NRSRO)  designated by the U.S. Securities and Exchange Commission. The NRSRO also revised upward its recent Rating Outlook on the Sarasota utility bonds to “Stable” from “Positive.”

Sustained economic recovery, propelled by such favorable factors as a stabilizing housing market, a decline in foreclosures, an uptick in home prices and rising activity in building permits, was among the key drivers that Fitch cited for its ratings upgrade for the Sarasota utility bonds. The statistical rating agency also noted that growth of local employment has outpaced expansion of the labor force, with the unemployment declining to 5.7% as of June 2014 from the 7.1% registered a year earlier.

Clout from tourists and wealthy retirees

Sarasota’s Investor Rating Upgraded; Housing Strength Cited

Fitch added that education and health care maintain a solid presence in the county even as the development of the local economy remains tied to the economically sensitive real estate and tourism industries. Likewise favorable, the NRSRO said, is the significant slice of affluent retirees in Sarasota’s population base which support wealth indices at levels higher than national and state levels. Because of the county’s popularity among wealthy retirees and tourists, the county’s estimated 356,000 permanent residents swell closer to the half a million mark during the winter months, Fitch said.

A major portion of the proceeds from the 2013 bond issue has been allocated to funding of the acquisition of the privately-owned Dolomite Utilities Corp.’s facility located in the northwest corner of Sarasota. This plant serves about 4,500 water and 7,300 wastewater customers. The county will undertake short-term improvements to the Dolomite wastewater treatment facility.
It will eventually build a master pump station to bypass flows for treatment through to the county’s biggest wastewater plant at Bee Ridge.

Improved and diversified water resources

Fitch observed that the Sarasota County’s water utility has a solid operating profile. It has ample and diversified water supply sources, including the Upper Floridan Aquifer and from the neighboring systems of the Peace River–Manasota Regional Water Supply Authority and Manatee County. Upgrades and enhancements continue on the reverse osmosis and electro-dialysis reversal treatment technologies at the county’s water treatment plants in order to ensure a long-term ability to treat brackish water for potable use.

Following the acquisition and subsequent improvements, the county hopes to reduce the rates paid by existing Dolomite customers, which are on average 24% higher than those paid by county customers. Due to its strong cash reserves, the county suspended rate increases for fiscal years s 2011 through 2014 and, in so doing, provided relief to ratepayers.

The territory of the Dolomite utility service has approximately 220,000 residents, a count that has been rising as more unincorporated residents as well as independent utilities along with new communities and neighborhoods are absorbed into the county’s consolidated system. With the bond proceeds, the Sarasota utility plans to continue acquiring smaller utilities along with the thousands of new water and sewer customers they serve.