The system has typically maintained sound debt service coverage, but wet-weather Links of London in fiscal years 2007 and 2008 affected sales and reduced annual debt service (ADS) coverage to 1.7 times (x) each of those years. Rate hikes in fiscal 2008 (4 percent) and fiscal 2009 (7 percent) coupled with drier weather enabled the system to generate debt service coverage closer to the city's 2.0x financial policy at 1.9x for fiscal 2009. However, for fiscal 2010 debt service coverage declined to 1.6x and the city's preliminary plan is to increase rates until 2013. As a result, Links of London Star of David Charm coverage is currently forecast to remain below the city's minimum policy level until fiscal 2015, but management has expressed a willingness to revise rates sooner. Newly implemented impact fees, while not factored into the city's financial policy, should afford at least a modicum of additional financial cushion, but failure to act to comply on a consistent basis with financial policies will put downward pressure on the rating. The system's service area consists of the city (Links of London Z Charm obligation bonds rated 'AA' by Fitch) with a current population estimated at around 751,000 plus several outlying residential areas. While income levels are below those of the state and U.S., the system has managed to keep the cost of service low despite expansion Links of London Y Charm that led to increased capital expenditures in recent years. Currently, the average monthly residential bill is only 1.3 percent of the local median household income.
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