Roughly $31.5 million in new debt the City of Lodi is incurring to pay for upgrades to its wastewater treatment system received A- ratings from Standard and Poor's and Fitch Ratings, with both firms firm noting the city's strengthening financial condition.
"The 'A-' rating reflects the essentiality of the service, its stable load growth, healthy service area, adequate financial position and procedures for annual CPI-based rate increases," Fitch Ratings said in a press release.
S&P noted Lodi's stable residential customer base and economy based on food production and services sectors, steady customer growth and a rate structure sufficient to repay the debt.
Fitch also boosted the ratings outlook from "evolving" to "stable" for $37.3 million in a previous wastewater financing, noting the city's progress in settling a 5-year-old federal lawsuit over liability for groundwater contamination. The "stable" outlook "reflects the progress the city has made in resolving the litigation and the city's decision to allocate the full costs of cleanup and litigation to the water fund through rate increases already adopted," Fitch noted in the press release.
The new financing will pay for the final phase of treatment plant upgrades required by the Regional Water Quality Control Board, refinance a 1991 borrowing and provide the funds needed to repair the failing sewage pipeline between the city and the White Slough Water Pollution Control Facility. Approximately $31.5 million in certificates of participation are scheduled to sell Nov. 14.
Fitch Ratings pointed out Lodi's creditworthiness is partly a result of having a more diverse employment base than the Central Valley overall. Fitch and S&P stated Lodi's credit rating wasn't higher because the groundwater contamination lawsuits are still pending, although mostly settled.