May 16, 2006
Favorable interest rates, successful bond sale helps King County reduce proposed two-year sewer rate
Sewer ratepayers have even better news about monthly sewer bills after King County’s bond rating was upgraded and bonds sold for sewer projects got a lower than expected interest rate. As a result Executive Ron Sims has presented an amended rate proposal to County Council members that would deliver lower-than-expected monthly bills over the next two years, if the council adopts the plan.
Sims’ decision to amend the rate proposal he submitted in April came after analysts at Standard & Poor’s upgraded the King County Wastewater Treatment Division’s sewer revenue parity bond rating from ‘AA-’ to ‘AA’. Moody’s Investor’s Services maintained the agency’s high A1 rating, unchanged from the previous year.
Standard & Poor’s cited good management of the Wastewater Treatment Division, liquidity that exceeds the division’s targets and long-term planning among the factors leading to the decision to upgrade the bond rating. The favorable credit ratings helped the county secure a 4.85 percent interest rate on bonds sold in early May to finance the sewer utility’s major capital improvement program.
“I am proud to submit an amended rate proposal that underscores the King County’s commitment to sound financial practices and keeps our ratepayers’ monthly bills lower than expected,” Sims said.
County sewer rates have held steady for the past two years.
The table below identifies the rate savings in the amended 2007-08 rate proposal forecast as compared with the original proposal and last year's budget forecast.
|
2007 |
2008 |
2006 Adopted Budget Forecast |
$29.25 |
$29.25 |
2007-2008 Rate Proposal |
$28.50 |
$28.50 |
2007-2008 Amended Rate Proposal |
$28.35 |
$28.35 |
The King County Council is now reviewing the rate proposal and is expected to vote on the proposal in June. If adopted, new rates would go into effect on January 1, 2007.
Sims said the amended rate proposal is consistent with King County’s financial policies that require its sewer utility to pursue stable rates while securing sufficient revenue to preserve the county’s favorable credit rating.
“Maintaining our outstanding credit rating is crucial,” Sims said. “By doing so, we minimize costs associated with the planned borrowing that is necessary for financing critical wastewater treatment projects, which help prevent sewer overflows and meet the needs of our growing population.”
The Wastewater Treatment Division’s proposed capital spending in 2007 is $295 million. In 2008, WTD is proposing to spend $418 million, which includes construction of the new Brightwater treatment system, and nearly two dozen other vital sewer improvement projects that are now under way or planned for.
People enjoy clean water and a healthy environment because of King County's wastewater treatment program. The county’s Wastewater Treatment Division protects public health and water quality by serving 17 cities, 17 local sewer utilities and more than 1.4 million residents in King, Snohomish and Pierce counties. Formerly called Metro, the regional clean-water agency now operated by King County has been preventing water pollution for more than 40 years.