Water department earns A-plus rating

The Sedalia Water Department has received an A-plus credit rating from Standard & Poor’s, a global financial services company.

During its regular meeting Thursday, the Board of Public Works heard from Carl Ramey, senior vice president of public finance for Stifel & Nicolaus, a St. Louis financial services company, about the department’s revenue bonds.

In December, the Sedalia City Council voted to approve refunding the bonds from 2005 and 2006, which required a credit rating.

“This is the first time we’ve had the bonds rated,” Ramey said. “Most bonds fall into an A rating category, so for these to be A-plus is a great thing for Sedalia. The higher the bond rating, the lower cost of interest for the bond. This savings, on average, equals out to about $64,000 or 11.9 percent savings a year for the remaining life of the bond until 2029.”

The savings add up to more than $1 million over the next 17 years, Ramey added.

Water Department General Manager Charlie Brosch said the rating won’t have a direct affect on water bills, but it does have an effect on keeping overall costs down.

“Sedalia won’t see their water bills go down, but if we suddenly had to replace a main pipe tomorrow, they probably wouldn’t see much, if any, of a bump in their bill to cover that cost because of our rating,” Brosch said. “We’re able to put that extra $64,000 back into the system.”

The original bond, issued in 1997 for $9.5 million, upgraded the city’s water system by constructing the elevated tank on West 16th Street, expanding the water treatment plant, adding a testing laboratory and laying new water lines.
 
In December, the council voted to approve issuing $7,750,000 to refund the outstanding bonds.

Ramey said the water department’s high rating was helped by the city’s A-plus rating, which was given by Standard & Poor’s last year.

According to reports, Standard & Poor’s cited Sedalia’s local economy, good coverage of annual debt service and low debt-to-plant ratios as some of the reasons it gave the A-plus rating.

However, the city’s below-average income levels and lack of regular rate reviews and formalized policies were a determent.