HomeMy WebLinkAboutIR 7643 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7643
September 22, 1992
op, To the Mayor and Members of the City Council
Subject: Water and Wastewater Performance Medians
$071 (Revised)
During the September 1, 1992 discussion on proposed wastewater rates (M&C
G-9809), the city council requested additional information concerning the
fiscal condition of the Water and Wastewater Fund.
At the September 8th Pre-Council Meeting, Informal Report No. 7641 was
presented which compared certain performance measurements for the Fort Worth
Water and Wastewater Fund with other Texas cities. The comparison included
cities having a AA rating for their water utility bonds (Dallas, Amarillo and
Irving) plus Austin which has a rating of "A". The Council requested that
additional comparisons be provided to consist of medians developed annually by
Moody's Investors Service.
These medians are usually calculated and published only when a City is issuing
debt. Amarillo last issued water system debt in 1985 and neither Moody's or
the Amarillo staff had current medians available. Where the information was
available, staff has calculated the appropriate median for Amarillo. The use
and purpose of such medians is best described by directly quoting from the
1992 Medians, Selected Indicators of Municival Performanca which reads,
"The following medians, derived during calendar 1991, convey various measures
of performance and earning capability that are common to revenue-producing
enterprises. These medians are valuable in assessing an enterprise's
financial strengths and weaknesses relative to other similiar enterprises.
Ratios derived from the income statement provide measures of profitability
(operating ratio and net take-down) and debt-servicing capacity (coverage and
safety margins) . Coverage levels demonstrate both current and prospective
debt repayment ability while safety margins denote additional levels of
protection. The debt ratio, which is calculated from the balance sheet,
signifies the enterprise's reliance on debt financing and its capacity to
support additional debt.
The medians are intended to serve as broad indicators only. Significant
deviation from the median is not necessarily an indicator of credit quality
and may, in fact, highlight a significant event or unusual characteristic of
the enterprise (i.e. , start-up operation, system expansion or restructuring,
or abnormal weather) ."
The reader of this information should be aware that the rating agencies use
these medians in balance with a large quantity of other information and to
draw conclusions based on the medians alone carries with it certain risks.
ISSUED BY TFE g.,!TY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7643
September 22, 1992
To the Mayor and Members of the City Council Page 2 of 2
Subject:
Water and Wastewater Performance medians
(Revised)
Median Moody's W. Dallas AM4J!d.Lg Uving Austin
Operating
Ratio(%) 64.60 61.00 50.70 70.40 73.00 39.50
. Net Take-
Down(%) 41.70 43.50 51.40 29.60 32.00 63.80
Interest
Coverage(X) 3.33 4.77 1.95 7.24 5.89 1.51
Debt Service
Coverage(X) 2.20 2.92 1.76 n/a 3.15 1.76
Debt Service
Safety
Margin(%) 19.10 28.70 22.50 n/a 21.80 19.80
Debt Ratio(%) 32.10 29-40 47.90 n/a 26.20 75.40 ''OWN
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Bob Terrell
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS