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 | | | | Standard & Poor's Bond Rating |  | The ‘A-‘ Standard & Poor’s underlying rating (SPUR) on Burton's outstanding water supply and sewage disposal system revenue bonds series 1998 reflects the system’s:
Stable service area,
Strong financial performance and coverage levels,
Good legal provisions, and
Minimal capital needs
Burton (‘A-‘ Go rating) is in Genesee County (A’+ Go rating), adjacent to Flint and 25 miles north of the heart of economic activity in Oakland County, Burton has experienced slow population growth over the past decade, reaching 30,300 by 2000. Burton has seen significant reinvestment in its residential and commercial sectors over the past decade as development from Oakland County has moved northward. The value of building permits, which includes additions, remolding, and new construction, has ranged from roughly $18 million to $32 million annually. This is also reflected in assessed valuation (AV) growth. Over the past 5 years, AV increases have averaged 9% per year to reach $647 million in 2001. Market value has increased accordingly and , at $1.3 million, equates to an above-average $47,500 per capita. The 10 leading taxpayers are not concentrated, making up just 12.7% of the total tax base.
The bonds are secured by revenues of the system. Other legal provisions include a debt service reserve funded with proceeds from the sale, which, if depleted, will be replenished with first available funds and a historical additional bonds test ( allowing for adjustments) of 125% of maximum annual debt service(MADS).
The city has only one $2.5 million revenue bond outstanding, with principal payments commencing in fiscal 2002. Other water and sewer system debt, totaling roughly $4 million, is paid from special assessments; this debt is also secured by the city’s GO pledge. Additional projects have been funded with cash on hand. The system presently serves 12,089 sewer customers and 6,395 water customers. All sewer customers that are not water customers are on a well water. The city conveys water ans sewer flows through it system. Water and sewage disposal service is purchased from the Genesee County Drain Commission.
Outlook
The stable outlook reflects the expectation of maintained good coverage and manageable future capital needs. |
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