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[ Press Release ] Fitch Affirms Indian River County, FL Water & Sewer Revs at'AAA'; ... Page 1 of 7 <br />Fitch Affirms Indian River County, FL Water & Sewer <br />Revs at'AAA'; Outlook Stable <br />Fitch Ratings -Austin -12 November 2018: Fitch Ratings has affirmed the rating on the following <br />Indian River County, FL (the county) revenue bonds at'AAA': <br />--$13.5 million water and sewer system revenue refunding bonds, series 2009. <br />The Rating Outlook is Stable. <br />SECURITY <br />The bonds are supported by the net revenues of the county's water and sewer system (the <br />system). <br />KEY RATING DRIVERS <br />EXCELLENT FINANCIAL PROFILE: The system has produced over 2.6x debt service <br />coverage (DSC) for the past five years and has maintained excellent liquidity. Audited fiscal <br />2017 results show 3.Ox Fitch -calculated DSC and over $45 million in unrestricted available <br />cash, equating to approximately 780 days cash on hand. <br />MINIMAL CAPITAL NEEDS, LOW DEBT: The system's capital improvement program (CIP) is <br />limited and primarily addresses renewal and replacement (R&R) projects, septic to sewer <br />conversions, and automatic meter reading implementation. The system is able to fund its CIP <br />via pay -go due to its strong margins and ample cash balances. Debt levels are very low and <br />all debt matures by 2024. <br />AFFORDABLE AND FLEXIBLE RATE STRUCTURE: Rates are affordable at approximately <br />1.5% of median household income (MHI) as a result of almost twenty years of no rate <br />increases. Management did indicate that future rate increases based on the consumer price <br />index may be needed moving forward. This is not a concern, as affordability is good and rates <br />are below Fitch's rate affordability threshold of 2%. <br />HEALTHY SERVICE AREA: The County is experiencing healthy customer growth, averaging <br />about 2% over the past five years. Housing starts increased over 15% in the last two years as <br />the County continues to recover from the recession. This growth and economic development <br />is expected to continue, and the system has ample capacity and water sources available to <br />service these needs. <br />RATING SENSITIVITIES <br />6 <br />https://www.fitchratings.com/site/pr/10050946 11/13/2018 <br />