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[ Press Release ] Fitch Affirms Indian River County, FL Water & Sewer Revs at'AAA'; ... Page 3 of 7 LOW CUSTOMER CHARGES The average residential customer bill of $60 for combined service assuming 7,500 gallons of water use and 6,000 gallons of sewer use is affordable at 1.5% of MHI. Rates should stay competitive as the county has a very manageable capital program that is expected to be funded with cash and grants. The system is in the process of finalizing a rate study that calls for a new rate structure. As part of its conservation initiatives, the recommended structure adjusts the consumptive tiers and, as a result, discourages heavy water usage. This change is expected to increase revenues. In addition, the County is requesting approval from the board for any future incremental increases based on CPI adjustments. The system currently exhibits solid rate affordability, so this should not pose any significant issues. ABUNDANT WATER SUPPLY AND SOUND INFRASTRUCTURE The county's water and sewer system provides services to a mostly residential customer base of approximately 49,000 water and 29,000 sewer accounts as of fiscal year 2017. Water is supplied through various wells from the Floridian Aquifer, with treatment provided by two county -owned treatment facilities. The water treatment plants have a combined 22.5 million gallons per day (mgd) of treatment capacity, which is more than sufficient to meet the system's average daily demand in fiscal year 2017 of 10.2 mgd. Water use is regulated by the St. Johns River Water Management District through a consumptive use permit that expires in 2031. The system can produce over 20.0 mgd of water, and the Utility Department is proactively researching alternative water supplies in order to support future growth needs over the longer term. Wastewater is treated at one of four regional treatment plants, with a combined current treatment capacity of 12.0 mgd. Current maximum daily demand is 6.1 mgd, leaving plenty of treatment capacity to meet future growth. Effluent is treated to 100% re -use standards, and as a result the county does not expect to face significant capital or other regulatory compliance costs related to numeric nutrient mandates for effluent discharged into local surface water. STABLE LOCAL ECONOMY The county's economy continues to see improvement following the economic downturn, categorized by increasing housing starts, sales tax and taxable value. The county's unemployment rate has declined to 4.9% as of August 2018 from 12.7% in 2011, yet remained higher than that of the state and national averages of 3.8% and 3.9%, respectively. The county's MHI is on par with the state and just about 15% below the national average, which is somewhat driven by the larger -than -average retiree population. Contact: Primary Analyst Asim Kapadia Analyst https://www.fitchratings.com/site/pr/10050946 11/13/2018