The city of Lawrence finally got some good news regarding the financial performance of its waterworks utility, an issue that has dogged the city for years and earlier this year led to higher utility rates for taxpayers.
Ratings agency Standard and Poor’s recently upgraded the rating on the city of Lawrence’s waterworks utility revenue and refunding debt—a move officials say could eventually save taxpayers money.
S&P Global Ratings announced Sept. 28 that the two-notch rating change, from BB+ to BBB, reflects the agency’s “opinion of the system’s recent improvements in operational and financial management, which the rating service expects will likely reverse a trend of structural imbalance in the city’s water utility fund and result in positive operating margins and improved liquidity."
Mayor Steve Collier said the upgrade will allow the city of Lawrence to refinance the waterworks' bonds at lower rates.
“This will enable the city’s utility to capture substantial savings, which will then be reinvested in utility infrastructure,” Collier said.
IBJ previously reported on financial struggles within the city, including the water utility.
In November 2015, Standard & Poor’s lowered waterworks’ revenue and refunding bonds three notches from BBB+ to BB+, reflecting the agency’s “weak” recent financial performance.
It noted the utility has been in structural imbalance since 2010, declining from a positive cash flow of $1.6 million in 2009 to a negative $637,000 at the end of 2014.
That led the city to decide to increase the utility rates 68 percent in May. For an average monthly home consumption of 4,000 gallons of water, the bill is now $37.66, compared to $22.41 before the fee hike.