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NEWS: Leadership reflected in recent stellar credit ratings

March 9, 2021 | As part of its continual efforts to wisely use customers’ money, the Northeast Ohio Regional Sewer District (Sewer District) is preparing to issue the Wastewater Improvement Refunding Revenue Bonds, Series 2021, resulting in Moody’s and S&P Global to affirm the Sewer District’s stellar credit rating.

“Given the Sewer District’s current $1.7 billion in outstanding debt and the impacts of COVID-19, it is a wonderful accomplishment to receive these two strong credit ratings,” said Ken Duplay, Chief Financial Officer for the Sewer District. “There are a lot of factors that weigh into the rating, including exceptional management and leadership, which has certainly helped to carry us through both operationally and financially during these challenging times.”

The Wastewater Improvement Refunding Revenue Bonds, Series 2021 are designed to refinance all, or a portion of the Sewer District’s series 2013 and 2014 bonds currently outstanding; these bonds were previously issued to fund large-scale sewer construction projects.  To prepare for this issuance, Moody’s and S&P Global’s analysis of the Sewer District resulted in both agencies affirming the following credit ratings: Moody’s assigned the Sewer District an Aa1 rating with stable outlook for its 2021 revenue bonds, and S&P Global assigned its “AA+” long-term rating to the same revenue bonds, as well, and affirmed its “AA+” rating on the existing debt.

“The Sewer District takes very seriously its responsibility to be vigilant stewards of our customers’ dollars, which wholly fund the region’s clean water work,” said Kyle Dreyfuss-Wells, CEO of the Sewer District. “Additionally, as an organization dedicated to protecting public health and the environment, these ratings reflect, which are affirmed by Moody’s and S & P Global, our efficient operations and judicious financial management necessary carry out that mission, and will help the Sewer District attract lenders, for continued costs savings.”

The Sewer District has a history of seeking cost-saving opportunities.  In 2019, the Sewer District announced a $37 million savings (net present value) on a refinance of a portion of the 2010 Build America Bonds, which were designed to help finance sewer construction projects.  Additional examples of savings include the refinance of another bond in 2017, resulting in a $18 million savings (net present value). Further, the Sewer District has saved nearly a half a billion dollars from value engineering on awarded construction projects, and $70 million savings (net present value) on various operations initiatives.

“The Sewer District is committed to clean water.  There is a cost to build sewer infrastructure and operate wastewater treatment plants.  Those costs will never go away,” said Dreyfuss-Wells.  “However, as we have demonstrated, we are committed to minimizing those costs and maximizing savings whenever possible.”

The Sewer District’s capital program for the 2017 through 2021 rate period is nearly $1 billion, including Project Clean Lake and other planned infrastructure investment projects. Project Clean Lake is the Sewer District’s 25-year program designed to reduce combined sewer overflow discharge because of heavy rain events from 4.5 billion gallons to 494 million gallons. To date, the Sewer District has already eliminated more than 1 billion gallons of combined sewer overflow from entering Lake Erie.

“Our priority is protecting the environment and public health while protecting customers’ wallets,” said Dreyfuss-Wells.  “Once the Wastewater Improvement Refunding Revenue Bonds, Series 2021 are issued, our goal is to achieve further savings.”