Sanitation District No. 1 of Northern Kentucky has received an upgrade from Moody’s Ratings, raising its revenue bond rating from Aa2 to Aa1.
The upgrade reflects SD1’s strong debt service coverage and liquidity, along with a declining debt ratio as the district continues to address significant capital needs.
“This upgrade is a testament to the strong financial stewardship and long-term planning at SD1,” said SD1 Executive Director Adam Chaney. “It reflects our commitment to responsibly managing resources while investing in critical infrastructure that protects public health, property and the environment. We have made strategic decisions in recent years to advance our Clean H2O40 program in a way that keeps us on target and saves our customers millions of dollars. We are pleased Moody’s has recognized these achievements through its upgraded rating.”
The Aa1 rating reflects the essential service SD1 provides to a growing multi-county region outside of Cincinnati, as well as its healthy financial metrics. Debt service coverage remains about 3x and liquidity levels are strong. Based on management’s multiyear projections, these metrics are expected to remain solid despite nearly $1.8 billion in capital needs through 2040. This stability is supported by timely rate adjustments, steady customer growth, a manageable debt position of 2.4x revenues, and strong cash reserves.
The upgrade comes amidst a 12-year run of SD1 receiving the Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting. The award recognizes organizations that demonstrate a constructive spirit of full disclosure to clearly communicate their financial story. SD1 anticipates receiving its 13th consecutive GFOA award this summer.
“Earning an upgraded rating from Moody’s and the GFOA Certificate of Achievement reinforces the financial strategies we have put in place,” said Ron Schmitt, Jr., SD1 director of finance. “It is ongoing recognition of our efforts to balance affordability for our customers with the need to make critical infrastructure improvements, while maintaining public trust through exemplary financial transparency.”
RSA Advisors, LLC, provides independent financial advice to SD1 and specifically provides assistance in planning, structuring and implementing financial transactions such as the issuing of Revenue Bonds to fund capital projects.
Dwight Salsbury is managing director/partner for RSA Advisors, and he echoed Schmitt’s sentiments.
“SD1’s rating upgrade is the culmination of years of operational discipline and financial stewardship,” Salsbury said. “Their sustained commitment to sound management has positioned the District to fund future capital projects at a lower borrowing cost, ultimately benefiting the communities they serve. RSA Advisors is proud of our relationship as Municipal Advisor to SD1, and we are pleased to see Moody’s Investors Service recognize their hard work and dedication.”
Sanitation District No. 1