AUSTIN, Texas--(BUSINESS WIRE)--Fitch Ratings does not anticipate any material impairment to City of Baton Rouge/East Baton Rouge Parish Consolidated Government operations and overall financial profile as a result of the unprecedented August 2016 flooding. City/parish officials believe available resources and federal government reimbursements will be sufficient to repair and replace flood-damaged city/parish property and vehicles and reimburse the city/parish for other storm-related outlays.
Officials report the loss of 90 police cars and three firefighting vehicles, as well as flood damage to one library branch and three fire stations. They report only minor damage to the parish-wide wastewater system, estimated at $2.5 million, primarily to various electrical components and one lift station. No significant impact to consent decree-related projects was reported, and management does not anticipate any delays in completing consent decree-related work by the Dec. 31, 2018 deadline. Some wastewater overflows occurred during the heaviest rains, but otherwise the recently updated wastewater system performed as expected. All overtime salary expenses for first responders - an estimated $5 million - have been paid, and management reports that debris removal will be the largest expense for the next several months. Given the extent of damage to homes in the service area, Fitch will monitor wastewater system revenues and collections for any spike in accounts receivable (noting also that the expected post-storm boost in sales tax receipts should bolster pledged revenues for several outstanding city/parish debt issues).
The federal government announced earlier this month that the federal reimbursement rate for storm-related damages and expenses will be increased to 90% from 75%, thereby reducing the state and local portion. City/parish officials have not made a complete damage estimate, as they wait on determination of depreciation amounts for lost rolling stock and an assessment of roads in flooded portions of the parish. Officials report no liquidity issues for repair and recovery-related expenses. Fitch has noted previously the city/parish's consistently healthy liquidity as a positive credit consideration.
Fitch's current Baton Rouge and East Baton Rouge Parish ratings are as follows:
--Baton Rouge and East Baton Rouge Parish Consolidated Government Issuer Default Rating - 'AA+';
--City of Baton Rouge public improvement sales tax revenue bonds - 'AA+'
--East Baton Rouge Parish road and street improvement sales tax revenue bonds - 'AA-'
--Louisiana Local Government Environmental Facilities and Community Development Authority (LCDA) subordinate lien revenue bonds (Parish of East Baton Rouge Road Improvement Project) - 'AA';
--East Baton Rouge Sewerage Commission revenue bonds - 'AA-';
--LCDA subordinate lien revenue bonds - 'AA-'.
The Rating Outlook is Stable.
Additional information is available at 'www.fitchratings.com'.