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DeKalb County’s water and sewer system has a healthy outlook—financially speaking.

On Nov. 23 Standard & Poor’s Ratings Services (S&P) gave the county’s various existing water and sewer revenue bonds and revenue refunding bonds its AA- long-term rating. The county’s series 2011A water and sewer revenue bonds received an A+ long-term rating.

“S&P has recognized our efforts to reorganize government, reduce staff and cut expenses, as well as raise revenue,” said DeKalb County CEO Burrell Ellis. “They recognize that DeKalb is serious about fiscal responsibility. This restored rating allows us to move forward with the important work of upgrading our water and sewer systems and create thousands of jobs.”

The ratings update comes eight months after S&P lowered the county’s general obligation debt from AA- to BBB and its long-term rating on the county’s appropriation-backed debt from A+ to BBB-. The rating on DeKalb’s outstanding water and sewer bonds was dropped from AA+ to AA-. After the ratings were lowered, they were withdrawn by S&P, a financial services company which publishes financial research and analysis on stocks and bonds.

Ellis and Commissioner Larry Johnson made a presentation regarding the county’s finances to representatives from S&P and Moody’s Investors Service Inc. over the summer.  Moody’s reaffirmed DeKalb’s Aa3 credit rating for general obligation debt in August. 

The ratings were withdrawn because “county officials were unable to provide sufficient and consistent information regarding the county’s current liquidity position [or] provide information as to how they planned to manage the county’s near-term projected cash flow imbalances,” according to a Nov. 23 statement by S&P.

During the presentation in New York, S&P credit analysts “asked a lot of questions about quirks in our finances” that led to the county’s “fiscal ailments,” Johnson said.

Johnson said the county’s hard work in addressing concerns by the rating agencies demonstrated its “willingness to do what it takes to preserve the financial integrity” of the county.

“Our credit card has been moved up a notch,” Johnson said. “But we still have to get back to that AAA bond rating. That’s the standard for DeKalb County.”

Joel Gottlieb, the county’s finance director, said an increased property tax millage rate earlier this year also led to the improved ratings.

“The outlook is stable based on our expectation that the system will maintain solid operations and preserve its healthy financial position aided by the county’s timely implementation of rate increases as it addresses its significant capital investment program,” said S&P credit analyst Paula Costa.

Since March, the county has instituted monthly cash flow monitoring of the restricted and unrestricted funds in its pooled cash account; provided additional cash flow management information to S&P; and has recently taken steps to segregate its water and sewer funds from the rest of the county’s pooled cash funds, thereby mitigating previous credit risks related to the utility funds, according to the S&P statement.

The ratings company said it may consider lowering the water-sewer system’s rating if the county does not proceed with “timely and appropriate rate adjustments.”

Last December, the county’s Board of Commissioners approved $1.345 billion in improvements to DeKalb’s water and sewer system, which will be financed by an 11-percent rate hike each year for three years beginning in 2012.

Gottlieb said the S&P ratings allow the county to market the water-sewer bond totaling approximately $400 million to determine what interest rates are available. On Dec. 6, the board is expected to approve a resolution that would lock in the interest rates for the revenue bond that will finance the acquisition, construction and equipping of various improvements to the water-sewer system.

County officials expect to close on the bonds in the next 30-45 days with construction contracts being awarded soon after that time.

At the end of 2012, the county will seek a second bond of approximately $300 million, Gottlieb said.