Fitch Ratings has affirmed the 'AA+' rating on the following Athens-Clark County Unified Government, GA (ACC) outstanding revenue bonds:

--Approximately $177 million water and sewerage revenue bonds, series 2015.

Additionally, Fitch has assessed the Standalone Credit Profile (SCP) of the water and sewer system (the system) at 'aa+'. The SCP represents the credit profile of the system on a stand-alone basis irrespective of its relationship with, and the credit quality of, ACC (internally assessed by Fitch).

The Rating Outlook is Positive.

ANALYTICAL CONCLUSION

The affirmation at 'AA+' and 'aa+' SCP assessment reflect the system's 'aaa' financial profile in the context of its 'a' revenue defensibility assessment and very low operating risk profile, assessed at 'aa'. The Positive Outlook reflects Fitch's expectations that leverage, measured as net adjusted debt to adjusted funds available for debt service (FADS) of 3.0x for fiscal 2021 while trending upward, is expected to remain at or below 4.0x throughout Fitch's forward-looking scenario.

Fitch expects these levels to be maintained despite capital spending much higher than historical levels, and in the face of revenue reductions due to a rate decrease. However, the Outlook could be revised back to Stable if higher than expected leverage is realized above current projections.

CREDIT PROFILE

ACC, a unified government since 1991, is located approximately 65 miles northeast of Atlanta and is anchored by the University of Georgia, the county's largest employer. The water and sewer systems serve about 33% and 23% of the county's population, respectively. The system is highly concentrated, with the top 10 users comprising a significant 23% of fiscal 2021 operating revenues, including 11% from Pilgrim's Pride (poultry manufacturing) and 8% from the university. Revenue however, remained stable throughout the pandemic downturn.

The system owns and operates one water treatment plant and three water reclamation facilities. Water supply, derived from both the North Oconee and Middle Oconee Rivers, is ample and expected to be sufficient through at least 2040. The 36 million gallons per day (mgd) J.G. Beacham Drinking Water Treatment Plant serviced 35% of fiscal 2021 average demand. Three wastewater reclamation facilities (WRFs), North Oconee, Middle Oconee and Cedar Creek, carry a total of combined treatment capacity of 28 mgd.

Average flow in 2021 was 12 mgd, or less than half of capacity. Permitted capacity is believed to be sufficient beyond 2035. Solids are dewatered and transported to the landfill compost facility. ACC is also a member of the Upper Oconee Basin Water Authority with joint ownership in the Bear Creek Reservoir from which the utility receives raw water.

Fitch considers the system a related entity to the unified government for rating purposes, given its oversight of the system, including the authority to establish rates and direct operations. The unified government's credit quality does not currently constrain the bond rating. However, as a related entity, the issue ratings could become constrained by a material decline in the general credit quality of the county.