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U.S. Municipal Water And Sewer Utilities Rating Actions, Second Quarter 2024

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U.S. Municipal Water And Sewer Utilities Rating Actions, Second Quarter 2024

Overview

S&P Global Ratings took 52 rating actions, revised 24 outlooks, and took 47 CreditWatch actions within the U.S. municipal water and sewer utilities sector in second quarter 2024. One hundred and twelve ratings were maintained with no outlook revisions. Forty-five ratings were removed from CreditWatch, and two were placed on CreditWatch with negative implications.

Negative rating actions exceeded positive actions by thirty-four to nine. Unfavorable outlook revisions exceeded favorable revisions by thirteen to eleven. Bond issuance declined against first quarter 2024 and was also lower than in fourth quarter 2023. Year over year, new ratings increased by one.

Table 1

U.S. Municipal Water & Sewer Utilities Rating Actions, Year-To-Date 2024
First quarter Second quarter
New rating 17 9
Upgrade 8 9
Downgrade 11 34
Favorable outlook revision 7 11
Unfavorable outlook revision 5 13
Removed from CreditWatch 1 45
CreditWatch with negative implications 73 2
Maintained ratings with no outlook revision 72 112
Developing outlook 1 0

Second Quarter Rating Actions

In second quarter 2024, we upgraded nine ratings and downgraded thirty-four. Positive rating actions were primarily driven by strong management practices that helped improve or maintain strong financial metrics, such as all-in-debt service coverage (DSC) supported by healthy rate structures and cost recovery, as well as by prudent management policies that suggested performance was sustainable. Negative rating actions were primarily driven by deteriorating financial metrics, mostly due to rising operating costs that have pressured operating margins for several quarters.

A significant portion of our negative rating actions were tied to our review of credit fundamentals following an error correction. For more information, see "Error In Our Economic Fundamentals Assessment Triggers Review Of Public Municipal Utility Sector Ratings," published Feb. 23, 2024. The review resulted in 22 downgrades as a result of the effects of previously overstated gross county product (GCP) growth combined with weakness in financial metrics.

Second Quarter Outlook Revisions And CreditWatch Actions

In the second quarter, we made thirteen unfavorable outlook revisions and eleven favorable outlook revisions. Negative outlook revisions reflected the effects of rising operating costs that we expect to narrow operating margins. Strong financial performance supported by prudent capital and rate planning underpinned the positive outlook revisions. We placed two ratings on CreditWatch with negative implications, both due to volatility in DSC and liquidity.

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Second Quarter Lookback

In June 2024, we published a report on a California groundwater subbasin's probation placement by the California State Water Resources Control Board that we believe could pressure the revenue and pricing power of 40 San Joaquin Valley municipal water, sewer, and utility districts. S&P Global Ratings also believes it could influence agricultural output, depress land value, raise water production costs and household bills, and ultimately force land out of agricultural use. For more information, see "Your Three Minutes In California Groundwater: Tulare Lake Subbasin's Probation May Herald More Restrictions, Rating Changes," published June 13, 2024 on RatingsDirect.

The following tables summarize S&P Global Ratings' second quarter rating actions for U.S. municipal water and sewer utilities. All rating actions are based on our criteria.

Table 2

U.S. Municipal Water And Sewer Utilities Rating Actions, Summary Second Quarter 2024
Entity State Rating to Rating from Outlook to Outlook from CreditWatch to Reason for rating
San Diego County Water Authority CA AAA AAA Negative Stable Outlook revision reflects our view of declining financial metrics
St. Mary Parish Consolidated Gravity Drainage District #2 LA A A Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction
Toledo-Lucas County Port Authority OH A A- Stable Positive Outlook revision reflects our view of increasing reserves and ongoing diversification of the pool, with 39 projects
Easton Area Joint Sewer Authority PA A A Stable Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements
Athens TX A Stable New rating
King Cnty Water District #111 WA AA- AA- Stable Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements
Baytown TX AA- AA- Negative Stable Outlook revision reflects our view of the pending litigation surrounding overflows coupled with significant additional debt plans
Seymour IN A A+ Stable Not meaningful Removal from CreditWatch and downgrade reflects our review of credit fundamentals following our GCP error correction, including the system's thin liquidity and relatively vulnerable economy that may limit future financial capacity
Baytown Area Water Authority TX AA- Negative New rating
Portage Sewer WI A A+ Stable Not meaningful Removal from CreditWatch and downgrade reflects our review of credit fundamentals following our GCP error correction, including sizable capital needs
Centre Water Works and Sewer Board AL A A Stable Negative Outlook revision reflects management's willingness to adjust rates as demonstrated to improve coverage and liquidity levels, which have been stabilized by a one-time revenue source
Citizens Wastewater of Westfield LLC IN AA AA- Stable Stable Supportive management policies and practices evident by consistent rate increases leading to steady financial performance
New Albany IN A A+ Stable Not meaningful Removal from CreditWatch and downgrade reflects our review of credit fundamentals following our GCP error correction, especially considering financial metrics supportive of a lower rating
Upper Trinity Regional Water District TX AA- AA- Positive Stable Outlook revision reflects strength in participants' credit quality
Maryville MO A+ A+ Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction
Oneonta Utilities Board AL A+ AA- Stable Stable Downgrade reflects weakened economic service area with lower liquidity metrics and declining median household incomes limiting revenue-raising flexibility
St Helena CA BBB+ A- Stable Stable Downgrade reflects historically volatile coverage metrics as well as our view that the city is likely to be exposed to additional costs to meet long-term water demand
WA Cnty Water Conservancy District UT AA AA Positive Stable Outlook revision reflects our view of improving financial metrics
Monterey Park CA A- Stable New rating
Eastern Adams County Metropolitan District CO BBB+ BBB Stable Positive Upgrade reflects improving financial metrics, with healthy rate increases combined with consistent growth in the service area
El Paso TX AA AA+ Stable Negative Downgrade reflects our view of the weakened financial position, which is stressed by the system's increasing debt burden and pressured rate affordability
Tyler TX AA AA+ Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction. Downgrade reflects our view of the system's metrics supportive of a lower rating
Albuquerque Metro Arroyo Flood Control Authority NM AAA AAA Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction
Marbury Water System AL A A+ Stable Not meaningful Downgrade reflects declining coverage coupled with an expanding capital program
Antigo WI A+ A+ Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction
East Bethlehem Township Municipal Authority PA BBB+ BBB+ Stable Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements
Iowa Falls - Sewer IA A A+ Stable Not meaningful Removal from CreditWatch and downgrade reflect our review of credit fundamentals following our GCP error correction
Phenix City AL BBB+ BBB+ Stable Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements
McKinney TX AA+ AA+ Stable Negative Outlook revision reflects our view of liquidity and coverage improvements supported by customer growth and rate increases
Citizens Water of Westfield LLC IN AA AA- Stable Stable Supportive management policies and practices evident by consistent rate increases leading to steady financial performance
Todd Creek Village Metropolitan District CO BBB+ BBB Stable Stable Upgrade reflects improving coverage and liquidity, which are supported by healthy utility rate increases, including the addition of a fixed fee in the district's rate structure to finance capital improvements
German Township Sewer Authority PA BBB- BBB- Stable Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements
Cumberland Mountain Water & Fire Protection Authority AL A- A Not meaningful Not meaningful Negative Downgrade reflects our view of the authority's weak service area economy and volatile financial metrics. The rating remains on CreditWatch with negative implications given our view of the authority's volatile financial performance and potential for coverage to decline in the near future
South Middleton Township Municipal Authority PA AA- AA- Stable Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements
The Water Works Board of the City of Arab AL A+ A+ Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction
Lynn Haven FL AA- AA- Stable Negative Outlook revision reflects improving coverage supported by continual rate adjustments, with additional rate plans
Buffalo Municipal Water Finance Authority NY A A+ Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction. Downgrade reflects erractic coverage in recent years coupled with liquidity levels supportive of a lower rating
Georgetown TX A+ A+ Positive Stable Outlook revision reflects continued strength in financial metrics through varying economic and operating conditions
Three Rivers Regional Wastewater Authority WA A+ Stable New rating
City of Columbus NE AA AA Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction
Coweta County Water & Sewer Authority GA AA+ Stable New rating
Eagle River Water & Sanitation District CO A+ AA- Stable Stable Downgrade reflects fluctuating liquidity metrics and additional debt plans that may lead to compressed margins in the near future
Auburn IN A A+ Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction. Downgrade reflects credit fundamentals supportive of a lower rating, including pressures related to the ongoing consent decree
Mountlake Terr WA AA- AA- Stable Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements
Livingston CA A- A- Stable Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements
Lodi CA AA AA- Stable Stable Upgrade reflects exceptionally strong coverage, which we expect to continue based upon the city's financial profile, lack of additional debt plans, and continued rate-setting flexibility
Randall Community Water District SD A A Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction. Further supporting the rating is the utility's planned expansion opportunity and future financial performance
Greenville TX A Stable New rating
Enumclaw WA AA- AA- Stable Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements
Santa Maria CA AA- AA- Stable Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements
Lapel Town IN BBB+ A- Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction. Downgrade reflects the relatively vulnerable economy and low nominal liquidity
Southaven MS AA- AA- Negative Stable Negative outlook reflects our view of the impact of potential future costs associated with the planned transition of wastewater treatment providers, which we believe could pressure coverage metrics
Oakman Water Works Board AL BBB A- Not meaningful Not meaningful Removal from CreditWatch and the downgrade reflects our review of credit fundamentals following our GCP error correction, including low nominal liquidity
Santa Cruz County Sanitation District CA AA- AA Stable Stable Downgrade reflects projected weakening within debt service coverage given a primarily debt-funded capital plan and a liquidity position that is weaker than that of similarly rated peers
Upper Thompson Sanitation District CO BBB+ Stable New rating
Somers WI A+ A+ Stable Positive Outlook revision reflects the utility's decrease in all-in debt service coverage as debt payments began to amortize in fiscal 2022 as well as the potential effect on coverage should the utility issue additional debt or not be able to secure water rate increase approvals from the Wisconsin Public Service Commission (WPSC)
Huntington Municipal Water Utility IN A+ A+ Stable Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements
Pleasanton CA AA Positive New rating
Wheeling WV A A Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction
Conway AR A+ A+ Stable Negative Outlook revision reflects our view of the city's improved liquidity reserves, both nominally and in days' cash, as capital improvement expenditures have decreased following the completion of several projects
The Water Works and Sewer Board of the Town of Sardis City AL A- A Stable Not meaningful Removal from CreditWatch and downgrade reflect our review of credit fundamentals following our GCP error correction coupled with limited managerial policies
Livingston TX A A+ Stable Not meaningful Removal from CreditWatch and downgrade reflect our review of credit fundamentals following our GCP error correction coupled with our expectation for increasing affordability pressures
Edinburg TX AA- AA Not meaningful Stable Negative CreditWatch and downgrade reflects our view of the lowered coverage and decreasing liquidity
Tri-County Joint Municipal Authority PA A- Stable New rating
Aurora CO AA+ AA+ Stable Positive Revised outlook reflects our view of the system's large capital cycle with high financing costs and rising costs of service
Stucker Fork Conservancy District IN A- A Stable Not meaningful Removal from CreditWatch and downgrade reflect our review of credit fundamentals following our GCP error correction coupled with our expectation for financial metrics to decline with no rate plans and rising debt service requirements
Daphne Utilities Board AL AA+ AA+ Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction
Airway Heights WA A- A Negative Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements. Downgrade reflects our opinion of the utility's delayed cost recovery to offset elevated cost pressures, including higher purchased water supply costs given the polyfluoroalkyl substances contamination in all three wells, and customer growth, which has resulted in vulnerable coverage and a decline in cash
Long Beach Public Utilities Department CA AA+ AA+ Negative Stable Outlook revision reflects our view that the city's water system is in the middle of a large capital cycle to address water-resiliency needs with increasing capital spending and rising fixed costs
Silver City NM BBB BBB+ Negative Not meaningful Removal from CreditWatch and downgrade reflects our review of credit fundamentals following our GCP error correction, especially considering very low liquidity metrics
Webster City IA A+ AA- Stable Stable Downgrade reflects the city's thin reserve levels from a historical practice of reactive rate increases by previous city management and cash-funding its capital improvement plan
Hale County Water Authority AL BBB+ A Not meaningful Not meaningful Removal from CreditWatch and downgrade reflects our review of credit fundamentals following our GCP error correction in addition to the lack of comprehensive managerial policies
Greene County Water and Sewer Authority AL BBB- BBB+ Stable Not meaningful Removal from CreditWatch and downgrade reflects our review of credit fundamentals following our GCP error correction in addition to the potential for financial fluctuations considering the small size of the operations
Washington - Water IN BBB+ A- Stable Not meaningful Removal from CreditWatch and downgrade reflects our review of credit fundamentals following our GCP error correction, including weak management practices and risk-mitigation planning
Coalinga CA BB+ BB+ Stable Negative Outlook revision reflects the city's progress on achieving a more resilient water supply
Conemaugh Township Municipal Authority PA BB+ BBB Stable Negative Downgrade reflects the authority's weakened overall financial position, highlighted by declining all-in coverage levels in fiscal 2023, an increased debt burden, and thin liquidity
Loveland CO AA Stable New rating
Caryville & Jacksboro TN A- A Negative Not meaningful Removal from CreditWatch, downgrade and outlook revision reflect our review of credit fundamentals following our GCP error correction, including low liquidity
Portage - Water WI A A+ Stable Not meaningful Removal from CreditWatch and downgrade reflects our review of credit fundamentals following our GCP error correction
Washington - Sewer IN BBB BBB+ Stable Not meaningful Removal from CreditWatch and downgrade reflects our review of credit fundamentals following our GCP error correction, including weak management practices and risk-mitigation planning
Terrebonne Parish Consolidated Waterworks District #1 LA AA- AA- Stable Not meaningful Removal from CreditWatch reflects our review of credit fundamentals following our GCP error correction
Colorado River Municipal Water District TX AA- AA- Stable Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements
Yucaipa Valley Water District CA AA- A+ Stable Positive Upgrade reflects our view of the district's extremely strong pro forma financial metrics, lack of additional debt plans, and successful efforts to support regional water supply reliability and drought resilience
Carmel IN BBB+ BBB+ Stable Negative Outlook revision reflects recently adopted rate increases, which we anticipate will support future financial metrics
Jackson County Utility Authority MS BBB+ BBB+ Stable Not meaningful Removal from CreditWatch reflects our receipt and review of financial information, including 2022 audited financial statements
Mulga Town AL BB+ BBB Negative Stable Downgrade and outlook revision reflect our view of weak risk management, culture, and oversight, including rate covenant violations in recent years and significantly delayed audit postings
Dallas Area Municipal Authority PA BBB A Negative Not meaningful Downgrade and outlook revision reflect our view of low cash and limited budgetary and rate-setting practices
Iowa Falls - Water IA A A+ Stable Not meaningful Removal from CreditWatch and downgrade reflect our review of credit fundamentals following our GCP error correction, especially considering the volatility in liquidity.
Miami Dade County FL AA AA- Stable Stable Upgrade reflects mitigated regulatory risk, favorable market position assessment, and prudent rate-setting practices
South Valley Sewer District UT AAA AA+ Stable Stable Upgrade reflects our view of the district's adopted rate plan, well-defined reserve policy, revenue diversity, and extremely strong financial position

Table 3

U.S. Municipal Water And Sewer Utilities Maintained Ratings, Summary Second Quarter 2024
Entity State Rating Outlook
Ohio Water Development Authority OH AAA Stable
Burbank CA AAA Stable
Walnut Valley Water District CA AA+ Stable
South Davis Sewer District UT BBB+ NM
Fish Creek Sanitary District No. 1 WI A Stable
Seattle WA AA+ Stable
Development Finance Authority of Summit County OH A- Positive
Tallahassee FL AA Stable
Charlotte NC AAA Stable
Kentucky Association of Counties Finance Corporation KY AA- Stable
Arlington TX AAA Stable
King County WA AA+ Stable
Greater New Haven Water Pollution Control Authority CT AA+ Stable
Baltimore Mayor & City Council MD AA- Stable
El Dorado Irrigation District CA AA- Stable
Irving TX AA+ Stable
Hampton Roads Sanitation District VA AA+ Stable
Orange Water & Sewer Authority NC AAA Stable
Maine Municipal Bond Bank ME AA+ Stable
Lake Chelan Reclamation District WA A+ Stable
Greater Cincinnati Metropolitan Sewer District OH AA+ Stable
North Texas Municipal Water District TX AA Stable
Medford Water Commission OR AA Stable
Point Comfort TX AA- Stable
Suffolk County Water Authority NY AAA Stable
Trinity River Authority TX AA+ Stable
Sacramento Area Sewer District Treatment and Resource Recovery System CA AA+ Stable
Jurupa Community Services District CA AA Stable
Narragansett Bay Commission RI AA- Stable
Irvine Ranch Water District CA AAA Stable
Los Angeles CA AA+ Negative
West Des Moines IA AA Stable
Fountain CO A- Stable
Augusta GA A+ Stable
Virginia Resources Authority VA AAA Stable
Santa Ana Financing Authority CA AA Stable
Cedar Park TX AA+ Stable
Plano TX AAA Stable
Tualatin Valley Water District OR AA+ Stable
Lafayette IN AA- Stable
Kentucky Bond Corporation KY AA- Stable
New Mexico Finance Authority NM AAA Stable
Coweta County Water & Sewage Authority GA AA+ Stable
District of Columbia Water & Sewer Authority District of Columbia AAA Stable
North Charleston Sewer District SC AA+ Stable
Great Lakes Water Authority MI AA- Stable
Massachusetts Water Resources Authority MA AA+ Stable
Colorado Water Resources & Power Development Authority CO AAA Stable
Fort Lauderdale FL AA+ Stable
Durham NC AAA Stable
New Hampshire Municipal Bond Bank NH AA+ Stable
Gordo Waterworks, Gas and Sewer Board AL BBB+ Stable
Warren County Port Authority OH BBB- Stable
Rural Water Financing Agency KY AA- Stable
Fairfax County Water Authority VA AAA Stable
Pleasanton CA AA Positive
New York City Municipal Water Finance Authority NY AAA Stable
Monte Vista Water District CA AA Stable
East Larimer County Water District CO AA Stable
Renewable Water Resources SC AAA Stable
Athens AL A+ Stable
Clairton Municipal Authority PA BBB+ Stable
Tarrant Regional Water District TX AAA Stable
Iowa Finance Authority IA AAA Stable
Alexandria Renew Enterprises VA AAA Stable
Indiana Finance Authority IN AAA Stable
Greensboro NC AAA Stable
Corpus Christi TX AA- Stable
Sugar Land TX AA Stable
Metropolitan St Louis Sewer District MO AAA Stable
Carrollton TX AAA Stable
Southern California Metropolitan Water District CA AAA Stable
Miami Dade County FL AA Stable
Rhode Island Infrastructure Bank RI AAA Stable
Oklahoma City Water Utilities Trust OK AAA Stable
Renton WA AA+ Stable
Glendale AZ AA Stable
Jurupa Community Services District CA AA+ Stable
Portland OR AA+ Stable
Whitewater WI A- Stable
Garland TX AA- Stable
Dallas TX AAA Stable
Midland TX AA- Stable
Olathe KS AA Stable
Fullerton CA AAA Stable
Oklahoma Water Resources Board OK AAA Stable
Los Angeles Department of Water & Power CA AA+ Stable
Hamilton & Bradley Counties Eastside Utility District TN AA Stable
New Jersey Infrastructure Bank NJ AAA Stable
Columbia Cnty GA AA+ Stable
Edmonds WA AA Stable
Fuquay-Varina Town NC AA Stable

This report does not constitute a rating action.

Primary Credit Analyst:Mallie Lange, Austin +1 2147655861;
Mallie.Lange@spglobal.com
Secondary Contact:Jenny Poree, San Francisco + 1 (415) 371 5044;
jenny.poree@spglobal.com
Research Assistant:Muskan Nidhi, Pune

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