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

Overview

S&P Global Ratings took 48 rating actions, revised 22 outlooks, and took four CreditWatch actions within the U.S. municipal water and sewer utilities sector in third-quarter 2024. One hundred and three ratings were maintained with no outlook revisions. Two were removed from CreditWatch, and two were placed on CreditWatch with negative implications.

Negative rating actions exceeded positive actions by two to one. Unfavorable outlook revisions exceeded favorable revisions by thirteen to eight. Bond issuance increased relative to second-quarter 2024 and is stronger compared to the same quarter in 2023.

Table 1

U.S. Municipal Water & Sewer Utilities Rating Actions, Year-To-Date 2024
First Quarter Second Quarter Third Quarter
New rating (new sale with new rating, outlook revision, or rating revision) 17 9 15
Upgrade 8 9 11
Downgrade 11 34 22
Favourable outlook revision 7 11 8
Unfavourable outlook revision 5 13 13
Removed from CreditWatch 1 45 5
CreditWatch with negative implications 73 2 2
Maintained ratings with no outlook revision 72 112 103
CreditWatch developing 1 0 1

Third Quarter Rating Actions

Negative rating actions were primarily driven by deteriorating financial metrics and elevated operational risks, consistent with our negative outlook on the sector, which reflects rising cost pressures. Positive rating actions were driven by strengthening financial metrics in addition to progression on capital improvement plans that resulted in strong operational management.

Third Quarter Outlook Revisions And CreditWatch Actions

Negative outlook revisions reflected our projected deterioration in financial metrics and well as our uncertainty regarding rate-setting practices. Positive outlook revisions reflected improvement in financial performance, typically supported by healthy rate-setting to offset rising operating expenses.

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Third Quarter Lookback

The midyear sector outlook was revised to negative as we expect operating and financial pressure to continue into 2025. We expect the complex regulatory environment and continued climate volatility to pressure credit quality as management teams navigate these challenges. Rising energy and chemical costs also continue to strain operating margins and we believe affordability will begin to diminish for some credits given economic conditions. Smaller systems have been more vulnerable to credit deterioration given lower nominal liquidity, less access to the benefits of economies of scale, and greater event risk given more limited managerial policies, practices, and expertise. For more information, see "U.S. Public Finance 2024 Midyear Outlook: A Cooldown Ahead," published July 15, 2024.

In August, we published our view of the Loper decision's potential credit implications. We believe the decision will likely influence the regulatory and policy landscape for U.S. public finance issuers with respect to the timing and scope of regulatory actions. For more information, see "What The Loper Decision May Mean For U.S. Public Finance," published Aug. 14, 2024.

The following tables summarize S&P Global Ratings' third-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 Third Quarter 2024
Entity State Rating to Rating from Outlook to Outlook from CreditWatch Reason for rating change
Brandon SD A+ Stable New rating.
Newark OH A- A- Stable Negative Outlook revision reflects improved financial performance and planned rate increases.
Oceanside CA AAA AA+ Stable Stable Upgrade reflects our view of improved financial performance.
Gypsum CO A Stable New rating.
Mebane NC AA- Stable New rating.
Corcoran CA A- A Stable Negative Downgrade reflects rising cost pressures leading to the decline of debt service coverage along with physical risks related to groundwater scarcity in the service area and the potential costs of mitigating these risks, which could adversely affect ratepayer affordability.
Ocoee Utility District of Bradley and Polk Counties TN A+ A+ Negative Stable Outlook revision reflects volatility in financial performance.
Marina Coast Water District CA AA- AA- Positive Stable Outlook revision reflects our view of improvement in financial metrics.
Knoxville Utilities Board TN AAA AA+ Stable Positive Upgrade reflects completion of a 20-year consent decree, strong management practices, and consistently improving financial risk profile.
Economy Borough Municipal Authority PA A A+ Stable Stable Downgrade reflects declines in debt service coverage and limited rate-setting flexibility.
Rockaway Valley Regional Sewage Authority NJ A+ Stable New rating.
The Utilities Board of the Town of Odenville AL A A Positive Stable Outlook reflects our view of improvements in financial metrics.
Esparto Community Services District Water CA A A+ Stable Stable Downgrade reflects thin liquidity and volatility within financial profile.
Town of Johnstown CO AA- Stable New rating.
Laguna Beach County Water District Public Financing Authority CA AA Stable New rating.
Cleveland OH AA- Stable New rating.
South Davis Sewer District UT BBB+ BBB+ Developing Not meaningful Outlook reflects that we could raise or lower the rating depending on negotiations for the transfer of ownership.
Egg Harbor Township Municipal Utilities Authority NJ A+ AA- Stable Stable Downgrade reflects our view of thin liquidity.
Portland Water District ME AA+ AA Stable Stable Upgrade reflects our view of the consistently strong financial performance coupled with the strong water supply.
Cumberland Mountain Water & Fire Protection Authority AL BBB+ A- Negative Not meaningful Downgrade and outlook revision reflect our view of the weak service area economy, volatile coverage, and limited liquidity reserves.
Bend OR AA+ AA Stable Stable Upgrade reflects strengthening financial metrics.
Mishawaka IN AA- AA- Negative Stable Outlook revision reflects declining debt service coverage and uncertainty surrounding future rate increases to support financial performance.
Polk County Water, Sewage And Solid Waste Authority GA A A Positive Stable Outlook reflects our view of the authority's improved financial metrics.
Ukiah CA A A+ Negative Stable Downgrade and outlook revision reflect weakening financial metrics due to rising operating expenses.
Trinity River Authority TX AA- AA- Negative Stable Outlook revision reflects potential for rate affordability pressures within major member cities due to rising costs, and weakness within financials at the largest contract participants.
Trinity Bay Conservation District TX A A Not meaningful Stable Negative CreditWatch reflects lack of sufficient information.
Town of North Liberty IN A- A Stable Stable Downgrade reflects increase in operational costs that have pushed financial margins to narrow levels, with increased capital spending and rising fixed costs.
Brentwood Infrastructure Financing Authority CA AA+ AA Stable Stable Upgrade reflects our expectation for consistently strong financial metrics, the lack of additional debt plans, and resilient water supply.
Center Township Water Authority PA A A+ Negative Stable Downgrade reflects weakening debt service coverage.
Niwot Sanitation District CO A+ Stable New rating.
Portage IN BBB BBB- Stable Positive Upgrade reflects improving financial metrics.
Bennett Town CO A A- Stable Stable Upgrade reflects strengthened financial metrics.
Laredo TX AA- AA- NM Negative Negative CreditWatch reflects our view that there could be downward rating pressure depending on the upcoming rate plans and layering of additional debt.
Port Angeles WA A- A Negative Stable Downgrade and outlook reflect our view of the delayed cost recovery to offset elevated cost pressures, resulting in weakened financial metrics.
Fairview UT BBB- BBB- Negative NM Outlook reflects our uncertainty regarding management's ability to build available reserves.
Murray City UT AA AA- Stable Stable Upgrade reflects consistently stronger debt service coverage metrics.
North Bend WA AA- AA- Stable Not meaningful Rating reflects receipt of timely audited financials.
Metropolitan Sewer Subdistrict SC AA Stable New rating.
Northeast Ohio Regional Sewer District OH AA+ AA+ Positive Stable Outlook reflects our view of the district's ability to continue executing on its large consent order program while meeting or exceeding planned financial targets.
Town of Prosper TX AA- Stable New rating.
Fond du Lac Sewer WI A+ Stable New rating.
Stevenson Utilities Board AL BBB- BBB- Negative Stable Outlook reflects our view of the decline in debt service coverage in recent fiscal years and uncertainty surrounding the longer-term financial profile and rate-making flexibility.
Medford OR A+ Stable New rating.
Public Utilities Commission of the City & County of San Francisco CA AA AA Negative Stable Outlook reflects the size and scope of upcoming debt plans and management's 10-year financial forecast.
Fairview UT BBB- BBB Not meaningful Stable Negative Downgrade reflects declining liquidity. CreditWatch reflects management not providing timely information surrounding updates and expectations for future financial performance.
Rayburn Country Munical Utility District TX BBB BBB+ Not meaningful Stable Negative Declining liquidity and weak disclosure, combined with rate covenant violation.
El Paso De Robles CA AA- AA- Stable Negative Outlook revision reflects stabilized financial profile following the implementation of rate increases.
Port of Morrow OR BBB A- Stable Stable Downgrade reflects the large upcoming capital improvement plan, including additional debt.
Grass Valley CA A+ AA- Stable Stable Downgrade reflects economic metrics and cash levels supportive of a lower rating level.
Jonah Water Special Utility District TX A+ A+ Positive Stable Outlook reflects the service area's strong continued growth, which has supported consistently strong operating margins.
Dallas County Park Cities Municipal Utility District TX AA+ AA Stable Stable Upgrade reflects strong credit profiles of the district's current participants.
Marin County Sanitary District No. 2 CA AA- Stable New rating.
Memphis TN AA+ AA+ Negative Stable Outlook reflects our view of upcoming capital spending plans, which could pressure near-term financial metrics.
St. Paul MN AAA AAA Negative Stable Outlook reflects our expectation for financial metrics to weaken.
Pine Bluff Water Authority AL A A Negative Stable Outlook reflects declines in the financial profile and limited rate-setting flexibility.
Sandy OR AA- Stable New rating.
Kane County Water Conservancy District UT BBB- A- Negative Stable Outlook reflects our view of the district's weakened cash levels and thin operating margins along with uncertainty about future actions regarding rate-setting and how reliance on tap-in fees will continue.
Guntersville Waterworks and Sewer Board AL A A+ Stable Negative Downgrade reflects thin liquditiy coupled with increasing concentration risks.
Carroll-Boone Water District AR A- A- Negative Stable Outlook reflects weaknesses in the financial performance of the lead municipal customer.
Chandler Town IN A A+ Stable Stable Downgrade reflects declining liquidity position.
Winslow AZ BB+ A Negative Stable Downgrade and outlook revision reflect insufficient debt service coverage and declines in liquidity.
Kalamazoo MI AA- AA- Stable Negative Outlook revision reflects our view of the utility's debt service coverage outperforming expectations and strengthening liquidity.
Memphis Light, Gas, and Water Division TN AAA AAA Negative Stable Outlook revision reflects our view of upcoming capital spending plans, which could pressure near-term financial metrics.
Tacoma WA AA+ AA Stable Stable Ugrade reflects conservative financial policies and long-term planning practices that have led to consistent exceptionally strong financial metrics.
Kearney NE A- Stable New rating.
Ashville AL BBB+ A Negative Stable Downgrade and outlook revision reflect thin operating margins and uncertainty surrounding future financial performance.
Woonsocket Water RI A- A Not meaningful Stable Negative Downgrade reflects lower liquidity, along with weaker debt service coverage metrics. CreditWatch reflects uncertainty surrounding proposed rate increases.
Fairburn GA A- A Negative Negative Downgrade and outlook revision reflect weak debt service coverage and uncertainty surrounding whether the adopted rate increases will stabilize debt service coverage at a stronger level.
Ontario CA AA+ AA Stable Stable Upgrade reflects our view of extraordinary financial strength along with effective rate-setting practices.
Sarasota County FL AA+ Stable New rating.
Esparto Community Services District Sewer CA A A+ Stable Stable Downgrade reflects thin liquidity coupled with volatility within financial metrics.
Warsaw IN A+ AA- Stable Stable Downgrade reflects volatility in debt service coverage and declines in liquidity.
Asotin County Public Utility District #1 WA A+ Stable New rating.

Table 3

U.S. Municipal Water And Sewer Utilities Maintained Ratings, Summary Third Quarter 2024
Entity State Rating Outlook
Ephrata Borough Authority PA A- Stable
Kentucky Association of Counties Finance Corporation KY AA- Stable
Orlando FL AAA Stable
Kalamazoo MI AA- Stable
Ohio Water Development Authority OH AAA Stable
Indiana Finance Authority IN AAA Stable
Trinity River Authority TX AA+ Stable
Charleston SC AAA Stable
Rural Water Financing Agency KY AA- Stable
Fond du Lac Water WI A Negative
Spartanburg County SC AA Stable
Woonsocket Sewer RI A+ Stable
Redwood City CA AA Stable
Benton Washington Regional Public Water Authority AR A+ Stable
Johnston County NC AA+ Stable
Tampa FL AAA Stable
Lewisville TX AAA Stable
New York City Municipal Water Finance Authority NY AAA Stable
Tampa Bay Water FL AA+ Stable
Valley Sanitary District CA AA+ Stable
Weber Basin Water Conservancy District UT AA+ Stable
Kentucky Bond Corporation KY AA- Stable
Honolulu City and County HI AA+ Stable
Loudon TN A+ Stable
Oregon Bond Bank OR AA+ Stable
Polk County FL AA+ Stable
Charlotte NC AAA Stable
Denver Board of Water Commissioners CO AAA Stable
Illinois Finance Authority IL AAA Stable
Portage WI A Stable
Exeter CA A Stable
Macon Water Authority GA AA Stable
Allegheny County Sanitary Authority PA AA- Stable
Westmoreland County Municipal Authority PA A+ Stable
Timpanogos Special Service District UT AA Stable
Burgettstown-Smith Township Joint Sewerage Authority PA A Stable
Harpeth Valley Utilities District TN AA+ Stable
Mesquite TX AA Stable
North Dakota Public Finance Authority ND AAA Stable
Palm Coast FL AA- Stable
Snoqualmie WA AA Stable
North TX Municipal Water District TX AAA Stable
Pasco County FL AA+ Stable
Fredericksburg TX AA- Stable
Tangipahoa Parish Sewerage District #1 LA A- Stable
Camarillo Sanitary District CA AA+ Stable
Huntsville AL AAA Stable
East Baton Rouge Sewerage Commission LA AA- Stable
Suburban Lancaster Sewer Authority PA A Stable
Louisville and Jefferson County Metropolitan Sewer District KY AA Stable
Cobb County Marietta Water Authority GA AAA Stable
Tangipahoa Parish Water District LA A Stable
Mesa Water District CA AAA Stable
Knoxville Utilities Board TN AAA Stable
Payson City UT A+ Stable
San Diego CA AA+ Stable
Indianapolis IN AAA Stable
The Metropolitan District Hartford County CT AA Stable
South Dakota Conservancy District SD AAA Stable
Texas Water Development Board TX AAA Stable
San Antonio TX AA+ Stable
Watauga River Regional Water Authority TN A Stable
Edmond Public Works Authority OK AA- Stable
Del Puerto Water District CA BBB+ Stable
Cincinnati OH AAA Stable
Arizona Water Infrastructure Finance Authority AZ AAA Stable
Vermont Bond Bank VT AA+ Stable
Upper Occoquan Sewage Authority VA AAA Stable
Maine Municipal Bond Bank ME AA+ Stable
Metro Water Reclamation District of Greater Chicago IL AA+ Stable
La Porte IN A- Stable
Oklahoma Water Resources Board OK AAA Stable
Stockton CA A Stable
Onslow Water & Sewer Authority NC AA- Stable
New York State Environmental Facilities Corporation NY AAA Stable
Cleveland OH AA+ Stable
Dorchester County SC AA Stable
South Bullock County Water Authority AL A- Stable
Gainesville GA AA Stable
City of Westminster CO AAA Stable
Pima County AZ AA Stable
Virginia Resources Authority VA AAA Stable
New Mexico Finance Authority NM AAA Stable
Pleasant Grove UT A+ Stable
Upper Trinity Regional Water District TX A+ Stable
Sherman TX A Negative
Tempe AZ AA- Stable
Asheville NC AA+ Stable
Peace River Manasota Regional Water Supply Authority FL 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:Uttara G Kulkarni, Pune

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