News Release News Release The City of Palo Alto
Communications Department
250 Hamilton Ave
Palo Alto, CA 94301


Subject :

New Standard & Poor’s Ratings for City Utilities: Storm Drain, Water Quality Control Plant and Gas & Water
Contact : Joe Saccio, Deputy Director, Administrative Services    650-329-2288

Palo Alto, CA – We are proud to announce that Standard & Poor's (S&P) has upgraded three City of Palo Alto Utility Revenue bonds to its highest possible rating. These include: the 1995 Storm Drain bonds, from AA+ to AAA; the 1999 Water Quality Control Plant bonds, from AA- to AAA; and the 2002 Gas and Water bonds, from AA- to AAA. Standard & Poor stressed the "fundamental strength" of these areas based on rate setting authority, debt coverage ratios, and the stability of the systems. 

S&P recently revised its criteria for rating public agency waterworks, sanitary sewer, and drainage debt to better reflect the quality and performance of local jurisdictions. The City was one of 43 Western Water and Sewer issuers that were upgraded, but is pleased to report that only Palo Alto and the Alameda Water District ratings were raised to Triple A.

Some of S&P comments include:

  • For the 1999 bonds, “debt service coverage . . . was in our view extremely strong. The debt burden is, in our view, low at just 18% to plant.”
  • For the 2002 bonds, “combined water and gas debt service . . . was in our view extremely strong. The combined debt is low at just 16% of plant.”

After hearing about the credit upgrades, Mayor Peter Drekmeier stated, “We are delighted that S&P has found our utility debt to be of the highest creditworthiness."

The City expects to issue water utility bonds in the near future to build a reservoir and a General Obligation bond in the next year for improvements to its library facilities and a community center. It is important to note that each bond issue is evaluated separately by credit agencies and ratings are dependent upon a wide variety of financial and other factors prevailing at the time of the rating.

About the City of Palo Alto
The City of Palo Alto is the only municipality in California that offers a full-spectrum of utility services that include electricity, fiber optic, water, natural gas, wastewater collection and treatment, and storm drain.