On Feb. 22 Standard and Poor’s announced that they have upgraded the City of Tyler’s water and wastewater system bond rating from a AA- to a AA rating. This rate adjustment has significant financial impact to future revenue bonds issued by the City and could result in a several hundred thousand dollar lifetime savings.
According to Standard and Poor’s, the rating was changed based upon Tyler Water Utility's:
- improving operating margins;
- strong debt service coverage;
- liquidity while addressing long-term water supply and capacity;
- ongoing economic and customer base expansion and diversification.
Other factors that affected the rating change include the ability to serve as a regional water supplier as outlined in the Tyler 21 plan, the City’s competitive fees and its solid liquidity position.
“Very few cities have AA ratings,” said Steven Adams of First Southwest Company, the City’s financial advisors. “This rating can be directly attributed to the quality management of the City.”
“We are extremely happy with the upgrade in the City’s bond rating,” said Mayor Joey Seeber. “As the City improves and expands its water and sewer system by the issuance of revenue bonds, this rating should result in significant savings over the life of the bonds.”
This is the third upgrade the City has received in eight years. The Standard & Poor's upgrades have taken the City’s rating from an A1 rating in 1999 to a AA- rating in 2000 and then to a AA rating today. Moody's Investor Services upgraded the City's rating in 2002 from A2 to A1."
The City of Tyler has paid off all general obligation debt, thanks to the implementation of the half-cent sales tax in 1995. General obligation debt is repaid by property tax revenue. Utility revenue bond debt is paid for solely from monthly fees for water and wastewater services.
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