The rating on certain Santa Rosa bonds was raised this week by an agency that sees improvement in the financial health of the city’s utilities department.
Standard and Poor’s raised its rating on the city’s wastewater bonds from A+ to AA-. The change brings the quality of the bonds up from “upper medium grade” to “high grade.”
The boost should save ratepayers money by lowering the interest rate the city needs to pay when it sells bonds to finance upgrades to its extensive wastewater collection and treatment system, explained David Guhin, director of the Utilities Department.
The city may sell up to $40 million in bonds to fund upgrades to the Llano Road wastewater treatment plant in coming years, Standard and Poor’s analysts wrote.
The city already has about $310 million in outstanding debt, much of it from the construction of the 40-mile pipeline recharging the Geysers geothermal fields with treated wastewater.
The upgrade may also allow the city to refinance some of that existing debt, Guhin said.
“It opens up the door for other opportunities of looking at our debt portfolio,” Guhin said.
Analyst Robert Hannay also cited the system’s “stable customer base, continued strong liquidity and strong debt service coverage ratio” and steady financial performance as reasons for the upgrade.
Hannay credited the city’s history of rate increases as generating increased revenues. He also noted that the utilities department was sitting on $71 million in unrestricted cash and investments, enough to fund operating expenses for 648 days if necessary.
“Our city staff and our Board of Public Utilities deserve a lot of credit for (their) financial discipline in leading us to this point,” City Manager Kathy Millison said in a statement.
(You can reach Staff Writer Kevin McCallum at 521-5207 or email@example.com. On Twitter@citybeater)