City receives AAA rating for utility bonds

The City of Round Rock joined an elite group of only nine other Texas cities when Standard and Poor’s upgraded the City’s utility debt to AAA – the highest credit rating possible. Round Rock is the only City in Central Texas with this top credit rating for its utility.

“This is a tremendous achievement for Round Rock, and one that reflects the stellar stewardship of City finances that has been in place for many years,” Mayor Craig Morgan said. “More importantly, this recognition has a bottom-line impact for our ratepayers.”

The AAA rating translates into lower interest rates, which reduces the City’s borrowing costs on its utilities. The rating helped increase the savings on the City’s sale this week of $33.4 million in utility revenue refunding bonds. The refunding will result present value savings of $3 million, or average annual interest savings of over $192,000 per year. The lower debt costs and the City’s continuing focus on good planning and pushing costs of expansion to growth will continue to help minimize future water rate increases and will help the City avoid wastewater rate increase for the next few years.

“This AAA rating is the first ever for any Round Rock debt, and reflects our financial strength, excellent leadership and management of the system, and forward-thinking policies enacted by our City Council,” City Manager Laurie Hadley said.

The S&P report stated: “The upgrade reflects the city’s continued extremely strong financial risk profile, which we believe is sustainable even with planned use of a portion of substantial available reserves in coming years to pay for growth-driven capital expenditures. While growth has moderated following the Great Recession, Round Rock has been at times among the fastest-growing in Williamson County, which itself is among the fastest-growing counties in the U.S. As such, the city has built up substantial balances of impact fees and capital-designated reserves it intends to use for identified projects and to defray the need for borrowing. Should growth cease, some of these projects can simply be deferred without, in our view, recourse to the system’s financial profile or operations.”

The City provides retail water and wastewater service to approximately 108,000 Round Rock residents, and 30,000 non-residents through 11 wholesale contracts.  The City has a long track record of excellent long-term capital and financial planning and working regionally to best serve the City’s customers. The City has water contracted from three reservoirs. Those, along with groundwater wells, will provide enough supply to serve the city through its ultimate build out – when the population is projected to be 250,000.

Round Rock’s 52-million-gallon-a-day water treatment facility supplies all current treated water needs. Its partnership in the Brushy Creek Regional Utility Authority with Cedar Park and Leander is a key part of providing for future supply to all three cities. Round Rock also partners with Cedar Park, Leander and Austin at the Brushy Creak Regional Wastewater System to provide cost effective wastewater treatment.




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