S&P Rates Alameda Cnty Wtr Dist,CA $48M Bnds AA- SPUR.

NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 11/3/98 --Standard & Poor's today assigned its double-'A'-minus underlying rating (SPUR) to Alameda County Water District, Calif.'s $48 million water system refunding bonds series 1998 dated Nov. 1, 1998 due June 1, 2020. The bonds are scheduled to sell Nov. 4, 1998 and are expected to receive a triple-'A' rating based on bond insurance.

The rating reflects the following credit strengths:

-- Strong financial performance,

-- High wealth levels and strong service area economy,

-- A manageable capital plan requiring no additional debt and only

cost of living rate increases,

-- A diverse water resource mix offset by exposure to increased

costs of imported water, particularly from the state water

project.

Located in the southern portion of Alameda County, Alameda County Water District serves 302,450 people in the cities of Fremont, Newark, and Union City. During the 1980s, the district's service area was one of the fastest-growing areas in the Bay Area; recent population growth trends have slowed during the 1990s but have remained strong. In addition to commuter access to the diversified Bay Area economy, large employers within the district include automobile and high-tech manufacturing. Wealth levels are about 150% of national and state averages.

Alameda County Water District primarily is a water distribution agency serving mostly residential customers. The district's water supply is both ample and diverse including the state water project (57%), the San Francisco Water Department (21%), and Alameda County Water District's own groundwater sources (22%). These supplies total 73,900 acre-feet annually compared to demand of 51,300. However, supplies from the state water project and San Francisco can be reduced in times of drought. While provisions in the Bay Delta Agreement provide comfort that the state water supply will remain available, costs will likely increase as the preferred alternative for the Bay Delta is implemented. The district's current five-year capital plan through 2003 is a manageable $115 million, which will not require any additional debt and only cost of living rate increases. This amount does not factor in possible Bay Delta related costs that are still developing. Rates are competitive with an average monthly bill of $24 for 1,400 cubic feet of consumption.

Financial performance has been strong with coverage of at least 3.04 times (x) since 1995, including connection fees, and at least 1.61x excluding connection fees. Coverage in 1998 was 6.61x and 3.83x, including and excluding connection fees, respectively. Projected coverages through 2002 are at least 5.0x with connection fees and 3.5x without connection fees. Liquidity is also strong, with $38 million of unrestricted cash available at the end of fiscal 1997, equivalent to 503 days of operating expenses.

OUTLOOK: STABLE

The outlook reflects the expectation of continued strong financial performance along with rate flexibility to address exposure to increased imported water costs, Standard & Poor's said.---CreditWire