Fitch Affirms Yuba City, California, Water System at 'A+'; Outlook Stable

SAN FRANCISCO--(Business Wire)--
In the course of routine surveillance, Fitch Ratings affirms the
'A+' rating on $28.2 million of outstanding Yuba City, California's
water revenue certificates of participation, series 2001 and 2005. The
Rating Outlook is Stable.

The 'A+' rating reflects the water system's strong historic and
projected financial performance and liquidity margins; sound planning
efforts, including an automatic annual rate increase; moderate capital
needs; and the need to acquire additional water rights over the medium
term for future growth as well as to ensure adequate capacity during
drought periods. Fitch continues to view the city's inclusion of
connection fees in its net revenue pledge and rate covenant as a
weakness. However, partially mitigating this concern is the city's
conservative projections for growth and the expansion plan's inherent
flexibility.

Fitch has issued an exposure draft on July 31 proposing a
recalibration of tax-supported and water/sewer revenue bond ratings
which, if adopted, may result in an upward revision of this rating
(see Fitch research 'Exposure Draft: Reassessment of the Municipal
Ratings Framework').

Fitch's rating definitions and the terms of use of such ratings
are available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality,
conflicts of interest, affiliate firewall, compliance and other
relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, San Francisco
Karen Ribble, 415-732-1756
Scott Monroe, 415-732-5618
or
Media Relations:
Cindy Stoller, 212-908-0526, New York

Copyright Business Wire 2008