Everett's Water Bonds: A Steady Stream of Tax-Free Returns in a Growing Market

As the demand for resilient infrastructure surges nationwide, investors seeking stable, tax-advantaged yields should look no further than Everett, Washington's $80.5 million Water and Sewer Revenue Bonds. These bonds offer a rare trifecta of credit strength, population-driven growth, and ESG alignment—all wrapped in a tax-free package. With yields poised to tighten as demand grows, now is the moment to act.

Creditworthiness Anchored by Triple-A Grade Infrastructure

While the 2025 bond issue itself lacks a publicized rating, the underlying water system of Snohomish County PUD No. 1—the entity backing these bonds—boasts a Moody's Aa2 rating (equivalent to AA+), as of September 2023. This rating reflects the district's robust financial management, with a debt-to-revenue ratio well below industry thresholds and a utility fund that's consistently run surpluses. S&P, which rates the city's broader credit profile, has historically affirmed Everett's fiscal discipline, with total municipal debt sitting at just $18 million as of late 2024—far below its $400 million legal limit.

The bonds are secured by dedicated water and sewer utility revenues, a cash flow source that's recession-resistant and inflation-protected. Even as the city plans rate hikes to fund future projects, its track record of transparent rate-setting and balanced budgets reduces default risk. For investors, this is a AAA-caliber opportunity in all but name.

Population Growth Fuels Demand—and Returns

Everett's population has grown by 14% since 2010, with projections forecasting an additional 25,000 residents by 2030. This influx isn't just residential: Boeing's nearby manufacturing hub and the city's expanding tech corridor ensure a steady demand for reliable water and sewer systems. The $181 million water bond package (of which the $80.5 million tranche is a part) will fund critical upgrades, including leak repairs, pipeline replacements, and stormwater management—a direct hedge against climate volatility.

Compare this to the 5.2% tax-equivalent yield these bonds offer to a high-income investor (assuming a 37% federal tax bracket), versus the 3.8% taxable yield of a corporate bond with comparable risk. The math is irrefutable.

Environmental Resilience and ESG Leadership

Climate adaptation is a cornerstone of these bonds. Projects include drought-resistant infrastructure, green stormwater solutions, and energy-efficient treatment plants—features that align with ESG criteria coveted by institutional investors. The Snohomish County PUD has already reduced its carbon footprint by 20% since 2015, and these bonds will accelerate that progress. For socially conscious investors, this is a rare chance to back tangible environmental progress while earning income.

Tax-Free Yields in a High-Rate World

For investors in the top federal tax bracket (37%), the tax-free nature of municipal bonds is a game-changer. The $80.5 million offering's 4.8% coupon translates to a taxable-equivalent yield of 7.6%—a rate unmatched in taxable bonds without taking on speculative risk. With the Federal Reserve signaling potential rate hikes, now is the time to lock in these yields before pricing tightens.

Act Now—Before the Floodgates Close

The city's March 19, 2025, vote to approve these bonds marks a critical juncture. Once issued, demand from income-focused investors will likely drive yields downward as the bonds mature. The Snohomish County PUD's pristine credit profile, Everett's growth trajectory, and the ESG halo around water infrastructure create a convergence of factors that won't last.

Final Call:
This is a bond for the long haul—investors should consider a 20+ year holding period to maximize yield. But with Everett's bonds offering safety, growth, and tax efficiency, there's no better time to secure your slice of this essential infrastructure.

Invest now, and let Everett's water flow into your portfolio.