YY- what you quoted supports what I said- at least 1 parent has to have had residency. Not necessarily so easy to prove residency by the way.
I agree with mammele that it is not necessarily a good thing to pass on US citizenship. Once upon a time, everyone wanted to do it to get child allowances. But that is not easy to get anymore, and it comes with a price- the US citizen has to file tax returns and FACTA reports, and if not, can be penalized.