Fitch Rates Weber Basin Water Conservancy District, UT's $31.385MM Water Revs 'AA'; Outlook Stable
Source: Business Wire
The 'AA' rating reflects the district's role as the regional wholesale water supplier to 540,000 people, strong financial performance with good debt service coverage levels and strong liquidity position, and a manageable five-year capital plan requiring no additional debt. Credit challenges focus on the longer-term development of additional water resources to meet future demand and the costs associated with such development.
The district was created in 1950 to act as the local sponsor and operator of the Federal Weber Basin Project (WBP) and to further supply water resources to the population within its boundaries. The district covers over 2,500 square miles within five counties: Davis, Weber, Morgan, Summit and a small portion of Box Elder. The district's primary purposes are to provide for the conservation and development of water resources within the district's boundaries; construct, operate and maintain water treatment plants and transmission line conveyance to cities and industries; and provide water for irrigation, secondary and other uses. Consistent with these objectives, the district serves as a provider of wholesale water from the WBP and other sources to various municipalities, industrial facilities, and agricultural enterprises within the district.
The district's financial performance has been strong with net revenues providing debt service coverage of at least 2.39 times (x) since 2006, not including available fund balance. Projected coverage is expected to range from 1.88x to 2.21x through 2013, not including available fund balances and the 35% federal subsidy on the district's interest payments on the BABs. The district's liquidity position is also strong with $21.7 million in unrestricted cash and investments at the end of fiscal 2008, equal to 696 days of cash. This current bond issuance will help finance the district's $50.5 million five-year capital plan and no additional debt is expected. Overall legal provisions are permissive allowing for available fund balances to be included in meeting a 1.25x rate covenant and allowance for a projected 1.25x MADS ABT.
The district's current water supply is adequate with a total maximum annual yield of 542,550 acre-feet (ac-ft) of which 270,356 ac-ft is the annual reliable yield. Water under contract at the end of 2008 was 224,200 ac-ft. The Bear River Water Supply Project is a longer term regional project to develop the Bear River as a future water supply for northern Utah. Although in preliminary planning stages, the project allocates 50,000 ac-ft per year to the district. This additional supply is expected to meet district needs through 2075 and come online by 2025. Conservation will also be a significant part of meeting future growth demands and the district is committed to reducing per capita water use 25% by 2050. Overall capital requirements for the development of new water supplies and system upkeep are projected at a high/manageable $500 million over the next 30 years.
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Contact:
Fitch Ratings, San Francisco
Robert Sakai, 415-732-5628
Kathy Masterson, 415-732-5622
Cindy Stoller, 212-908-0526
(Media Relations, New York)
cindy.stoller@fitchratings.com
