Fitch Ratings, a leading provider of credit ratings, commentary and research, has assigned a AAA-rating to the Coachella Valley Water District (CVWD) for its $59.1 million Water Infrastructure Finance and Innovation Act (WIFIA) loan.
“This AAA rating is tremendous for the first formal credit rating in CVWD’s history” said Geoffrey Kiehl, Director of Finance for CVWD. “We are nearing the end of a year-long process whereby Fitch meticulously analyzed CVWD’s financial stability and leadership before ultimately assigning their top rating of AAA.”
The loan will fund the construction of the Coachella Valley Stormwater Channel Improvement Project. The project will increase capacity to capture and convey storm water, reduce stormwater runoff to the surrounding areas, and help the district meet design standards. Further, it will fund the construction of the North Indio Regional Flood Control Project, a 3.3-mile regional stormwater channel conveyance facility to manage and capture stormwater and reduce recurring runoff and debris to the City of Indio and parts of the unincorporated county.
The WIFIA loan is secured by a senior lien gross pledge of storm water revenues, including property tax revenue, revenue from land leases, interest income and all other revenue received by the stormwater fund. A debt service reserve fund will also be pledged to the repayment of the loan and will be sized to one year of debt service.
After weighing financial strengths and weaknesses of a company, Fitch provides a rating that indicates the risk involved with lending to that entity. An investment grade of AAA is reserved for the best quality companies, reliable and stable. The analysis is available on the Fitch Ratings website.
CVWD recently shifted its strategy for capital projects from a pay-as-you-go approach that draws from reserves to short-term and potentially long-term financing for capital improvement projects.
“Paying for almost half of the costs of these two key projects with an ultra-low cost, long-term loan permits the District to preserve our financial flexibility, as we accelerate the expansion and repair of critical stormwater control facilities over the next several years,” Kiehl said.
The Coachella Valley Water District is a public agency governed by a five-member board of directors. The district provides domestic and irrigation water, agricultural drainage, wastewater treatment and reclamation services, regional storm water protection, groundwater management and water conservation. It serves approximately 108,000 residential and business customers across 1,000 square miles, located primarily in Riverside County, but also in portions of Imperial and San Diego counties.