Financial Management

Left Column: 

Bond refinancing will save ratepayers $51 million

As part of its ongoing effort to minimize costs to ratepayers, the Water Authority in February refinanced bonds and reduced the cost of financing vital water supply projects by $51 million through 2034 on a net present-value basis – or $60 million in gross savings. Strong credit ratings and aggressive investor outreach allowed the Water Authority to win favorable terms despite weakness in the municipal bond market.

The move capped a successful multi-year plan to cut the cost of financing the Capital Improvement Program. In July 2011, the Water Authority executed a $140 million senior lien bond sale designed to save $13.5 million over 15 years. The Water Authority also expects to save $5.2 million from a $94.5 million bond refunding sale in September 2011.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Carlsbad Desalination Project financing saves $200 million

The Water Authority teamed with private developer Poseidon Water to sell construction bonds at 4.78 percent for Poseidon’s seawater desalination plant in Carlsbad and a related pipeline. That will save approximately $125 per acre-foot – an estimated $200 million over three decades – compared to earlier projections.

Independent analysts cited the Water Authority’s financial stability and strong credit ratings, along with the strategic importance of the desalination plant, as critical factors in their positive assessments of the debt.
 

Sidebar: 

Risk management efforts lower insurance costs

For the second consecutive year, the Water Authority’s insurance carrier didn’t pay any claims against the agency’s liability and property coverage. That sterling safety record is good news in its own right, and it saves the Water Authority an estimated $100,000 annually in the form of lower annual premiums and other financial incentives.

The Water Authority is insured by the Special District Risk Management Authority, which has approximately 600 members. The Water Authority ranks in the top 10 percent for no-claims performance.