Friday Jul 01 2011
San Juan Water District earns high financial rating
Gets AA+ rating for 'strong financial performance'
The San Juan Water District earned the second-highest rating available for its financial stability in a report completed by Fitch Ratings released June 30. The district earned an AA+ rating. According to the report, the high rating is partly because the district’s “financial performance has been consistently strong with solid debt service coverage and ample liquidity maintained through a period of economic recession and declining water demand.” The local district provides retail and wholesale water services to 196,000 residents in portions of Placer and Sacramento counties. The district also wholesales water to the Citrus Heights Water District, Fair Oaks Water District, Orangevale Water Co. and the City of Folsom. According to the report, the San Juan Water District’s operating revenues have grown in recent years, although water sales have sharply declined amid conservation efforts and economic weakness. The report attributes this, in part, to rising water rates. The district raised retail rates by an average of 6.7 percent in the last four years, which helped it maintain its financial performance as water consumption fell more than 20 percent from fiscal year 2008 to 2010. “Retail water bills appear affordable at about 0.6 percent of median household income, suggesting some rate flexibility remains,” states the report. The district also has significant reserves for its ongoing capital improvement program. Capital reserve funds — largely funded from excess operating revenues — are expected to have balances of about $20.4 million at the end of the 2011-12 fiscal year, according to the report. This will allow the district to maintain an active capital improvement program without borrowing. The report says the district has regularly maintained and improved its infrastructure with capital expenditures regularly outpacing depreciation. ~ Sena Christian