Fitch Ratings, a global rating agency that offers independent credit opinions, acknowledged Olivenhain Municipal Water District’s conservative fiscal policies by reaffirming OMWD’s AAA bond rating with a stable outlook. AAA is the highest possible rating awarded by Fitch, and OMWD is one of only a handful of Southern California water agencies that have achieved this recognition.
Fitch noted that based on audited financials, OMWD’s financial performance remains strong even in challenging operating environments, including revenue reductions due to state-mandated conservation. Despite sharp increases in wholesale water costs, OMWD maintains adequate cash reserves and debt coverage, which Fitch expects to continue. Fitch also noted that OMWD rates remain affordable.
“It is an honor to have Fitch recognize OMWD’s efforts to protect ratepayers from bearing undue financial burden,” stated Larry Watt, OMWD Board President. “Maintaining the highest bond rating saves our ratepayers millions when issuing bonds to finance critical new water facilities or refinance existing obligations.”
This exemplary rating means OMWD can secure a loan at lower interest rates, as there is less risk that money will not be repaid. Because OMWD pays back debt over many years, lower interest rates for repayment of bonds will result in significant savings to OMWD ratepayers. This is crucial as OMWD moves forward with water supply projects designed to ensure customers enjoy reliable, high-quality water well into the future.
In 2016, Fitch upgraded the rating for OMWD’s revenue bonds from AA+ to AAA with a stable outlook. OMWD’s board promptly approved refinancing its existing Financing Authority Water Revenues Bonds Series 2009. The bond refinancing resulted in savings to OMWD ratepayers of an estimated $3.68 million over the 22-year life of the bond.
In its report, Fitch acknowledged OMWD’s commitment to long-term financial stability, manageable borrowing plans, conservative financial forecasting, and equitable and disciplined rate setting. OMWD’s water supply diversification efforts were also key to the rating given. The aggressive expansion of OMWD’s recycled water system and the development of a brackish groundwater desalination facility currently under evaluation can provide water supplies that are more reliable to customers at more predictable prices.