The Upper Santa Clara Valley Joint Powers Authority sold $62.6 million in bonds on behalf of the Santa Clarita Valley Water Agency (SCVWA) to finance improvements to the valley’s water system.
The bonds mature between 2031 and 2036, yielding between 2.43% and 2.76%. They pay interest at 5%. The securities received a rating of AA+ from S&P Global Ratings.
“The rating reflects the agency’s sophisticated management and diversified water portfolio, which has provided stability during hydrological challenges,” according to S&P.
The issuance comes as the SCVWA enacts its capital improvement plan, which calls for $680 million in spending over the next five years. The plan is focused on reducing the contamination of chemicals known as per-and polyfluoroalkyl substances (PFAS) in the valley’s water supply.
The agency removed 45% of its groundwater supply wells in 2020, citing the contamination of PFAS. In 2019, groundwater consisted of 28% of the total water used in the Santa Clarita Valley’s service area, according to the agency.
The SCVWA estimates that construction and operation of treatment systems for PFAS could reach $160 million over the next five years. It opened its first PFA treatment plant in fall 2020.
The Santa Clarita Valley includes parts of Los Angeles and Ventura counties. The bonds are secured by a portion of the agency’s revenue, which is supported by property tax allocations.
BofA Securities Inc served as underwriter on the issuance, purchasing the bonds for $75 million. The price reflected a premium of $13 million.