A water conservancy district south of Salt Lake City, Utah, issued $90.9 million in bonds to finance capital improvements within the district’s water system.
The bonds, sold by the Jordan Valley Water Conservancy District (JVWCD), mature between 2025 and 2054, yielding between 2.33% and 3.81%. They pay interest at 5%. The securities received a rating of AA+ from S&P Global Ratings and AA+ from Fitch Ratings.
The rating reflects “the district’s very strong revenue defensibility and operating risk profiles,” Fitch analysts wrote.
The bonds will fund projects that help the district contend with an expected increase in population that could strain its water system. The population of the district’s service is expected to increase by 20% over the next sixteen years, according to the official statement accompanying the sale of the bonds. The proceeds will finance the expansion of a water treatment plant, the construction of two new storage reservoirs, the extension of an aqueduct, and other projects.
The improvements will occur under the umbrella of Prepare60, a center established by Utah’s four largest water conservancy districts that will direct billions of dollars in water infrastructure upgrades over the next decade. The JVWCD alone projects that it will spend $467 million on infrastructure improvement projects in the next ten years, according to the bond documents.
The projects aim to maximize the district’s existing water supply resources rather than building new ones. They will be financed by annual increases in the district’s water rates, ranging from 2% to 6%.
“The District strives to provide for the maximum development and utilization of existing water resources in lieu of the immediate development of additional water supply projects,” the bond documents read.
The JVWCD services 1.1 million Utahns, including the majority of the residents of Salt Lake City. The bonds are special obligations of the district, payable by revenue from the water system.
J.P. Morgan Securities LLC and Stifel, Nicolaus & Company, Inc served as underwriters on the issuance, purchasing the bonds for more than $100 million. The price reflected a premium of almost $10 million. LRB Public Finance Advisors acted as municipal advisor.