Standard & Poor’s Rating Services (S&P) has affirmed its “AA/Stable” long-term rating of Las Virgenes Municipal Water District’s (LVMWD) credit worthiness for present and future bond debt.
Standard & Poor’s ratings are a benchmark that can affect the cost of borrowing, in this case for bonded debt, by a given agency. In its report, S&P cited several positive factors, including the economic strength and stability of the LVMWD service area. However, the S&P report stated those strengths are “partially offset by the district’s exposure to more stringent regulatory requirements by way of the treatment plant’s discharge into the environmentally sensitive Malibu Creek.”
The report added that there could be “a positive rating action” if proposed water quality standards are less stringent, along with “a negative rating action” if significant debt is required to finance a large capital program and rates are not adequately adjusted to maintain a strong financial profile.
“We’re generally pleased with Standard & Poor’s evaluation, in that it reaffirms the District’s finances are stable and in compliance with industry standards, which reflects well on our financial policies and practices," said David W. Pedersen, LVMWD's general manager.
Mr. Pedersen added that S&P’s concerns about more stringent water quality standards for Malibu Creek are shared by many, including the District’s Board of Directors. “We remain committed to the responsible environmental stewardship of Malibu Creek, but as we have said, any new standards must have a firm foundation in science. As the report indicates, an unintended consequence of the proposed new regulations is that they could adversely affect our bond rating, which would, in turn, increase costs to our customers.”
He added that the District has been in discussions with the U.S. EPA, and along with its Joint Powers Authority partner, Triunfo Sanitation District, filed a recent federal court action related to new standards being proposed for the Malibu Creek watershed.