Public Agency:
Bond, Consulting or Both:
Practice Areas:
NHA Contributions: NHA developed a creative and cost-effective solution that helped the District avoid collapse of its primary water supply. In addition to developing a low-cost funding option on an expedited schedule, NHA developed rate models and a water supply surcharge analysis that ultimately helped support the new debt.
Project Completion: August 2014
NHA Contact: Mark Northcross and Rob Schmidt
Unique Characteristics of Project: NHA developed and delivered to the District an emergency funding solution to avoid terminating water service.
Executive Summary: Due to the ongoing drought, many water agencies on California’s central coast have been facing reduced water supplies and saltwater intrusion into their groundwater sources. The drought resulted in saltwater intrusion in both District aquifers, which was projected by district engineers to make the water too brackish for potable consumption.
The District contacted NHA seeking financial assistance to fund an emergency water supply project. The district needed to finance a prefabricated desalinization unit in less than four months to avoid severely curtailing water production or even terminating service altogether.
A significant reduction in water production would have severe financial implications to the District’s revenue stream, which was primarily based on volumetric charges. Working with the District’s rate consultant, NHA assisted in the preparation of a rate analysis and development of an emergency water supply surcharge that would support the new financing.
Given the accelerated timeline for project implementation, rate approval, and financing, NHA worked on an expedited schedule to secure a loan with a single financial institution which avoided a traditional public offering process that would have added two months to the funding timeline. This process also assisted the District in working directly with the credit analysts to answer questions and perform the necessary due diligence.