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They’d have trouble paying for what they want to take

Back in March of 2009, the San Luis and Delta-Mendota Water Authority issued revenue notes to fund the Delta Habitat Conservation and Conveyance Program (DHCCP) Development Project.  The DHCCP is the entity that is supposed to assess potential habitat restoration and water conveyance options for the BDCP and conduct an environmental review.

Fitch Ratings, a global rating agency that evaluates and rates agencies that issue bonds, said this about the March 2009 bond issue:  “Financial strength is derived from the obligor’s, the Westlands Water District (WWD, or the district), credit quality (revenue bonds rated ‘A’ by Fitch Ratings), based on satisfactory historical financial operations and high commodity value.”

Fitch Ratings also said, “The value of the WWD’s entitlement to a substantial amount of water (1.15 million acre feet) offers financial flexibility, as it can be marketed for municipal and industrial uses at higher price if the water is not sold for agricultural purposes.”


But Fitch also noted, “Although the authority manages substantial water rights, the availability of water in recent drought years raises concerns regarding future water availability and associated rising costs due to infrastructure needs that will continue to escalate the cost of the commodity.”

Two things are worth noting here:

First, back in 2009 Westlands was considered stable from an investment perspective because they could market their water to cities and industry if they could make more money that way than selling water to grow food.

This is the district that asserts a moral claim to water from the Delta, saying that it is growing food to feed the country and scoffing at protections for fish.

Westlands needs a stable water supply not to grow food but to borrow money.

Sean Hannity?  Leslie Stahl?  Is anyone listening out there?

Second, somebody ought to be looking out for the best interests of municipal bond investors, because investments backed by water rights and water supply just may not be wise investments.  Two years ago, Fitch recognized that water availability was a concern.

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