
It looks like the politically powerful Westlands Water District, one of the main backers of Governor Jerry Brown's Delta Tunnels and Congressional legislation to eviscerate protections for Sacramento River Chinook salmon and Delta smelt, is in more financial trouble.
Fitch Ratings downgraded the scheduled October 26 bond sale by Westlands from 'AA-' to 'A+'.
Among the issues facing Westlands Water District, Fitch cites shrinking irrigated acreage, previous financial obligations, and the potential for increased leveraging to pay for the Delta Tunnels, according to Restore the Delta.
The downgrade reflects Fitch's view that district operations face increased pressure over time. Despite improvements to the district's debt profile following this transaction and potentially lower leveraging related to a drainage settlement with the U.S. than previous estimates, the prospect of ongoing escalation in district charges coupled with probable declines in irrigated acreage heightens concentration risk and affordability concern.
The statement includes a warning that overcommitting to the California WaterFix could push the rating even lower.
Public reports now estimate the district's share of future costs of the California Fix at $2.5 billion. Significant further leverage by the district in support of the California Fix could apply downward pressure to the ratings.
Barbara Barrigan-Parrilla, Restore the Delta executive director, quipped that bond ratings agencies are like Mom and Dad. Westlands is asking to raise the limit on their credit card again, despite questionable earnings potential. At some point, Mom and Dad get out the scissors.
Tunnel proponents cannot demonstrate how $17 billion, before cost overruns, will be raised to build the Delta Tunnels. The public does not have a completed and vetted finance plan for the project to examine. When asked who commits to paying the bill, all the water districts point to someone else.
What is clear is that ‘someone else’ includes federal taxpayers, California taxpayers, Southern California and Silicon Valley property taxpayers, and urban water ratepayers. These folks will end up subsidizing large agricultural interests like Westlands growers.