Crescenta Valley Water District Refinances Bond Debt for Long Term Savings
It is the mission of the Crescenta Valley Water District (District) to provide quality water and wastewater services to the Crescenta Valley community in a dependable and economically responsible manner.
On Tuesday, Aug. 15, the District board of directors took another significant step in that direction by approving the refinancing of $8.1 million of bond debt. This will save the District and its customers $1.2 million over the next 20 years, which “equates to about $150 for each of the District’s approximately 8,300 customer accounts,” said James Lee, District staff who managed the bond refinancing. The bond debt refinancing is part of the District’s continuing efforts to reduce cost and expense to help offset the increasing cost of purchased water and infrastructure replacement.
The District had issued $10.1 million of revenue bonds in 2007 to fund critical infrastructure replacement and improvements. Since that time, interest rates have declined to historic lows, and enough time has passed for the District to avoid any prepayment penalties. The board moved quickly but deliberately to take advantage of this timing opportunity to achieve the high level of savings.
In June 2017, the District also established a long-term investment fund for future obligations, which will significantly reduce the District’s costs. These savings will not be realized for several years, but this long-term investment will save an estimated $5.7 million over the next 20 years.
Delivering reliable and safe water and consistent customer service at the most affordable levels are the District’s foremost concerns. The largest cost driver for fulfilling this mission is the cost of maintaining the infrastructure that treats and delivers the water. The District operates the water supply system with 88 miles of pipeline, 19 reservoirs with a storage capacity of 17 million gallons, 12 wells, and three pump stations, all servicing an area with considerable elevation gain spread over 11 pressure zones. Portions of the water distribution system are over 70 years old and in need of rehabilitation and repair, and the District must address this aging infrastructure necessary to distribute water.
While the District strives to achieve cost savings and manages infrastructure maintenance, it also continues to face other financial challenges. Reduced water sales, declines in local groundwater supply and increasing infrastructure replacement needs continue to pose challenges to the District. For example, the community has responded commendably to the state water conservation mandate. While the 27% reduction in water use (as of 2016) places our community’s efforts amongst the leaders in the state, the reduction of water use has resulted in a reduction in revenue averaging $950,000 annually over the past three years when compared to fiscal year (FY) 2014.
CVWD’s local water supply (groundwater) has also been reduced by 40% due to the lack of rainfall over the past five years. This has required an increase in the more expensive imported water supplies to meet its customers’ water demands. CVWD’s imported water purchase expense is projected to increase $630,000 over the last fiscal year.
The District manages numerous initiatives to reduce costs in the face of these challenges. State grant funds are utilized whenever possible, with $690,000 in grant revenue expected next year; the District has appreciably decreased its number of staff; a leak detection program is underway to reduce water losses; and new pipeline repair methods are being used to reduce annual maintenance expenses.
The bond debt refinancing produces excellent savings, but it is only one part of the District’s continuing efforts to reduce costs. Cost savings for the District goes beyond simply looking for reductions. It is a complex balance between maintaining critical infrastructure, meeting local and state laws and regulations, and having a proactive stance toward the future, all while delivering reliable and safe water today.