Once again, sound management of City assets has translated into a money-saving financial rating. That’s good news for the City and its residents.
The City of Asheville’s Water Resources Fund has received a debt rating upgrade! On September 4, the City learned that Moody’s Investor Services formally upgraded the debt rating for Water Resources from Aa2 to Aa1.
What does the upgrade really mean? An upgrade means that the rating agency considers Water Resources to be well-managed, financially stable and able to pay back any borrowed funds. Rating the debt at Aa1, or “high quality,” an investment-grade rating, reflects the agency’s confidence in the management of the water system. Now, when Water Resources issues debt (borrowing money from investors for capital projects), it will do so at a lower interest rate and save Water Resources money. And that makes for better fiscal management of taxpayer money.
Why does this matter? The rating allows the City to finance a cornerstone improvement to the water system — the North Fork Dam Improvement Project, which provides 70% of the City’s drinking water.
Begun in 2017, the North Fork Dam Improvement Project will make the dam a safer structure for our community by making it able to better withstand inflow from severe storm events. The $54.6 million project will add capacity to the reservoir. It will also reinforce the dam against the potential for damaging seismic activity.
While Water Resources is an enterprise fund — which means money collected from its customers pays for the service — the City will need to issue bonds for $30 million of this project. The City has already paid $15 million for the project from the enterprise fund.
This dam was originally constructed in 1955 and can continue to serve our community with investment in its integrity and efficiency. Find more about the project at this link.
A key initiative that helped lead to the upgraded rating is improvements Water Resources has made in the Non-Revenue Water Program (NRW). Non-revenue water is defined water that is “lost” after treatment and before delivery to a customer, through leakage, breaks or other means.
Prior to targeted efforts, the City’s water loss percentage was approximately 25%, and had been as high as 33%.
“This was too high, even considering our mountainous terrain which requires higher than typical water pressures within the system to ensure delivery throughout the service area,” said Interim Water Resources Director David Melton. “The high water loss percentage concerned not only staff, but the rating agencies.”
Water Resources staff met the Non-Revenue Water challenge with improvements, including pressure optimization efforts, increased early leak detection, refined data collection, improved meter and billing accuracy, and capital improvement projects that replaced aging infrastructure. Through these ongoing efforts, staff reduced the water loss to 22%.
According to Moody’s announcement about the Water Resources’ improved rating: “The upgrade to the high quality Aa1 rating reflects the growing size and diversity of the service area’s economic base, strong management practices including comprehensive fiscal policies, an active pay-go capital improvement program, regular rate reviews and long term planning.”
“Water Resources will continue to refine and improve the Non-Revenue Water Program moving forward,” Melton said. “Investments in infrastructure (waterline replacements, meter replacements, etc.) will play a major role in continuing to provide a high level of service at a reasonable cost to customers.”