AAA rating assigned to DC Water’s WIFIA loan; low-cost funding advances critical water & wastewater projects
December 18, 2020
Today DC Water announced a AAA rating by S&P for the upcoming Water Infrastructure Finance and Innovation Act (WIFIA) loan. DC Water plans to close on the loan in the coming weeks for approximately $156 million in EPA funding. The fixed-rate funds, at current U.S. Treasury rates, will help DC Water implement 20 important capital projects and will save money for both DC Water and its customers. The WIFIA loan will cover 49 percent of eligible project costs.
David L. Gadis, DC Water’s CEO and General Manager, commented, “This funding provides for a system-wide comprehensive infrastructure repair, rehabilitation and replacement program. It funds small-diameter water main replacements, wastewater treatment plant upgrades and sewer rehabilitation projects—all necessary for us to provide critical services that are vital to public health. Our finance and engineering staffs worked tirelessly through an exhaustive process to secure these funds.”
S&P Global Ratings lauded DC Water’s sustainable financial performance, liquidity and reserves, and strong financial management. DC Water’s financial management practices include a 10-year CIP and a long-term financial forecast and has met coverage, liquidity, pay-as-you-go capital, and rate stabilization reserve fund goals. Fitch Ratings cited DC Water’s strong financial management, rate flexibility and economically robust service area as key ratings drivers. Fitch also applauded DC Water’s expense reduction measures prompted by the coronavirus pandemic. Fitch also gave DC Water a stable outlook.
Said Matthew Brown, Chief Financial Officer, “These low interest funds help us advance critical infrastructure projects, providing much-needed upgrades and rehabilitation to the District’s water, sewer and wastewater treatment facilities and infrastructure. At the same time, paying lower interest rates on loans saves us money on debt service that we can pass along to customers in the form of less steep rate increases.”
The WIFIA program includes many benefits:
• Favorable Interest Rates- The low, fixed interest rate is equal to the US Treasury Rate of a similar maturity
• Customized Repayment Schedules- Water and wastewater utilities can customize their repayment based on anticipated revenues and expenses
• Long Repayment Period- up to 35 years from substantial project completion
• Draws May be Staggered- Rather than one distribution at the outset, DC Water can draw as needed for the projects for which the loan was awarded. DC Water won’t start paying interest on funds until we draw them.
About DC Water
DC Water provides more than 700,000 residents and 21.3 million annual visitors in the District of Columbia with retail water and wastewater (sewer) service. With a total service area of approximately 725 square miles, DC Water also treats wastewater for approximately 1.6 million people in neighboring jurisdictions, including Montgomery and Prince George’s counties in Maryland and Fairfax and Loudoun counties in Virginia.
The Blue Plains Advanced Wastewater Treatment Plant is located at the southernmost tip of the District, covering 153 acres along the Potomac River. Blue Plains is the largest advanced wastewater treatment facility in the world and home to North America’s first thermal hydrolysis plant that enables anaerobic digestion to create electricity from wastewater.
The WIFIA program accelerates investment in water infrastructure by providing long-term, low-cost supplemental loans for regionally and nationally significant projects. The WIFIA program was established by the Water Infrastructure Finance and Innovation Act of 2014. For more information, visit www.epa.gov/wifia.