Post Date:04/03/2024 7:30 AM

By Zach Cartaya, Director of Finance and Administration for Highlands Ranch Water and Sanitation District and Highlands Ranch Metro District

Highlands Ranch Water and Sanitation District is excited to announce that our 2024 debt issuance to begin phase 2 of our infrastructure refurbishment and replacement at the Joseph B. Blake Water Treatment Plant was successfully completed on Feb. 1, 2024. These infrastructure investments are critical to ensuring we are compliant with State and federal regulations and that we are able to provide clean, safe drinking water to our customers for the next forty years and beyond.

A debt issuance is an approach used by both public and private sector entities to raise funds by selling bonds to external investors. By utilizing this approach, Highlands Ranch Water is able to minimize the impact of costs for infrastructure replacements on rate payers by avoiding the need to raise the funding necessary right away to complete the projects.

This debt issuance was one of the most successful debt issuances in Highlands Ranch Water’s history. We experienced strong tailwinds going into this issuance including market factors and Highlands Ranch Water’s strong credit rating. The district’s credit was reexamined prior to the issuance and was reaffirmed as AA+ by Fitch and AAA by Standard & Poor’s (S&P). These high markings are indicative of the leadership team’s focus on fiscal discipline and accountability.

As noted by S&P, “The 'AAA' rating reflects our view of the system's consistently strong liquidity and a strong, effective management team. Overall, we believe that management has mitigated most of the system's environmental, social, and governance risk by adopting and adhering to operating and financial policies and procedures. Although drought risk in the area is elevated, the district draws water from multiple sources and has a comprehensive response plan that includes drought rates and water conservation measures. We understand that management will continue considering rate increases to increase coverage to historic levels, and we do not believe that this will significantly increase affordability pressures or social risks, given the stable local incomes.”

Beyond Highlands Ranch Water’s credit rating, we were fortunate to encounter favorable market conditions going into the offering. The Federal Reserve held interest rates at their current levels, and supply was relatively low. Both factors drove investors to see the district’s debt issuance as an extremely safe and attractive investment. Investor excitement and confidence in Highlands Ranch Water placed the debt offering in the top ten issuances in the country for the week of Jan. 29.

This issuance, coupled with the district’s new infrastructure improvement fee, ensures the viability and state of good repair for our infrastructure. Together they help to lessen the impact on rate payers by offsetting future infrastructure debt needs and minimizing the impact of the current costs of infrastructure improvements.

Highlands Ranch Water’s board and staff remain committed to strong financial discipline and providing value from every dollar collected by residents. Together we will continue to address fiscal challenges that face our customers.