After months of drought concerns, Corpus Christi officials finally have encouraging news about the city’s water supply.
Recent rainfall has pushed the capacity of lake Corpus Christi to over 20 percent. City leaders now expect that number to climb to nearly 30 percent by the end of the week as additional inflows reach the lake.
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“We just met with the National Weather Service who says you can expect it to get to almost 30% by the end of this week,” City Manager Peter Zanoni said. “Water is still coming in from the headwaters from these rain events last week.”
But while reservoir levels are rising, the city’s financial outlook on water projects has taken a significant hit.
On Monday, Fitch Ratings downgraded Corpus Christi’s utility debt three notches, lowering it from AA- to A-.
The downgrade means the city will face higher borrowing costs as it moves forward with major water supply projects.
Zanoni said rating agencies are evaluating more than just the city’s proposed seawater desalination project.
“The rating agencies are looking not just at seawater desalination, what that vote is tomorrow, they are looking more holistically at all of our water supply projects to include the reservoirs,” Zanoni said. “So as the reservoirs rebound that helps us.”
According to city officials, the downgrade will increase borrowing costs by approximately $3.75 million over 30 years for every $100 million in debt issued. That works out to roughly $125,000 per year in additional costs.
The city plans to issue about $500 million in bonds in July to fund several water projects. Based on current estimates, the lower credit rating could add nearly $20 million in additional interest costs over the life of those bonds.
City Councilwoman Carolyn Vaughn said council members plan to discuss the city’s water finances during Tuesday’s council meeting.
“Yes absolutely, I think we have to talk about that tomorrow,” Vaughn said. “The money that has been borrowed. We need to have clear direction on that tomorrow and I think those are the questions we’re going to ask.”
Vaughn also suggested that if state officials become involved in local water planning, financial support should accompany any intervention.
Meanwhile, Councilman Roland Barrera told 3NEWS that city leadership has failed to provide the certainty needed to maintain higher bond ratings, a situation he says will ultimately cost taxpayers throughout the Coastal Bend.
The downgrade comes at a critical time as Corpus Christi continues pursuing long-term solutions to secure its water future while also benefiting from the first significant reservoir recovery over the past couple of years.