ADEQUATE FINANCIAL PERFORMANCE: SJWD's financial performance has begun to recover after a period of weakness during California's recent drought.
Fitch judges SJWD to have the lower credit quality of the two obligors.
OBLIGOR CREDIT QUALITY: The rating on the San Juan and Citrus Heights Project revenue certificates of participation is sensitive to changes in the credit quality of either San Juan Water District (SJWD) or Citrus Heights Water District, but particularly the credit quality of the SJWD.
SAN JUAN FINANCIAL PERFORMANCE: The rating could come under downward pressure if SJWD's liquidity continues to deteriorate or if recent revenue gains are not sustained.
The SJWD service area has solid economic fundamentals.
SJWD's retail service area is centered on the affluent community of Granite Bay.
The SJWD board of directors has strong control over rates and has adjusted rates significantly to offset recent financial stresses.
SJWD's supply position is generally strong with high-priority water rights significantly in excess of demand on the American River, which feeds Folsom Lake, California's ninth largest reservoir, but the current drought has highlighted the risks of the agency's surface water dependence.
SJWD's direct debt burden is quite low at $43.2 million, or $800 per customer.