DALLAS – The Denver Board of Water Commissioners, Colorado's oldest and largest water utility, will take bids on $170 million of triple-A-rated revenue bonds in a competitive sale Tuesday.
The two series up for grabs include $100 million that will finance projects and $70 million of Series B refunding bonds issued for interest-rate savings.
Series A, structured to provide level debt service, will reach final maturity on Sept. 15, 2045.
Series B, maturing in 2037 will refund 2007A bonds, with present value savings expected to be about 13%, according to Denver Water Treasurer Usha Sharma.
George K. Baum & Co. is Denver Water's financial advisor. The water utility is a separate entity from the City and County of Denver, with no revenues in common.
With this issue, the board will have about $467 million of outstanding debt. All of the Denver Water's long-term debt is fixed-rate, with about 37% to be repaid in 10 years. Maximum annual debt service of $41.6 million comes in fiscal year 2017.
The water utility, created in 1918 to buy out a private company for $14 million, serves about 1.2 million people, or roughly 25% of Colorado's population.
The utility boasts some of the strongest water rights in the Southwest region, according to Moody's Investors Service, which rates the bonds Aaa with a stable outlook.
Its raw water comes from reservoirs supplied by precipitation and snow pack runoff in the Rocky Mountains, through the South Platte River, Moffat System, and Blue River/Roberts Tunnel. Denver Water has 12 reservoirs in the Rocky Mountains that use a system of tunnels to cross the Continental Divide to the city near the base of the foothills.
The utility has aggressively promoted conservation amid a growing population.
"Recent average daily consumption levels remained low in comparison to fiscal 2006, which were roughly 20% higher," Moody's analyst John Nichols wrote.
Moody's raised its rating to Aaa from Aa1 in 2014, joining Standard & Poor's, which has held the utility at AAA since 2009.
Over the next five years, capital improvement plan calls for $1.2 billion of projects, of which $845.5 million is for system expansion. It is anticipated that 70%, or roughly $600 million, of the expansion capital projects will be financed with bond proceeds.
Officials anticipate issuing more bonds in annual amounts of about $150 million through fiscal year 2020, according to Moody's.