Standard & Poor's Ratings Services said it lowered its long-term rating and underlying rating to A-plus from AA-minus on Diablo Water District, Calif.'s water revenue certificates of participation.
The outlook is stable.
"We are lowering the rating based on audited fiscal year 2013 financial performance that was weaker than previously estimated by management, and projected continued reliance on one-time developer fees to produce at least sufficient total debt service coverage," said Standard & Poor's credit analyst Tim Tung.
The ratings reflect the district's: uneven parity-lien debt service coverage (DSC) during the past five fiscal years; reliance on one-time developer fees to generate at least sufficient parity-lien DSC during the past four fiscal years; consistently insufficient total DSC when including the district's share of annual debt service related to off-balance-sheet debt for a jointly owned water treatment plant; and declining liquidity position as district-held reserves are drawn down to pay debt service.
