District in Stable Financial Condition; Gets Clean Audit

May 25, 2016  

Once again an independent auditor has given the Water District an unqualified clean opinion and indicated the District is financially sound.

The annual audit for Fiscal Year 2015 was presented to the Board of Directors by Allan Johnston, CPA, who conducted the detailed audit of financial statements.

The audit confirms management's assessment that the District is in excellent financial condition. The District maintains an unrestricted fund balance that will be used for future projects and any large unexpected expense or to deal with reduced water sales in the wake of a severe storm.

Total revenue from water sales in 2015 was $20.17 million compared to $19.7 million in 2014. In 2014, the District increased wholesale rates to municipal water providers by 25 cents to $2.89 per 1,000 gallons due to a need for additional bond debt service coverage and to fund a pair of new sedimentation basins. 

The City of Corpus Christi moved forward with the $160 million Mary Rhodes Pipeline Phase 2 project and increased raw water rates to regional customers by 18 cents per 1,000 gallons.  The District passed this increase through to municipal water providers in 2015 resulting in a wholesale rate of $3.07 per 1,000 gallons for drinking water.  The District projects only modest rate increases over the next five years.

Above normal rainfall amounts over the service area in 2015 resulted in a slight reduction in total water sales from 7.7 billion gallons in 2014 to 7.5 billion gallons in 2015.  Of the total 49% was drinking water, 33% was industrial treated water and 18% was untreated raw water sold to industry.  The District serves large industrial process plants including voestalpine Texas, Sherwin Alumina, Occidental Chemical Corp., Ingleside Ethylene, Chemours Co. (formerly Dupont), Air Liquide, Ingleside Cogeneration, Gregory Power Partners and TPCO America.

At the end of 2015 the District had long-term bond debt of $36.2 million including revenue bonds issued in 1998, 2009 and 2015 to fund major construction projects. $19 million in bond debt was refinanced in 2015 at a reduced interest rate. Bond debt is paid off through future revenue from water sales.

At the end of 2015 the District had $9.6 million in reserves, down from $10.9 million at the end of 2014.

The District has several construction projects underway to serve increased demand from industrial customers.  Those projects are being paid for by industrial customers.  It is anticipated that any District improvements necessary to meet other industrial growth will be financed by future industrial customers.

The Water District is a "cost of service" entity, meaning that customers are charged water rates based on the total cost of operations, water purchases and debt service.
The District purchases raw water from the Nueces River and Lake Texana through contracts with the City of Corpus Christi which manages the regional surface water supply system.