Bond Jitters Spread after Westlands Water District Investigation

Article by Geoffrey MohanMarch 10, 2016

Westlands Water District canals in California's Central Valley, photographed in 2009. (Russel A. Daniels / Associated Press)

Jitters over a federal investigation of Westlands Water District bled over into the proposed delta tunnel project Thursday as a bond rating agency placed a negative watch on a $29.8-million bond helping to fund the controversial water diversion plan.

Fitch Ratings took that cautious step back because Westlands is the sole guarantor of a 2013 bond issued by the San Luis & Delta-Mendota Water Authority, which operates significant portions of the federal water project in the western San Joaquin Valley.

Westlands is one of 29 members of that authority, which controls more than 3 million acre-feet of water in the western San Joaquin Valley and in San Benito and Santa Clara counties.

“They were issued with 100% Westlands backing,” Fitch analyst Teri Wenck said of the water authority bonds. The rating firm has made clear that any change in the financial evaluation of Westlands would affect the rating of bonds issued by the water authority, she added.