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3/10/26, 9:55 AM Santa Ana Financing Authority, CA Water Revenue B I S&P Global Ratings <br />ENGLEWOOD (S&P Global RatingsbOct. 31, 2025--S&P Global Ratings <br />EN Q Support <br />��aFlOWe rating actions listed abouearch <br />Agti 4§ view, Santa Ana water utility has greater physical risks in our credit <br />consideration, which the system is managing through drought management, <br />conservation, and PFAS mitigation. Contamination from PFAS has been <br />found throughout the state, including in several Southern California counties. <br />The city has entered into an agreement with OCWD pursuant to which <br />OCWD will design and construct PFAS treatment facilities at its own expense <br />at all affected wells. To address these changing contaminant levels, the city in <br />collaboration with OCWD is undertaking water treatment enhancement <br />projects. During the construction period, the city faces increased imported <br />water purchases from MWD, which are significantly more costly than the <br />groundwater alternative. The rate structure allows these costs to be passed <br />through, which we view favorably. The quality of the drinking water provided <br />by the system meets all drinking water standards set to protect public health. <br />The city has a comprehensive water conservation program that is ongoing, <br />even during periods of normal water supply. The city monitors water sales <br />and expenditures monthly and relies on customers to voluntarily conserve <br />water in conjunction with the city's current master plan, future supply <br />projections, and various drought related scenarios to adjust as necessary. We <br />believe by adopting and adhering to the utility's master plan, the city is making <br />proactive strides to lessen its exposure to the region's current climate, supply, <br />contamination, and drought -related risks. <br />In addition to physical risk, rising water costs could result in elevated <br />affordability risk although we are not aware of material customer resistance to <br />the current rate plans. Management continues to work with its community to <br />address affordability risks and offers a subsidized commodity rate to low- <br />income customers. The utility's governance risks, related to risk management, <br />oversight, and culture, are neutral and are highlighted by its credit supportive <br />rate -setting practices and comprehensive management policies. The utility <br />https://www.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3470161 2/7 <br />