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$14.0 <br />c <br />0 <br />$12.0 <br />$10.0 <br />$8.0 <br />$6.0 <br />$4.0 <br />$2.0 <br />$0.0 <br />Figure 5. Rate Study CIP Expenses by Funding Source, FY 2026 to FY 2031 <br />FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 <br />Rate Funded <br />Debt Service and Coverage Ratios <br />The water utility has three outstanding debt issuances that are currently being paid by rates: the 2024 <br />Series Revenue bond, the DWSRF Well 32 Nitrate treatment Loan, and the CWSRF AMI project loan. <br />Total annual debt payments are around $3.8 million a year. Table 27 shows the water utility's annual <br />debt payments used in this study. <br />Table 27. Rate Study Debt Service Expenses, FY 2026 to FY 20311 <br />Principal $1,059,795 $1,566,470 $1,618,141 $1,674,886 $1,736,705 $1,798,599 <br />Interest $2,212,940 $2,277,083 $2,222,412 $2,165,418 $2,105,849 $2,043,455 <br />Total Debt Service $3,272,735 $3,843,554 $3,840,554 $3,840,304 $3,842,554 $3,842,054 <br />Debt issued by the water utility also includes a requirement for revenues to exceed operating expenses. <br />The City's debt service coverage requirement under its current covenants is 125 percent, or 1.25 times <br />the operating expenses. Maintaining a healthy debt coverage ratio will help the City keep a good credit <br />rating and will allow the City to service issue debt at lower rates. Table 28 shows the current debt service <br />coverage calculation based on the revenues and expenses under current rates. <br />9 Debt service payment schedules taken from original loan agreements provided by City staff <br />City of Santa Ana - 2026 Water and Sewer Rate Study <br />20 <br />