Water Revenue Credit Overview
Water Revenue Bonds Overview
Norfolk Water Revenue Bonds are secured by net revenues of the City’s Water System (the “System”). The System is the major regional provider of water for South Hampton Roads, serving a broad and diverse customer base, including both wholesale and retail customers.
The System provides reliable, high-quality water to Norfolk retail service customers and wholesale service to the United States Navy, the city of Virginia Beach, the city of Chesapeake, the city of Portsmouth and the Western Tidewater Water Authority. Population in the area served by the Water System totals approximately 1.1 million people.
The System owns and operates two water treatment plants. The System receives water from eight City-owned water supply reservoirs, two river intakes and four ground water wells owned by the City that are available in times of shortages. The System’s distribution facilities include (among others), 822 miles of water mains, storage tanks, and pumping stations.
Norfolk’s City Council adopts the System’s annual budget, establishes water rates and fee structures, and provides overall policy direction. Norfolk’s Department of Utilities operates and maintains the Water System and oversees the Water Utility Fund. The City has established and maintains a separate enterprise fund, the Water Utility Fund, to account for all of the financial activity related to providing water services. The Water Utility Fund is operated on a self-supporting basis. The City’s Department of Finance, which has the responsibility for all financial administration in the City, and the Department of Budget and Strategic Management, maintain oversight with strong control procedures and regular financial metric monitoring.
The City’s comprehensive financial policies, which were adopted by City Council, include policies governing the Water Utility Fund. These include, among others:
· The Water Utility Fund will be self-supporting.
· Must maintain total debt service coverage above 1.5 times its total annual debt service (gross of the Return on Investment (“ROI”) and Payment in Lieu of Taxes (“PILOT”) payment).
· Minimum of 240 days of operating expenses in unrestricted cash.
