KBRA assigns a long-term rating of AAA with a Stable Outlook to the Las Vegas Valley Water District, Nevada (the District) General Obligation (Limited Tax) (Additionally Secured by SNWA Pledged Revenues) Water Improvement Bonds, Series 2026C, and General Obligation (Limited Tax) (Additionally Secured by Pledged Revenues) Water Refunding Bonds, Series 2026D. Concurrently, KBRA assigns the AAA rating and Stable Outlook to the District’s outstanding parity limited tax general obligation debt.

Proceeds of the Series 2026C Bonds will finance projects in the Southern Nevada Water Authority’s (SNWA) (Authority Project Bonds) capital improvement plan, including upgrades, repairs, construction, or acquisition of pumping stations, reservoirs and wells, water pipelines, and other wholesale distribution system facilities, and to pay the costs of issuance. The Series 2026D Bonds will refund certain outstanding District obligations (District Project Bonds).

Authority Project Bonds and District Project Bonds (the Bonds) are direct and general obligations (G.O.) of the District, to which the full faith and credit of the District is pledged, and are payable from any legally available funds. If necessary, and subject to State of Nevada (the State) constitutional and statutory limitations on the aggregate amount of ad valorem property taxes levied within the District, the District will levy an ad valorem property tax on all taxable property within its jurisdictional boundaries to pay debt service on the Bonds.

KBRA notes the District has never levied an ad valorem property tax for the repayment of G.O. debt. Instead, debt service has been paid from the operations of the underlying utilities. Debt service on Authority Project Bonds is paid from, and secured by, a lien on the Pledged Revenues of the Authority received by the District under the Repayment Agreement. The District Project Bonds are secured by, and repaid from, a lien on the Net Pledged Revenues of the District.

Given the District’s G.O. pledge is the ultimate source of repayment for the Bonds, KBRA’s rating on all District G.O. debt is based on its application of the U.S. Local Government General Obligation Methodology. Furthermore, KBRA does not make a rating distinction between debt issued directly by the District or on behalf of the Authority.

The District is a retail provider of potable water to the City of Las Vegas and much of the unincorporated area of Clark County with the exceptions of the Cities of Boulder City, Henderson, Mesquite, and North Las Vegas, as well as Nellis Air Force Base, each of which operates its own retail water distribution utility. These four cities along with, the Big Bend Water District, the Clark County Water Reclamation District, and the District (together the Members) formed the Authority to be the wholesale distributor of treated water from regional raw water supplies, mainly Lake Mead on the Colorado River created by Hoover Dam.

Key Credit Considerations

The rating was assigned because of the following key credit considerations:

Credit Positives

  • A large and diverse economic and property tax base provides significant resources for District operations

  • Long-tenured and experienced management team utilizes sophisticated long-term modeling that results in consistently strong financial performance with robust coverage of annual debt service and significant liquid reserves.

  • District and related Authority have been in the forefront of water conservation efforts, reducing annual water usage within its service area while also banking water resources likely sufficient to meet the region’s needs over the next 10 to 15 years.

Credit Challenges

  • While increasingly diversified, the regional economy remains sensitive to fluctuations in the tourism and gaming industries, especially during national economic recessions.

  • Location in the arid Southwestern United States and resultant long-term constraints in the Colorado River Basin that encompasses seven U.S. states, including Nevada, and Mexico which may lead to additional federal regulations and limits on water allocations.

Rating Sensitivities

For Upgrade:

  • Not applicable.

For Downgrade:

  • A severe economic recession that drives a meaningful and lasting downturn in the tourism and gaming industries that disrupts the economic underpinnings of the Las Vegas metropolitan area.

  • Potential for increasingly stringent limitations on water resources in the Colorado River basin that constrict economic activity within the Las Vegas metropolitan area and reduce the revenue generating ability of the District.

To access ratings and relevant documents, click here.

Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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