California water board plans bond sale as state braces for deluge of rain

California’s State Water Resources Control Board asked the California Infrastructure and Economic Development Bank to issue $650 million for a revolving fund so it can loan money to local governments for a wide range of projects.

IBank’s staff recommended approval of the resolution authorizing the issuance of the bonds at a Dec. 21 meeting. The board meets again on Jan. 25.

If the board approves, IBank would issue the bonds for the State Water Resources Control Board, an agency whose mission is to preserve, enhance and restore the quality of California’s water resources and drinking water.

The proposed bond sale comes after several weeks of above-average rainfall in the state, which water experts say may not be enough to prevent the state from experiencing its fifth year of drought.

State leaders over the past decade have focused on which water projects would do the most to alleviate the state’s ongoing water crunch. The recent rainfall has raised criticism again that the state has not spent enough on projects to store water.

Parts of the state remained under flash flood warnings Monday morning, after a weather phenomenon known as an atmospheric river dropped historic rain levels on San Francisco, Oakland and other areas.

A second atmospheric river was predicted to hit Wednesday and could worse than the New Year’s Eve deluge that resulted in flooding and mudslides, according to the National Weather Service.

“Widespread flooding and damaging winds expected from Wednesday afternoon through Thursday as a strong weather system and atmospheric river moves through the region. Subsequent weather systems will bring additional precipitation and periods of stronger winds this weekend and into at least early next week,” according to the National Weather Service.

It’s the third atmospheric river to hit the region since Dec. 26, the office said, adding that parts of the Russian River are now at particular flood risk. The NWS also said the storm’s high winds could inflict severe damage in areas where the soil is already saturated.

The bonds would be issued under the California Infrastructure and Economic Development Bank Clean Water and Drinking Water Revolving Fund.

The 2023 bonds would be special limited obligations of IBank and the State Water Board, payable solely from and secured by a pledge of state water board assets.

As of Oct. 3, the state water board had approved funding for 15 local water infrastructure projects totaling $308 million that would be funded by the bonds.

The bonds hold across-the-board triple AAA ratings from the three largest rating agencies.

The underwriter hasn’t been selected, nor has it been determined if the bonds will sell in a negotiated or competitive deal.

Hawkins, Delafield & Wood LLP is bond and disclosure counsel. HilltopSecurities Inc. is the municipal advisor.

The proceeds of the 2023 bonds will be deposited into the California Clean Water State Revolving Fund, enabling the state water board to provide low-cost financial assistance for eligible projects including, but not limited to, wastewater management systems, nonpoint source pollution management systems, and estuary conservation and management for clean water infrastructure improvement and to improve clean water quality throughout the state.