The bond funding, combined with $52 million in district cash, will be used to refund a series of bonds and certificates of participation dating back to 2005. Fitch assigned an A+ rating to the latest round of bonds.

Fitch has also downgraded to A+ from AA- the rating of past revenue certificates of participation and refunding bonds totaling $175 million.

The ratings firm also downgraded to A+ from AA- $29.8 million in refunding revenue bonds of the San Luis & Delta Mendota Water Authority, of which Westlands is a member and the bond guarantor. The ratings outlook, though, was revised to stable from negative.

The downgrade, according to Fitch, reflects increased pressure on district operations over time, despite a settlement with the federal government to fix drainage problems in the district.

“… the prospect of ongoing escalation in district charges coupled with probable declines in irrigated acreage heightens concentration risk and affordability concerns,” according to Fitch.

Westlands continues to boast a high value of crop production in its service territory, totaling more than $2 billion last year, but supply problems have taken a toll, according to Fitch. The district covers 614,700 acres in Fresno and Kings counties, of which 565,000 is irrigable. However, the district estimates only 357,000 acres were irrigated this year.

Despite the challenges, Fitch said the district is improving its financial position, with cash balances of more than $100 million in fiscal 2016, up from $40 million in 2010.

The settlement with the U.S. Bureau of Reclamation struck a year ago provides for the receipt of a permanent water contract as well as relief of $295 million in debt obligation to the feds.

“However, Fitch is concerned with the additional responsibilities taken on by the district for drainage management and the related costs and liability that could be incurred,” according to a news release.

Within a year of the settlement, which awaits Congressional authorization, the district would be required to pay $185 million to compensate farmers in drainage affected parts of the district and permanently retire 100,000 acres of land. Of that, 7,500 acres remain to be obtained by the district.

The district would also be on the hook for a drainage solution.

“Measures identified by the district to manage drainage include conservation, source control, land retirement and collection and reuse of shallow groundwater,” according to Fitch. “Additional capital costs related to drainage management in the district have yet to be determined but could be substantial.”

On the whole, Fitch has sounded a cautiously optimistic outlook on Westlands ability to borrow and operate in the future.

“Water use in the state is generally divided into three sectors: 50% environmental, 40% agricultural and 10% urban. With increasing demands on water resources, particularly in situations like the recent California drought, there has and will likely continue to be increased competition over available resources. As the largest agricultural provider in the nation, the district is often heavily invested in discussions about water use in the state,” according to Fitch.