Two major credit agencies have reaffirmed strong credit ratings and a stable financial outlook for the Metropolitan Water Reclamation District of Greater Chicago (MWRD).

Fitch Ratings and S&P Global Ratings assigned the MWRD with AAA and AA+ ratings respectively. The ratings were announced as the MWRD plans to issue approximately $500 million in general obligation bonds to support capital improvement projects. Tasked with transforming wastewater into clean water for 5.19 million people every day in Chicago and 128 surrounding municipalities, protecting area waterways and Lake Michigan, and managing stormwater to mitigate flooding for Cook County, the MWRD relies on strong finances to fulfill its many essential roles.

“We prioritize fiscal responsibility to our taxpayers, and these strong credit ratings affirm our unwavering commitment to sound financial stewardship. This enables us to effectively serve our community while safeguarding our water environment,” said MWRD President Kari K. Steele. “We have been able to maintain these ratings because we are supported by a diverse tax base, an ample general fund balance, strong reserves, prudent management of our finances and proactive approaches to meet our pension obligations.”

The MWRD remains committed to long-term fiscal management by providing advance funding to its MWRD Retirement Fund. For the fourth straight year, the MWRD plans to invest its reserves toward pension obligations. The Executive Director's Budget Recommendations for 2025 includes an anticipated $30 million in reserves to maintain the Retirement Fund. 

Fitch credited the MWRD’s strong financial profile to a “very strong revenue defensibility” and “very strong operating risk profile.” Except for the MWRD Capital Improvements Bond Fund, all MWRD funds derive revenues primarily from a stable revenue source. Approximately 59 percent of the 2024 appropriation was supported by property taxes. Other revenue sources include more than $132.5 million through land rentals, user charge, sewer permit fees, connection impact fees, investment income, and grants and reimbursements. Fitch credited the MWRD’s strong tax base for this defensibility. 

“Fitch considers the estimated residential [cost], based on median home value, affordable for around 92 percent of the service area population. The favorable service area is characterized by midrange income levels and a moderate unemployment rate relative to the nation,” the Fitch report stated.

S&P Global Ratings credited the MWRD’s five-year Strategic Plan for its comprehensive approach to address climate, regulatory and affordability considerations. The report also recognized the MWRD’s Climate Action Plan outlining a plan to mitigate carbon emissions while also mitigating and adapting to the effects of climate change that threaten to disrupt water systems and cause flooding.

“We believe the [MWRD’s] capital plans and mission to improve water quality protect properties from flood damage, and the sustainability and resiliency plans, as they are implemented, set MWRD on the path to mitigate elevated environmental risk,” the S&P report stated.

Additionally, S&P provided a second-party opinion, assessing that the MWRD’s bonds are in alignment with Green Bond Principles. The second-party opinion cited the MWRD’s ability to provide significant environmental and human health benefits and invest in climate resilient infrastructure. “The issuer plays a critical role in communities as a protector of public health, and MWRD actively engages the community,” the report stated.

The MWRD began to issue Green Bonds in 2014 to allow investors to invest directly in bonds which specifically or partially fund environmentally beneficial capital projects undertaken by the agency. Through 2023, the MWRD had issued nearly $500 million in Green Bonds to fund a variety of sustainability-focused projects, including streambank stabilization efforts, construction of a phosphorus recovery facility, and a capital improvements project to improve energy efficiency and eliminate air pollution at various facilities. Green Bonds are secured by the full faith and credit of the MWRD, and therefore, holders of the bonds do not assume any specific project-related risk.

“We thank the credit agencies for this vote of confidence and our taxpayers who every day instill the confidence in us to protect the region’s health and environment,” said MWRD Chairman of Finance Marcelino Garcia. “With the strong credit rating, we will continue to make the long-term investments that make our communities livable and a proud place to call home thanks to a thriving and healthy water environment.”

The MWRD maintains seven water reclamation plants that transform nearly 500 billion gallons of water each year, controls 76.1 miles of navigable waterways, owns and operates 23 pumping stations, 33 regional stormwater detention reservoirs, 110 miles of deep tunnel and three massive, combined sewer reservoirs.