The Regional Wastewater Advisory Committee voted Dec. 18 to forward a draft Board of Supervisors policy that would formalize how the county manages wastewater cash reserves and when those reserves may be used.

In a presentation to the committee, county finance staff described the policy as a tool to codify practices around maintaining emergency liquidity, operating reserves and debt‑service reserves and to spell out a remediation plan if reserves are used. Mr. Quang presented the draft and answered members’ questions before the committee recommended it be sent to the Board of Supervisors for consideration.

Committee discussion focused in part on whether banked effluent credits — the county’s accumulated underground storage/recharge credits — should be treated as reserve assets. A member noted that effluent credits are not immediately convertible to cash and would require a sale and ADWR (Arizona Department of Water Resources) approvals before yielding liquidity. Staff responded that the draft policy is intentionally centered on cash/liquidity metrics used by rating agencies, while acknowledging the need for future work to clarify how non‑liquid assets such as effluent credits should be recognized and managed.

The reserve policy recommendation passed by voice vote after committee members debated the distinction between liquid cash and non‑cash assets.

Capital‑markets advisers from RBC Capital Markets then briefed the committee on how rating agencies view utilities’ finances. The presentation described four interlocking ‘pillars’ that support favorable credit treatment: setting rates and cash reserves at levels rating agencies expect; maintaining an appropriate debt‑service coverage ratio (the committee’s planning target is 1.3x); aligning with county pay‑as‑you‑go policies that shorten amortization; and using excess cash to defease or prepay debt when advantageous. Presenters said Pima County’s wastewater utility currently carries strong credit signals (S&P double‑A; Fitch double‑A+ in recent agency reports) and that maintaining liquidity and coverage supports lower interest costs and more affordable rates for customers.

Presenters and committee members also discussed common rating‑agency metrics — days cash on hand and median coverage levels used for peer comparisons — and whether such medians fairly reflect large, urban systems like Pima County’s. County advisors said rating agencies use medians as one data point but perform a deeper, facility‑level analysis and can account for the utility’s unique structure.

What’s next: the committee’s recommendation will be transmitted to the Board of Supervisors. Staff said additional work on effluent‑credit valuation, and whether those credits should be treated as part of a reserves framework, will be scheduled for a future meeting when the county’s annual effluent utilization report is complete.