Date: Jan. 29, 2003

Water district financing program
to save county taxpayers $50 million

SAN JOSE - The Santa Clara Valley Water District today issued its first short-term notes, signaling the start of a financing program that is expected to save county taxpayers about $50 million over the next 10 years through lower interest rates.

The $6 million worth of commercial paper issued today is the first of a planned sale of $100 million in commercial paper that will be used to finance the water utility capital improvement program. The water district's long-term water utility capital program has identified projects totaling $500 million.

"In the past, we have used long-term bonds to raise money from the capital markets. We are now diversifying our financing sources to take advantage of our strong credit ratings and the lower short-term interest rates," said Joseph R. Atmore, the district's finance manager. "Short-term interest costs average about two percent less than fixed rate debt."

The commercial paper program, which Atmore said has generated great interest among the major mutual funds, is rated A1+ and P1 by Standard & Poor's Corp. and Moody's Investors Service Inc., respectively.

The high ratings will ensure that the cost of borrowing for the district will remain among the lowest in the industry, thus reducing the district's overall cost, Atmore said.

Also known as "Just-in-Time" financing, Atmore said commercial paper is an attractive option for financially-strong organizations because they incur debt only when they need it.

Lehman Brothers, a global investment banking firm, is the water district's dealer for the program.

The Santa Clara Valley Water District manages Santa Clara County's wholesale drinking water resources, coordinates flood protection for its 1.7 million residents and provides stewardship for the county's 10 reservoirs and more than 700 miles of streams.