Rainfall postpones Corpus Christi water emergency threat into next year

A water supply emergency for Corpus Christi, Texas, is now projected in September 2027, nine months later than the previous projection due to recent rainfall, city officials announced on Tuesday.

In May, the drought-stricken city moved the potential onset of a Level 1 emergency, indicating its water system is 180 days from supply not meeting demand and requiring curtailment in use, to December from September.

While the latest delay was hailed as good news by the city council, Nick Winkelmann, Corpus Christi Water's chief operating officer, cautioned the hunt for water needs to continue.

"This is not a point in time where we are to let up or to get comfortable," he said. "We must continue to execute our plan to diversify the water supply."

To stave off the crisis, Corpus Christi has $1 billion of groundwater, wastewater reuse, and other projects aimed at producing 66 million gallons of water daily underway. Long-term projects being explored involve seawater desalination, although the future of an Inner Harbor desalination plant remains uncertain after the city council earlier this month postponed until September consideration of an initial contract for the project.

Corpus Christi Water, a city agency, is the primary water supplier for a seven-county region, which is experiencing stage three drought conditions that triggered water-use restrictions.

The looming water crisis has weighed on the bond ratings of the city of 317,000, which have been hit with downgrades and negative outlooks since late last year. Still, Corpus Christi reported "strong interest from investors" for last week's $115 million general obligation bond sale that resulted in a 4.15% interest rate after a repricing lowered yields. The bonds were rated AA with negative outlooks by S&P Global Ratings and Fitch Ratings.

In a report on Tuesday, S&P said credit pressure is building across Texas' Coastal Bend region where Corpus Christi is located, due to dwindling water supplies.

"We believe drought and subsequent water scarcity will continue to have both near- and long-term impacts on utility and local government credit quality in the region," the report said "Where risks are unaddressed, issuers in the region could wrestle with dampening economic growth, financial performance, reserves and liquidity, creating capital pressures, and increasing debt and liabilities."