CORPUS CHRISTI, Tx — Moody's Ratings downgraded the City of Corpus Christi's credit rating on Thursday, citing the city's urgent need to secure more water and the narrow window in which to do so.
The credit rating agency lowered the city's General Obligation and sales tax revenue ratings from Aa2 to A1, and its utility rating from Aa3 to A1.
A credit rating works like a report card for a city's finances. When the rating goes down, it becomes more expensive for the city to borrow money for projects like fixing roads or building water infrastructure. Those higher costs typically get passed on to residents through increased utility bills or taxes.
Moody's pointed to the region's water shortage as the main concern. According to the rating agency's analysis, the city's own projections show water demand will exceed available supply by April 2027.
The rating agency noted that ongoing drought conditions along the Texas Gulf Coast and substantial industrial water consumption continue to threaten the long-term water supply. Moody's also observed that multiple city administrations have faced difficulties implementing strategies to expand the water supply, and the lack of significant rainfall to refill Lake Corpus Christi and Choke Canyon reservoirs has sped up the emergency timeline.
According to a city press release, "The rating agency specifically highlighted the potential for curtailment of industrial operations, a key component of the regional economy, should water supply solutions not be successfully implemented."
The city's two main reservoirs are currently 10.6% capacity, according to the city.
City Manager Peter Zanoni said the city is working aggressively to address the water shortage.
"While we acknowledge Moody's decision to downgrade our credit ratings, we want to assure our residents and investors that the City is fully committed to aggressively addressing the need for water supply diversification," Zanoni said in a statement released Friday. "The report clearly underscores the urgency of our ongoing efforts, including the pursuit of seawater desalination, Evangeline Aquifer groundwater access in Nueces and San Patricio Counties, and water reuse projects.”
However, Moody's noted in its analysis that the expected completion dates for these projects line up closely with when the city anticipates reaching a water emergency, leaving minimal room for construction or permitting delays.
