# Covenant and capital plan testing

URL: https://municorn.us/build/covenant-and-capital-plan-testing/
Updated: 2026-09-08
Tags: build, credit

> **Cite as:** Municorn.us, "Covenant and capital plan testing", Municorn water loss index, https://municorn.us/build/covenant-and-capital-plan-testing/ (source filings retrieved 2026-09-08).
> **Licence:** CC BY 4.0 — https://creativecommons.org/licenses/by/4.0/ — reuse and redistribution are permitted with attribution to Municorn.us and a link to this URL.
> **Caveat that must travel with these figures:** "Water loss" is at least three different quantities depending on the jurisdiction, and nothing here supports a comparison between states.

A capital plan run against a rate covenant and its coverage requirement, from the audited statements, so the year coverage breaks is a date rather than a worry.

## What it is

The revenue requirement, existing and proposed debt service, and the coverage ratio each year across the plan horizon, tested against the covenant the bond documents actually contain rather than against a rule of thumb.

## What you hand us

The audited statements, the capital improvement plan, the existing debt schedule and the covenant language from the official statement or the bond ordinance. The covenant language matters — additional bonds tests differ, and a model built against the wrong one answers a question nobody asked.

## What you get back

A model with the assumptions on one tab, coverage by year, and a memo naming which year the coverage line moves and which assumption moves it. Re-runnable when the plan or the actuals change.

## What it is built from

Your own documents. Where the analysis also needs filed operating data — a loss figure, a peer comparison — that comes from the corpus and carries its own citation.

## What it does not do

It does not advise on an issuance. Sizing, timing and structuring a bond sale is a regulated activity and it is not this.

It does not opine on the credit. It runs your plan against your covenant and reports the arithmetic; whether that is an acceptable margin is a judgment we do not make for you.

It does not forecast demand. Consumption and growth assumptions are inputs you supply, and the memo names them, because a coverage year that depends on an assumed growth rate is a fact about the assumption.

_Municorn.us · https://municorn.us/build/covenant-and-capital-plan-testing/ · CC BY 4.0 https://creativecommons.org/licenses/by/4.0/ · source filings retrieved 2026-09-08_

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