Bonds

The Virgin Islands Superior Court ruled the territory’s Senate has the power to alter the Water and Power Authority’s board of directors, a decision one municipal bond analyst called a credit positive.

The court upheld a Senate bill requiring board members to have greater expertise in energy, technology, economics, and finance; reducing the number of members to seven from nine; and deleting the requirement three of them be members of the governor’s cabinet.

Virgin Islands Gov. Albert Bryan Jr. sued in August 2021 for a temporary and permanent injunction against the bill, arguing it impinged on his prerogative to appoint those he wished to the board.

“Clearly this is a first step in reforming the operations at WAPA,” Muni Credit News Publisher Joseph Krist said. “It is clear that the existing structure along with the politics was not going to solve WAPA’s problems. If the new board is open to change and not tied to the status quo, there is a huge opportunity to affect real improvement to the power system and to the economy. It should be credit positive.”

WAPA has about $207 million in bonds, $341 million in long-term debt, and $1.098 billion in total liabilities outstanding. The bonds are rated CC by Fitch Ratings.

Noting that the Legislature created the WAPA governing board, Janelle Sarauw, who as senator sponsored the bill, said, “As such, we possess the authority to amend or make changes to the utility as necessary for the public good.”

Calling WAPA “a very technical entity,” she said, board members “should be equipped with skills to make sound decisions.”

That was not the case, Sarauw said. The “board filled with political cronies and cabinet members. The law changes that.”

Sen. Kenneth Gittens said the court order “represented a victory on behalf of the people of the Virgin Islands.”

Virgin Islands Superior Court Judge Renée Gumbs Carty lifted a temporary stay on enforcement of the law and denied Bryan’s request for a permanent injunction earlier this month.

WAPA and the governor did not immediately respond to a request for comment and WAPA board members could not be reached.

In February Moody’s Investors Service withdrew its Caa2 rating on WAPA’s senior electric bonds for lack of information.

In explaining the decision to The Bond Buyer, Moody’s Senior Credit Officer Kathrin Heitmann said, “WAPA has a history of filing audited financial statements with substantial delay. For example, the audit for the fiscal year ending June 30, 2020, was filed with a two-year delay. We typically expect audits to be filed within 12 months after fiscal-year end for rated government entities.”

The fiscal 2021 audit is still not available and is not expected for another several months, Heitmann said. The latest unaudited financial information, available as of March 8, was for August.

Bryan has said fixing WAPA’s many problems is his number one priority .

Articles You May Like

Kentucky exports hit record $40B
Recovery costs for Maui fire are putting Hawaii’s budget at risk
Israel has ‘basically signed on’ to a ceasefire, US official says
Utah bill doubling bonding authority for hospital project passes
China’s Country Garden gets liquidation petition from creditor