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Government's Unpaid Bills Push WAPA Revenues Down

Feb. 23, 2007 — While the V.I. Water and Power Authority's cash reserves are increasing, projected revenues are still on the decline due to an $18 million government debt, WAPA officials said Friday.
On the electric side, outstanding government receivables total approximately $12.7 million, officials said during a governing-board meeting. Delinquent agencies include Juan Luis Hospital on St. Croix, which owes nearly $4 million; the Department of Public Works, which owes $1.4 million; and the Department of Education, which owes $1.6 million.
The Department of Finance also owes the authority $3.8 million for street-lighting repairs.
During Friday's meeting, WAPA Chief Financial Officer Nellon Bowry explained that, by law, two percent of the property taxes paid on each island go to WAPA annually for street-light repair and maintenance. However, the Department of Finance, in charge of turning over the money, has made only one payment in the past 18 months, Bowry said.
Governing board member Roy Anduze said the fact that the government has "not sent out property-tax bills for the past two years" has exacerbated the situation.
On the water side, one of the authority's largest debtors is the V.I. Housing Authority (VIHA), which has an outstanding account balance of approximately $2 million. WAPA learned of the situation after VIHA Executive Administrator Michael Hollis asked the utility to help correct a water-leak problem occurring in some of the local housing communities, Bowry said.
Bowry circulated a letter written to Hollis on Thursday by WAPA Executive Director Alberto Bruno-Vega. In the letter, Bruno-Vega said the utility would not be able to offer its assistance, and suggested that the agency hire a leak-detection firm.
"We are surprised, however, that under federal oversight, the VIHA has begun to be delinquent with their water accounts," Bruno-Vega writes. "As of Jan. 23, 2007, VIHA has an outstanding balance of $2,008,720. Failure to pay your outstanding balances may result in the disconnection of water services."
The letter raised the ire of several governing board members, who described the situation as unfair.
"It's ridiculous that the federal government can be indebted to WAPA and the local government while the small people are getting cut off," said member Claude Molloy. "The Housing Authority is supposed to be excessively efficient, but this doesn't show efficiency to me."
The U.S. Department of Housing and Urban Development assumed control of VIHA, once a locally managed government entity, in August 2003.
At least five other V.I. government agencies, including the Department of Education and Juan Luis Hospital, have added to the water system's debt, which now totals $5.6 million, Bowry said.
Board members decided to set up a committee to look into the outstanding government receivables. According to Molloy, the committee will work on addressing the problem with members of the new administration.
"We have to let them know that WAPA's problem is the government's problem," he said.
The utility's deferred fuel costs, which total almost $15.5 million on the electric side, also negatively impacts WAPA's financial position, said Maurice Sebastien, assistant chief financial officer. That figure represents approximately seven percent of WAPA's budgeted revenues.
"While we have been able to make a good reduction in the balance since June of 2005, the $15 million figure is still high," he said. "But the continued reduction of that balance will certainly assist our cash flow."
Deferred costs on the water side total $3.7 million, which represents nine percent of WAPA's budgeted revenues, Sebastien added.
In other news, the governing board voted to reprogram $243,000 from the authority's fiscal year 2007 budget to cover costs associated with upgrading a cable line on the waterfront. It also voted to extend a three-year contract with Ashland Specialty Chemical, an entity hired to provide chemicals and additives for plant operations.
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