By The Star Staff
The Financial Oversight and Management Board has approved a $61.96 million debt transaction that will allow the Puerto Rico Aqueduct and Sewer Authority (PRASA) to find sourcing for capital projects.
The debt transaction involves the Puerto Rico Department of Health and the Puerto Rico Infrastructure Financing Authority (PRIFA).
The information is contained in a March 29 letter sent by Oversight Board Executive Director Robert Mujica to Fiscal Agency and Financial Advisory Authority (AAFAF by its Spanish initials) Executive Director Omar Marrero Díaz.
The oversight board’s letter is in response to a letter dated March 20 from the AAFAF, and other supporting documentation, requesting approval for the debt transaction. Under the terms, the island Health Department and the PRIFA would authorize PRASA to enter into a $61.96 million financial assistance agreement using funds from the drinking water state revolving fund program. The agreement’s structure breaks down the funding as follows: $54.48 million as an interest-bearing (1.00%) senior loan with a 30-year repayment period; and $7.48 million as a non-interest bearing (0.00%) principal forgiveness loan. The agreement enables cost-effective capital investments in PRASA’s raw water intake and water treatment facilities, which are critical for PRASA to provide safe and clean water services, the letter notes.
“Therefore, the agreement is consistent with the 2022 certified fiscal plan for PRASA (the CFP), as it mitigates PRASA’s need to use its own operating revenues to comply with the capital investment projections,” Mujica said. “However, as explained in the [CFP], PRASA must continue deploying capital investments while aiming to maximize the multiple sources of available funding, including assigned and obligated federal funding. Particularly, PRASA should prioritize the capital deployment efforts of the federal funds awarded for recovery and reconstruction projects stemming from the hurricanes of 2017.”
The oversight board recently certified a compliant $1.1 billion budget for PRASA for fiscal year (FY) 2023. Despite PRASA’s efforts to stabilize or reduce operating costs, inflation and other macroeconomic factors are expected to result in higher operating expenditures. PRASA’s payroll is also projected to increase as it implements measures designed to retain and expand its workforce with a focus on critical workers, such as plant operators and electromechanics. Those employee retention initiatives are expected to increase payroll by $14 million in FY 2023.