Home Electromagnetic Agua SUD may struggle to repay debt in August – Progress Times

Agua SUD may struggle to repay debt in August – Progress Times

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Facing financial problems, the Agua Special Utility District may be forced to withdraw money from a reserve fund to cover bond payments in August.

Rick Perez — executive vice president of Rio Bank who sits on the board of Agua SUD — asked chief executive Roberto J. Salinas about the situation during a meeting on Monday.

“Are we on track to pay our bills? Perez asked. “Or are we going to have problems?

Salinas said Agua SUD had enough money to cover its six-figure debt payments in April and May. In August, however, Agua SUD is expected to make additional debt payments which amount to nearly $2.1 million.

“It is quite possible that we will need to use our bond reserve fund to meet these payment obligations,” said attorney Matthew R. Beatty of the Austin-based law firm Beatty Navarre Strama, which represents the utility district.

Beatty blamed Performance Services Inc., which convinced Agua SUD to install energy-efficient LED lights and electromagnetic water meters, for the lack of money.

Performance Services Inc. promised that the $11.6 million project would be amortized.

LED lights would reduce Agua SUD’s electricity bill. The real money, however, would come from electromagnetic water meters.

According to the company, modern electromagnetic counters are more accurate than older mechanical counters. He claimed that electromagnetic meters would increase revenue by sending customers more accurate water bills.

After installing the LED lights and water meters, Agua SUD determined that the project had not really paid for itself and sued Performance Services Inc.

“As we have always maintained, PSI strongly believes in the performance contract process and fully supports all of our projects,” the company said in a statement released last month. “We look forward to defending this project in court and rebutting these allegations.”

Agua SUD, meanwhile, is expected to make $1.1 million in lease payments for the Performance Services Inc. project in 2022.

Half of the money is due on May 1.

In addition to payments from Performance Services Inc., the Utilities District owes Government Capital Corporation approximately $101,000 to cover lease payments for the Agua SUD vehicles.

“There’s no doubt that we’re in an extremely difficult financial situation,” Beatty said. “And from what we’ve seen, this financial situation is the result of a multitude of decisions, but $1.1 million to be paid to Bank of America Leasing for the PSI project is a significant part of that.”

To cover the August debt payments, Agua SUD may withdraw money from bond reserve funds. A permanent solution may require raising rates or finding ways to reduce costs.

Perez suggested that Agua SUD start informing creditors of the possibility of financial problems.

“Because, like, if the payment is due tomorrow — if they don’t get the check, they’re going to ask questions,” Perez said.