Thursday, October 17, 2013

Water = Money

Only of interest to the municipal finance wonks out there, but there has been a positive development in the long saga of the Pittsburgh Water and Sewer Authority's variable rate bond imbroglio. If you don't know the details, you don't want me to even try and explain.  But the backup letter of credit for the bond, credit that JP Morgan once left the PWSA hanging without, is to be replaced.  PNC was providing a letter of credit, but it appears that the Royal Bank of Canada will be the new credit provider, with a slightly better credit rating for good measure. 

Still, some may have noted the PWSA is being forced to raise rates anew to cover capital investment required in the near future.  I still wish someone would go and at least do a psuedo audit of their last big borrowing (~$419 million in 2008) to determine how much of that $$ ever made it into capital investments, and how much just went into financing, and refinancing, costs resulting from JP Morgan leaving the PWSA hanging after setting up the whole deal.

But good news in the short term.  I pointed out earlier in the year that some sort of refinancing had to happen, and it looks to have worked out for the better. Don't want anyone to say I ignore the good news when it comes. 


Anonymous Rich E said...

"I still wish someone would go and at least do a psuedo audit of their last big borrowing..." - isn't this what Michael Lamb's office is supposed to be doing? We need some reform of our authorities!

Thursday, October 17, 2013 9:30:00 AM  
Blogger Shawn Carter said...


Municipal Authorities are instrumentalities of the Commonwealth, bodies corporate and politic, legally independent of their parent municipalities, largely for the purpose of keeping certain liabilities off of said parent municipality's books, and arms' length for tax purposes.

The Controller, who can audit City departments and operations at will, as per the City's Home Rule Charter, can only audit an Authority if the Authority is so inclined to permit it.

You would need to pose that question to the person with the power to appoint the Boards of Directors.

Thursday, October 17, 2013 9:59:00 AM  
Blogger Bram Reichbaum said...

... in other words, the mayor.

It's actually a worthwhile project to undertake in my opinion. The citizenry would benefit from being educated by what goes on around them.

Thursday, October 17, 2013 10:41:00 AM  
Blogger C. Briem said...

By and large Shawn said it. Authorities are not legally city entities, no matter how the governance is structured (i.e. city appointees on the board) so I don't think a city controller would have any meaningful access to books. So you say the state auditor general right? But given the scope of how many authorities there are in Pennsylvania, it just isn't conceivable given the resources of that office to really do much.

So you get the de facto truth that authorities exist, almost by design, to have a bit of independence from other public entities.

So you have to be a bit careful when you start to talk about creating ever more public authorities as is a not uncommon proposal despite the travails of say the Harrisburg Authority. There you had a public authority almost co-located with the auditor general, yet the financing there is what brought down the CITY of Harrisburg because of interwoven financial commitments.

Those who have tried to decompile the financial linkages between the city and its independent authorities here over the many decades have generally found an undecipherable morass.

Thursday, October 17, 2013 11:10:00 AM  
Anonymous Anonymous said...

I believe Bill is cooking up a Stormwater Authority. What do you think about that?

Monday, October 21, 2013 4:53:00 PM  
Blogger C. Briem said...

Without answering that, I repeat a point I've made before that the most interesting thing to watch in the new administration is what happens over at the PWSA board. News headlines will be about all sorts of other nominal changes, some more important that others, but the real battle will be over who controls the capital expenditures that fall under the purview of the PWSA. But it won't generate the headlines it deserves. Same as battle that has been going on over ALSCOSAN board. Again... water = money.

Monday, October 21, 2013 10:56:00 PM  

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