The Puerto Rico Oversight Board approved a new fiscal plan for the island’s Highways and Transportation Authority that was more pessimistic about debt service than the one it replaced.
The board approved the HTA plan along with ones for the Puerto Rico Electric Power Authority and Puerto Rico Aqueduct and Sewer Authority on Monday. The new fiscal plans are the result of the board’s annual plan revision process.
In the HTA plan certified Monday, the board said the “amount of net revenues available” for things like debt service payments is “highly dependent” on the authority getting additional revenue streams beyond anticipated commonwealth transfers to the authority.
The HTA has about $6 billion in debt outstanding.
The June 2019 board certified HTA plan had projected there would be $493 million of surplus money available from fiscal 2019 to fiscal 2024 for “strategic projects and/or debt service.” This included projected transfers from the commonwealth government to the authority.
Whereas past year’s fiscal plans had calculated how much cash would be available each year of the fiscal plan after anticipated revenue and expenditure measures, none of this year’s fiscal plans do this. According to the board past years’ projections of cash was to be used for debt payment and/or capital spending.
The board said that PREPA has completed two of the five steps toward its transformation: the creation of a strong independent regulator with the Puerto Rico Energy Board and an agreement this month with LUMA Energy to manage the transmission and distribution system.
In addition, the board said it plans to privatize the generation of island electricity and increase the use of renewable energy. The authority will also need to maximize federal funding for the authority’s recovery from Hurricane Maria. Finally, the authority’s debt and pension liabilities will have to be restructured, the board said.
PREPA has about $9 billion in debt outstanding.
For PRASA the board is planning 11 fiscal measures, including continuing small rate increases. The board anticipates the rate increase will lead to $908 million in additional revenue from fiscal 2020 to fiscal 2025.
The PRASA plan includes $251 million per fiscal year from fiscal 2020 to fiscal 2025 in debt service for the authority's senior debt, which includes the bonds it sold to the public.
PRASA had $4.4 billion in debt outstanding as of December 31.
PREPA and HTA are currently not paying debt service on their bonds. Their debt is in the Title III bankruptcy process created by the Puerto Rico Oversight, Management, and Economic Stability Act.
