WASHINGTON – The Puerto Rico Aqueduct and Sewer Authority will delay payments on loans and renegotiate loan agreement terms under U.S. state revolving fund and rural development programs, according to two forbearance agreements detailed in an event notice posted on EMMA on Wednesday.
Both forbearance agreements were executed on June 30, according to the July 6 filing.
The Puerto Rican authority historically receives federal funds for its capital improvement program through state revolving fund loans granted by the U.S. Environmental Protection Agency clean water and drinking water state revolving fund programs. The SRF loan funds are administered by the commonwealth's Environmental Quality Board (EQB) and the Puerto Rico Department of Health (PRDOH), with support from the U.S. Environmental Protection Agency.
Puerto Rico also receives federal funds through bond proceeds under the U.S. Department of Agriculture Rural Development Program.
Both the SRF loans and rural development (RD) bonds are secured by a guaranty from the commonwealth.
PRASA executed its forbearance agreement for the SRF loans with PRDOH, the administrator of the drinking water revolving funds, EQB, the administrator of the clean water revolving funds, and the Puerto Rico Infrastructure Financing Authority, a public commonwealth corporation operating as agent for the revolving funds.
PRASA had about $555.4 million in debt from the SRF loans as of June 30, 2015, according to the latest annual financial information and operating data.
The forbearance agreement, which has the acknowledgement and support of the U.S. EPA, grants a delay in payments due on SRF loans for a period of six months with the possibility of an extension for six more months if certain conditions are met. The agreement includes payments that were due on July 1.
PRIFA, EQB, and PRDOH, with the support of the EPA, are expected to negotiate new terms and conditions to the SRF loans during the forbearance period, according to the event notice.
The forbearance agreement that PRASA executed with the USDA Rural Development Program grants the authority three more months through Sept. 30 to defer payments due on RD bonds and to allow for additional time to "examine all options available to correct PRASA's deficiencies and restore the repayment of the RD bonds," according to the event notice.
The RD forbearance agreement also includes payments that were due on July 1.
