The CEO of the San Antonio Water System tried to reassure council members Wednesday that the financing of the Vista Ridge pipeline is on track. Most of the council seemed to approve of the move while others questioned an outstanding debt.
In May, the SAWS Board approved giving Kansas City-based Garney Construction full control of developing and building the 142-mile Vista Ridge Pipeline. The original manager, Abengoa, had begun bankruptcy proceedings and wanted to shed 80 percent of its stake in the project.
Abengoa, had already borrowed $120 million. To take over the project Garney had to agree to repay Abengoa's loan.
SAWS CEO Robert Puente told council members Garney decided to give up some of its profit and do just that. “They have reached an agreement with the banks on how to pay this money back. So they are assuming the responsibility of that loan,” he said.
Councilman Ron Nirenberg seemed to be concerned that absorbing the $120 million debt would affect rate-payers. “How is that not absorbed though by Garney in terms of the impact through the SAWS rate-payers? Is that just on another set of books for their company, it’s not part of the Vista Ridge ledger for them?”
SAWS CEO Robert Puente responded that SAWS, and its water customers, will not be responsible for the loan repayments.
“We are totally protected from payment or the non-payment of that loan,” he said “And, the way it’s getting paid back, we believe, we don’t know because this is an agreement between them, that it may be part of a reduction in principal, it may be an assumption of some fees, it’s also part of the fact that they are borrowing money as needed as opposed to all at once.”
The water system recently announced it will be able to significantly reduce what it’s paying for the pipeline project because it was able to lock in a lower than expected interest rate on the financing.
SAWS says the lower interest rate will reduce the pipeline cost to customers by $529 million.
