The V.I. Water and Power Authority will have until June 30, 2027 to address nearly $64 million in bond anticipation notes after its governing board voted Tuesday to extend the debt’s maturity by another nine months, giving management additional time to pursue refinancing that officials say should minimize costs and avoid materially increasing WAPA’s outstanding debt.
The decision came during an emergency board meeting called specifically to address WAPA’s 2021 and 2024 bond anticipation notes, or BANs, which were scheduled to mature September 30. WAPA’s publicly posted agenda confirms that the extension of the two series was the meeting’s sole action item following an executive session on legal matters.
Chief Financial Officer Lorraine Kelly initially asked directors to extend the notes only through the end of 2026. Their maturity dates had already been extended twice this year, including actions in July and August, and Ms. Kelly told the board that WAPA needed additional time to settle on refinancing terms that would “minimize costs and any material increase in the amount of outstanding debt.”
Ms. Kelly, who became WAPA’s permanent chief financial officer in December 2024 after serving in the role on an interim basis, has been involved in the authority’s efforts to improve financial stability and restructure its obligations. WAPA said when announcing her permanent appointment that her responsibilities include financial turnaround, strategic planning and risk management.
The notes now carry a combined maturity value of $63.74 million, according to Ms. Kelly. Another $628,000 is being held in a principal account associated with the 2024 BANs.
WAPA Chief Executive Officer Karl Knight told directors that the financing serves a different purpose from the billions of dollars in federal recovery funding flowing into the authority for capital construction.
“When it comes to capital projects…that’s all been well-funded,” Mr. Knight said, referring to major hurricane-recovery investments. “What ultimately the Authority needs for its day-to-day operations is operating working capital for…paying for materials, parts, goods, services, payroll, paying rent.”
Ideally, those recurring expenses would be supported by revenue collected from customers, Mr. Knight said. “To the extent that those fall short, we have to raise funds through other financing mechanisms.”
The distinction comes as WAPA simultaneously oversees an extensive portfolio of federally supported reconstruction and grid-hardening projects. The authority said last week that its recovery work has shifted increasingly toward project execution, with eight undergrounding projects completed and additional projects underway on St. Croix, St. Thomas and St. John. Federal recovery dollars earmarked for those projects, however, cannot simply be redirected to cover WAPA’s general day-to-day operating needs.
Bond anticipation notes are generally shorter-term debt instruments intended to provide financing while an issuer prepares for longer-term funding or refinancing. WAPA has used the structure repeatedly during its financial restructuring.
The 2021 BANs originated when WAPA’s board authorized five-year notes to finance remaining acquisition, maintenance and accrued-interest costs associated with Wärtsilä propane-fired generators at the Randolph Harley Power Plant, along with installation costs associated with leased Aggreko units at the Richmond Power Plant. At the time, WAPA said it expected the notes eventually to be refunded through longer-term financing.
WAPA records from 2022 showed the Series 2021A and 2021B BANs carrying a combined original balance of $35 million, with a then-scheduled maturity of July 1, 2026.
The 2024 BANs, meanwhile, stem from another refinancing chain. In 2022, WAPA authorized up to $42 million in Series 2022A and 2022B BANs to refinance its earlier 2020A notes. In August 2024, the board approved a term sheet converting the 2022 BANs into 2024 BANs, and the board subsequently placed ratification of those 2024 notes on its September 2024 agenda.
Tuesday’s discussion centered not on taking out another tranche of debt immediately, but on giving WAPA enough time to evaluate how best to refinance what is already outstanding.
Ms. Kelly told directors that extending the notes through December 31 would have resulted in approximately $1.5 million in interest, an expense she said had already been incorporated into WAPA’s budget.
Director Joan Foy questioned whether a longer extension would provide management more breathing room without requiring another near-term board action. After confirming that the anticipated interest expense could be absorbed within the existing budget, she proposed moving the maturity all the way to June 30, 2027 — six months beyond what management had requested.
Ms. Kelly said extending the notes through June could result in as much as $4.5 million in interest costs.
Mr. Knight emphasized that the amount did not represent an unplanned addition to WAPA’s operating budget. “This would have been the interest that would have been paid anyway,” he said.
Most board members agreed that providing the longer refinancing window was preferable to returning repeatedly for short extensions. Five directors voted in favor of the June 30 maturity date.
Chairman Maurice Muia, who joined the meeting shortly before the vote, opposed the extension. WAPA identifies Mr. Muia as chairman of its governing board.
Lynton Scotland, participating in one of his first meetings since joining the board, abstained. WAPA announced Mr. Scotland’s appointment on September 24 following his nomination by Gov. Albert Bryan Jr. and confirmation by the 36th Legislature. The authority said his background includes more than three decades in utility operations, procurement and supply-chain leadership, including work at Consolidated Edison, NRG Energy and DuPont.
The 5-1-1 vote leaves WAPA with nine additional months beyond the September 30 deadline to negotiate what management hopes will be more favorable long-term terms for the $63.74 million obligation.
