MOBILE, Ala. (WKRG) — After nearly a year of incomplete payments to Synovus Bank, the Prichard Water and Sewer System Board came before a judge to determine whether a receivership is imminent for the board.
While Synovus Bank notified the board that they had been put into a covenant default, the board was told they have 30 days to ‘diligently take action’ to fix the issue.
The board, according to court documents, went nearly a year missing those payments and paying partial amounts.
The purpose of the bonds granted to the board by Synovus, according to former Sen. Doug Jones, representing Synovus Bank, was to allow to board to improve water infrastructure and repay various unpaid debt.
However, attorneys and representatives representing the water board argued that since the board’s Operation Manager Mac Underwood joined PWSSB, the board has made notable headway in alleviating the board’s financial and operating problems.
While Synovus wants the board to be put under an independent receivership, the defense argued Underwood should receive the board because of his 15-year experience at the state’s largest water system, among other credentials.
However, under Underwood’s authority, attorneys for Synovus argue the board have still missed or partially paid monthly payments from December 2022 to September 2023. As of next month, the board would be in default by $2.8 million.
Meanwhile, the PWSSB voted 4-1 to increase customer rates by 22%. In defense, the board says that they “faced financial challenges” and are “committed to restoring the system’s financial stability.” The rate hikes would go to increase the board fiscal year 2024 budget to $3 million.
The board’s total revenue in 2023 was $11,419,124, and for 2024, the board projects a revenue of $14,432,631.
Attorneys and representatives for Synovus shifted their focus to the board’s failure to present required audits for the board’s fiscal year 2022. After receiving an audit, Synovus declined it, stating an ‘audit disclaimer.’
The water board’s attorneys argued that under Underwood’s authority, the board has made it an effort to present audits to the bank.
An administrative proceeding filed through the Environmental Protection Agency came in on Monday. The proceeding would disperse grants to the water board that could be used to alleviate their financial woes.
The proceeding caused some parties within the courtroom to ask the judge to hold his decision for 90 days while the board negotiates a concessionaire agreement.
Court is still in order, and we will update this story as we learn more.