Audit: Xenia struggling with debt payments
The Xenia Rural Water District, once saddled with up to $140 million in debt, continues to struggle to make its loan payments, according to a recently released state audit.
”Adverse economic conditions have limited the ability of the district to obtain customers in amounts sufficient to service its long term debt,” officials wrote in a report released by the office of state Auditor Mary Mosiman.
The auditors wrote that the district, which includes customers in Calhoun, Hamilton and Webster counties, has been able to restructure its debt.
”However, significant uncertainties remain regarding the district’s ability to continue its operations and to satisfy its obligations to its creditors on a timely basis,” they added.
Andy Nielsen, a deputy state auditor, cast the situation in less gloomy terms during a telephone interview.
”It looks like they’re kind of at a turning point where they’re turning things around,” he said.
Nielsen said the district must improve its financial picture by increasing revenue, controlling expenses or some combination of revenue increases and cost controls. He said revenue could be increased through additional sales of water or a rate hike.
”There’s still some uncertainty for customers,” he said.
Nielsen said he doubts that the water district would shut down simply because if it did the lenders would not get any payments.
A phone call seeking comment from L.D. McMullen, the district’s general manager, wasn’t returned.
According to the state audit the district had revenues of $12,217,282 during 2012. That was a 36.5 percent decrease from 2011, the auditors wrote.
During 2012, the district had expenses of $14,281,582, according to the audit report. That’s a 6.8 percent decrease from 2011.
Last spring, the U.S. Department of Agriculture lowered the interest rates and extended the payment period on $45 million worth of rural development loans for Xenia. That move is expected to save the district $20 million over 40 years.
Another creditor, Assured Guaranty Corp., of New York, N.Y., extended the repayment schedule on $3 million the district owes.
Bank of America forgave most of a $7 million loan to the district, while the Iowa Finance Authority restructured $1.4 million worth of debt.
Nielsen said the district has received some ”pretty good term restructuring from the creditors.”
Xenia Rural Water District, based in Bouton, has about 9,400 customers in 11 counties.