The Steuben Courier Advocate
  • Village board bails out BEGWS

  • The beleaguered Bath village utility was pulled back from the brink of a “technical” default after an emergency Bath village board meeting Thursday night.

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  • The beleaguered Bath village utility was pulled back from the brink of a “technical” default after an emergency Bath village board meeting Thursday night.
    Bath village board members approved using a total of $650,000 in village funds to pay off a one-year bond issued to Bath Electric Gas and Waters Systems and due Friday to Five Star Bank.
    BEGWS Director Matthew Hunter told village board he was notified this week the bank could not renew the bond, as it has in the past.
    If BEGWS failed to pay off the bond, it would be in technical default, and by law reported to the Securities and Exchange Commission.
    That could force a new loan at sharply higher rates, and dramatically affect utility operations, he said.
    But while village board members said there was never any doubt they would do whatever it took to save the utility, there was an hour’s worth of questions, bewilderment and head shaking before the vote.
    Village Attorney John Leyden said the bond – a resolution anticipation note – has been routinely issued for years. While it is a one-year note, it has been typically renewed for a second year.
    The first mention of a note being issued for $100,000 goes back to 1997, according to BEGWS’ records.
    Since then, the size of the note has grown substantially, Hunter said.
    In the past renewing the bond has allowed BEGWS to rely on higher fuel payments from customers during the winter to pay down the debt, said Hunter, who has been with the utility for three months.
    But last year, fuel payments were down and the utility is unable to pay off the note, he said.
    Hunter said he did ask the utility’s bond counsel if another bank would renew the note.
    “There was just this kind of chuckle,” he said.
    Village board members agreed to use $607,000 from village savings, and $43,000 from the village checking account to pay off the note.
    Village Mayor John Stranges and trustees Bill vonHagn and Mark Bardeen voted for the loan. Stranges said trustees Jeanne Glass and Mike McNally could not attend the meeting, but agreed to the loan in phone conversations with him.
    The money must be paid back to the village, at no interest, by May 31, 2013, village officials said.
    The village also has an interest-bearing account of $800,000 which was not used for the BEGWS debt.
    Trustees also said the utility needs to look at ways to pay the village back before May. That may include finding ways to draw on the utility’s reserves that -- so far – can’t be tapped.
    “There was not a prayer we weren’t going to let (BEGWS) default,” village BEGWS liaison and Trustee Bill vonHagn said. “But we should both share the pain.”
    Page 2 of 2 - BEGWS Chief Commissioner Harold Rodbourn agreed.
    A former village trustee, Rodbourn said it would be a priority of the utility to pay back village taxpayers.
    He said the commission would be looking further into the matter.
    “We can’t operate the way we have since 1997,” he said. “I still don’t understand how all this happened.”
    The village board will discuss the matter more, and look at possible ways for the utility to pay off its new debt to the village when it meets in regular session at 7 p.m. Monday.

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