CPA may get bond rating with fees hike

The Commonwealth Ports Authority is expecting to get a bond rating anytime now with the recent announcement in the raising of airport and seaport fees and charges as well as huge reduction in operating expenses, according to Roman Tudela, finance committee chairman.

Although the new airport fees and charges will still take effect on March 1, 2000, the corresponding 10 percent cut in salary expenditures will cover the debt service for the airport bond.

A bond rating would enhance the credibility of the ports authority in the financial community. It would also prevent the current interest rate of 6.25 percent from jumping to 6.70 percent.

The ports authority board has announced a reduction in employees working hours from 80 to 72 per pay period starting April 1, 1999 which would give management some $550,000 in savings for one year.

New seaport rates, charges and fees will increase on July 1, 1999. This means that wharfage fee shall increase by $3.25 per revenue ton while port entry fee, dockage rates, bunker fee and home port fee shall increase by 30 percent. At the airport, passenger facility charge will jump by 39 percent from $5.79 to $8.000; and a 65 percent hike

The two rating agencies — Fitch IBCA and Standard & Poor’s have sought the increase in airport and seaport fees as a condition before giving any bond ratings to the $53 million bond debt to ensure the bondholders that CPA can meet debt service.

With only 167 employees in 1994, Tudela noted that the number shot up to 288 when the ports authority became an employment agency as the former administration gave high-paying jobs to its political allies.

At least 60 percent of the $11.10 million budget of CPA for this fiscal year will go to salaries and wages of the employees. This led the airlines to demand a cut in the number of workforce instead of carrying out an airport rate increase.

CPA had accumulated a surplus of almost $24 million in 1994 but the previous management spent everything on Capital Improvement Projects, without saving some money for its operation.

In 1996, a financial study on the ports authority cautioned CPA management then about the way it was managing its financial resources as officials travelled around the world.