Brownsville Public Utilities Board - News

FOR IMMEDIATE RELEASE
October 22, 2004

Contact: Margarita Halaby
Marketing Manager
cell: (956) 459-6371; pager: (956) 574-5418

Brownsville PUB Board of Directors Defend Finances

(Brownsville, TX) –Recent media coverage relating to the financial status of Brownsville PUB is incorrect and untrue. Brownsville PUB is financially sound. Several incorrect statements are clarified below:

Incorrect statement: The Brownsville PUB has a deficit of $350 million.

FACT:: The Brownsville PUB does not have a deficit. It does have debt service of $335,000,000 and assets of over $566,801,000. This can be compared to having a mortgage on a home, whereby monthly payments are made on the home (the debt service) while equity is built. In other words, having debt service is a normal part of business operations.

Incorrect statement: The Brownsville PUB is going to raise rates: 15%, 20%, or 50%

FACT:: The Brownsville PUB is currently in the process of conducting a cost of service study to restructure our debt service and future capital improvement projects. Based on the results of the study the Brownsville PUB can make a recommendation for rate adjustments to the Mayor and City Commissioners. The Brownsville PUB Board of Directors does not have the authority to raise rates. Only the Mayor and City Commissioners can raise rates.

Incorrect statement: The Brownsville PUB is in poor financial condition.

FACT:: The Brownsville PUB has always had a clean audit. Each independent auditor has issued an opinion that the utility’s financial statements conform with Generally Accepted Accounting Principals (GAAP). Additionally, Fitch International Rating Agency in New York continually highlights one of the Brownsville PUB’s strengths as being a strong financial performer. The bond rating agency has consistently given the utility an “A” Bond Rating. Other New York bond rating agencies have also rated the Brownsville PUB with high marks.

See attached balance sheets.

The Brownsville Public Utilities Board is a full-service, locally owned and operated utility providing electric, water, and wastewater service. It has over 400 dedicated and responsive employees that provide reliable utility service for the City of Brownsville.

P.O. Box 3270 Brownsville, TX 78523-3270
(956) 983-6100 Fax: (956) 983-6289

PUBLIC UTILITIES BOARD OF THE CITY OF BROWNSVILLE, TEXAS
(A Component Unit of the City of Brownsville, Texas)
Balance Sheets
September 30, 2003 and 2002
Assets					2003	2002
Current assets:
	Cash and cash equivalents			$	� 11,582,571	2,124,741
	Investments				8,524,294	20,754,782
	Receivables:
		Fees and services, net of allowance for uncollectible accounts of $686,557 and $615,313 in 2003 and 2002, respectively			20,096,419	15,179,526
		Intergovernmental			257,443	396,457
		Accrued interest			5,506	16,993
	Inventories				5,103,119	5,542,503
	Prepaid items				178,209	139,853
			Total current assets		45,747,561	44,154,855
Noncurrent assets:
	Restricted assets:
		Cash and cash equivalents			3,121,989	1,106,476
		Investments			74,926,669	30,020,634
			Total restricted assets		78,048,658	31,127,110
Capital assets, net of accumulated depreciation					437,799,445	402,262,431
Bond issue costs and other assets					5,205,557	5,009,879
			TOTAL ASSETS	$	566,801,221	482,554,275

Liabilities and Equity				2003	2002
Current liabilities:
	Accounts payable		$	13,244,743	14,610,071
	Accrued vacation and sick leave			4,229,585	4,096,773
	Due to primary government			3,315,914	3,568,231
	Due to other governments			�	265,674
	Deferred credit � fuel cost recovery			3,687,753	3,136,131
		Subtotal		24,477,995	25,676,880
Current liabilities payable from restricted assets:
	Accounts payable and accrued liabilities			1,780,042	1,567,316
	Accrued interest			549,632	721,042
	Customer deposits			2,026,470	2,052,978
	Current portion of revenue bonds payable			9,930,000	7,295,000
	Current portion of capital lease obligation			98,927	142,546
		Total current liabilities payable from restricted assets		14,385,071	11,778,882
		Total current liabilities		38,863,066	37,455,762
Noncurrent liabilities:
	Revenue bonds payable			305,425,620	240,021,572
	Capital lease obligation			161,268	260,209
		Total noncurrent liabilities		305,586,888	240,281,781
Fund net assets:
	Invested in capital assets, net of related debt			170,684,326	155,412,958
	Restricted			23,264,850	25,376,076
	Unrestricted			28,402,091	24,027,698
		Total fund net assets		222,351,267	204,816,732
		Total liabilities and fund net assets	$	566,801,221	482,554,275