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Credit crunch delays sale of Aloha Utilities

NEW PORT RICHEY — Wayne Forehand and his Trinity neighbors weathered a decade of dark, smelly water. They thought they finally overcame troubled Aloha Utilities after a public agency reached a deal to take over the company later this month.

Now there's another delay: America's financial crisis.

The Florida Government Utility Authority cannot complete its $90.5-million purchase of Aloha before the Dec. 23 deadline because it couldn't line up financing. Bank of America balked at the deal as credit tightened nationally, officials said.

The agency agreed Friday to extend the purchase deadline to Feb. 27 as other lenders are sought. Talks have begun with Wachovia and two other financial institutions, said Brian Armstrong, the authority's acquisition attorney.

"I'm disappointed that it is delayed and we're not going to have good water," said Forehand, who has led residents' efforts to win improvements.

However, Forehand said he was optimistic new operators would soon be running the utility.

"These guys have enough invested in this that they want to make it happen," Forehand said.

Pasco County signed on with the authority to take over the utility, which has 25,000 customers in southwest Pasco. Many of them have complained of black, stinky water for years.

Using the agency, Pasco can later take charge of the utility and make it part of the county's public system. But Pasco doesn't have to pay for it up front.

Customers will. Typical household bills will rise from $55 monthly to $88 for the purchase and related improvements. Authority officials say if Aloha kept the system, it was planning to hike bills to $140 a month.

Two months ago, the agency and Aloha reached the purchase deal. It allowed for two months for the agency to inspect Aloha's system for unexpected problems, and line up financing.

With final reports due soon, no unforeseen maintenance issues have popped up, said Armstrong and Bruce Kennedy, Pasco's utilities director and an alternate on the agency board.

But Bank of America decided it didn't want to loan all of the money, and its leaders rejected the financing, Armstrong said. So closing the purchase was delayed.

The county has faced lending trouble, too. It planned a $185-million utilities bond issue for a variety of construction projects, but the bonds have been on ice since September because buyers have been scarce.

The extension for the Aloha purchase calls for the deal to be canceled if it doesn't close by Feb. 27, although another extension is possible if both sides agree.

David DeCamp can be reached at [email protected] or (800) 333-7505, ext. 6232.

Credit crunch delays sale of Aloha Utilities 12/12/08 [Last modified: Friday, December 12, 2008 7:51pm]
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