Feb. 21, 2002 – A team of auditors from PricewaterhouseCoopers delivered good fiscal news Wednesday to the Port Authority in spite of a significant slump in cash flow.
"By looking at your financial statements, you're doing pretty well," auditor Roberto Santa Maria, a partner at PricewaterhouseCoopers in San Juan, told board members. It was an upbeat summary of Fiscal Year 2001, when the authority's net income was $47,000 and debts aged three months and over rose from $1.1 million to $1.7 million. Cash reserves were reported at $22 million, down from $27 million over the previous report.
The report was delivered in a public session of the Port Authority Governing Board's finance committee. Finance meetings are usually held behind closed doors, but chairman Iver Stridiron invited members of the press and interested citizens to sit in while the audit was read aloud.
PricewaterhouseCoopers has been reviewing VIPA's books for several years. The auditors attributed the drop in revenues to changing practices at the Port Authority's airports. Revenues derived from the territory's marine ports and harbors were reported to have remained steady. Gordon Finch, authority executive director, said passenger traffic through the airports also remained steady in Fiscal 2001, but he blamed the drop in revenues on user fees charged to air carriers.
The fiscal year ended Sept. 30, less than three weeks after the terrorist attacks of Sept. 11 decimated air travel nationwide and also cut into cruise ship traffic.
"Volume remained pretty constant in 2001, so it was not a matter of reducing volume," Finch said. "It was the amount of fees charged."
Vendors and concessionaires renting space at the airports also contribute to revenues, but Santa Maria said rent payments have fallen behind, accounting for the rise in outstanding debt. The auditors and finance committee members agreed that the slowdown in air travel after Sept. 11 meant less business for their vendors, making it harder for them to meet their monthly obligations.
"After 9/11, all of the tenants were in to us, asking for an extension," committee member Kent Bernier said.
Auditors said the situation was exacerbated by scheduled increases in tenant leases that were not applied on time because Port Authority accountants were not always aware of them. Santa Maria recommended that the agency review all leases and reasons tenants are giving for slower payments.
Stridiron expressed concern about how well the agency was managing uncollectible debts, some from tenant leases and others from landing fees charged carriers. Finch said some of that debt would have to be written off in order to present a more accurate picture of Port Authority finances.
And auditors cautioned against making revenue projections based on anticipated federal grants, such as the $5.4 million that came in during Fiscal 2001 through a combination of local and federal programs.
Finch also discussed the prospect of future revenues with an eye toward new federal security requirements for all U.S. airports. Some federal funds will be available through the new federal security program, Finch said, but those funds will most likely be channeled to Cyril E. King Airport on St. Thomas rather than to Henry E. Rohlsen Airport on St. Croix.
