Wells Fargo terminates BexarMet's line of credit

Water utility blames financial bind on new law that puts board's fate in the hands of voters.

The Bexar Metropolitan Water District is blaming a new state law for the loss of its $50 million line of bank credit, forcing it into a financial crisis that will cause the layoffs of some of its 311 employees as soon as next week and bring capital improvements to a halt.

The bank, Wells Fargo, also asked BexarMet to repay by December $10 million that it has borrowed so far, according to the utility, which said it has $13 million in cash reserves.

With short-term borrowing power cut off, BexarMet will point to its predicament to bolster its lawsuit against the legislation, which allows ratepayers to vote on whether to dissolve the utility's board.

If it can convince the courts that the law is doing real harm even before a dissolution vote, BexarMet could win at least a delay of the November election, if not a cancellation.

“This credit freeze effectively locks us out of the credit and bond markets nearly every utility uses to manage its capital project funding and creates an artificial crisis,” BexarMet interim General Manager Tom Gallier said Tuesday. “This is entirely the result of uncertainty over the district's future given the dissolution election mandated in (Senate Bill) 341.”

Read more in the SA Express news.