U.S. Secretary of Transportation Ray LaHood coauthored a letter with Virginia Gov. Bob McDonnell, Maryland Gov. Martin O’Malley and Washington, D.C. Mayor Vincent Gray calling for reforms at MWAA.

By Carten Cordell  | Watchdog.org Virginia Bureau

ALEXANDRIA — The activities of the Metropolitan Washington Airports Authority have stoked the ire of public officials and residents alike, though whether that has affected the authority’s ability to borrow money is unclear.

Four high-profile, executive stakeholders — U.S. Secretary of Transportation Ray LaHood, Virginia Gov. Bob McDonnell, Maryland Gov. Martin O’Malley and Washington, D.C. Mayor Vincent Gray — are taking note of the shenanigans.

A scathing letter to the MWAA coauthored by the stakeholders expresses concern with the authority and its management of the $6 billion Silver Line Metro project.

The authority still has relatively strong ratings on its bonds, which are divided between airport and Dulles corridor operations. But analysts are waiting to see whether MWAA’s plan to pay for the second phase of the Silver Line is tenable.

“We look at a lot of different factors in our analysis to come to the rating,” said Todd Spence, a Standard & Poor’s research analyst following MWAA’s bond rating. “There is a whole host of factors, many of which management can impact, but we haven’t seen the updated projections to see if … the controversy impacts any of the other things that we look at.”

Standard & Poor’s, a New York-based credit rating service, gave MWAA’s toll revenue bonds a BBB+ rating in January, signifying a stable  but tenuous assessment of the authority’s debt leverage.

Among the issues to watch, the analysis noted the “reliance on continued revenue growth to support the debt levels, and the potential for cost overruns associated with the rail extension.” The report cited revenue growth through higher tolls, despite declining transactions, maintained adequate funding levels.

While MWAA’s current financing plan should pay for Phase 2, cost overruns could jeopardize the bond rating, which are at the heart of the authority’s critics, namely LaHood, McDonnell, O’ Malley and Gray.

“It has become clear that MWAA’s policies and procedures are deficient and lack the safeguards necessary to ensure the principled oversight of nationally and regionally significant assets,” the quartet’s letter said.

A mess regarding MWAA’s board of directors got more convoluted Monday, when a Fairfax County judge declined to sit McDonnell’s nominee, Caren Merrick, in place of ousted board member Dennis Martire while  Martire’s lawsuit remains unresolved.

The legal stalemate over who may sit on the board further complicates MWAA’s already battered reputation, which was sullied recently by stories of sweetheart deals given to former board members and subordinates, first reported in “The Washington Examiner” and “The Washington Post”.

While policymakers wrangle over how to put MWAA back on track, analysts said they have to cut through the political debate to determine the solidity of the financial ground on which the authority stands.

“We don’t really want to be on the political side of things,” Spence said.

Is the scope the project reasonable, and can the authority pay for it? he asks.

Spence said projects such as the Silver Line Metro are susceptible to factors that could downgrade MWAA’s debt standing below investment grade, which continues to be stable.

“We are kind of waiting to see how they come up with the overall capital plan on how to fund the project,” he said.

Contact Carten Cordell at carten@olddominionwatchdog.org