CHESAPEAKE—The Virginia Resources Authority, a state agency that lends money to communities for various projects, said its “confidence and trust have been breached” with the Southeastern Public Service Authority, and accused SPSA of misrepresenting its financial situation.

VRA is owed more than $129 million by SPSA.

In a letter dated Wednesday, VRA Executive Director Sheryl Bailey told the authority’s board members — and the chief administrative officers for the eight communities served by SPSA — that the payments on its $129.42 million loan “must stay current.”

Bailey blasted SPSA staff and consultants for providing VRA with information that was “inaccurate or misleading,” and provided three examples.

The first instance involves a $12.1 million loan from Wachovia in 2008. Bailey said that at a Jan. 9 meeting, SPSA staff presented VRA with a spreadsheet showing principal payments SPSA planned to make during fiscal years 2009 through 2018 and an amortization schedule that showed the loan amortizing from 2012 through 2017.

But Bailey said that upon further investigation by VRA staff, the entire $12.1 million is due in October 2011 as a single balloon payment.

“VRA was stunned that a discrepancy of this magnitude could exist in the information furnished to us,” Bailey said.

The other two examples cited by Bailey involve a $4 million working capital line of credit and a $13.2 million line of credit for capital improvements at the waste-to-energy incinerator in Portsmouth, both of which were also through Wachovia.

Bailey said both lines of credit were omitted from the debt service spreadsheet SPSA provided to VRA at the Jan. 9 meeting.

“VRA understood that the two Wachovia lines of credit had not been used that much or had been used and repaid on a monthly basis,” Bailey said.

VRA and SPSA officials met again on Jan. 19. During that meeting, Bailey said the question was raised as to why the $4 million line of credit could not be used to help remedy SPSA’s cash flow problems.

“SPSA senior staff finally revealed that it was ‘tapped out,’” Bailey said. “VRA found it quite disturbing that this information was not volunteered, but provided only with the greatest apparent reluctance after persistent questioning.”

Bailey said she learned through media coverage of SPSA’s Jan. 28 meeting that almost half of the $13.2 million line of credit had been spent and that VRA’s role in a plan to restructure SPSA’s debt had been presented in such a way that it was “in blatant contravention of the understanding between VRA and SPSA,” she said.

Commenting on the situation, Bailey said, “This series of experiences has left VRA deeply disappointed in how its good will has been blatantly and recklessly misrepresented and misused by SPSA officials and representatives.”

Bucky Taylor, SPSA’s executive director, and Tom Kreidel, the authority’s public relations coordinator, were both unavailable for comment Friday.

Despite the imbroglio, Bailey said VRA “is still willing to work with the communities of South Hampton Roads to seek a positive way forward,” but added that “such a positive way forward would absolutely require full disclosure and accurate information regarding every single item encountered, both large and small.” She did not mention SPSA.