80.3 F
Charlotte Amalie
Wednesday, May 25, 2022
HomeNewsArchivesTERRITORY FINALLY RID OF HUGO DEBT

TERRITORY FINALLY RID OF HUGO DEBT

Nov. 8, 2001 – A dozen years after Hurricane Hugo dealt the territory a devastating blow, the V.I. government is finally free of the Federal Emergency Management Agency loan made in the aftermath of the disaster.
Brian Modeste, Delegate Donna Christian Christensen's legislative director, said Thursday that President George W. Bush signed a bill into law on Monday that forgives the territory's Hurricane Hugo Community Disaster Loan.
"The governor has been working on this since he took office, so we're glad to be rid of the burden," Government House spokeswoman Rina McBrowne said.
Modeste said the territory borrowed $89.9 million, which was a quarter of the territory's operating budget for 1989. This was the maximum allowed by law.
He said that the territory received three drawdowns on the loan that totaled $50 million.
In 1997, FEMA forgave $21 million of that $50 million, leaving the territory still owing a principal of $29.1 million. Modeste said the territory made regular quarterly loan payments of $1.6 million through Jan. 16, 1999, which were applied to the annual interest of 8.25 percent that had accrued.
What Bush forgave consisted of a $29 million principal and $16 million in accrued interest, for a total of $45 million.
FEMA can cancel all or part of a Community Disaster Loan upon determining that revenues of the local government in the three fiscal years following the disaster are insufficient to meet its operating budget because of disaster-related revenue losses and unreimbursed operating expenses. Forgiving a loan requires the approval of Congress and the president.
After the federal government concluded that the V.I. government would never be in a position to repay what it owed. it declared the loan "non-performing." This opened the door for a complicated process in which the federal Office of Management and Budget calculated that the remaining $45 million on the loan was worth only $2 million. Congress then appropriated $2 million to FEMA to cancel the loan.
The territorial government still owes FEMA money for a Community Disaster Loan made after Hurricane Marilyn struck in 1995. That debt had totaled about $200 million. The president's act reduced it to $155 million.
"Now we can continue to work on forgiveness of the Marilyn loan," Jacobs-McBrowne said.
FEMA director Joe Allbaugh stated in a federal report earlier this year that, nationwide, "our experience is that disaster loan forgiveness rates are between 60 and 70 percent."

Print Friendly, PDF & Email
Keeping our community informed is our top priority.
If you have a news tip to share, please call or text us at 340-228-8784.




Support local + independent journalism in the U.S. Virgin Islands

Unlike many news organizations, we haven't put up a paywall – we want to keep our journalism as accessible as we can. Our independent journalism costs time, money and hard work to keep you informed, but we do it because we believe that it matters. We know that informed communities are empowered ones. If you appreciate our reporting and want to help make our future more secure, please consider donating.

STAY CONNECTED

20,771FansLike
4,722FollowersFollow

FROM FACEBOOK

Comments Box SVG iconsUsed for the like, share, comment, and reaction icons
Load more
Nov. 8, 2001 - A dozen years after Hurricane Hugo dealt the territory a devastating blow, the V.I. government is finally free of the Federal Emergency Management Agency loan made in the aftermath of the disaster.
Brian Modeste, Delegate Donna Christian Christensen's legislative director, said Thursday that President George W. Bush signed a bill into law on Monday that forgives the territory's Hurricane Hugo Community Disaster Loan.
"The governor has been working on this since he took office, so we're glad to be rid of the burden," Government House spokeswoman Rina McBrowne said.
Modeste said the territory borrowed $89.9 million, which was a quarter of the territory's operating budget for 1989. This was the maximum allowed by law.
He said that the territory received three drawdowns on the loan that totaled $50 million.
In 1997, FEMA forgave $21 million of that $50 million, leaving the territory still owing a principal of $29.1 million. Modeste said the territory made regular quarterly loan payments of $1.6 million through Jan. 16, 1999, which were applied to the annual interest of 8.25 percent that had accrued.
What Bush forgave consisted of a $29 million principal and $16 million in accrued interest, for a total of $45 million.
FEMA can cancel all or part of a Community Disaster Loan upon determining that revenues of the local government in the three fiscal years following the disaster are insufficient to meet its operating budget because of disaster-related revenue losses and unreimbursed operating expenses. Forgiving a loan requires the approval of Congress and the president.
After the federal government concluded that the V.I. government would never be in a position to repay what it owed. it declared the loan "non-performing." This opened the door for a complicated process in which the federal Office of Management and Budget calculated that the remaining $45 million on the loan was worth only $2 million. Congress then appropriated $2 million to FEMA to cancel the loan.
The territorial government still owes FEMA money for a Community Disaster Loan made after Hurricane Marilyn struck in 1995. That debt had totaled about $200 million. The president's act reduced it to $155 million.
"Now we can continue to work on forgiveness of the Marilyn loan," Jacobs-McBrowne said.
FEMA director Joe Allbaugh stated in a federal report earlier this year that, nationwide, "our experience is that disaster loan forgiveness rates are between 60 and 70 percent."