April 6, 2004 – In a brief meeting on Monday, the Public Finance Authority board voted to extend the deadline to April 23 for Hovensa to utilize an allocation of private activity bonds awarded them in February.
Under a resolution adopted in February, Hovensa was to have informed the authority of its intent for the funds by March 15 and to have utilized the allocation by April 1.
"Hovensa and its partner in Venezuela were "not able to meet the requirements" by the April 1 deadline, Kenneth Mapp, PFA director of finance and administration, explained to the board.
Hovensa is a joint venture of Amerada Hess, parent company of Hess Oil Virgin Islands Corp., and Petroleos de Venezuela, the huge government-owned oil company of the South American nation.
"We were fairly confident that we would meet the deadline," Alexander A. Moorhead, Hovensa's vice president for government affairs and community relations, said on Tuesday morning, "but we ran into some problems that made us unable to meet it." He did not specify the nature of the problems.
Moorhead said the authority's newly approved resolution is simply "extending the time for us to sell some bonds."
The board on Monday also approved a resolution to increase the allotment to Hovensa slightly, to $50.7 million from the $50.6 million it approved in February. The money from the bonds is to assist Hovensa in refinancing the debt for its recently completed coking unit and help fund the construction of any new facility related to the unit.
Mapp told board members that the additional $94,218 was excess private activity bond funds that had not been slated for any purpose and recommended that the money be given to Hovensa.
Private activity bonds are tax-exempt bonds backed by a government that are intended for use by a trade or business outside the government, and that are to be repaid from revenues secured from that trade or business.
"The generation of private activity bonds is based on the baseline population of each state or territory," Mapp said. He said the volume cap for the bonds was $50.6 million based on a population of 108,612 individuals in the territory. But more recent figures show the population as 108,814, he said, thus allowing for Hovensa to receive the increase.
Also during Monday's meeting, PFA board member Ira Mills, director of the Office of Management and Budget, told his colleagues that they should look into the use of private activity bonds to fund college scholarships.
Mills explained later that he envisioned the money being given to companies that in turn would use it to fund scholarship programs for students with the proviso that they come back to the Virgin Islands after getting their degrees and work for the donor companies.
He said he believes that Wyoming and Oklahoma are currently using private-activity bond proceeds in that manner to help fund scholarships.
Members present at Monday's meeting were Gov. Charles Turnbull, the chair; and Bernice Turnbull and Mills. All sit on the board by virtue of their public offices. The two private-sector board members, Roy Jackson and Paul Arnold, were absent.
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