July 14, 2004 – A deal between a public utility and public housing was struck in the Virgin Islands on Wednesday as officials of the Water and Power Authority signed a memorandum of understanding with federal authorities in charge of the V.I. Housing Authority to settle an outstanding debt of more than $4 million.
And as the initial payment, Michael Liu, U.S. Housing and Urban Development assistant secretary, handed Alberto Bruno-Vega, WAPA executive director, a check for $350,000.
The settlement involves cash and land, according to the two agreements signed Wednesday.
The Housing Authority, in HUD receivership since last August, will pay off the $4.16 million it owes WAPA in monthly installments of $175,000 until the debt is erased in December 2005.
At the same time, the federal managers signed over a three-quarter acre parcel of land owned by the Housing Authority near the Lucinda Millin Home for the Aged on St. Thomas in return for WAPA deducting $100,000 from the debt. Bruno Vega said the utility plans to install a new transformer on the site.
The deal is a "significant occasion for WAPA and also for the Virgin Islands Housing Authority," Bruno-Vega said. "We have accomplished two major goals that WAPA has been striving for, for a considerable length of time."
One, he said, is resolution of accounts receivable from the Housing Authority dating back "several years."
The other, he said is acquiring a site on which to build a substation needed to supplement the capacity the existing Long Bay substation to provide power from Long Bay to Bovoni.
Demand for power in that area is expected to increase with the development of the Yacht Haven commercial complex scheduled for completion next year.
"This substation is going to serve the Lucinda Millin area, the Lockhart Garden area, Havensight, Frenchman's Reef, all the way to Bovoni — and most specifically it would also serve the new Yacht Haven, which has a significant load requirement by the middle of 2005," Bruno-Vega said. "That is why we have to rush to get this new substation in place."
For Housing Authority officials, the signing of the MOU is a sign that, 11 months after the federal takeover, VIHA is getting its financial house in order.
Answering questions from reporters at the signing ceremony, Liu said that HUD receiver Donna Ayala and her team in untangling VIHA's jumbled bookkeeping were able to identify revenues that could be dedicated to the monthly $175,000 payments.
"This is not an obligation that was outstanding due to our management," Liu said. "This is a problem that was held over. But we have to take that responsibility, and we did."
Liu also said the deal signals that HUD through its receivership management is willing to work with the local government "as long as they're willing to work with us, too."
Resolving the Housing Authority's utility bills addresses roughly one third of the government's $16.4 million outstanding debt to WAPA, Bruno-Vega said. Of that debt, $6.4 million is owed by the central government and $3.7 million is owed by Juan F. Luis Hospital on St. Croix, he said. He said talks are under way to settle the St. Croix hospital's debt, too.
He said the money coming in from the Housing Authority will go to settle WAPA's own debts to vendors and other contractors, some of whom are now doing business on a cash-only basis as a result of not having been paid for previous billings.
In a release issued by HUD later Wednesday, Liu said that "while HUD has accomplished a lot in the 11 months it has been in control of VIHA, there is still a long road ahead."
The receivership team headed by Ayala "is continuing to resolve many of VIHA's financial deficiencies, including submitting a balanced budget for the first time in three years and bringing public housing units back on line," the release stated. "The team has rehabbed 225 apartments that are now occupied. When HUD took control there were 822 vacant units with more than 500 that needed extensive repair. To date, 316 units were approved for demolition and 24 have been demolished. Another 200 are proposed for future demolition."
In addition, the release stated:
– The receivership team has secured two HOPE VI demolition grants totaling $1.7 million that will be utilized to raze the run-down Louis E. Brown Villas on St. Croix.
– Work is to begin in August on the new Hoffman Nullyberg housing development on St. Thomas. The first two phases of the project will provide replacement public housing. The development, which will include a community center, "had been stalled for seven years," the release said.
– In an effort to "reduce and control" rising public housing water and power costs, VIHA will implement a conservation plan under an energy audit agreement with Citizens Conservation Services/Ameresco. An energy audit to begin shortly will include engineering analyses, validation of billing and operating data, and assessment of site and equipment conditions.
"Improvements will include large-scale infrastructure upgrades, reduced maintenance costs, improved resident conditions and substantial energy savings," the release said. Water conservation measures are to include detection and repair of infrastructure and fixture leaks and replacement of faulty toilets, shower heads, faucets, pressure-control devices and water submeters.
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