March 13, 2007 — The clock is ticking for hotel developer Paul Golden, who will soon have to prove that he has obtained enough financing to start construction on a proposed resort and casino development on St. Croix, or face the axe from the Public Finance Authority.
In June 2002, former Gov. Charles W. Turnbull signed into law a bill authorizing the PFA to float $41 million worth of bonds — $32 million of which would go toward building a convention center on St. Croix. In March 2003, the PFA board tentatively passed a resolution authorizing the center to be built in conjunction with Golden's proposed resort. At the time, however, the arrangement was contingent upon Golden obtaining at least $95 million in financing needed to begin construction on the rest of the development.
Since then, Golden has been unable to secure the necessary funds and has continued to press the PFA to extend the financing deadline. The most recent extension, however, expired Dec. 31, 2006.
There was more bad news for Golden last week when a New Jersey jury ruled that Golden must repay his mother more than a half-million dollars in loans and sale proceeds from a restaurant which, she alleged, he obtained fraudulently to pursue business interests on St. Croix (See St. Croix Source story, "Mainland Jury Rules Casino Developer Must Repay Nearly $600,000").
During Tuesday's PFA board meeting, Gov. John deJongh Jr. said the authority had received correspondence from individuals representing two other prospective developments on St. Croix — William and Punch LLC and Annaly Bay Resorts LLC — requesting that the convention center be removed from Golden Resorts, and put out to bid.
"It's a reasonable request," deJongh said after the meeting. "They see the uncertainty and want us to consider it. But Mr. Golden has been going through the process and has his permits filed. I don't want to talk about pulling the plug until we have a handle on the financial situation."
During the meeting, deJongh proposed that the requests be considered at the board's next meeting — after the authority is able to ascertain whether Golden has or is close to sealing the deal with two potential financial backers. At a PFA meeting held last October, Golden said that "two banks" had indicated they would be willing to provide the company with startup money if the local government gave Golden a guarantee on a $15 million "bridge loan" to begin construction.
The Senate approved the loan guarantee in a session held at the end of December 2006. Turnbull subsequently put his stamp of approval on the document prior to leaving office in January.
PFA board members will also be looking into the status of renovations to the King's Alley Hotel on St. Croix, a public/private project the government became involved in after the authority acquired the property by default in 2001. The cost of the project was initially pegged at $2.5 million — however, more funds have been needed over the years to take care of certain "urgent" problems not listed in the original scope of work.
Board members voted Tuesday to have King's Alley Management Inc., the corporation that runs the government's portion of the hotel and the surrounding shopping complex, to check on the status of the project and report back to the authority at the next board meeting.
After the meeting, however, acting PFA Executive Director Cherrie Wallace-Cole said that she had recently visited the hotel and described it as "99 percent complete."
"Only a few little details need to be fixed," she said. "That's why the board asked us to check it out — so we can pinpoint exactly what needs to be done."
Board members present during Tuesday's meeting were Debra Gottlieb, deJongh, Roy D. Jackson and Austin Nibbs.
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