Nov. 19, 2008 — A report presented Wednesday to the V.I. Port Authority governing board predicts an Aviation Division shortfall for 2009, based on projected decreases in traffic volume and on trends of increasing operation costs.
While the review by Reynolds, Smith and Hill said increased user fees are justified, it stopped short of recommending increases, noting "the reality of an airline rate increase at this delicate juncture is clearly not likely."
The report cited two major factors in its projection: First it recognized a trend of increase in operating expenses and second, the decrease in the number of visitors brought in by airplane.
The increase in operating expenses includes salaries and benefits, and realized little offset from the board's recent decision to share benefits costs with employees.
While noting a surplus of revenues over expenses, the report did not take depreciation into account, board member Gordon A. Finch said.
"Once you include depreciation, we are seriously in debt," Finch said. "We go from black to red."
The board also considered a report of aging past-due rental accounts.
"This is an area of concern for us," board chairman Cassan Pancham said. "We have approaching $6.4 million of accounts receivable. We have to focus on driving this down, given the evolving economic situation."
The authority's monthly financial report bore out Pancham's concerns. As of Sept. 30, the authority realized $45.9 million in operating revenues, a 3.94-percent increase over the same period last year, but operation expenses were at $57.8 million, up by 9.13 percent over last year.
The current operating loss exceeds the prior-year loss by 35.08 percent, from $8.8 million to $11.9 million in FY 2008, according to the financial report.
In other action, the board approved an additional 5,000 cubic yards of dredging at the entrance of Gregerie East Channel. HCS Consulting and Marine Construction will dredge the channel for the largest of cruise ships, including Royal Caribbean's Genesis-class ship, the Oasis of the Seas, which at $1.2 billion and 1,180 feet needs the extra margin of safety that the dredging will bring.
The dredging comes as part of a yet-to-be-fully inked deal between the port authority, the West Indian Company and Royal Caribbean.
The spoils from the dredging will be hauled to the Bovoni landfill, according to the proposal.
The $477,275 contract includes nearly $60,000 to stage equipment needed in case the dredging encounters rock.
Finch, recalling private-sector experience in St. Croix, recommended including a clause requiring the contractor to notify the authority as soon as he encounters rock, and that VIPA must agree that the material encountered is indeed rock.
According to Port Authority documents, the work will be completed by the end of February.
"We want to get this channel dredged as soon as possible so that larger ships can come into Crown Bay," Gordon Finch said.
The board also approved an agreement for design services associated with rehabilitating the Cyril E. King Airport runway. The award recipient, URS Caribe, has a three-year consultancy contract with the authority. The services will cost $429,218, but 95 percent of the funding will come from the Federal Aviation Administration.
The resurfacing design for CEKA includes plans for milling, installation, re-marking and re-grooving the runway, and is expected to be completed within three months, according to engineering director Dale Gregory.
Eventual work on the runway will be conducted overnight between 11 p.m. and 7 a.m., Gregory said.
The board also entertained three requests for rent reductions. The St. Croix Taxi Cab Association's request, which it had based on the impact of the reduction of American Eagle flights into Henry E. Rohlsen Airport, was rejected.
The board denied a rent-reduction request by the Caribbean Drag Racing Association.
The St. Thomas Marina Corporation requested a temporary rent reduction based on the problems associated with dust and dirt generated by VIPA dredging. The firm had previously requested and received compensation for similar problems from earlier dredging, but noted that customers' yachts are again being affected, resulting in financial and business-reputation damages. The board referred the matter to staff for further investigation.
The board approved a lease for space for an ATM at the E.W. Blyden Marine Terminal. The rent for the space guarantees $1,200 annually to the authority, with 50 percent of gross revenues after 240 transactions.
Finch reported that the St. Thomas dredging was a little behind schedule, due to some delays associated with permitting discussions with the Department of Planning and Natural Resources.
In Frederiksted, relocation of rock from the channel has begun and the work is expected to conclude before the end of the month, according to Finch
Finch also hailed the installation of parking meters at HERA.
"Hallelujah!" he said.
Finch noted that the meters should be up in another week or two.
"It is an embarrassment that the parking system has been down for two years," Finch said.
Board members present included Finch, O'Connor, Pancham, Hector Peguero and Yvonne E.L. Thraen.
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