74.7 F
Charlotte Amalie
Friday, March 29, 2024
HomeNewsArchivesPFA Bumps Up Bond Issue to $410 Million

PFA Bumps Up Bond Issue to $410 Million

After giving the go-ahead last month to issue up to $250 million in new bonds, Public Finance Authority board members amended the figure Friday to $410 million, which is expected to free up more money for government operations as fiscal year 2011 approaches.

Speaking during a meeting Friday, PFA board chairman Gov. John deJongh Jr. said the increased amount is within the government’s current $500 million borrowing authorization and should keep layoffs and tax increases off the radar.

“I know it’s a difficult situation,” he said in response to concerns about borrowing even more money to plug the funding holes. “But the alternatives are just as difficult. But studies have shown that those who have cut government spending with layoffs are actually hurting themselves coming out of this crisis, and I don’t think the territory is in a position to deal with new taxes.”

Last year, senators authorized the government to borrow up to $250 million to meetmulti-million dollar funding gaps projected for both fiscal years 2010 and 2011. This initial proposal allowed officials to float bonds, tap into government public fund accounts, or turn to a bank or other financial institution for money.

At the time, the government opted to borrow $50 million from internal funds, and an approximately $200 million line of credit subsequently opened with the banking syndicate formed by Banco Popular and FirstBank.

Since then, deJongh has lobbied for more money to keep the government afloat, and senators recently passed a bill bumping the borrowing authorization up from $250 million to $500 million. At that time, officials said the plan was to float up to $250 million in bonds, put $100 million toward the line of credit and use the rest to cover this year’s $170 million budget shortfall.

At Friday’s meeting, PFA bond counsel Patricia Goins said it looks like the government would be needing about an extra $160 million, to include $200 million to completely pay off the existing line of credit and $150 million to cover this year’s budget shortfall.

And if all goes well in ongoing negotiations between the government and the banks, what’s left of the $500 million authorization will be used to open a new line of credit, PFA head Julito Francis said later.

Francis also explained that at the time of last month’s board meeting, deJongh had not yet signed the new borrowing authorization bill into law. So, in addition to increasing the final amount to $410 million, board members also voted to amend their original resolution for up to $250 million in bonds by rolling in some of the bill’s new provisions — such as bumping up the total borrowing authorization to $500 million and changing the maturity date on the line of credit.

The government hopes to close on the bonds by June 30th.

In other news, board members also approved a few of funding requests, including:

  • $350,000 from the PFA’s project account to close out construction on the V.I. Territorial Emergency Management Agency’s new headquarters on St. Thomas (the total covers additional administrative fees for architect Jaredian Designs and change orders for two secure conference and operations rooms);
  • $10,000 from the PFA’s project account for costs associated with the recent Association of Caribbean Commissioners of Police Conference; and
  • $2,450 from the PFA’s project account to Public Works to put signs along the newly dedicated Routes 652 and 702 on St. Croix.

The board moved forward with a contract for 3P Inc to bring King’s Alley Management Inc — a board under the PFA tasked with overseeing the management of the King’s Alley Hotel on St. Croix — onto the PFA’s new financial management system and to install a reservations system at the hotel.

West Indian Co. Ltd President Edward Thomas Sr. also gave the PFA — WICO’s parent company — his annual report, which showed an increase in passenger arrivals to the territory during calendar year 2010 thanks to the berthing of the world’s two largest cruise ships, the Oasis of the Seas and the Carnival Dream.

Thomas said WICO is also anticipating a better summer season than last year, with about 60,000 more visitors, followed by an active 2010-2011 season.

Even so, with some of the ships shifted to Crown Bay and the economy still on the rebound, WICO has continued to struggle financially and is currently catching up on its $700,000 payment to the government in lieu of taxes, Thomas said.

Board members present during Friday’s meeting were deJongh, Debra Gottlieb, Keith O’Neale Jr. and Pablo O’Neill. Board member Angel Dawson Jr. also joined the meeting via teleconference.

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.