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VIPA Board Moves to Take Over Wharfage-Fees Collection

The V.I. Port Authority board decided Wednesday to try moving toward collecting its own wharfage and tonnage fees, which U.S. Customs and Border Patrol has long collected on its behalf. The problem is VIPA recently hasn’t been seeing most of that money.

The issue of the fees is not a new one and is becoming an increasing concern for VIPA officials. The Source reported in September 2009 that VIPA was awaiting payment of $6.3 million in fees that had accumulated since January 2008. In October 2010, VIPA voted to write off that debt, in order to allow its fiscal 2009 audit to be completed, but plans to continue trying to collect.

Since then, another $3.3 million shortfall has accumulated. And the fees continue to accumulate at a rate of about $270,000 per month, according to VIPA Finance Director Judith James.

For its part, Customs says it does not owe the money, pointing to a 1994 memorandum of agreement where it is authorized to collect operating costs from these fees before turning the funds over to the V.I. government.

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Customs and Border Patrol was placed under the purview of the new Homeland Security Department after the Sept. 11, 2001 terrorist attacks, whereupon costs began to skyrocket. For 2001 through 2003, Customs costs increased by 29 percent, but in the period from 2004 though 2009, costs jumped more than 80 percent, James said.

The loss of what had been a reliable revenue stream has hurt VIPA’s financial position, putting some bonds at risk of technical default.

“We are in default on our marine bonds and will continue to be in default until this is settled,” said board member Gordon Finch. Attorney General Vincent Frazer later clarified that while VIPA’s financial status put the $13 million in bonds in jeopardy, they had not been declared in default by the lenders. He concurred the agreement needed to be changed as quickly as possible.

But the V.I. government entered the agreement, not VIPA, and the government has to be the party to change or leave the agreement, he said.

“So, come Jan. 1, the Port Authority can be in a position to collect its own fees,” Frazer said, adding that the authority must “express to the governor we need to cut the Port Authority out of the agreement right away, so the process can begin.”

Tourism Commissioner Beverly Nicholson-Doty, who chaired the meeting, said Customs officials had told her they spend more on clearance services than they collect in fees, but she felt the territory was getting the wrong end of the stick.

“The federal government is providing the same services at no expense in many foreign countries,” she said.

Customs does not want to see the agreement changed, Frazer said.

“Customs has hinted if they stop getting the money, they will stop providing pre-clearance services,” Frazer said. Echoing Nicholson-Doty, Frazer said he felt Customs had an obligation to perform the same functions they do free of charge at international airports around the world and should not put a U.S. territory in a worse position than foreign countries.

The board voted to send a letter to Gov. John deJongh Jr. asking him to immediately begin cutting the Port Authority out of the 1994 agreement. It also approved a measure proposed by Finch to do “what it has to to begin collecting its own marine-use fees.”

In other business, the board approved a $216,000 contract with Spartan Concrete to mix and pour concrete for the first phase of apron paving at St. Croix’s Wilfred Allick Port and Transshipment Center. It also approved several new leases and modifications to existing leases.

Board members also discussed options for repairing or replacing a leaky membrane roof and a partly corroded metal roof at Cyril E. King Airport on St. Thomas.

VIPA Engineering Director Dale Gregory presented an estimate of $3.7 million to replace a leaking membrane roof and a metal roof that has serious corrosion on the last six to eight inches at the roof’s eaves. Of that, $1.2 million would pay to replace the membrane roof, and the rest for the metal roof.

A second option would be to completely rebuild the second floor of the airport and put a new roof over the entire thing, Gregory said. That would cost at least $21 million, he said.

Most of the actual leaking has been in the membrane roof, several board members said, asking whether the job could be limited to replacing that component. Gregory said the leaks in the metal roof needed to be addressed because they would in time cause damage to the rest of the building.

“Why can’t we just replace the six to eight inches that are corroded?” asked Finch.

“We can,” Gregory said.

The board directed Gregory to come back with more options and prices for dealing with the leaky roof at its next meeting.

Present were board members: Doty, Finch, Frazer, Robert O’Connor, Labor Commissioner Albert Bryan and Public Works Commissioner Darryl Smalls. Absent were Cassan Pancham and Yvonne Thraen.

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The V.I. Port Authority board decided Wednesday to try moving toward collecting its own wharfage and tonnage fees, which U.S. Customs and Border Patrol has long collected on its behalf. The problem is VIPA recently hasn't been seeing most of that money.

The issue of the fees is not a new one and is becoming an increasing concern for VIPA officials. The Source reported in September 2009 that VIPA was awaiting payment of $6.3 million in fees that had accumulated since January 2008. In October 2010, VIPA voted to write off that debt, in order to allow its fiscal 2009 audit to be completed, but plans to continue trying to collect.

Since then, another $3.3 million shortfall has accumulated. And the fees continue to accumulate at a rate of about $270,000 per month, according to VIPA Finance Director Judith James.

For its part, Customs says it does not owe the money, pointing to a 1994 memorandum of agreement where it is authorized to collect operating costs from these fees before turning the funds over to the V.I. government.

Customs and Border Patrol was placed under the purview of the new Homeland Security Department after the Sept. 11, 2001 terrorist attacks, whereupon costs began to skyrocket. For 2001 through 2003, Customs costs increased by 29 percent, but in the period from 2004 though 2009, costs jumped more than 80 percent, James said.

The loss of what had been a reliable revenue stream has hurt VIPA's financial position, putting some bonds at risk of technical default.

“We are in default on our marine bonds and will continue to be in default until this is settled,” said board member Gordon Finch. Attorney General Vincent Frazer later clarified that while VIPA's financial status put the $13 million in bonds in jeopardy, they had not been declared in default by the lenders. He concurred the agreement needed to be changed as quickly as possible.

But the V.I. government entered the agreement, not VIPA, and the government has to be the party to change or leave the agreement, he said.

“So, come Jan. 1, the Port Authority can be in a position to collect its own fees,” Frazer said, adding that the authority must “express to the governor we need to cut the Port Authority out of the agreement right away, so the process can begin.”

Tourism Commissioner Beverly Nicholson-Doty, who chaired the meeting, said Customs officials had told her they spend more on clearance services than they collect in fees, but she felt the territory was getting the wrong end of the stick.

“The federal government is providing the same services at no expense in many foreign countries,” she said.

Customs does not want to see the agreement changed, Frazer said.

“Customs has hinted if they stop getting the money, they will stop providing pre-clearance services,” Frazer said. Echoing Nicholson-Doty, Frazer said he felt Customs had an obligation to perform the same functions they do free of charge at international airports around the world and should not put a U.S. territory in a worse position than foreign countries.

The board voted to send a letter to Gov. John deJongh Jr. asking him to immediately begin cutting the Port Authority out of the 1994 agreement. It also approved a measure proposed by Finch to do “what it has to to begin collecting its own marine-use fees.”

In other business, the board approved a $216,000 contract with Spartan Concrete to mix and pour concrete for the first phase of apron paving at St. Croix's Wilfred Allick Port and Transshipment Center. It also approved several new leases and modifications to existing leases.

Board members also discussed options for repairing or replacing a leaky membrane roof and a partly corroded metal roof at Cyril E. King Airport on St. Thomas.

VIPA Engineering Director Dale Gregory presented an estimate of $3.7 million to replace a leaking membrane roof and a metal roof that has serious corrosion on the last six to eight inches at the roof’s eaves. Of that, $1.2 million would pay to replace the membrane roof, and the rest for the metal roof.

A second option would be to completely rebuild the second floor of the airport and put a new roof over the entire thing, Gregory said. That would cost at least $21 million, he said.

Most of the actual leaking has been in the membrane roof, several board members said, asking whether the job could be limited to replacing that component. Gregory said the leaks in the metal roof needed to be addressed because they would in time cause damage to the rest of the building.

“Why can't we just replace the six to eight inches that are corroded?” asked Finch.

“We can,” Gregory said.

The board directed Gregory to come back with more options and prices for dealing with the leaky roof at its next meeting.

Present were board members: Doty, Finch, Frazer, Robert O'Connor, Labor Commissioner Albert Bryan and Public Works Commissioner Darryl Smalls. Absent were Cassan Pancham and Yvonne Thraen.