Working off a recent authorization from the Legislature, Public Finance Authority board members approved Wednesday a $50 million bond issue that would help the government cover critical costs for the territory’s two hospitals along with outstanding payments to the V.I. Water and Power Authority.
Gov. John deJongh Jr. sent down a bill in June to borrow more than $100 million to cover the budget shortfall for the current fiscal year along with “critical” government needs, such as the outstanding WAPA bills and hospital costs. Senators changed the terms of the bill at another hearing in June, introducing their own proposal that would authorize the reissurance of a working capital loan in the amount of $50 million prior to the end of the fiscal year.
Senators had proposed that the full loan must be repaid in less than one year, but during a special session in July, Finance Commissioner and PFA Executive Director Angel Dawson told senators that the bank was not interested in the short-term loan proposal, particularly since the bill did not say how the loan would be repaid.
At the end of the session, the Senate voted 14-0 to authorize the government to convert the short-term $50 million loan into a long-term loan or bond secured by gross receipts taxes.
Dawson explained at Wednesday’s PFA meeting that the PFA has not been able to “successfully conclude” discussions with FirstBank – the current holder of the government’s $40 million line of credit – on the conversion of the loan. To save time, since the money is needed going into September, Dawson said the PFA has been laying the preliminary groundwork for the bond issue and “recommends that we move in this direction given the current market conditions.”
The bonds, which will be backed by gross receipts taxes, will cover:
– $11 million for Gov. Juan Luis Hospital’s payroll from July through September;
– $5.25 million for JFL’s WAPA bills;
– $1 million for the upgrade of electronic records at the St. Croix hospital;
– $7 million for Schneider Regional Medical Center;
– $5.25 million for Schneider’s WAPA bills;
– $3.5 million for SRMC capital improvements;
– $1.5 million to Human Services to cover outstanding debts for Sea View Nursing Home
– and $1.5 million for the Bureau of Corrections’ outstanding WAPA bills.
PFA bond counsel Patricia Goins said the maximum interest on the bonds will not exceed 8.5 percent, with a maturity of not more than 30 years.
PFA board members also approved a lease for Dive Experience Inc. to operate a shop out of the Kings Alley Hotel on St. Croix. The business will take over the space previously designated at the hotel for a restaurant, which has been vacant for years.
The lease is for five years with a five-year option to renew. If the hotel is sold, the dive shop has 90 days to vacate if the new owners ask them not to stay.
PFA board members said the dive shop is a “long-standing St. Croix company” and were excited that a “homegrown” business, looking to expand, would be moving in to the space. The shop already kept their boat on the nearby boardwalk and board members said it would be easy for customers to come to the shop.
