During a fast-moving Public Finance Authority meeting on Thursday, board members unanimously approved a resolution for a bond issuance, leveraging local hotel occupancy tax revenues, to help finance renovations at the Frenchman’s Reef Resort on St. Thomas.
Eric Taylor, a partner with Hawkins Delafield & Wood LLP, a law firm with several locations in the U.S. mainland that is serving as bond counsel for the PFA, outlined the need for the issuance and sale or delivery of the PFA’s Hotel Occupancy Tax Revenue Bonds, Series 2022A, Economic Recovery Fee Revenue Bonds, Series 2022B, and Hotel Occupancy Tax and Economic Recovery Fee Developer Note (Frenchman’s Reef Hotel Development Project).
“Proceeds of the bonds will be used to finance and refinance certain eligible costs and expenses incurred by the hotel developer in connection with the renovations of the Frenchman’s Reef Resort,” said Taylor.
According to Taylor, in terms of bond details and security, the series 2022A bonds will be issued in an aggregate principal amount not to exceed $43 million, mature no later than Jan. 1, 2049, and bear interest at a fixed rate not to exceed 10 percent per year. The 2022B bonds will not exceed $20 million, mature no later than Jan. 1, 2049, and bear an interest rate to not exceed 13 percent per year, while the Hotel Occupancy Tax and Economic Recovery Fee Developer Note will not exceed $244,940,000 and will be payable through hotel occupancy tax revenues and economic recovery fees, and mature no later than 30 years after issue.
The resolution also establishes the Indenture of Trust, a First Supplemental Indenture, a Second Supplemental Indenture, and a Third Supplemental Indenture, a Hotel Occupancy Tax and Economic Recovery Fee Collection and Disposition Agreement, a Bond Purchase Agreement and a Limited Offering Memorandum, and authorizes certain other actions in connection with the issuance and sale of said bonds and developer note.
Dorothy Isaacs, PFA board member, posed many questions during the meeting and inquired who requested the bond issuance.
Nathan Simmonds, executive director of the PFA, said that the resolution is “a result of the Economic Development Authority under the Hotel Development Act, which allows hotels that were substantially destroyed as a result of the hurricanes to apply for hotel development through the hotel development act, to utilize portions of the Hotel Occupancy tax and Economic Recovery fees that are charged to their hotel guests in order to fund the renovation costs.”
Isaacs also inquired about the full anticipated opening of the Frenchman’s Reef hotel.
David Bornn, Government House’s chief legal counsel, replied that the hilltop portion of Frenchman’s Reef is to be open in early December, with the hotel fully opening in April 2023.
Gov. Albert Bryan Jr., Finance Commissioner Bosede Bruce, Office of Management and Budget Director Jennifer O’Neal, and Keith O’Neale were also present.