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Finance Authority Moves Ahead With Capital Improvement Plan

Jan. 8, 2009 – Public Finance Authority board members Thursday moved forward with a long-term capital improvement plan to stimulate the local economy, approving the funding needed to push through several critical projects that many have said would create hundreds of jobs and make use of some the authority’s unused cash in the bank.
From a new library and archives center on St. Thomas to the revitalization of one of St. Croix’s historic towns, some of the projects discussed by PFA board members during their monthly meeting on St. Thomas have long been in the works. Others — such as construction of a multi-million dollar rum distillery or a shopping center that will bring Home Depot to the big island — are being factored in as large revenue producers, ones that will help to finance several outstanding government debts and infrastructure improvements across the territory.
“This is the first move by the PFA to ensure that these projects — three in particular — are moving forward,” Gov. John deJongh Jr. – the board’s chairman – said after Thursday’s meeting.
The government’s efforts also tie into the proposed economic stimulus package being touted by President-elect Barack Obama – with the promise of additional federal funds for state and local governments. The territory has already submitted a “group of projects” for consideration, the governor added.
To help in the process, the board amended a previous resolution authorizing the issuance of up to $400 million in new gross receipts tax bonds to finance a slew of territory-wide education, emergency management, law enforcement, general government, waste management, transportation and recreation projects. The amendment, which was approved unanimously on Thursday, removes the mention of any specific projects from the list.
“Given that the Obama administration is giving us access to financing for capital projects, I wanted to make sure there was no duplication in our efforts,” deJongh explained after the meeting, adding that the proposed package does not contain earmarks for specific projects, only groups of projects. “We wanted to see what approvals we get first.”
The government is hoping to receive something in the neighborhood of $500 million, he added.
The approval of the bond authorization is expected to be one of the first items up for consideration by the 28th Legislature, according to incoming Senate majority members. The authorization, which requires a go-ahead from the Senate before the bonds can actually be floated, was left hanging when the 27th Legislature closed up shop at the beginning of last month.
It’s expected that the first $100 million in new rum cover-over revenues – the result of the move of Captain Morgan Rum to the Virgin Islands – can be factored into the territory’s budget during fiscal year 2012, according to PFA financial advisor David Paul. Meanwhile, beer, wine and spirits giant Diageo PLC has been pulling the money needed to finance the move out of its own pocket, signaling the need for the government to jump in and provide some startup cash to really get the project off the ground, he said.
In October, the PFA board passed a resolution authorizing the issuance of as much as $250 million in special project bonds needed to finance the construction of the new Captain Morgan distillery on St. Croix. Since the sale of the bonds hinges on the approval of a major Coastal Zone Management (CZM) permit, board members on Thursday authorized the issuance of up to $50 million in bond anticipation notes – a short-term financing method – to keep the process moving.
“This is a short-term solution – and these notes are intended be refunded from the proceeds of the long-term bonds once the markets settle a little,” said Patricia Goins, the authority’s bond counsel.
The bond anticipation notes, or BAN’s, should be issued within 60 to 90 days, according to PFA head Julito Francis. Meanwhile, Diageo this week finalized a lease with the St. Croix Renaissance Group for its distillery site, along with a lease for a warehouse facility in Estate Diamond, Francis said.
The authority also approved resolutions authorizing:
— Issuance of as much as $14.5 million in tax increment financing (TIF) bond anticipation notes to fund the public portions of the proposed Island Crossing Center (See “Island Crossing Developers Make Case for Tax Break.”
— Issuance of as much as $8 million in bond anticipation notes (the resolution, which requires legislative approval if the notes are floated, also provides for the alternate option of a lease purchase agreement with IBM) to purchase equipment needed for the territory’s emergency 911 system; and
— A stand-by funding agreement with the V.I. Waste Management Authority, which gives – but does not commit – the PFA the ability to go the bond market if WMA needs any additional financing for its $90 million solid waste management plan (the agreement allows the PFA to provide money to the WMA on an “as needed basis,” which, according to Goins and PFA board members, would help tackle the federal consent decrees the agency is currently trying to comply with).
Keeping them up to date on the status of three of the authority’s capital improvement projects, Public Works Commissioner Darryl Smalls assured board members that efforts in pushing forward the library and archive center project, the re-construction of the Toro Building on St. Croix and build-out of a new headquarters for the V.I. Territorial Management Agency on St. Thomas are going according to plan.
Excavation has been ongoing at the library’s site in Estate Donoe, and contractor Balbo Construction has been working to remove “a lot of rock” from the area in an attempt to secure the facility’s foundation, Smalls said. Public Works is also looking at an alternate route into the construction site, he added.
Meanwhile, a contractor has been selected for the demolition of the Toro Building, and work is expected to proceed within 90 days, Smalls said. The site will be the new home for the Justice Department on St. Croix. A request for proposals has been sent out for an architectural and engineering firm to do the design of the building, he added.
Making VITEMA a home in the old E D Plumbing building on St. Thomas is also a project that Public Works expects to finish quickly, Smalls said. A construction company should be selected by Monday, he said.
Because Thursday was the last time the PFA board could meet (according to a recently passed legislative mandate, the governor must soon submit the names of three additional board members – one from each island – in order for the body to have a full-fledged quorum), board members tried to help the process along by approving a resolution for up to $2 million from interest earned on the 1992 matching fund bonds to allow Public Works to pay for architectural and engineering services, along with equipping the building.
Another resolution unanimously passed Thursday allows Public Works to enter into a contract with whatever construction company is selected for the project by a selection committee consisting of Justice, Public Works and PFA representatives.
The board also authorized the use of:
— $88,179 in 2003 gross receipts tax bond proceeds to be shifted from the Frederiksted Revitalization Project to the Department of Tourism to pay for improvements to the department’s headquarters in the Oscar Henry Building on St. Croix (with cruise ships on their way back to the big island, it is imperative that the department be re-installed in its space, deJongh said after the meeting);
— $400,000 from interest earnings on the authority’s 1992 matching fund bonds to cover the rehabilitation of Central High School’s vocational building and the installation of the fencing th
e school needs for its re-accreditation efforts; and
— $250,000 to complete the information technology infrastructure upgrades to the Old Danish School House on St. Croix ($150,000 for the project – which will house the Office of the Governor and St. Croix administrator – will be reprogrammed from the authority’s Hospital Street Project, while the remaining $100,000 will be taken from the dividends the authority receives from the West Indian Co. Ltd.).
Francis said that the end of the first phase of the Frederiksted Revitalization Project – the completion of the Verne I. Richards Memorial Park — is also progressing, with Roy Canton from the Department of Housing, Parks and Recreation being contracted by the St. Croix Veterans Administration to move ahead with the design work.
Board members present during Thursday’s meeting were deJongh, Office of Management and Budget Director Debra Gottlieb and Finance Commissioner Claudette Watson-Anderson.

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