With the V.I. Government Employee Retirement System seeing growing numbers of serious inquiries about business loans, its governing board approved amendments to its Alternative Investment Policy on Monday, standardizing fees and interest rates.
Board Chairman Raymond James said that in the past, GERS Administrator Austin Nibbs was allowed to negotiate fees, but with more potential GERS partnerships, an upfront policy was necessary “so when investment proposals come before us, we have a clear answer regarding lending, investment and interest rates.”
The new policy would have GERS charge an interest rate approaching 8.25 percent, but as determined by current market interest rates, risks and terms. Loans of less than $5 million would have a $10,000 fee, rising to $15,000 for loans up to $10 million and $20,000 on larger loans.
Fees would be subject to adjustment, based on the specific project.
The board also instated a loan closing fee of 1 percent on loans under $5 million, and half a percent on larger loans.
There would also be a maintenance fee of no less than half a percent of the outstanding loan balance per year.
Board member Carver Farrow proposed an amendment to the policy changes, adding a $5,000 processing fee onto each alternative lending loan.
“These fees are on the borrower,” James said, emphasizing that the fees and interest are not paid by GERS, but are income for GERS.
Voting yea were James, Farrow, Judge Edgar Ross, Dr. Wilbur Callender, Leona Smith and Desmond Maynard. Member Vincent Liger was absent.
After going into executive session for two hours to discuss contract negotiations and personnel matters, the board also voted to accept the terms of a proposal from Standard International Group to help analyze and investigate new lending and investment requests under the Alternative Investment Policy.
After two tries and one member changing his vote, the board also accepted the V.I. West Indian Company’s counter proposal to manage Havensight Mall – with one modification: keeping the management fee paid to WICO at 4.5 percent of receipts.
Farrow initially voted against the measure, saying he had some concerns that WICO needed to address in several areas. He offered few details, saying they were discussed in executive session, but mentioned signage and parking.
Ultimately voting to approve the proposal were Farrow, Ross, Smith and James. Callender and Maynard voted against. Liger was absent.
Despite a small crowd eager to talk about it, there was no discussion about an ongoing controversy that arose because GERS has not been processing applications for retirement benefits for several months while the system wrestles with a requirement that might make some employees either accept a lower annuity than they expected or make good on missing contributions that should have been paid by the Virgin Islands government in years past.
“The contribution issue will be dealt with at the end of the month, when hopefully we will have a final policy to address every issue we have,” Chairman Raymond James said to the board and members of the public at the outset of Monday’s meeting on St. Thomas.
