82.4 F
Cruz Bay
Monday, May 20, 2024
HomeNewsArchives$46M HUGO LOAN CLOSE TO BEING DROPPED

$46M HUGO LOAN CLOSE TO BEING DROPPED

April 24, 2001 — The Turnbull administration is confident that the federal government will forgive $46 million in disaster loans, even though it’s not a done deal.
Gov. Charles Turnbull said over the weekend that the U.S. Office of Management and Budget has completed a re-estimate of the current net value of the territory’s Hurricane Hugo Community Disaster Loan, which was given soon after the devastating storm struck in 1989. The re-estimate, he said, was done under the Federal Credit Reform Act at the behest of the V.I. government.
If Congress approves the re-estimate, the territory’s $46 million debt would be reduced by nearly 97 percent, leaving a new balance of just more than $1 million. Turnbull said the federal government has already shifted nearly $45 million into a special account to cover the cost of the writeoff.
According to Delegate to Congress Donna Christian Christensen, the catch is whether Congress, which is now hashing out the fiscal year 2001-02 budget, will appropriate $3.5 million to cover the re-estimated loan balance and interest. That money, she said, would likely come from the Interior Department.
"OMB has agreed to be supportive on this issue. We’re trying to gauge when this could happen," Christensen said. "It’s looking like it could be in this year’s budget."
Just as important to the cash-strapped V.I. government is the Federal Emergency Management Agency’s decision to extend the suspension of debt payments on the Hugo loan through the end of the end of the fiscal year in September. That would keep the administration from having to pay out $8 million, Turnbull said.
Meanwhile, the governor said he has ordered the V.I. Office of Management and Budget to prepare a petition to cancel the $150 million Hurricane Marilyn Community Disaster Loan, which will be submitted to the federal government in June. Marilyn pounded the territory in 1995.
In 1999 Congress, at the urging of the Turnbull administration, modified the FEMA loans to make them eligible for debt relief under the Federal Credit Reform Act of 1991. As for the Hugo loan, FEMA approved an $89 million loan to the Virgin Islands government in 1990, of which the government has drawn down about $50 million. FEMA subsequently canceled $21 million, leaving about $29 million of the principal.
Interest accrued of roughly $17 million, bringing the outstanding debt to $46 million. According to Interior officials, on average, loans from the past five or six years from states including Florida have been reduced by 95 percent under the same process.

Print Friendly, PDF & Email
Keeping our community informed is our top priority.
If you have a news tip to share, please call or text us at 340-228-8784.

Support local + independent journalism in the U.S. Virgin Islands

Unlike many news organizations, we haven't put up a paywall – we want to keep our journalism as accessible as we can. Our independent journalism costs time, money and hard work to keep you informed, but we do it because we believe that it matters. We know that informed communities are empowered ones. If you appreciate our reporting and want to help make our future more secure, please consider donating.

Previous article
Next article

UPCOMING EVENTS