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HomeNewsArchivesANOTHER STEP TOWARD CANCELING HUGO LOAN

ANOTHER STEP TOWARD CANCELING HUGO LOAN

June 30, 2001 – The U.S. Senate Appropriations Committee has approved $2 million to cover the cost of canceling the outstanding balance on the territory’s Hurricane Hugo Community Disaster Loan, provided after the devastating storm in 1989.
The committee action brings the Turnbull administration another step closer to its goal of having the $46 million loan forgiven. The approval reduces the Hugo debt by nearly 97 percent, leaving a balance of just over $1 million.
Gov. Charles W. Turnbull said the federal government has already shifted nearly $45 million into a special account to cover the writeoff. The $2 million for the cancellation costs, originally estimated at $3.5 million, is to cover the re-estimated loan balance and interest.
The re-estimate of the Hugo loan was done under the Federal Credit Reform Act at the behest of the V.I. government. Turnbull said that with the Senate committee’s approval and with a similar measure approved in the U.S. House of Representatives last week, elimination of the Hugo debt from the territory’s books is almost complete.
"I am extremely gratified by the Senate committee vote to cancel this burdensome debt," Turnbull said in a release. "Without the House and Senate action, the government would have been forced to pay off the entire $46 million balance at a cost of nearly $10 million a year, a sum which we could ill afford and which would have put our economic and financial recovery in jeopardy."
Meanwhile, the Turnbull administration completed an application to the Federal Emergency Management Agency two weeks ago to have $160 million in principal and interest owed on the Hurricane Marilyn disaster loan forgiven. Hurricane Marilyn struck the territory in 1995.
One requirement for getting the Marilyn loan canceled is the submission of the official financial statements of the territory for the three fiscal years after the disaster. FEMA and other federal officials have expressed dissatisfaction with the financial reports provided by the government, questioning the accuracy of the accountings.
Among multiple requests for supplemental budget appropriations this week, Turnbull asked the Legislature to approve $2.75 million for Finance Department repairs, equipment and "personnel costs associated with the hiring of personnel to monitor and facilitate agreed-upon audit procedures and to pay for any additional costs associated with auditing of the government's financial records." At the special session the governor called Thursday to address his measures, the Senate majority voted to send all of the appropriation requests to the Finance Committee.
According to FEMA records, the Virgin Islands has repaid $7.4 million of the money owed from Marilyn. Including the accumulated interest, it should be paying off the balance to the tune of just over $9 million per year.
Turnbull said it could take FEMA at least several months to process the Marilyn request. He said he will use the same debt-relief procedures under the Federal Credit Reform Act to seek cancellation of any balance of the Marilyn loan not forgiven by FEMA.

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