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BOND ACT REVISIONS, VIHA BOARD DISSOLUTION OK'D

July 29, 2003 – In Monday's special session called by Gov. Charles Turnbull, a clearly divided Senate approved, in identical 9-6 votes, his requests for numerous technical amendments and several substantive ones to the $235 million bond issue bill he signed into law last week.
It also authorized him to dissolve the V.I. Housing Authority board of commissioners and appoint an interim board in an effort to stave off a federal move to place the agency in receivership because of financial concerns.
Many of the amendments to the borrowing law, approved by the Senate on July 15, consisted of adding phrases and changing language errors. These changes were characterized as "just some tidying up" by Sen. Douglas Canton Jr.
One amendment provides for the issuance of bond anticipation notes. These are necessary to provide interim financing until the bond proceeds become available, Finance Commissioner Bernice Turnbull said.
Deleted from the law was the requirement that income-tax refunds and vendor payments be split 50/50 between the two districts. Instead, as the governor specified, payments will be based on what is owed.
Another amendment deleted the appropriation of $20 million to fund the Government Employee Retirement System's unfunded liability and of $45 million to the Economic Development Fund for initiatives on St. Croix, and then earmarked the whole $65 million to "finance economic development intiatives" on St. Croix, but not through the Economic Development Fund.
(For a breakdown of the original bill approved by the Legislature on July 15 and signed by the governor and sent back down to the Senate with his amendment requests on Friday, see "Approval of bond bill ends long day's debate".)
The special session, which began around 10:30 a.m., concluded at about 11 p.m. with few breaks and intense discussion by a divided Senate.
Sens. Canton, Roosevelt David, Carlton Dowe, Emmett Hansen II, Louis Hill, David Jones, Almando "Rocky" Liburd, Shawn-Michael Malone, and Luther Renee voted for the all of the amendments. Sens. Lorraine Berry, Adlah "Foncie" Donastorg, Norman Jn Baptiste, Usie Richards, Ronald Russell and Celestino White voted against them.
The justification for the governor's requested borrowing is becoming less and less apparent, Berry said. She said the money appropriated to pay vendors is for two months, as the current fiscal year ends on Sept. 30. "What are we going to do next year?" she asked her colleagues.
There will be no next year for the VIHA board of commissioners — which convened in a regularly scheduled meeting on Tuesday and voted to relieve Ray Fonseca of his duties as executive director.
The Senate voted 8-6 to authorize Gov. Turnbull's dissolution of the board of commissioners and to appoint an interim board to serve for up to six months. The interim body is to consist of seven members, two of them residents of public housing. The board now consists of nine members. There was no information from the governor on whom he would appoint to the interim board.
There was some discussion on the floor as to whether the governor had the authority to dissolve the board. According to Title 29 of the Virgin Islands Code, "the governor has the authority to dissolve the board, but not without a hearing before the governor or a hearing officer specially designated by him," legal counsel Constance Krieger stated.
However, the measure passed, with Sens. Berry, Canton, David, Dowe, Hansen, Hill, Jones, Malone and Renee voting in favor; and Sens. Donastorg, Jn Baptiste, Liburd, Richards, Russell and White voting against.
Before moving to a vote on the matter, senators spent the entire afternoon and evening hearing testimony from commissioners and former and current employees of the Housing Authority.
"So once again we are in a situation of crisis, operating in crisis," Hill said. "It is necessary to take some action so that we do not end up in a receivership."
A financial management review released last September by the U.S. Department of Housing and Urban Development found inadequate financial management systems, unallowable expenses, co-mingling of funds and ineligible interest expenses, according to Keith Richards, assistant to the governor. HUD is VIHA's funding source.
Michael Liu, HUD assistant secretary for public and Indian housing, who visited the territory earlier this month, concluded that "the current structure of the board of commissioners does not lend itself to effective management," Keith Richards told the lawmakers.
VIHA commission member Carmen Senton Donovan told the senators she felt hurt. The board "was never given a chance to establish a recovery plan to address this problem," she said.
Donovan admitted that the authority has many problems. She also said that the present staff does not listen to the board.
Shirley Lake-King, former VIHA controller, said the board was misinformed and misled. She said that the executive director said the authority was operating under a budget deficit, but that last Oct. 18 HUD approved VIHA's 2002 budget with a surplus of $1.7 million, commending VIHA for $3.16 million of estimated budget reserves for FY 2002.
Fonseca told the legislators that VIHA employees are filling more than 22 positions on an interim basis at a higher level than those for which they were hired because of upper-echelon layoffs at the start of this year due to budget cuts.
This prompted Renee to comment: "The people that were fired were the brains and experience. How can the plan work when the people that know the system are no longer there to implement it?"
Fonseca conceded that VIHA's major problems are with finances. But, he added, "We also have problems with physical appearance. It is a troubled agency."
Sen. Richards noted that the HUD report stated that two vehicles were missing from the Housing Authority. VIHA's interim financial officer, Lenia Parson, told the Senate that an invoice may have given the appearance that there were two vehicles. The discrepancy has existed since a 2001 audit, she said.

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