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PFA PLANS TO PUT $2.5M INTO RESTORING HOTEL

Aug. 6, 2003 – The Public Finance Authority unveiled its plans for the restoration of the King's Alley Hotel in Christiansted to the Senate Finance Committee during the authority's budget hearing on Tuesday.
Kenneth Mapp, PFA director of finance and administration, told the committee that the authority has nearly completed redevelopment plans for the hotel, which it acquired in 2001 when private developers defaulted on the only loan given from 1994 PFA bond issue proceeds set aside for ventures with the private sector.
The PFA's investment in the hotel exceeds $5.25 million at present, Mapp said, and the costs of renovation will entail an additional $2.5 million.
"This investment is necessary not only to revitalize and reposition the King's Alley operation into a profitable position in the market but to give the authority the greatest opportunity to recover its investments should we sell the property," Mapp said.
Mapp said he knows that many senators are wondering if the government should get into the hotel business. But, he said, a management team will run the facility's day-to-day operations. "This issue of a government owning a facility with a management team running it is not new," he said.
Sen. Adlah "Foncie" Donastorg, the Finance Committee chair, told Mapp: "I would have preferred to see that the property was sold."
Mapp replied that selling the hotel at this point would result in a financial loss to the government.
(Two year ago, soon after the King's Alley foreclosure, the PFA was looking for another entity to take over management of the property. See St. Croix Source report "WICO may manage foreclosed King's Alley".)
Discussion of the hotel was part of the overview of the PFA's financial picture that Mapp presented. The authority as a quasi-independent agency sets its own budget and generates its own funding, but the Finance Committee receives such overviews from the various authorities as part of its annual budget hearings.
Mapp estimated the PFA's Fiscal Year 2004 budget at $3.2 million, down from $3.8 million for the current fiscal year. The authority's budget is funded from interest earn on bond proceeds, internal revenue matching funds and/or its other revenue streams.
In his testimony, Mapp said the PFA has raised more than $1.4 billion and managed more than $98 million in public projects on behalf of the people of the Virgin Islands.
He outlined the Frederiksted Economic Revitalization Project that the authority is currently working on. The PFA hopes to renovate the town and establish a specific "identity" for it to lure visitors and residents alike, he said.
Public Employees Relations Board
Also testifying before the Finance Committee on Tuesday was the Public Employees Relations Board, which requested a budget of $700,043.68 for FY 2004, up from the $500,000 appropriated for FY 2003.
Sen. Louis Hill commented that since the FY 2004 budget hearings began, many departments and agencies have been coming before the committee requesting budget increases as if they did not realize that the territory is facing a fiscal crisis. "These are very difficult fiscal times; these are very challenging times for the government," he said.
The PERB, an independent agency of the government with quasi-legal powers, is the sole recourse of government employees and managers including the independent instrumentalities such as the Water and Power Authority, Port Authority and the hospitals to address labor relations matters. The board hears grievances and seeks to arrive at amicable agreements between employees and their managers. It also provides arbitration training.
Donastorg said that of the 113 cases filed with the PERB this year, more than 80 were resolved. He said this shows him that PERB can operate on a lower budget.
However, PERB's executive director, Zandra Petersen, told the committee that "if we had to go below $600,000 this would affect our effectiveness."

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