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Golden Resorts Dropped as Partner in Proposed Convention Center

July 12, 2007 — The Public Finance Authority pulled the plug Thursday on a proposed partnership with hotel developer Paul Golden, saying it will take bids from other competitors for the construction of an approximately $32 million convention center on St. Croix.
While this does not prevent Golden from bidding on the project, it does stamp out a resolution passed by the PFA in 2003, which authorized the center to be built in conjunction with Golden's resort. At a PFA board meeting in mid March, Gov. John deJongh Jr. said the authority has already received letters of interest from two other developers, William and Punch LLC and Annaly Bay Resorts, and would be ready to consider other proposals if Golden could not prove he has sealed the deal with two financial backers.
In June 2002, former Gov. Charles W. Turnbull signed into law a bill authorizing the PFA to float $41 million in bonds — $32 million of which would go toward building a convention center on St. Croix. The resolution to build the center was passed in March 2003, and was contingent on Golden obtaining at least $95 million in financing needed to begin construction on the rest of the development.
During the PFA's board meeting Thursday, Golden said he had signed off on an agreement with one backer for a $125 million construction loan, which could eventually increase to $140 million in long-term financing. However, Golden later told deJongh that he would not be able to obtain a firm letter of commitment from the lender until two lawsuits pending against the company have been settled.
"It doesn't exist, what you’re asking for," Golden said. "We signed the term sheet almost a year ago. I traded emails with them earlier this week, and they're excited about the extensions we just got, but they're ready to move forward. They're waiting on us."
Golden's project has been in the works for the past seven years. Though plans have been completed for the resort, construction has not yet begun, primarily because of two unresolved legal issues — lawsuits filed by the V.I. Conservation Society and Traxco, the company that operates and manages St. Croix’s Randall "Doc" James Racetrack. (See "Another Golden Resorts Delay: Decision About Extension Postponed.")
"Years later, these things are still in appellate court," Golden said Thursday. "In terms of where we are on the project, we're basically ready to move forward and begin construction, but we can't complete the financing on the project until the lawsuits are settled. And the lawsuits are pretty much tactical — they're meant to delay construction on the project."
PFA board members went into closed session to discuss Golden's presentation, and his request for another extension to obtain the financing needed to break ground on the resort. After resuming the meeting an hour later, however, the board unanimously voted to begin accepting bids for the convention center, saying representatives from Carambola have also expressed interest in submitting a proposal.
Board members also unanimously voted to send out requests for proposals (RFP) to parties interested in purchasing or managing King's Alley Hotel on St. Croix. The project was recently embroiled in controversy when the PFA canceled its contract with Best Construction after the company allegedly missed several construction deadlines.
Speaking after the meeting, PFA Executive Director Julito Francis said the authority would be giving Best Construction "the benefit of the doubt" by reviewing the company's response to a list of deficiencies cited in May.
"Upon completion of the review, final steps will be taken," he added, saying that the PFA would be moving forward on other parts of the project in the interim.
Proposals to manage or buy King's Alley must be submitted by September, Francis said, since the project is slated to be completed by October.
In other news, the board voted to write a letter to Robin Bay Associates in response to the company's request for the issuance of $50 million in private activity bonds — funds that can be used to subsidize public-related facilities, such as sewage or water-treatment plants.
In its request, Robin Bay did not say exactly how it would use the funds, according to PFA legal counsel Jim Hindels, who suggested the board write to the company asking for more information on its proposal.
A response from the company will then be submitted to the PFA's bond counsel for review, board members said.
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