The V.I. Port Authority is now awaiting payment of nearly $8 million in wharfage and tonnage fees collected on the authority’s behalf by U.S. Customs and Border Patrol, the VIPA board learned Wednesday during its monthly board meeting at its St. Thomas headquarters.
The issue of the fees is not a new one and is becoming an increasing concern for VIPA officials. The Source reported in September 2009 that VIPA was awaiting payment of $6.3 million in fees that had accumulated since January 2008. According to the latest VIPA financial report, the wharfage and tonnage fees now exceed $7.8 million, and have yet to be turned over to the authority.
The issue will be detailed in the authority’s Ernst and Young audit for 2009, according to board member Gordon A. Finch, who chaired the board’s finance committee meeting earlier in the month. The completed audit is expected by the end of May.
The committee determined that the letter transmitting the audit needed to make reference to the federal government via Customs and Border Patrol.
Under a 1994 memorandum of agreement, U.S. Customs and the V.I. government negotiated a deal where Customs would collect wharfage and tonnage fees due the authority, extract Custom’s operating costs for the pre-departure passenger inspection, and then turn over the remaining funds to the V.I. government, which then extracts its own administrative fee and turns the remainder of the fees over to the Port Authority.
Counsel for the Port Authority has said that VIPA was not made a party to the agreement.
It is important to note that when the V.I. government and then U.S. Customs inked their agreement, Border Patrol was yet not part of the equation, and the Department of Homeland Security did not yet exist, generating questions about whether the original intent of the agreement had been expanded along with the expansion of the federal agency, but without review by the V.I. government or the Port Authority.
The agreement has not been revised since then, despite U.S. Customs being lumped in with Border Protection and placed under the purview of Homeland Security in the aftermath of the September 11, 2001 terror attacks.
Concurrent with this consolidation is an increase in the operational costs extracted by Customs. For the period between 2001 and 2003, Customs costs increased by 28.6 percent, but in the period between 2004 though 2009, costs jumped 81.5 percent, according to a letter from Gov. John deJongh Jr. to DHS Secretary Janet Napolitano asking for discussions about modifying the agreement.
DeJongh’s letter was met with a reply from a DHS assistant secretary, which said that the Border Patrol’s operational costs have increased faster than the collected funds accumulated. The DHS letter further indicated that the agency and the V.I government’s “working together” was a “critical tool to ensure that tourism remains viable despite increases in security requirements.”
As of press time, the Source had not received a response to a request for an interview with the governor on this topic.
The disparity between what has been received and what is owed has been a hot topic at VIPA and also with Government House for over a year.
“This ought to be included as an entity that owes money to the Port Authority, and not just the V.I. government,” Finch said. “It should include the fact that Customs and Border Patrol collected our monies and we never received [them].”
The funds are critical to maintaining the Authority’s bond ratings.
“We have to make every possible effort to collect, otherwise it will negatively affect our bottom line,” Judith James, VIPA director of administration and finance said. “Right now it is not a problem with the rating agencies because we still plan to collect. It only becomes a problem when it hits our bottom line.”
“They [federal authorities] have resisted all requests,” Attorney General Vincent Frazer said. “We are going to try to invite them into discussions and get the governor’s assistance.”
On Thursday, Government House weighed in again on the issue. "The Administration has been working with the board and management of VIPA to address the past-due amounts and CBP’s interpretation of allowable charges under the agreement. The governor has raised this issue with Secretary of Homeland Security and is meeting with the VIPA board this weekend. We do not believe there is any threat to the continued services provided, and all measures to ensure its continuation will be taken."
