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HomeNewsArchivesPFA Moves Ahead With New Line of Credit to Fill Budget Gaps

PFA Moves Ahead With New Line of Credit to Fill Budget Gaps

Public Finance Authority board members met briefly Wednesday to give the go-ahead for a new line of credit that will free up about $125 million for expenses in fiscal year 2011.
Last year senators authorized the government to borrow up to $250 million to plug multi-million dollar funding gaps projected for both fiscal years 2010 and 2011. This initial proposal allowed officials to float bonds, tap into government public fund accounts, or turn to a bank or other financial institution for money.
At the time, the government opted to borrow $50 million from internal funds, and an approximately $200 million line of credit was subsequently opened with the banking syndicate formed by Banco Popular and FirstBank.
Since then, officials have lobbied for more money to keep the government afloat, and senators recently passed a bill bumping the borrowing authorization up from $250 million to $500 million. At that time, officials said the plan was to float up to $250 million in bonds, put $100 million toward the line of credit and use the rest to cover this year’s $170 million budget shortfall.
At last month’s meeting, PFA bond counsel Patricia Goins said it looks like the government would be needing about an extra $160 million, which would pay off the existing $200 million line of credit and free up $150 million to cover this year’s budget shortfall.
At the time, she said if all goes well in ongoing negotiations between the government and the banks, what’s left of the $500 million authorization will be used to open a new line of credit.
Goins confirmed Wednesday that both banks were on board for a $131.4 million line of credit — of which the government plans to use about $125 million for FY 2011, and the remaining $6.4 for this year. To make it official, the PFA board passed a resolution amending the original authorization for a $200 million line of credit and reinstating it at the new reduced amount. The resolution also changes the maturity date on the line of credit from Oct. 1, 2012 to Oct. 1, 2013.
Board members also pledged their support for a portion of Wintdots Development’s efforts to develop property on Flagberry Hill owned by the local Elskoe family.
About a year ago, senators passed a bill mandating that the PFA guarantee the project for $49.5 million, which the company’s principals have said is needed to obtain financing from their lender. However, PFA head Julito Francis explained later that the board was only able to support about $9.8 million worth of expenses needed to renovate the existing facility at Paradise Point, of which Wintdots owns half, since the remaining money will be used to refinance old loans and construct a geothermal energy plant, which he said was not included in the Senate’s authorization.
The guarantee doesn’t mean the government is fronting the money for the project, said Wintdots chairman Dean Luke. It has just helped the company get the money and lower interest rates it needs to push forward with the work.
He said later that thanks to a recent approval from the Public Services Commission, the company should break ground on the geothermal energy plant next month and is in ongoing negotiations with the V.I. Water and Power Authority for a power purchase agreement.
Wrapping up their business Wednesday, the board also voted to extend for one year the terms of three West Indian Co. Ltd board members whose terms expired in February.
Board members present during the meeting were Finance Commissioner Angel Dawson, Gov. John deJongh Jr., Office of Management and Budget Director Debra Gottlieb, Keith O’Neale Jr. and Pablo O’Neill.

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