The Senate Finance Committee approved raising the V.I. Port Authority’s limit on outstanding bonds from $100 million to $500 million Tuesday.
VIPA Executive Carlton Dowe testified that raising the cap wouldn’t necessarily mean that the Port Authority would issue bonds up to the proposed limit. However, Dowe said the financial flexibility was needed for VIPA’s short-term financing needs, including seaport maintenance projects, predevelopment projects in Crown Bay, development of a new U.S. Customs and Border Protection facility in Red Hook and costs associated with dredging the Charlotte Amalie Harbor.
In response to questions from Sen. Hubert Frederick, Dowe acknowledged that the Port Authority doesn’t yet have the capacity for $500 million in debt.
“Not today. But we’re looking at the future — what the future might hold,” he said, prompting Frederick to ask why they shouldn’t raise the limit incrementally to match pace with the Port Authority’s financial growth.
Dowe highlighted the costs of the Port Authority’s various projects and stressed that VIPA can only borrow what it can afford to repay.
“We’re just asking for the flexibility so next year, two years from now, we don’t run back here and tell you, ‘well, we want to go up by another $50 million,’” he said. “Stability is what we’re talking about.”
At the same time, lawmakers decided to hold in committee a bill that proposed tiered increases to the Highway User’s Tax based on vehicle weight. As proposed by Sen. Ray Fonseca, the bill called for eight weight classes and a per-pound tax ranging from 16 cents to 30 cents.
Public Works Commissioner Derek Gabriel lauded the effort to provide the department with badly-needed funding to repair the territory’s roads but suggested grouping vehicles into three classes to lessen the “administrative burden” on the V.I. Internal Revenue Bureau.
IRB Director Joel Lee suggested a flat increase to the current rate of 16 cents per pound for larger vehicles, noting that the cost of implementing an eight-class price system “far exceeds the anticipated collection costs.”
“What is wrong with us in the Virgin Islands,” Sen. Marise James later asked, “where we can’t just do a little more work for us to get more money so we can repair our roads? That’s what I’m trying to figure out.”
Lee acknowledged that heavier vehicles cause more damage to roads and signaled an openness to adding more classes but called eight “a little excessive.”
Consideration of those measures came after lawmakers approved two leases, including one 50-year agreement between the Virgin Islands government and Tropical Marine to operate a retail shop, commercial spaces, a marine engine repair shop, import activities and a parking lot in Red Hook with an annual rent of $30,000.
V.I. Property and Procurement Assistant Commissioner Vincent Richards noted that Tropical Marine has leased the property since 2005 and said the company “has made significant investment on both the upland and submerged property, beautifying the premises by creating a lighted and secure parking area.”
The committee also approved a 99-year lease between the Virgin Islands government and the Charles M. Kim V.I. Foundation to open a Virgin Islands Museum of Art at 48B Norre Gade in Kings Quarter on St. Thomas, also known as the Hamburg-Amerika Line building, with an annual rent of $1,200. The lease included a five-year construction period.
The foundation is run by the family that owns the financial services company Alpine Group. Jason Charles, Alpine’s chief of external affairs, who also serves as chair of the West Indian Company board, presented testimony on their behalf.
“We would like to make it clear from the beginning — neither Alpine Group, Alpine Securities or any of its subsidiaries, the Charles M. Kim V.I. Foundation, or the Kim family will use this building for any profit,” he said.
Charles said the goal is to establish “a dedicated space for the arts that will further enhance opportunities for local arts and music programs.”
“This initiative will also broaden community awareness, foster a diverse tourism market and preserve the beauty of our culture,” he said.
Acknowledging that the museum would add cultural and economic value to Charlotte Amalie, Senate Majority Leader Kurt Vialet said the territory needed some assurances that the space would remain a museum for the entirety of the lease.
“My concern is, suppose ownership change of the Alpine Group,” he said. “Just suppose the present composition changes in any way. How are we able to make sure that those protections are going to stay in place in reference of Virgin Islanders being a part of the board and being a part of the project moving forward?”
Charles said the lease agreement would require that the property be used as a museum administered by a nonprofit. Vialet referenced the language of the proposed agreement, which stated that the premises could be used for “the operation of museums, galleries, or exhibition, for community and civic purposes, studios, and production of art, culture, and historical materials and associated office and/or retail use and other related purposes.”
“I’m trying to tie in where it mandates that a museum must be in that building at all times,” he said. “Because this lease is for 99 years plus two 50-year [renewal options], so we’re going to all be gone. So 30 years from now, 40 years from now — when we’re all gone — I want to make sure that the intended purpose still exists. So what part of the lease speaks to that?”
Attorney Leigh Goldman, the foundation’s general counsel, said after several minutes of back-and-forth that the lease had been “painstakingly crafted” with input from the V.I. Property and Procurement Department and others to make sure the project fulfilled a “significant public, cultural, historical, artistic purpose.”
“Only — and primarily only — to benefit the people of the Virgin Islands,” he said.
Goldman said the tenants would be Charles M. Kim V.I. Foundation, and the government would be allowed to cancel the lease if the foundation dissolved. Further, he said, the government would be able to cancel the lease if the space is used for anything other than what the lease describes.
“The specific reason, to my recollection, as to why the word ‘retail’ was left in there is … most museums have shops where the individuals who contribute to the cultural showings within it have an opportunity to sell those to the public, and we invite the public to participate in our museum and in our culture by purchasing something to take home with them,” he said, adding that the inclusion doesn’t “in any way, shape or form redirect the primary purpose of the building as a museum and cultural center.”
Though the presentation was well-received, the lease’s length and low annual rent raised eyebrows.
“Ninety-nine years is extremely — a long time to say one hundred dollars a month,” Gittens said, questioning whether the agreement was in the best interest of Virgin Islanders.
The approved measures will be taken up by the Senate Rules and Judiciary Committee.
