The $42 million payment of the government's 1990 Hurricane Hugo disaster loan from the Federal Emergency Management Agency, which Secretary of the Interior Bruce Babbitt mentioned at a new conference Monday, is still pending at this stage.
Clarifying remarks made yesterday at a Government House press conference, Ferdinand Aranza, director of Interior's Office of Insular Affairs, said FEMA approved a loan to the Virgin Islands government not to exceed $89 million in 1990, of which the government has drawn down about $50 million. FEMA canceled $21 million, leaving about $29 million of the principal which it couldn't forgive — no matter how hard it tried, according to Aranza — because the V.I. government didn't have the proper documentation.
Interest accrued of roughly $13 million brings the outstanding debt to $42 million.
Aranza said that Interior and V.I. Congressional Delegate Donna Christian Christensen, had looked into a credit reform act passed in 1991 which could apply to the V.I. FEMA loan.
Aranza said he feels the $42 million has a good chance of being forgiven under the 1991 legislation. He said on average, loans from the past five or six years from states including Florida have been reduced by 95 percent under the same process.
Aranza said, "Based on the 95 percent forgiveness rates, we're pretty confident FEMA will reestimate the loan –- it's FEMA's call."
Aranza said Babbitt has written FEMA, the Interior's sister agency, requesting the loan forgiveness, and Aranza hopes it will be resolved before the end of this year.
