Public Finance Authority OKs $50M bond borrowing for V.I.'s hospitals
Published: August 14, 2014
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ST. THOMAS - The V.I. Public Finance Authority board on Wednesday approved going to the bond market to borrow $50 million to fund the territory's ailing hospitals and cover a portion of the V.I. government's current budget deficit.
The V.I. Legislature authorized the borrowing at a special session last month.
PFA Executive Director and Finance Commissioner Angel Dawson Jr. said the Public Finance Authority tried to negotiate a long-term deficit financing package with FirstBank, the institution that currently holds a $40 million line of credit for the government.
"We have not been able at this point to successfully conclude the discussions with the holder of that note," Dawson said.
The need for the funds is pressing, and the fiscal year is entering the fourth quarter, so the Public Finance Authority will turn to the bond market to borrow the money.
The authorization granted by the board Wednesday allows for $50 million in bonds to be issued at an interest rate no higher than 8.5 percent. The maturity of the loans will not exceed 30 years, and they will be backed by Gross Receipts taxes.
Gov. John deJongh Jr. originally had asked the Legislature for the authority to borrow $169 million to close the budget gap, fund a number of capital projects and fund the hospitals' utility debts and payroll shortfalls.
The Senate rejected the governor's proposal, and instead gave him the authority only to turn the existing $40 million line of credit with FirstBank into a $50 million loan to be paid back in 270 days.
DeJongh responded by calling the Senate into special session to consider a proposal that modified the Senate's bill, allowing the government to make it a longer-term loan and have it backed by Gross Receipts taxes. The Legislature approved the governor's second proposal in July.
The $50 million will go to the hospitals and toward other needs in the government including:
- $1 million for Luis Hospital to upgrade medical records.
- $11 million for Luis Hospital to meet payroll from July to September.
- $7 million for Schneider Hospital to pay outstanding accounts payable.
- $3.5 million for capital improvements for Schneider Hospital.
- $1.5 million to the V.I. Human Services Department to pay Sea View Nursing Home an outstanding debt.
- $12 million to the V.I. Water and Power Authority to pay a portion of the government's outstanding utility bills of $5.25 million for each hospital and $1.5 million for the Bureau of Corrections.
The earmarks total about $36 million, leaving about $14 million to help address the government's current $27 million budget shortfall, Dawson said.
Dawson said he expects the closing on the bonds to take place in September.
The governor also is asking the Senate to consider extending the $40 million line of credit for at least another year. That measure was sent down as one of the pieces of enabling legislation included in the Fiscal Year 2015 executive budget and will be considered by senators next month.
- Contact reporter Aldeth Lewin at 714-9111 or email email@example.com.