Senate tables bill regarding V.I.'s stake in Texas oil company
Published: April 2, 2014
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ST. THOMAS - A number of measures sent to the Legislature by Gov. John deJongh Jr. were held in committee for further consideration Tuesday during a meeting of the Senate Finance Committee.
Additionally, two lease agreements for government land were passed by committee members.
A bill to create a subsidiary of the V.I. Public Finance Authority to hold the assets of Lonesome Dove Petroleum Company Inc. was held in committee Tuesday.
The oil company came into receivership of the Virgin Islands government in 1992 as part of an effort to collect $21.8 million in taxes, penalties and fees from the company.
V.I. Attorney General Vincent Frazer said in a few weeks, the federal receiver will file a motion in federal court to transfer the corporate shares of the company to the V.I. government and end the receivership action.
Frazer said the company's assets are oil, gas and mineral interest leases, not hard assets, such as land, buildings, equipment or exclusive ownership of leasehold rights.
The company has no employees.
Over the years, the territory has collected $19 million in owed taxes, all of which were deposited into the Union Arbitration Award and Government Employees Increment Fund.
Frazer said the government collects about $1 million a year in revenues from the company's leases.
"I am not at liberty to disclose the financial information of the recent evaluation of the portfolio since it has not yet been submitted to the court," Frazer said during his Senate testimony. "However, we can comfortably conclude that the portfolio will continue to earn approximately $1 million each year until the market improves."
In the future, when market conditions improve, the government could sell the company and its assets, Frazer said.
As part of the bill establishing a Public Finance Authority subsidiary to own and operate Lonesome Dove, the governor is asking for the revenue stream to be directed to support early childhood education and health care and hospital facilities.
Senators also held a bill Tuesday earmarking projects to be funded by the Community Facilities Trust Fund. The fund is supported by rum revenue from the Diageo deal - 3 percent of the total cover-over returned to the territory on rum produced by Diageo is put into the fund.
The fund was established to provide a revenue stream for community development projects in the territory. While the fund is administered by the Public Finance Authority, projects to be funded must be recommended by the governor and approved by the Legislature.
As of Feb. 28, the balance in the fund was $8.9 million, V.I. Finance Commissioner Angel Dawson Jr. said.
About $3.7 million already has been earmarked for projects, leaving $5.1 million available, he said.
The governor is proposing the money be spent as follows:
- $1 million to the Bureau of Information Technology for the 911 radio tower enhancement project.
- $1 million for the V.I. Police Department to enhance and upgrade the territory's surveillance camera system.
- $2 million for paving and road repairs, to be split evenly between the districts.
- $500,000 to the V.I. Port Authority to dredge the Schooner Bay Channel in Christiansted.
- $350,000 to Public Works for maintenance of public cemeteries.
- $150,000 to conduct a feasibility study for a multi-purpose sports complex on St. Thomas.
- $100,000 to the V.I. Housing Authority to help fund the demolition of the Ralph de Chabert housing community.
Another bill held in committee Tuesday does many things, from clarifying what purpose the Tourism Revolving Fund can be used for to allowing the V.I. Internal Revenue Bureau to publish the names and businesses of delinquent taxpayers.
The bill also would reprogram about $4.5 million that was budgeted, but not needed, to restore the 8 percent salary cuts in the 2014 fiscal year.
Senators wanted to know why this money would not be used to close the $40 million budget gap for the current fiscal year. Office of Management and Budget Director Debra Gottlieb said the reprogramming will fund existing projects, contracts or critical budgeted items in the current year.
The Senate Finance Committee also approved a renewal for a 20-year lease agreement between the government of the Virgin Islands and ABC Sales and Services, Inc.
The company is located on 26,433 square feet in Sub Base and has held a lease with the government since 1992.
The new rent for the property will be $45,204.72 annually.
The Senate committee also approved a second lease, which is an agreement between the government and Commercial Security Services, Ltd., Inc.
The 20-year lease will be for about 2,016 square feet in a two-story wooden building in Sub Base. The annual rent will be $18,144, less during the construction period.
- Contact reporter Aldeth Lewin at 714-9111 or email email@example.com.