Home News Local news FONSECA LAYS OUT AUSTERITY PLANS FOR SENATORS

FONSECA LAYS OUT AUSTERITY PLANS FOR SENATORS

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Mar. 11, 2003 – In a meeting that lasted nearly six hours Monday night, the Housing Authority's executive director, Ray Fonseca, outlined for senators his plan to bring the fiscally troubled agency back to economic health.
The Senate Housing Parks and Recreation Committee took testimony from Fonseca and other housing officials as well as the head of a company whose contract to build affordable housing was recently terminated by the VIHA chief.
Since Fonseca took over the Housing Authority last year, he has made headlines repeatedly. The federal Housing and Urban Development Department threatened last June to take over management of the agency. Since then, Fonseca has developed a recovery plan and won HUD approval of it.
In the face of a balanced budget mandate from HUD last October and in response to the department's objection to a structure in which 49 percent of the authority's employees were managing the other 51 percent, he laid off more than a dozen senior managers in December. He also dismantled the Housing Authority Police force at the end of last year.
Fitzgerald Rowe, who chairs VIHA's board of commissioners, told the senators on Monday that the plan was necessary to "prevent immediate financial collapse" of the agency.
Fonseca told the committee that, although VIHA is making strides toward recovery, an anticipated 30 percent cut in federal funding could translate into a $6.7 million loss in revenues for the agency.
He warned the VIHA board in February of a coming nationwide cutback in federal funding for public housing. At that time, he said the anticipated cut was "between 30 percent and 10 percent," which could mean between $6 million and $2 million in lost funding.
Meanwhile, the V.I. government owes VIHA $7.1 million, much of it from an unfunded rent rebate program, Fonseca said. The situation "severely impairs" the authority's ability "to provide safe, sanitary and decent housing for all our residents," he said.
Fonseca said other cost-cutting measures include redesigned rent-abatement programs; a plan to decrease water usage in housing communities; repair of vacant apartments for occupancy; and implementation of a Youthbuild program.
Under the Youthbuild program, scheduled to start April 1, qualifying school dropouts or unemployed persons ages 16 to 24 will receive training in the building trades and assist with the renovation of existing public housing as well as the construction of new units.
Terminated contractor has his say
C. Knox LaSister, chief executive officer of Smart Inc., testified at the committee meeting about a contract dispute his company has with VIHA. Fonseca terminated a $60 million contract with Smart Inc. in February, saying the company had failed to meet two deadlines and was projecting a $10 million cost overrun. Fonseca also said at that time that the company had been overpaid some $400,000 by VIHA."
LaSister told the senators on Monday: "Our company has been defamed by Ray Fonseca. I appear before you to defend our integrity." Employing visual displays in his presentation, LaSister claimed his company had not failed to meet any deadlines.
Smart was hired to secure financing to build the Louis E. Brown VII Villas on St. Croix and develop the new Hoffman-Nullyberg housing community on St. Thomas. LaSister maintained that his company "did our job, and did our job well." He said if the contract had not been terminated, "new housing developments would have resulted in approximately $70 million in construction activities for the territory."
According to Fonseca, deadlines and cost issues aside, another reason he terminated the contract was that VIHA has personnel within its own ranks who are capable of managing the housing community construction projects.
Sen. Emmett Hansen II, the committee chair, told those testifying that he was "enormously pleased" with their thorough presentations, adding that such was not the case at many committee meetings in the 24th Legislature, where committees often resorted to subpoenas to get witnesses to testify.
Committee members present were Sens. Hansen, David Jones, Luther Renee, Raymond "Usie" Richards and Celestino A. White Sr. Also present were non-member Sens. Carlton Dowe, Adlah "Foncie" Donastorg and Louis Hill.

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