Home News Local news Bonds to Fund Wastewater and Sewage Treatment Improvements

Bonds to Fund Wastewater and Sewage Treatment Improvements


Dec. 21, 2004 – Construction should begin soon on two wastewater treatment plants in the territory, Sonya Nelthropp, director of the V.I. Waste Management Authority, said earlier this week.
Proceeds from the recent closing of a $94 million bond issuance will allow for the construction of federally-mandated wastewater treatment plants at the current Anguilla wastewater treatment plant site on St. Croix and at Red Point, near the Cyril E. King Airport on St. Thomas. The money will also fund an upgrade of the entire wastewater collection system in the territory.
For years, the territory has been plagued with sewage problems, especially on St. Croix where raw sewage erupts on a regular basis into the streets of various communities.
The improvements are expected to bring the territory into compliance with various federal mandates to upgrade the system. Non-compliance has cost the local government more than $20 million in fines over the years.
Nelthropp said the bond money remains with the V.I. Public Finance Authority, but as work begins on the projects funds will be drawn down to the Waste Management Authority.
"We're looking to start construction of the plants in January or February," Nelthropp said, adding the system upgrades would soon follow.
"The Turnbull administration is the only administration that has given the money and the resources to get this 20-year problem fixed," Nelthropp said.
Last week, at the Public Finance Authority's Frenchtown office, Gov. Charles W. Turnbull, who serves as PFA chairman, announced the closing of the $94 million 2004 Internal Revenue Matching Fund bond transaction that made the construction of the plants possible. Part of the proceeds will also fund road repairs.
PFA Executive Director Kenneth Mapp said Monday the underlying security for the bond is the excise tax on the sale of Cruzan Rum.
Cruzan Rum is manufactured by V.I. Rum Industries, whose parent company, Todhunter International, is mostly owned – 68 percent – by Trinidad-based Angostura Ltd.
There is no secondary security for the Internal Revenue bonds, Mapp said, but added Cruzan Rum has done well over the years.
The V.I. government receives 13.25 cents on every dollar from the federal government on every proof of Cruzan Rum sold on the U.S. mainland.
"Currently, this amounts to $75 million a year," Mapp said. Of that amount $47 million goes toward the debt service, he said, and the remainder ends up in the General Fund.
Mapp said the bonds from the 2004 series were "oversubscribed." Meaning, he said, "There were more people wanting the bonds, than there were bonds."
This could be attributed to a decision by rating company Standard & Poor, to upgrade the bond's rating to a BBB from a BBB-.
The rating is specific to the bonds and does not reflect the V.I. government's overall rating.
"One of our goals is to get the government rated as well," Mapp said. "But we have some issues to work out."
Mapp said the BBB- rating means the bonds are triple tax-exempt; investors do not have to pay state, local or federal taxes. "They're very good bonds from an investment perspective."
In upgrading the bonds, Standard & Poor's stated in its report, "The upgrade reflects a 15-year track record of increasing revenues and a strengthened competitive position for the Virgin Island's rum producer because of greater investment by its Florida-based company [Todhunter International] and the Virgin Islands government increasing subsidy of molasses prices, the primary ingredient in rum production. Also significant is the strong market share for Virgin Island's bulk rum, and the federal government's forgiveness of $127 million of FEMA loans associated with Hurricane Marilyn."

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