The V.I. Port Authority (VIPA) on Wednesday wrote off $6.5 million in debt it claims it is owed by the U.S. Customs and Border Protection.
The debt, which VIPA has carried on its books since 2007 as accounts receivable, is approximately two-thirds of the $9.3 million the authority says it is owed by the federal agency.
The write-off decision, made by VIPA’s board at its monthly meeting at its St. Thomas headquarters, was driven by the need to wrap up the FY 2008 audit. Auditors told the authority it could either write off the debt or they would write an “exception” for the amount.
Customs and Border Protection collects the wharfage and tonnage fees owed to the VIPA by freight-hauling ships, which call in the U.S. Virgin Islands. Under a 1994 Memorandum of Agreement (MOA) between the V. I. government and what was then U.S. Customs, Customs extracts its operating costs before remitting the fees to the V.I. government, which then extracts an administrative fee and remits the remainder to the Port Authority.
But fees have been slow in coming, if at all. The last time VIPA received a payment was in September 2009, and that payment of $124,000 was for January of that year, according to Judith James, VIPA’s director of finance and administration.
Before the write-off, the debt totaled $9.29 million, dating as far back as January 2007 and most recently summed in September of this year.
According to VIPA general counsel Don Mills, Customs denies that it owes the debt.
Writing off the debt does not mean the authority will not go after the funds.
“We will still pursue the collection process,” Mills said.
Mills also said that the authority has been negotiating with the agency, and may get some relief through that venue.
Either way, the VIPA’s upcoming bond rating will now bear the imprint of the write-off.
“As of right now, we are current in covering our debt service,” James said, noting that the ratings company, Standard & Poor’s had already asked for the 2008 audit in order to develop the authority’s bond rating for fiscal year 2011.
VIPA is considering a process where they collect the fees themselves, VIPA Executive Director Kenn Hobson said, but said this would be contingent upon termination of the MOA. Hobson said that he anticipated needing a minimal staff to collect the fees.
In other actions:
–the board approved a contract for its airport liability insurance, through the brokerage of Nausch, Horgan and Murray in the amount of $319,828. The insurance covers losses related to terrorism, personal injury, employee benefits liability, public officials’ liability, fire and other types of risk.
–the board also approved a three-year lease renewal to GEC, LLC on St. Croix at a rate of 50 cents per square foot, the appraised value of the undeveloped land outside the fence at Henry E. Rohlsen Airport. The rate is a considerable increase over the tenant’s proposed 29 cent per-square-foot rate. However, the board resolved to offer the lease at the higher rate in obeisance to the Federal Aviation Administration’s requirements, which call for all leased space to be at fair market value. Failure to comply with the FAA requirements could cause the Port Authority to lose federal funding.
–the board also awarded a $4.1 million contract to expand the baggage handling facilities at Cyril E. King Airport to Custom Builders. The company has successfully completed several contracts for the Authority in the past.
As part of the contract, the two existing baggage belts at the airport must be kept in service during construction. The project is scheduled for a June completion.
–the board awarded a $49,789 contract extension to Burns and McDonnell Engineering Company for post-design services for the Enighed Pond Marine facility on St. John.
–the board approved a task authorization for Ricondo and Associates to provide professional services during the construction phase of the rehabilitation of runway 10-28 at Rohlsen. Ninety-five percent, or $6.9 million, of the funds for the project come from the FAA, while the Port Authority supplies the other $32,680.
–Finally, the board awarded a $58,000 contract award to Ricondo to perform an energy audit at Rohlsen. The audit and subsequent implementation of the energy-conservation measures are required for compliance with requirements established by the use of V.I. Energy Office funds.