ST. THOMAS- Members of the 33rd Legislature led by Senate President Novelle E. Francis, Jr. convened in Special Session at the request of the Governor of the United States Virgin Islands Albert Bryan, Jr., at the Capitol Building on Tuesday and vetted Bill No. 33-0363- An Act amending Title 29 of the Virgin Islands Code by adding a new chapter 24, to create the Matching Fund Securitization Corporation. Special Session is pursuant to Section 7 (a) of the Revised Organic Act of 1954, as amended for the United States Virgin Islands. Invited testifiers are the Government Administration and the Advisory Team.

Rising out of Special Session and into the Committee of the Whole, lawmakers received testimony on the proposed legislation. The measure seeks to acquire all of the Virgin Islands Government’s rights, title, and interest in the Matching Fund Receipts to be paid to or for the account of the Government by the United States Treasury during the Transfer Period and the Related Rights; issue Matching Fund Securitization Bonds and the Residual Certificate to pay the purchase price therefore and as otherwise authorized under the act, and direct the Secretary and the United States Department of Interior to pay the Matching Fund Receipts directly into the Deposit Account. Sen. Francis stated that further vetting is required due to the complexities of the bill. “This is a very complex issue that requires a lot of due diligence. The legislation requires additional amendments and further conversations and input from stakeholders. We are hoping to complete this proposal in a timely fashion.”

Defending the bill, Nathan Simmonds, Director of Finance Administration for the V.I. Public Finance Authority highlighted some of the benefits to the Government of the Virgin Islands (GVI). Simmonds mentioned that the bill authorizes the Special Purpose Vehicle (SPV) to issue Matching Fund Bonds, issue a residual certificate delivered to the Government along with any cash purchases for Matching Fund Receipts, provide estimates of rum production to the U.S. Treasury annually while assisting with the collection of the Matching Fund Receipts, and establishes an independent vehicle and bankruptcy remote from GVI and an SPV with limited rights and authorities. Additionally, Simmonds stated that GVI will be authorized to sell its rights to the Matching Fund Receipts that are to be received from the U.S. Treasury to the SPV for as long as the New Matching Fund Bonds are outstanding and to make certain non-impairment covenants to the SPV in connection with that sale. Sen. Stedmann Hodge stated that New Matching Fund Bonds at a lower rate is advantageous. “When a statutory lien is attached to a specified revenue source such as Matching Fund Receipts, if there was some form of shortfall the bondholders will still have the ability to collect the debt from the same revenue source; in this case the Matching Fund Receipts. Ultimately, the revenue source can still be applied to pay off the debt service.”

However, Sen. Donna Frett-Gregory indicated that GVI refinancing for savings may not be the best solution. “I believe that the focus should be maximizing borrowing capacity. If we move in the direction of the bill, then years from now the Territory will be unable to float additional bonds.” In lieu of GVI’s ongoing budget deficits and liquidity challenges, Robert Gordon, Financial Restructuring Lawyer, and Partner in the New York Office of Jenner & Block LLP stated that the bill does not address public debt, underfunding liability, and capital for infrastructures. Speaking on behalf of retirees, Gordon stated that reduced debt payments by $85 million annually for the next three years, will not significantly impact the $4 billion owed in the underfunding liability of GERS.

Rising out of the Committee of the Whole and back into Special Session, the meeting recessed, and the measure was assigned to the Committee on Finance for further consideration. ###