St. Thomas

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BILL FOR THE MATCHING FUND SECURITIZATION CORPORATION FAILED

Published: Dec 9, 2020

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 voted down Bill No. 33-0446- An Act repealing and replacing Act Nos. 8329 and 8330; amending Title 29 Virgin Islands Code, by repealing chapter 24 in its entirety and replacing it with a new chapter 24; terminating the existence of the “Matching Fund Securitization Corporation.” However, lawmakers voted favorably for other measures. Special Session is pursuant to Section 7 (a) of the Revised Organic Act of 1954, as amended for the United States Virgin Islands. All approved items on the agenda will be forwarded to the governor for further consideration.

“Once again, we are vetting the bill regarding the Matching Fund Securitization Corporation. There were three meetings previously held on August 25th, August 27th, and September 17th of this year as it pertains to Bill No. 33-0446. We are doing our due diligence to make a final determination,” Sen. Francis said.

The proposed legislation seeks to create as of the date hereof, a new entity named the “Matching Fund Securitization Corporation” to (1) acquire all of the Virgin Islands Government’s rights, title, and interest in the Matching Fund Receipts to be paid to the account of the Government by the United States Treasury during the Transfer Period and the Related Rights, (2) issue Matching Fund Securitization Bonds and the Residual Certificate to pay the purchase price therefore and as otherwise authorized under the act, and (3) direct the Secretary and the United States Department of Interior to pay the Matching Fund Receipts directly into the Deposit Account; approving and ratifying all actions taken pursuant to Act Nos. 8329 and 8330 prior to the date hereof; and ratifying the amendments to the rum company agreements; and for other related purposes.

Rising out of Special Session and into the Committee of the Whole, senators received testimony from representatives of the Virgin Islands Public Finance Authority (VIPFA), the Office of Management and Budget (OMB), the Virgin Islands Department of Finance, the Government Employees Retirement System, the Cruzan Rum Distillery, Diageo, and numerous law firms representing the Government of the Virgin Islands as bond counsel for the Matching Fund Securitization Corporation. Testifiers discussed the benefits of repealing Act Nos. 8329 and 8330.

According to VIPFA Director of Finance Administration Nathan Simmonds, the new corporation or special purpose entity would issue Matching Fund Securitization Bonds with a lower interest rate that will ultimately reduce debt service requirements and enable Matching Fund Receipts to GVI and the rum companies after debt service is paid. OMB Director Jenifer O’Neal indicated that refinancing debt would allow higher investment-grade credit ratings which can open opportunities to refinance the loan. Additionally, Squire Patton Boggs (US) LLP. Partner Pedro Hernandez mentioned that once the governor remits the Matching Fund Receipts to the Matching Fund Securitization Corporation, the United States Treasury and the Department of Interior will issue a written document supporting and solidifying this decision. Sen. Francis inquired as to why there are difficulties understanding the transaction. Simmonds noted that the reason why people perceive difficulties with the bill is that there is a misunderstanding that GVI is giving away the monies when in fact there is no loss of control of revenues.

Separately, lawmakers considered the following:

Bill No. 33-0447- An Act amending Title 14 Virgin Islands Code, section 1461 relating to public nuisances by adding paragraph (3) to define public nuisance as including anything that endangers the public peace, health, safety, welfare, economic well-being, or lives and property of citizens of this Territory; and amending section 1462 to establish penalties for actions that endanger public peace, health, and safety, to preserve the lives and property of the people of this Territory during states of emergency. The Department of Health Commissioner Justa Encarnacion mentioned that enforcement is necessary to mitigate against the spread of the coronavirus in the Territory in conjunction with the Governor’s Executive Order. However, lawmakers collectively expressed opposition to the measure citing that it is excessive, making the lives of residents difficult, and there is a lack of enforcement of basic laws and this law will be no different.

Bill No. 33-0448- An Act Amending Act. No. 8310, relating to the Governor’s authority to borrow monies from public funds of the Virgin Islands to offset cash flow problems caused by shortfalls in the collection of revenues resulting from the COVID-19 Pandemic and to create working capital, avoid layoffs of Government Employees, pay essential obligations and meet the operating expenses of the Government, to change the fiscal year for the Governor’s borrowing of funds from the Fiscal Year 2020 to the Fiscal Year 2021; and for other related purposes.

Bill No. 33-0450- An Act renewing and extending the State of Emergency in the U.S. Virgin Islands, based on the COVID-19 Pandemic for an additional 60 days from December 8, 2020, to February 6, 2021.

Rising out of Committee of the Whole and back into Special Session, policymakers voted down Bill No. 33-0446. However, senators voted favorably for Bill No. 33-0448 and Bill No. 33-0450. Lastly, Bill No. 33-0447 was removed from the agenda and will be reconsidered during Legislative Session on Friday, December 11th at 12:00p.m.

 

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