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COMMITTEE RECEIVES FINANCIAL OVERVIEW FROM WICO, VETS GERS MEASURE

Published: Mar 6, 2024

ST. THOMAS – The Committee on Budget, Appropriations, and Finance, under the leadership of Senator Donna A. Frett-Gregory met Tuesday in the Earle B. Ottley Legislative Hall. Lawmakers received testimony from the West Indian Company Limited concerning its financial overview for Fiscal Years 2023 and 2024. Additionally, lawmakers considered a measure to establish a deadline for the resumption of GERS’ personal loan program, removing the $10,000,000 annual aggregate amount and the 8% interest rate cap, limit the system’s liability to $75,000, and set a parameter in section 717 that all loans must be structured such that the payoff date occurs before the retiree reaches age 70. The approved item on today’s agenda will be sent to the Committee and Rules and Judiciary for further consideration. 

The Committee first received testimony from the West Indian Company Limited concerning its financial overview, the status of the outstanding amount owed to the central government in lieu of taxes, as well as an update on capital projects. Anthony Ottley, the President and Chief Executive Officer of the West Indian Company Limited delivered testimony. According to Ottley, there is a 70 percent increase in cruise ship arrivals and 43.3 percent more passengers during Fiscal Year 2023 compared to Fiscal Year 2022. Of the 262 ships and 837,000 passengers that were expected last year, 261 ships arrived, which brought 825,247 passengers. This brought $6.4 million to the company from passenger fees, as well as an estimated $136 Million in passenger spending which contributed to the territorial economy. The forecast for Fiscal Year 2024 has 281 confirmed berths, with twenty more ships or a 7.6 percent increase over year ago arrivals, with one million passengers expected to visit. According to Ottley, WICO will consider business “back to normal” when berthing requests and passenger arrivals return to 2019 cruise season numbers, when 1.1 million visitors arrived. It is expected that this goal will be achieved by the 2025 cruise season.  

More than 80 percent of WICO’s annual income comes from its portion of the Marine Single Tariff Passenger Fee, or head tax, mooring and unmooring fees, and other service chargers. Additionally, WICO receives income from water sales, warehouse rental, and property rental. The Employee Retention Credit improved cash flow during the off season. WICO has started to transition away from full dependency on cruise ships, hoping to develop the surrounding property and other offerings on the dock. Recently, $17 Million in financing to the Virgin Islands Port Authority was approved to dredge the Charlotte Amalie Harbor. Other projects include working with WAPA to replace piping infrastructure to reduce water loss from pipe leakage. Ottley reminded the body that plans for an additional cruise ship dock, Long Bay Landing are tabled and mentioned that WICO has had to turn ships away due to high demand and limited berths. The WICO PILOT (Payment in lieu of taxes) was set at $500,000 annually in 1999, then increased to $1 Million in 2003. The PILOT was later reduced to $700,000. The total PILOT now exceeds $10 Million. Ottley implored that the PILOT should be reduced, preferably to a percentage of WICO’s annual income. Additionally, WICO has yet to return to “normal” operation since the 18-month period of no ships due to the COVID-19 pandemic. Ottley reminded the body of its difficulty to pay the PILOT due to numerous circumstances, such as the development of the Crown Bay and Austin “Babe” Monsanto Terminal, which took about 30 percent of cruise traffic from WICO. This reduced WICO’s passenger visits from 1.7 million per year to 1.1-1.2 million passengers per year.  

Chair Donna A. Frett-Gregory voiced concern over ships being transferred to the Crown Bay dock when WICO was at capacity. As per Ottley’s testimony, this has happened at a loss to WICO, with business being deferred to Crown Bay. She implored cooperation between the two entities.  

Additionally, lawmakers considered Bill No. 35-0196, an act to amend Title 3, Virgin Islands Code, sections 717(c) and 766(c) to establish a deadline for the GERS to resume the personal loan program, remove the $10,000,000 annual aggregate amount and the 8% interest rate cap, limit the system’s liability to $75,000, and set a parameter in section 717 that all loans must be structured such that the payoff date occurs before the retiree reaches age 70. The measure was proposed by Senator Milton E. Potter. 

Dwayne E. Callwood Sr., Chairman of the Board of Trustees for the Government Employees Retirement System. Callwood Sr. and the GERS supported the proposed measure. He called the proposed measure a desperately needed “shot in the arm” which would place the GERS on better financial footing. However, he warned that GERS is still technically insolvent. Callwood further spoke stating that the status of the GERS was much stronger than it was two years ago. As a result of structuring of the payments due to GERS and the Special Purpose Vehicle, there would be negative cash flow value between 2026 and 2039. During the GERS Board of Trustees retreat in July 2023, the board agreed to revisit the restart of a personal loan program in early 2024.  

During the January board meeting, it was agreed that there would be a limited restart of the personal loan program. Later, the board granted the administrator the authority to restart a limited personal loan program no later than April 30, 2024. This is for the calendar year 2024. The board also agreed to work on a limited loan program for retirees as well. The proposed measure would limit the liability of the GERS to $75,000. This would place the GERS in line with other government semi-autonomous agencies like the Virgin Islands Port Authority and the Virgin Islands Housing Authority. There is currently no liability cap. Callwood Sr. stated that the GERS has been named defendant in lawsuits in incidents on properties that are not owned by GERS but are near GERS owned properties. This cap would protect the sustainability of GERS. The proposed measure was voted upon favorably.  

Senators present at today’s committee hearing included Donna A. Frett-Gregory, Novelle E. Francis, Jr., Marvin A. Blyden, Samuel Carriόn, Dwayne M. DeGraff, Ray Fonseca, Kenneth L. Gittens, Marise C. James, Javan E. James, Sr., Franklin D. Johnson, Carla J. Joseph, and Milton E. Potter 

The Division of Public Affairs is committed to providing the community with accurate information on proceedings at the Legislature of the Virgin Islands. Visit legvi.org. 

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