{"id":64876,"date":"2018-07-03T08:35:44","date_gmt":"2018-07-03T08:35:44","guid":{"rendered":"https:\/\/viconsortium.com\/?p=64876"},"modified":"2018-07-03T16:16:21","modified_gmt":"2018-07-03T16:16:21","slug":"gers-to-receive-over-300-million-if-mapp-arclight-refining-deal-is-ratified","status":"publish","type":"post","link":"http:\/\/wp.viconsortium.com\/?p=64876","title":{"rendered":"GERS To Receive Over $300 Million If Mapp-ArcLight Refining Deal Is Ratified"},"content":{"rendered":"

A pension system on the verge of imminent collapse may find a piece of salvation within the new agreement<\/span><\/a> between the Virgin Islands Government and ArcLight Capital to restart refinery operations on St. Croix.<\/p>\n

How much money will the government make from the deal?<\/strong><\/p>\n

The unratified agreement provides for the processing of about 200,000 barrels of crude oil feed stock per day and is expected to bring the government millions in revenue each year.<\/p>\n

Limetree Bay Terminals is slated to make annual payments to the government at a base rate of $22.5 million, in lieu of taxes. Depending on the refinery\u2019s performance, that base rate could increase to $70 million per year, but annual payments won\u2019t fall below $14 million, Governor Kenneth Mapp said during a press conference at Government House Monday.<\/p>\n

Mr. Mapp quoted industry consultants Gaffney-Cline and Associates when projecting a government revenue of more than $600 million during the first 10 years of refining operations. This income will be added to the $11.5 million that the government already collects annually from Limetree\u2019s oil storage operations. After refurbishing the facility for refining purposes, Gov. Mapp\u2019s administration is hoping that there\u2019ll be actual refined product on the market by January 2020.<\/p>\n

I think those folks who are relying on their pensions for their livelihood could breathe a slight sigh of relief, and I want to assure them that we\u2019re not giving up on five years. We\u2019re gonna see the process all the way through. – Governor Mapp<\/p><\/blockquote>\n

Should the deal with ArcLight become law, the company will make a $70 million closing payment to the government<\/span><\/a> \u2013 $30 million in exchange for 225 acres of land and 122 homes that the government acquired from Hovensa and $40 million in prepaid taxes.<\/p>\n

What would this mean for the Government Employees Retirement System (G.E.R.S.)?<\/strong><\/p>\n

The deal says that 50 percent of the annual revenues from refining operations will go directly to G.E.R.S. According to the governor, this should turn out to be about $300 million during the first 10 years \u2013 if all goes as planned.<\/p>\n

The entire deal still hinges on a legislative vote. The governor has called senators into special session on July 25 to consider and ratify the agreement.<\/p>\n

Within his submission to the 32nd<\/sup> Legislature, Mr. Mapp is also proposing that the government will purchase the Havensight Mall and the ground lease for a Port of Sale property \u2013 both of which are currently owned by .E.R.S.. If the purchase is successful, the Public Finance Authority (P.F.A.) would take ownership, and the West Indies Company (W.I.C.O.), P.F.A.\u2019s subsidiary, would manage the properties.<\/p>\n

If W.I.C.O. and P.F.A. were to acquire these assets, the government would be able to enter agreements with the territory\u2019s cruise partners or other entities and make more money than is currently being generated \u2013 a win-win for both the G.E.R.S. and the government, according to the governor.<\/p>\n

After the purchase, G.E.R.S. is supposed to receive 50 percent of the annual net revenues from the mall and ground lease.<\/p>\n

We don\u2019t have two and a half billion dollars to write a check and just solve the problem. – Governor Mapp<\/p><\/blockquote>\n

The P.F.A. is also supposed to make a $25 million down payment out to GERS and enter a mortgage agreement with the entity at an 8 percent annual interest rate. According to Governor Mapp, this interest rate is higher than the pension system\u2019s required rate of return.<\/p>\n

Breakdown of What GERS is Slated to Receive from New Deal<\/strong><\/p>\n