News Column

GERS finalizes settlement with government

June 21, 2014

By Jenny Kane, The Virgin Islands Daily News, St. Thomas



June 21--ST. THOMAS -- The Government Employees Retirement System did some housekeeping by approving a number of measures that the group already had in the works, including the settlement agreement with the V.I. government and a $15 million loan to Tibbar Energy.

At its regular monthly meeting Thursday, the board OK'd the agreement that addresses the "missing" contributions owed by the government to GERS.

The board initially had approved the settlement with the government in February, though some of the language since then had changed.

The agreement establishes the employer contribution owed for about 250 people who retired between Oct. 1, 2010, and Dec. 31, 2012. It promises delinquent property tax collections to cover the cost of the government's contribution -- about $6 million -- but the money will not be available until 2016.

In 2011, the government borrowed $13 million from GERS to pay retirement incentives mandated by the V.I. Legislature. To repay the loan, the Special Real Property Tax Receipts Fund was created to collect delinquent property taxes from 1973 to 2005.

The settlement agreement states that when the loan is repaid in 2016, any excess money in that account will go to pay the 250 retirees, according to GERS Administrator Austin Nibbs.

In other business at Thursday's meeting, the board:

- Approved a $15 million loan to Tibbar Energy, which plans to operate a biomass/biogas facility on St. Croix as part of a power-purchase agreement with the V.I. Water and Power Authority.

The loan has a 10 percent interest rate and a term of 10 years, according to Nibbs.

Under the power-purchase agreement, WAPA would buy energy from Tibbar's anaerobic digester facility, which would generate biogas to be fed into generators on St. Croix. The agreement also would enable an electrical interconnection between Tibbar's facility and WAPA's.

The estimated completion date for the interconnection is June 2015.

WAPA will pay Tibbar at an average rate of $0.25 per kilowatt hour for 25 years, with an option to renew for an additional five-year period, according to Hugo Hodge Jr., executive director of WAPA.

The connection should help ratepayers realize savings of about 4 percent to 5 percent on their bills, Hodge has said previously.

Tibbar is expected to invest about $50 million into St. Croix, according to Kevin Rames, attorney for Tibbar.

- Voted to decrease the carrying value of one of its hedge funds, the Attilanus Fund, by 20 percent. In 2007, GERS entered into a 10-year, $50 million investment plan with the Attilanus Fund. The fund oversees investments in viatical life and senior settlement policy contracts, buying life insurance policies from terminally ill or old people for a percentage of the total policy. The investor pays the premiums and receives the policy payout when the beneficiary dies. Nibbs said the fund is not traded on the open market, so the system must hire someone to value the investment, though a study reported that no value accurately could be determined.

- Decided to rescind a resolution that authorized the GERS administrator to enter into a contract with Synergy Group, LLC for an amount not to exceed $1.5 million conditioned on the rezoning of Estate Hoffman/Nullyberg and update of the feasibility study.

GERS had bought 120-acres in Estates Hoffman and Nullyberg in 2006 for $4.5 million and had planned a multi-use development to include a hotel, convention center, restaurant, office space, senior living facility and 105 single-family home lots.

However, in May, the Senate denied the zoning request in May for a variety of reasons, including that the development was not a wise investment for the retirement system.

- Contact Jenny Kane at 714-9102 or email jkane@dailynews.vi.

___

(c)2014 The Virgin Islands Daily News (St. Thomas, VIR)

Visit The Virgin Islands Daily News (St. Thomas, VIR) at www.virginislandsdailynews.com

Distributed by MCT Information Services


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Source: Virgin Islands Daily News (St. Thomas)


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