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Limetree Bay Terminals Awards Scholarships To 20 Virgin Islands High School Graduates

CHRISTIANSTED — Limetree Bay Terminals of Estate Hope has awarded scholarships to 20 recent 2019 graduates of Virgin Islands high schools to assist them in their pursuit of a degree at an accredited U.S. college or university.

The scholarship recipients are:

 Anthony Etienne who plans to attend Barry University

 Elizabeth Ferguson who plans to attend the University of the Virgin Islands

 Hakim Alexander who plans to attend the Florida Southern College

 Isaiah Stevens who plans to attend Texas A&M University

 Jada Jarvis who plans to attend The New School

 Joshua Ramsundar who plans to attend the University of the Virgin Islands

 Kevin Hughes, II who plans to attend Syracuse University

 Lalloni Canton who plans to attend Virginia Commonwealth University

 Layalie Washshah who plans to attend Queens University at Charlotte  Mahlana Graham who plans to attend Oakwood University

 Maya Acosta who plans to attend Virginia Commonwealth University  Mayah Russell who plans to attend the University of Central Florida

 Michael Dow, Jr. who plans to attend the University of the Virgin Islands

 Michelle Laudat who plans to attend the University of the Virgin Islands

 Mojania Denis who plans to attend the University of Miami

 Monae Edmead who plans to attend Kennesaw State University

 Nichel Daniel who plans to attend the University of the Virgin Islands

 Samira Abed Richardson who plans to attend the University of the Virgin Islands

 Stacy Frederick who plans to attend the University of the Virgin Islands

 Teon Persuad who plans to attend the University of Miami

The recipients were selected based on their scholastic record and financial need compared to other applicants.

These scholarships will continue for four years, provided the students maintain good academic standing at an accredited U.S. college or university.

Limetree has awarded over $100,000 in scholarships for the 2019-2020 school year. CEO Darius Sweet congratulates all the scholarship applicants and recipients and recognizes their hard work and dedication to education.

“Education will provide students the tools to help with the continued growth and success of the community as well as Limetree,” Sweet said. “Limetree is proud of all the students who applied for Limetree’s scholarship and we encourage all students to remain committed to their pursuit of higher education.”

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Some 1,300 Workers Have Arrived On St. Croix To Work At Limetree Bay Refining

CHRISTIANSTED — Limetree Bay Ventures said that it has closed a $1.25 billion financing deal to restart its refinery located in St. Croix’s south shore industrial area.

The company is undertaking the project in conjunction with the tolling, supply and off-take agreements that it executed with BP Products North America in December.

The common equity in Limetree Bay is owned by affiliates of ArcLight Capital Partners, Freepoint Commodities, and a sovereign wealth fund.

“The closing of the financing provides the resources necessary to complete the refinery restart,” said Brian Lever, President, Limetree Bay Refining. “We have 1,300 workers currently involved in the project and expect a significant ramp in activity over the coming months as we prepare for restart by the end of (2019).”

The financing comprises $550 million of preferred equity and a $700 million term loan. The preferred equity was led by funds and accounts managed by EIG Global Energy Partners, which was joined by other investors including funds affiliated with BlackRock and Barclays.

The term loan was led by Westbourne Capital. In conjunction with the financing, ArcLight also made a significant additional common equity commitment to Limetree Bay.

Barclays acted as lead placement agent and EIG Global Energy Partners Capital Markets, LLC served as co-placement agent on the preferred equity issuance by Limetree Bay. Goldman Sachs Bank USA and Barclays acted as joint lead arrangers and joint bookrunners on the term loan issuance by Limetree Bay Refining.

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Mapp Thanks Senators Who Rubber Stamped Payday Loan Disguised As Refinery Deal

Mapp Thanks Senators Who Rubber Stamped Payday Loan Disguised As Refinery Deal

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CHARLOTTE AMALIE — Governor Kenneth Mapp has formally approved an agreement with Limetree Bay Terminals, LLC to resume oil refining operations on St. Croix.

The landmark agreement, ratified by the 32nd Legislature on July 25 as Bill No. 32-0246, is expected to create an estimated 1,300 construction jobs and as many as 700 long-term positions in addition to the hundreds of Virgin Islanders already employed at Limetree’s oil terminal storage facility.

“We are rebuilding the economy of the territory with the resumption of petroleum refining at the Limetree Bay refinery,” Governor Mapp wrote in his transmittal letter to Senate President Myron Jackson. “This revenue sharing agreement between Limetree Bay Refining, LLC and the people of the Virgin Islands will generate vital needed revenues to add more solvent years to the Government Employees Retirement System (“GERS”), provide vital public services to our community and sustain living wages to public employees…Together, it is projected that these Agreements will bring an estimated $775 million in revenues to the Government over the next ten years, of which more than $600 million will be new revenues generated entirely by the refinery. Those revenues are in addition to the substantial economic benefits to be conferred upon the territory by the direct capital investment of more than $1.4 billion by our partner, Limetree Bay.”

Meanwhile independent gubernatorial candidate Warren Mosler said “our Senators know that they were grossly misled by Limetree and the Governor into believing the vote was about restarting the refinery, when Limetree and the Governor knew all along that the refinery was already moving to restart under the 2015 agreement.”

“Our Senators now know that they were not voting on whether or not to restart the refinery, but on whether or not to give Limetree further substantial benefits in return for upfront cash,” Mosler said. “Therefore I urge our Senators to rescind their votes and re-vote based on the information they now have in their possession.”

While nine Senators ratified the refinery agreement, the body did not act on the other measures forwarded by the governor as part of the refinery package to include legislation to address a number of capital projects, the additional payments of tax refunds and the long needed reform of the Government Employees Retirement System. Mapp’s original proposal included directing half of all revenue generated by the refinery deal to GERS as a significant cash infusion that is necessary for the system to remain solvent.

“I look forward to working with members of the Legislature on these very critical and important economic issues affecting the Territory,” the Governor said. “Let’s do what we did with the first two Agreements and make this a positive achievement for our territory.

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COMMENTARY BY JANETTE MILLEN-YOUNG: Mapp Put A Raw Deal Over On Us With Limetree Bay

COMMENTARY BY JANETTE MILLEN-YOUNG: Mapp Put A Raw Deal Over On Us With Limetree Bay

FOOLED AND BEGUILED: Senator Janette Millen-Young says Gov. Kenneth Mapp pulled a fast one on the Legislature. Senators voted 9-5 to approve the Limetree Bay refinery deal.

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CHARLOTTE AMALIE — Shortly after midnight last Thursday morning, nine members of the 32nd Legislature approved the governor’s multi-million-dollar plan to give Limetree Bay Terminals LLC the rights to the former Hovensa oil refinery facility on St. Croix’s South Shore. But far too many questions remain unanswered about the future of that facility and what the deal will mean to Virgin Islands taxpayers and employees who may be employed by Limetree.

The governor, as usual, rushed this legislation with his typical “take it or leave it” push. Five senators, including two St. Croix senators and myself, voted against the proposal for various reasons. It is my belief that all of us favor economic development and private-sector job creation for the entire territory. But because of the governor’s virtually secret negotiations and vague promises, it appears the Virgin Islands has again given away too much too soon with no guarantees that the territory will receive any significant benefit from this deal.

Anyone who takes time to read the agreement should be shocked at the giveaway. For example, in Section 11.2 of the agreement, Limetree will pay no income taxes, will not pay any excise taxes, will not pay U.S. Customs duties, will not pay fuel taxes, will not pay gross receipts taxes, will not pay production taxes, will not pay property taxes, will not pay franchise taxes, will not pay annual report fees and will not pay any licensing fees, among other things. Let us remember, residents, including our senior citizens and veterans, received a hike that many could ill-afford in property taxes just last year.

The tax exemptions given to Limetree seems to be a giant tax giveaway and in return the territory may create 100 new jobs. Or, maybe 80 new jobs, or maybe more or less. Where is the guarantee of creating and maintaining a certain employment level? Are there any penalties if Limetree doesn’t meet those obligations?

And, it remains completely unclear what guarantees, if any, are in place for Virgin Islands employees who may work at the oil facility. Will they have a guaranteed minimum wage above the standard minimum wage in the territory? Will they have a reasonable health-insurance plan? Will they have a pension and or 401(k) plan? Will Limetree be exempt from Workman’s comp claims? Will Limetree be exempt from the territory’s Early Plant Closing law? Will employees be forced into arbitration instead having the option to seek legal counsel if there is an employment disagreement?

According to the agreement, Limetree will apparently have complete authority to back out of the deal and sell its position – including the laundry list of tax-free and other benefits – to anyone it wants, including companies that are foreign owned. Additionally, the Virgin Islands government will have no participation in such action, and seemingly, will not benefit financially from such a transaction.

Certainly, one of the looming issues is the environmental concern. The Limetree agreement fails to explicitly state how it will implement the Consent Decree that the U.S. Environmental Protection Agency ordered in 2011. This was a result of HOVENSA failing to uphold federal mandates and evidence of illegal emissions and oil spills. A $700-million fine was assessed and Limetree inherited the responsibility to correct those deficiencies. How will that be addressed?

Environmental damage is especially serious here. A number of dangerous chemicals remain somewhere underground in our beloved St. Croix. There must be a cleanup. If not, we will leave to our children and our children’s children the worst environmental heritage in the Caribbean.

Some may agree that the Limetree agreement is seductive. Yes, we would all like to again see the hay days when Hess and Hovensa served as the territory’s largest private-sector employer and brought in $250 million annually to the territory. But with the agreement now in place, a virtual unlimited tax holiday and no serious penalties for non-compliance, it’s doubtful any glory days are ahead.

I have long advocated for economic development and job creation for the ENTIRE territory. But with so many vague promises and unanswered questions in the Limetree deal, I was not about to risk the future of the people of the Virgin Islands. That’s why I voted no.

–SENATOR JANETTE MILLEN-YOUNG IS A GUBERNATORIAL CANDIDATE OPPOSING GOV. KENNETH MAPP

https://vifreepress.com/2018/07/critics-say-refinery-deal-is-a-payday-loan-designed-to-float-government-until-elections/

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Critics Say Refinery Deal Is A Payday Loan … Designed To Float Government Until Elections

Critics Say Refinery Deal Is A Payday Loan ... Designed To Float Government Until Elections

PAYDAY LOAN? Senators voted 9-5 to approve the Limetree Bay refinery deal on Wednesday. Critics say the tax concessions granted by the government were not needed for the oil storage terminal company ArcLight Capital Partners to transition the property into a refinery.

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CHRISTIANSTED — Governor Kenneth Mapp thanked the members of the 32nd Legislature for the ratification of an agreement which he said “will allow oil refining to resume on St. Croix, bringing hundreds of new jobs and millions in new revenues to the U.S. Virgin Islands.”

“This is a good day for the people of the Virgin Islands as we have signified to the outside world that following two Category 5 hurricanes, we are truly open for business and private sector investment in our community,” Mapp said. “I deeply appreciate the Legislature’s efforts to thoroughly vet this agreement and would like to thank the senators that supported it. I am also, of course, extraordinarily grateful for the hard work that our team put into negotiating this landmark deal.”

Governor Mapp said that much work lies ahead as senators did not act on the proposal in its entirety and that he remains particularly concerned about provisions being removed that would directly enhance the solvency of the Government Employees Retirement System (GERS). The Governor’s original proposal called for GERS to receive half of the $615 million to be generated by the refinery over the next ten years.

“I look forward to working with the Legislature to bring some peace of mind to our retirees,” he said.

But critics of the deal said it was more like a payday loan engineered to benefit ArcLight Capital Partners — not the people of the territory.

“Since the restart was already going forward, and Limetree said it had already invested $44 million and planned on making a profit, even with full taxes, it must have been our Governor who went to them asking for the $70 million in cash, and what they would want in return,” gubernatorial candidate Warren Mosler said. “That is, they didn’t come to us for more benefits, but instead we went to them for a loan to which they agreed in return for the additional benefits, including the property, tax breaks, and delayed deconstruction. ”

Prominent Christiansted attorney Andrew C. Simpson agreed.

“The proposed refinery operating agreement is a massive economic Christmas gift to Limetree Bay in exchange for a short term $40 million infusion to our government,” Simpson wrote. “The headlines and short term cash infusion may benefit the Governor’s re-election campaign, but the concessions to Limetree Bay are bad for the Virgin Islands in the long term.”

Mosler also wondered if local lawmakers understood the legislation that they were voting on.

“Question: Did the USVI Senate know it was voting on a loan from Limetree at a ridiculously high rate of interest, but pretended to be voting to restart the refinery?” he asked on Facebook.

On Wednesday, Sens. Marvin Blyden, Jean Forde, Novelle Francis Jr., Myron Jackson, Neville James, Nereida “Nellie” Rivera-O’Reilly, Janelle Sarauw, Sammuel Sanes and Kurt Vialet voted yes on the deal. Sens. Alicia “Chucky” Hansen, Janette Millen-Young, Dwayne DeGraff, Tregenza Roach and Terrence Nelson voted no. Senator-at-Large Brian Smith was absent for the vote.

Mapp said that Senators also “failed to consider the portion of the proposal that calls for the acquisition of Havensight Mall from GERS and the lease of the Port of Sale property facility by the Virgin Islands Public Finance Authority.”

“If given the approval by the Legislature, we can then redevelop these areas and give GERS 50 percent of the net revenues in perpetuity,” Governor Mapp said. “Additionally, senators did not act on a $10 million equity loan to Island Global Yachting for the construction of a new 110-room hotel at Yacht Haven Grande.”

The former HOVENSA refinery had been shuttered for nearly five years when Governor Mapp assumed office in 2015 and its closure had virtually destroyed St. Croix’s economy. The Mapp Administration made reopening the facility among its highest priorities and through the Governor’s assertive efforts, the U.S. Virgin Islands Government eventually assumed ownership of the refinery, selling a large portion of it to ArcLight Capital for oil storage.

Under the new agreement with ArcLight Capital, ratified early Thursday morning, the owners of what is now called Limetree Bay Terminals, will invest approximately $1.4 billion to refurbish the existing refinery. More than 1,300 local construction jobs are anticipated for the building phase. Once refining operations commence at the end of 2019, as many as 700 permanent jobs will be created. The new jobs will be in addition to the more than 750 jobs now at the terminal storage facility.

Mapp said that housing and meals will be provided to St. Thomas and St. John residents who are hired to work at the refinery.

Upon the closing of the transaction, ArcLight Capital will make a $70 million payment to the Government of the Virgin Islands. The payment includes $30 million for the purchase from the government of approximately 225 acres of land and 122 homes. This property was acquired as part of the government’s settlement of claims against the refinery’s former owners. The Virgin Islands Government will retain the vocational school and the more than 350 acres of land it had received in the 2016 settlement. The closing payment also includes a $40 million prepayment of taxes by a new refinery entity created by ArcLight Capital to operate the facility.

After crediting the $40 million of prepaid taxes, ArcLight Capital will make annual payments to the government in lieu of taxes at a base rate of $22.5 million a year. With market adjustments based on the refinery’s performance, this could increase to as much as $70 million per year, but will not be less than $14 million a year. The initial refining operations will provide for the processing of approximately 200,000 barrels of crude oil per day.

According to industry experts and consultants Gaffney, Cline & Associates, the U.S. Virgin Islands anticipates more than $600 million over the first 10 years of the restart of the refining operations. This income is in addition to the $11.5 million currently flowing to the government from the oil storage terminal each year.

https://vifreepress.com/2018/07/op-ed-piece-vote-slow-not-no-on-limetree-refinery-deal-by-andrew-c-simpson/

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OP-ED PIECE: ‘Vote Slow, Not No’ On Limetree Refinery Deal: By Andrew C. Simpson

OP-ED PIECE: 'Vote Slow, Not No' On Limetree Refinery Deal: By Andrew C. Simpson

OP-ED PIECE BY ATTORNEY ANDREW C. SIMPSON

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The Governor and Limetree Bay LLC are trying to hurry a refinery deal through our Legislature with undue speed.

As the late Governor Farrelly used to say, “Hurry dog eat raw meat.”

The proposed refinery operating agreement is a massive economic Christmas gift to Limetree Bay in exchange for a short term $40 million infusion to our government. The headlines and short term cash infusion may benefit the Governor’s re-election campaign, but the concessions to Limetree Bay are bad for the Virgin Islands in the long term. The Legislature should refer the proposal to the Finance Committee, engage professional refinery engineers and economists, and consider what is being offered very carefully before approving anything.

Let’s start with the so-called urgency. There is no true urgency. We are told that the refinery needs to be operating by 2020 to take advantage of the new sulfur fuel regulations. Limetree Bay already has an operating agreement with the Virgin Islands that allows it to restart and operate the refinery. The fact of the matter is that Limetree Bay is going forward with everything needed to restart the refinery even as I write this. For months, hundreds of workers have been preparing to restart the refinery. The modular houses started arriving on-island this week and are being stored in the parking lot across the street from the refinery. There is no need for a new operating agreement for Limetree Bay to move forward with the refinery operation. (The sale of the refinery housing back to Limetree Bay can be accomplished with a simple real estate contract if that is essential to the restart.) If a new operating agreement was an essential part of the equation, Limetree Bay would have been in front of the Legislature a year ago—before it began spending all of the money it has been spending over the last year.

The only “urgency” is that Limetree Bay wants to renegotiate the terms of its existing operating agreement Under that agreement, Limetree Bay must pay 17.5% of refinery income to the Virgin Islands Government. Limetree Bay wants to reduce that number. It knows that once the refinery is up and running, it will have lost the biggest leverage it has to renegotiate that number. So the “urgency” is two-fold: First, Limetree Bay doesn’t want to lose its leverage; second, any delay will give the Senate time to scrutinize the deal.

Here’s what a little scrutiny will show:

* there is no minimum number of employees required by the proposed refinery operating agreement.

* there is no requirement that the refinery be restarted and operated.

* the claim that the minimum annual payment to the Virgin Islands will be $14 million is false. If the refinery processing drops below 85,000 barrels per day, the minimum payment is $10 million. And if the refinery processing

drops below 10,000 barrels per day, the minimum payment is . . . ZERO. In any normal world, where “minimum” actually means “minimum,” the minimum payment would be reported as zero, not $14 million.

* The refinery will require the coker to process the Columbian Castilla crude it plans to use as feedstock. Castilla crude has a high vanadium content compared to other crudes. The coke that is produced will have vanadium in it which creates a disposal problem for the spent coke. Further, vanadium will inevitably be released as particulate matter during the refining process and particularly when the coker is not operating properly. (It never operated properly when HOVENSA ran it and there is no reason to think that Limetree’s experience will be any different.) Operation of the refinery in the configuration proposed by Limetree Bay means health issues downwind from the refinery. Let’s understand what the ramifications are before we accept the 40 million pieces of silver.

* Even if the legislature ratifies the agreement, there is no deal – because it is subject to Limetree Bay entering into a contract with someone to provide feedstock to the refinery. So guess what that means? After we’ve been hurried into a bad deal and given away substantial benefits, we will just be starting the one-way negotiation. Because you know that the next step is for Limetree Bay to come back in two months and say, “We’ve almost got the feedstock company ready to sign; but, we need one or two more concessions from the Virgin Islands . . .”

The one legislative hearing that we have already had has already revealed some important information. First, we learned that the Governor’s projection of revenue to the VI Government of $600 million over 10 years was a best case scenario and that the likely revenues will be far less than that. Second, we received confirmation that the there is no minimum number of jobs that the restarted refinery must offer.

This deal was presented as the economic savior of the Virgin Islands. Senators, don’t be hoodwinked—we will get less money under this deal than under the existing deal. The refinery is going to restart no matter how you vote on this deal. As far as I can tell, the only thing the VI gets from this deal in exchange for substantially reducing the amount that Limetree Bay must pay by hundreds of millions of dollars is an advance payment of taxes of $40 million. That’s a raw deal. It’s too early to say “vote no.” But the Legislature should certainly vote slow. Send this deal to the Finance Committee and let’s shed some real light on it.

–Andrew C. Simpson is U.S. Virgin Islands attorney based in Christiansted, St. Croix

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Gov. Mapp Announces ‘Landmark’ $1.4 Billion Deal to Restart Refinery in St. Croix

Gov. Mapp Announces 'Landmark' .4 Billion Deal to Restart Refinery in St. Croix

CHRISTIANSTED — Governor Kenneth Mapp announced Monday an agreement which would reopen one of the world’s largest refineries, create hundreds of jobs in the territory and shore up the solvency of the Government Employees Retirement System (GERS).

Governor Mapp said the $1.4 billion agreement was between the Government of the Virgin Islands and ArcLight Capital Partners, LLC, the owners of what had been one of the largest oil refineries in the world, when it was shutdown in 2012. The massive deal includes reopening the refinery portion of the operation, which when restarted, will inject hundreds of millions of dollars into the local economy, generating new tax revenues.

Under the agreement with ArcLight Capital, the owners of what is now called Limetree Bay Terminals, the company will invest approximately $1.4 billion to refurbish the existing refinery located in St. Croix. Over the next 18 months, this will create more than 1,200 local construction jobs.

Once refinery operations commence at the end of 2019, as many as 700 permanent jobs will be created. The new jobs will be in addition to the more than 750 jobs now at the terminal storage facility. The initial refining operations provide for the processing of approximately 200,000 barrels of crude oil feedstock per day.

“This agreement is great news for the people of the Virgin Islands as we continue to grow and expand our economy,” Governor Mapp said, who noted it is tremendous news for the ‘Big Island,’ which felt the full brunt of the shutdown of refining operations in 2012.

He added that the capital investment will not only benefit St. Croix since the revenues from the agreement will shore up the solvency of GERS, but it will also help fund a new 110-room, “upscale lifestyle” hotel, flagged by a major four-star brand on St. Thomas.

Governor Mapp has called the Virgin Islands Legislature into Special Session on Wednesday, July 25, 2018 to consider and ratify the agreement. “This landmark deal to jumpstart our recovery and to pave the road to better times … requires us to move expeditiously if the refinery is to restart on schedule,” said Governor Mapp. “I look forward to working with members of the Legislature and our partners at Limetree Bay to realize its potential for the benefit of all of our people.”

Upon the closing of the transaction, ArcLight Capital will make a $70 million closing payment to the Government of the Virgin Islands. The payment includes $30 million for the purchase from the government of approximately 225 acres of land and 122 homes. This property was acquired as part of the government’s settlement of certain claims against HOVIC, Pedevesa de Venezuela, Hovensa and Hess Oil Corporation. The government will retain the vocational school and more than 350 acres of land it had received in that settlement. The closing payment also includes a $40 million prepayment of taxes by a new refinery entity created by ArcLight Capital to operate the refinery.

Once refinery operations commence and after crediting the $40 million of prepaid taxes, Limetree will make annual payments to the government in lieu of taxes at a base rate of $22.5 million a year. With market adjustments based on the refinery’s performance, this could increase to as much as $70 million per year, but will not fall below $14 million a year.

According to industry experts and consultants Gaffney, Cline & Associates, the government expects to receive more than $600 million over the first 10 years of the restart of the refining operations. This income is in addition to the $11.5 million currently flowing to the government from the oil storage terminal each year.

“For comparison sake, in the over 30 years that Hess Oil operated the refinery on the island of St. Croix, the company paid approximately $330 million in corporate taxes to the government. As you may recall, in 2015 Hess Oil filed suit for the return of (those tax payments),” Governor Mapp pointed out.

The governor explained that his submission to the Legislature provides that 50 percent of the annual revenues from the refining operations go directly to GERS. The anticipated payments over the first 10 years amount to $300 million.

Mapp’s bill also provides for the purchase from GERS of the Havensight Mall and the ground lease of the Port of Sale property. In addition to this purchase, the bill provides that GERS will receive 50 percent of the annual net revenues from the mall and the ground lease. The Public Finance Authority (PFA) will take ownership of these properties, and the Authority’s subsidiary, The West Indian Company (WICO), will fully manage and develop these properties.

From the closing payment and new revenue streams generated by investments made possible by this transaction, the PFA will make a $25 million down payment to GERS and enter into a mortgage with GERS at a rate of 8 percent per annum, which is above the pension system’s required rate of return, for the balance of the agreed purchase price of these assets.

Acquisition of these assets by the PFA and WICO will allow the government to enter into an agreement with the territory’s cruise partners or others to fully develop and leverage these assets to generate a much higher degree of revenue for GERS and the government.

In addition to the $25 million cash injection, the mortgage payments, 50 percent of the mall revenues and half of the annual payments from the refinery, will be dedicated to GERS.

“All together, based on (estimates from) our industry consultants, these measures will generate more than $380 million into GERS over the next 10 years,” said Governor Mapp. He also remarked that actuaries cautioned that these payments and infusion of cash will not save the system, but they will extend its life by an additional five years, “giving all of us, the plan’s sponsor, the plan and the plan’s members, some breathing space to rationally find a permanent solution to restore GERS to solvency.”

“Please note that I have previously submitted a bill to the Senate to increase the government’s contribution to GERS over the next three years as well as increase the contribution of its members whose salaries are higher than $65,000 per year,” Governor Mapp added. “So, these two measures combined provide more than five years of additional solvency of the retirement system.”

The Governor’s submission to the Legislature also provides that out of the closing payment, up to $10 million will also be used as an equity investment in the new 110-room hotel located at Yacht Haven Grande on St. Thomas. This hotel will be the first new hotel built in the territory in decades.

In return for its investment, the government will receive a security interest in the hotel and land underneath it, interest payments for 10 years, five percent of the hotel’s cash flow and a seven percent carrying interest in the net proceeds if the hotel is ever sold. Fifty percent of the cash flow generated by the hotel that is paid to the government will also be dedicated to GERS’ solvency.

Funds from the closing payment will also be divided up and used to pay $10 million of income tax refunds; $3 million for the operation of the judicial branch for the upcoming fiscal year; $2 million for the relocation and development of a legislative complex on St. Croix; $7 million to the Waste Management Authority to pay outstanding obligations to vendors; $3 million to the St. Croix Capital Improvement Fund, and $4 million for the Paul E. Joseph Stadium. A sum of $2 million will flow to the St. John Capital Improvement Fund and $1 million will be allocated for the reconstruction of the St. John Battery, which was destroyed by Hurricane Irma.

“This landmark agreement did not happen overnight. It is the result of much hard work by the owners of ArcLight Capital and my Administration over the past two years,” Governor Mapp said. “It is the product of complex negotiations with major players in the global oil industry. It required tremendous work with the Trump Administration and the President’s Council of Environmental Quality, the EPA (United States Environmental Protection Agency) and the U.S. Department of Justice. More work remains to be done, but this agreement allows the Virgin Islands to accelerate its recovery, grow its economy, create jobs for its people, propel new startup businesses, as well as support existing businesses and ultimately provide revenues for our government and our retirement system,” he said.

Two years ago, the government entered into an agreement with Limetree Bay Terminals, LLC, a subsidiary of the private equity firm ArcLight Capital, for the operation of the oil storage terminal at Limetree Bay. The 31st Legislature ratified that agreement, and it has proven to be an overwhelming success story. The terminal now employs more than 750 full-time people, more than 80 percent of whom are Virgin Islanders.

To date, the company is paying more than $11 million annually in taxes to the government, has invested approximately $260 million in capital improvements to its facility and is in the final stages of a $100 million capital project, building the single-point mooring buoy that will allow it to handle the world’s largest tankers.

“Limetree has been a good corporate citizen, a good business partner and has donated more than $1 million in charitable and educational contributions. The Limetree Bay terminal has played a critical part in the Territory’s road to economic recovery. We have both worked hard on the restart of the refinery and I want to personally thank Jake Erhard and Evan Schwartz of ArcLight Capital, for doing business with us and continuing to invest in the U.S. Virgin Islands.” The Governor welcomed Robert Haugen, Senior Vice President of Refining at Limetree Bay Terminals, who will lead the refining operation.

ArcLight Capital’s plan anticipates a massive capital investment in a compressed period of time in order to capture a market opportunity in the oil industry. “Timing is of the essence in completing the turnaround and restart of the refinery,” Governor Mapp implored, announcing that during the legislative process, ArcLight will detail its strategy and its schedule to employ more than 1,200 workers during the accelerated construction period. “The objective of the overall strategy is to have refined product from the St. Croix refinery in the market come January 2020,” he reported.

Qualified Virgin Islands residents will be given preference in all hiring. ArcLight Capital will be required, and the local government will assist, to advertise and publicize all job opportunities for local residents. Residents of St. Thomas and St. John, who may be interested in working during the reconstruction of the refinery, will be offered a place to live while working on St. Croix without charge.

Together, the Amended Terminal Operating Agreement and Refinery Operating Agreement may bring an estimated $775 million in revenues to the government over the next 10 years, of which more than $600 million will be new revenues generated entirely by the refinery. Those monies are in addition to the massive economic benefits that will be conferred upon the Territory in general, and St. Croix in particular, by the infusion of $1.4 billion in direct capital investment and the creation of as many as 700 new full-time, permanent jobs.

Jake Erhard, Partner at ArcLight Capital Partners, LLC, thanked Governor Mapp for encouraging the company not to limit its engagement to a terminal-only transaction when they took over the refinery two and a half years ago. “The progress we’re making on the ground with the refinery assets would not have happened if we were left to our devices,” he remarked. “We only wanted to buy the terminal assets, and Governor Mapp and his administration insisted that we include all of the assets including the refining assets into the transaction so we abided and did that.” He said that one of the other salient features of the terminal operating agreement is the framework around the public-private partnership. “Of all the things, that was probably the most gratuitous aspect of that transaction because it’s really proven to be a tremendous benefit for us.” Robert Haugen echoed Erhard’s comments and thanked the government for its support of a large, challenging and exciting project.

Tom Mukamal, Chief Executive Officer of Island Global Yachting, acknowledged the governor and his team’s tenacity which helped make the hotel development a reality. “The financing coupled with $30 million in private funds will see this project move ahead,” he said, describing the urban hotel development as “shovel ready” given the infrastructure that already exists at Yacht Haven Grande and the planning that had been done many years ago.

Read Governor Mapp’s letter calling Legislature into special session here.

https://vifreepress.com/2018/07/mapp-says-arclight-capital-will-restart-refinery-and-bring-600-million-in-taxes-over-10-years/

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MAPP: ArcLight’s ‘Restart’ of St. Croix Refinery To Bring $600 Million Over 10 Years, 1200 New Jobs

MAPP: ArcLight's 'Restart' of St. Croix Refinery To Bring 0 Million Over 10 Years, 1200 New Jobs

FILE PHOTO: An abandoned truck is seen outside the installations of the Hovensa petroleum refinery in St Croix on June 28, 2017. REUTERS/Alvin Baez/File Photo

CHRISTIANSTED — Owners of an idled oil refinery in St. Croix, that was once among the world’s largest, plan to invest $1.4 billion to refurbish and restart a portion of the plant, they said today.

ArcLight Capital Partners, a private equity firm expects the former HOVENSA refinery to be able to process 200,000 barrels per day of crude and deliver fuels to market by January 2020, officials said at a news conference.

The Boston-based company spent two years studying the market and developed “a refinery profile we see thriving in the current marketplace,” said John Erhard, an ArcLight partner.

It aims to produce fuels that meet an International Maritime Organization mandate calling for large vessels to switch by 2020 to fuels containing no more than 0.5 percent sulfur from 3.5 percent, the company has said.

If the renamed Limetree Bay refinery can be refurbished to produce the fuels in the next 18 months, it could benefit from expected lower prices for heavy crude and strong demand for its fuels, said analysts.

“If you have the ability to make compliant bunker fuel, you can make a lot of money,” said John Auers, executive vice president at consultancy Turner, Mason & Co.

Mark Broadbent, principal research analyst at Wood Mackenzie, also said demand for IMO 2020 fuels should favor Limetree Bay, but it is unclear whether ArcLight can restore operations within its budget and by 2020.

“Getting an idled refinery up and running could be very expensive,” he said.

In the 1970s, the refinery on St. Croix was able to process 650,000 barrels per day. It halted processing in January of 2012, filed for bankruptcy three years later and was sold to ArcLight and trading firm Freepoint Commodities.

The two companies run Limetree Bay Terminals, a 25 million-barrel oil storage and marine terminal on the site.

As part of its agreement with the USVI government, Limetree has purchased 225 acres of land and more than 100 homes surrounding the refinery to facilitate the restart, Governor Kenneth Mapp said in an interview.

“They’ve already begun spending money,” Mapp said. “Assets and resources are already on their way.”

Reopening the refinery will be a boon to the U.S. Virgin Islands, which has struggled economically since Hovensa closed in 2012.

The government will collect $600 million in revenue from the refinery over its first 10 years in operation, Mapp said.

Restarting the facility also will bring 1,000 construction jobs and 700 permanent jobs to the site, in addition to the 750 workers at Limetree’s nearby oil terminal site, he said.

Officials did not discuss BP Plc’s potential involvement in the refinery restart, but two sources familiar with the matter said the British oil company is in negotiations to supply crude to the plant.

The deal under discussion would be similar to a supply and marketing arrangement BP struck with NARL Refining for the 115,000-bpd Come by Chance refinery in Newfoundland, one of the sources said. That deal soured over two years ago.

ArcLight and Freepoint officials were unavailable for comment. BP spokesman Mike Abendhoff declined to comment on its potential role.

Part of Mapp’s statement today:

“I am pleased to announce today an agreement between the government of the Virgin Islands and ArcLight Capital, the owners of Limetree Bay Terminals LLC, to restart refining operations on the island of St. Croix. The agreement that we signed this morning, that I will be transmitting to the Legislature of the Virgin Islands, provides that the owners of the refinery will invest, practically immediately, $1.4 billion dollars to refurbish the refinery over the next 18 months and create more than 1,200 construction jobs and as many as 700 permanent jobs once refining operations commence at the end of 2019. The new jobs will be added to the more than 750 jobs that now exist at the terminal storage facility. The initial refining operations under this agreement provides for the processing of approximately 200,000 barrels of crude oil feedstock per day. This agreement is great news for the people of the Virgin Islands as we continue to grow and expand the economy. It is tremendous news for the Big Island, which felt the full brunt of the shutdown of refining operations back in 2012.

“The restart of the refinery will inject hundreds of millions of dollars into our economy, generate new tax revenues to our government and create hundreds of non-refining jobs in addition to those created at the refinery itself. It will also be the impetus of new businesses which may compliment the refining operation. The capital investment in employment alone will significantly boost the St. Croix economy. But it is not only St. Croix that will benefit. As a result of this agreement, the territory’s economy will expand. The Government Employees’ Retirement System will receive a direct flow of revenues to shore up its solvency and a new upscale lifestyle hotel branded at a Hilton, Hyatt or Intercontinental will be constructed on the island of St. Thomas. Today I am submitting this agreement to the 32nd Legislature for its consideration and ratification. I am calling the Legislature into Special Session for 10 a.m. Wednesday July 25, 2018.

“Upon the closing of this transaction, ArcLight Capital will make a closing payment to the government of the Virgin Islands in the amount of $70 million dollars. This closing payment will provide $30 million dollars for the purchase from the government of approximately 225 acres of land and 122 homes. The government had acquired this property as part of its settlement of certain claims against HOVIC (Hess Oil Virgin Islands Corporation), PDVSA (Petróleos de Venezuela, S.A) de Venezuela and Hess Oil Corporation. The government will retain the Vocational School and over 350 acres of land it had received in that settlement. The closing payment also provides a $40 million dollar pre-payment of taxes by the new refinery entity created by ArcLight Capital to operate the refinery. Once refinery operations commence and after crediting the $40 million dollars of pre-paid taxes, Limetree will make annual payments to the government in lieu of taxes, at the base rate of $22.5 million dollars a year, with market adjustments based on the refinery’s performance, this could increase to as much as $70 million dollars per year, but will not in any case, fall below $14 million dollars a year. According to our industry experts and consultants, Gaffney, Cline and Associates, we the government expect to receive more than $600 million dollars over the first 10 years of the restart of the refining operation. This income is in addition to the income now being generated by the government from the oil storage terminal facility which is currently paying the government $11 and a half million dollars per year.

“Just for comparison’s sake, in the over 30 years that Hess Oil operated the refinery on the island of St. Croix, the company paid approximately $330 million dollars in corporate taxes to the government. And as you all may recall, in 2015 Hess Oil filed suit for the return of the complete $330 million dollars. This refinery agreement will shore up the finances and buys additional years of solvency of the Government Employees’ Retirement System. My submission to the Legislature provides that 50 percent of the annual revenues from the refining operation go directly to GERS. This amount over the first 10 years from the refinery payments to GERS is anticipated at $300 million dollars. In addition to the infusion of cash from the refinery to GERS, my bill also provides for the purchase of the Government Employees’ Retirement System, the Havensight Mall and the ground lease of the Port of Sale property owned by the public pension program. In addition to that purchase, the bill provides that GERS will receive 50 percent of the annual net revenues of the mall and the ground lease. The Public Finance Authority will take ownership of these properties and the Authority’s subsidiary, the West (Indian Company Ltd.), will fully manage and develop these properties. From the closing payment and new revenue stream generated by investments made possible by this transaction, the PFA will make a $25 million dollar down payment to GERS and enter into a mortgage with GERS (at) a rate of eight percent per annum. A rate above the pension system’s required rate of return, for the balance of the agreed purchase price of these assets. The balance of the purchase price will be driven by appraisals of the property. Acquisition of these assets by the PFA and WICO will allow the government to enter into an agreement with territory’s new partners or others to fully develop and leverage these assets to generate a much higher degree of revenue for GERS and the government. In addition to the 25 million dollar cash injection, the mortgage payment, one half of the mall revenues, one half of the annual payments from the refinery will be dedicated to GERS. Altogether, based on our industry consultants, these measures will generate more than $380 million dollars into GERS over the next 10 years. The actuary defined that these payments and the infusion of cash will not save the system. But they will extend the life of the system by an additional five years giving all of us, the plan’s sponsor, the plan and the plan’s members some breathing space to rationally find a permanent solution to restore GERS to solvency.”

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St. Thomas Senator Millin Young and St. Croix Chamber President Bengoa To Challenge Mapp

St. Thomas Senator Millin Young and St. Croix Chamber President Bengoa To Challenge Mapp

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CHRISTIANSTED — St. Croix Chamber of Commerce President Edgar Bengoa confirmed today he would be running as the Lieutenant Governor candidate on a ticket with St. Thomas Sen. Janette Millin Young in the November gubernatorial elections.

Although it’s not official, the word on the street was that Millin Young and Bengoa would be running this year.

Their candidacy brings to nearly 20 the number of candidates who will challenge Gov. Kenneth Mapp and Lt. Gov. Osbert Potter in the fall.

Word is that Mapp will announce an “October Surprise” just before the elections in November that British Petroleum (BP) is buying the South Shore oil refinery on St. Croix and again operating the former HOVENSA plant as an oil and gas producing facility.

The official announcement was made May 9 at Emerald Beach Resort in St. Thomas.

In January of 2018, Mapp called Millin Young, a sitting St. Thomas senator, a “setty fowl” and said she was “stupid” for questioning the Limetree Bay Terminals proposal on St. Croix.

St. Thomas Senator Millin Young and St. Croix Chamber President Bengoa To Challenge Mapp

 

EDGAR BENGOA: THE CHAMBER OF COMMERCE PRESIDENT ON ST. CROIX

 

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Limetree Bay Terminals Downplays Amount of Friable Asbestos Released on St. Croix During Hurricane Maria

Limetree Bay Terminals Downplays Amount of Friable Asbestos Released on St. Croix During Hurricane Maria

CHRISTIANSTED — Friable asbestos was likely a problem for Limetree Bay Terminals and anyone downwind of the St. Croix oil storage facility after its facilities were compromised during Hurricane Maria.

The Virgin Islands Free Press was the first media source to alert the public that Maria severely damaged the former HOVENSA oil refinery and oil storage terminal on Sept. 19.

Limetree Bay Vice President of Operations Nate Werner wrote a memo on Oct. 9 acknowledging the damage and allowing that some of the damaged buildings likely contained asbestos. The issue came up at a safety meeting.

“During the weekly safety topic, we discussed damage to insulation in the idled refinery process units from the storm and potential hazards it might present,” Werner wrote. “Limetree Bay is required to assume most of this insulation contains asbestos, but only testing will confirm that. Insulation is being kept damp while removal/disposal operations are underway. Access to areas where damaged insulation is present has been restricted and proper PPE is required.”

According to the U.S. Environmental Protection Agency (EPA), by keeping the materials wet it makes it more difficult for the material to become airborne and easier to cleanup. PPE means Personal Protective Equipment.

The notification was taken both to meet Occupational Safety and Health Administration (OSHA) requirements, as well as out of an abundance of caution, Werner wrote.

“When asbestos removal and management operations are conducted at a site, OSHA regulations require a formal notification to employees and other employers at the site who are in or may be near the work areas of the presence, location and quantity of asbestos containing materials or potentially asbestos containing materials,” he wrote. “To ensure everyone is aware of potential hazards, Limetree Bay has decided to notify all of our employees and other employers on site, even those who work in areas that are asbestos-free.”

The memo was addressed to all employees and contractors working at the site.

Werner declined to be interviewed. He asked that questions be put to Limetree Bay Terminals spokeswoman Tara Graham, who has not responded yet.

Department of Planning and Natural Resources (DPNR) spokesman Jamal Nielsen said the department had not been notified about asbestos at the facility, but he said that the South Shore site also contains an asbestos dump site. Enforcement at the site is usually conducted by the EPA, Nielsen said.

EPA officials did not immediately return requests for comment.

The refinery isn’t the only source of asbestos on St. Croix. The former Alcoa alumina plant, portions of which were visibly damaged by Maria, also has been the subject of asbestos warnings from the EPA in the past.

Asbestos is a fire-retardant mineral material used as insulation in construction in the past, capable of causing lung disease and cancer in people exposed to it.

According to the National Cancer Institute, low levels of asbestos exposure do not usually present a threat.

According to the NCI, “people who become ill from asbestos usually have been exposed to it on a regular basis, most often in a job where they have worked directly with the material or through substantial environmental contact.”

Education Department officials have said that asbestos was found in three Virgin Islands schools in the aftermath of the 2017 storms.

The amount of asbestos in the schools wasn’t enough to shut down the facilities, all of which are currently in use by students, Education Commissioner Sharon McCollum acknowledged.

To read more:

https://vifreepress.com/2017/11/explosion-rocks-limetree-bay-terminals-month-hurricane-maria-blast-not-reported-u-s-chemical-safety-board/