ST. CROIX — The Virgin Islands Public Finance Authority unanimously approved a three-month contract extension and a $300,000 increase of the not-to-exceed amount during a regular meeting held virtually today to pay Squire Patton Boggs up to $1.1 million for work the international law firm completed to finalize the Vitol propane infrastructure transaction with the Virgin Islands Water and Power Authority.
The board approved a resolution to authorize the PFA to enter a contract not to exceed $501,500 with TruNorth Dynamics for the upgrade of the PFA’s existing financial computer software to Microsoft Dynamics 365 Business Central from Microsoft Dynamics GP version 2015. The upgraded software will include the implementation of a human resources and payroll solution component to simplify daily tasks.
The board met in executive session, during which board members discussed certain actions and strategies to provide additional assistance to WAPA, according to attorney Kye Walker, PFA general counsel, who reported out of executive session.
“At this time, the board is unable to disclose the details of what is being discussed because the premature disclosure may frustrate proposed agency action,” she said. “No action was taken during the executive session and at this point, discussions are ongoing.”
The Water and Power Authority and Vitol agreed on a $145 million settlement for WAPA to buyout the liquefied petroleum gas supplier and own the propane infrastructure at the Randolph Harley Power Plant on St. Thomas and Richmond Power Plant on St. Croix. On April 28, 2023, the WAPA board approved the settlement that is being reimbursed by the federal government.
The VI government initially made a $45 million payment toward the buyout that was due May 1, 2023. The U.S. Department of Housing and Urban Development recently approved $100 million through the Community Development Block Grant – Mitigation program to finalize the purchase of the propane infrastructure. The transaction closed on July 16. Reimbursement of the $45 million to the VI government is the last part that needs to be completed.
Walker said the contract with Squire Patton Boggs began in November 2022 when the law firm negotiated the resumption of fuel after Vitol cut off its supply to WAPA. She said the second part of the contract, which expired May 24 and was extended to August 23, involved the purchase of the LPG assets from Vitol, as well as obtaining the grant funds from HUD.
“There was some delay in obtaining those grant funds, and that is why the contract with Squire Patton had been extended,” she said.
Walker said the government used the law firm’s legal services to negotiate as well as to review and draft agreements. She said the government used the firm’s public policy team to work in Washington, D.C. to facilitate the transactions with HUD and Vitol. She said Squire Patton Boggs assisted the government during the process to negotiate a nine-month fuel contract with Vitol to reduce the cost of propane that was being supplied to WAPA and enter the shortest contract term possible so the Authority can go into the open market and negotiate even better rates for the propane fuel supply.
“Through the month of June, all of those services would have totaled about $971,000,” Walker said, noting the law firm provided a 15% discount it has honored from November 2022. “They never increased the rates on us, and I have combed through their invoices that have been submitted before I forward them on to the PFA to make sure all discounts have been applied.”
Walker said it was necessary to increase the not-to-exceed amount in the contract to $1.1 million from $800,000 to cover the services Squire Patton Boggs provided.
“The services should be concluded this month,” she said. “The only thing that remains open is the second part of the transaction, which is obtaining the $45 million that returns to the treasury, and that’s near completion as well.”
Now that the government received the $100 million from HUD to close on the Vitol transaction, Walker said the Authority can get all the insurance policies in addition to changing over some permits.
“That’s what’s needed to secure the $45 million, so we're just at the finish line with the $45 million that will be reimbursed to the government,” she said.
Governor Albert Bryan Jr., board chair, thanked the board members for their diligence and help to finalize the transaction.
“Now we can negotiate a better price on fuel and not be tied to a single fuel provider,” he said. “It eliminates monthly payments to Vitol that WAPA had to pay before that they weren’t paying anyway, but now we don’t have to worry about them. It adds $145 million to their asset column, which is good.”
