Legislature of the Virgin Islands 
P.O. Box 1690, Emancipation Garden Station 
St. Thomas, U.S. Virgin Islands 00804 
——○—— 
POST AUDIT DIVISION 
 
TEL: (340) 774-2478 
FAX: (340) 774-2492 
 
March 11, 2025 
 
MEMORANDUM: 
 
TO: 
 
Senator Novelle E. Francis, Jr. 
 
 
Chairperson 
 
 
Committee on Budget, Appropriations and Finance 
 
 
36th Legislature  
 
FROM: 
Post Audit Division 
 
SUBJECT:  
Bill No. 36-0038 – An Act amending title 29 Virgin Islands Code, chapter 10, subchapter III, 
section 551, subsection (a) by increasing the limit for outstanding bonds for the Virgin Islands Port Authority 
from $100 million to $500 million 
 
BILL SUMMARY 
 
Bill 35-0038 seeks to codify the change in the bond limits for the Virgin Islands Port Authority (VIPA). The 
Virgin Islands Port Authority Board has approved raising its bonding limit from $100 million to $500 million, 
marking a significant shift in the agency's ability to fund critical infrastructure projects. This change revises a 
limit that was last amended in 1988 under Section 551 of Title 29, Chapter 10 of the Virgin Islands Code, 
which raised the bonding capacity from $65 million to $100 million. With this increased bond capacity, VIPA 
gains the financial flexibility to modernize and maintain the territory’s port facilities. This ensures the Virgin 
Islands can continue supporting its marine trade and tourism sectors. However, this expansion also brings 
important considerations regarding debt management and long-term fiscal stability. 
 
Increasing the bond limit from $100 million to $500 million will significantly affect the Virgin Islands’ 
economic landscape, public finance, and infrastructure development. This move presents opportunities for 
growth and risks that must be carefully managed. 
 
Potential Benefits: 
 
• 
Enhanced Infrastructure Investment: The increase in the bond limit provides VIPA with the 
financial capacity to secure additional funds for vital infrastructure improvements. Investments in port 
modernization and facility upgrades could significantly improve operational efficiency, making the 
ports more competitive. This would position the ports as essential assets for long-term economic 
development. 
 
• 
Economic Stimulus: Funds raised through the expanded bonding capacity could stimulate local 
economic growth. By improving port facilities, VIPA could attract more cruise line traffic, driving 
tourism and boosting industries linked to the sector. This increased economic activity could create 
short-term jobs (during construction) and long-term employment opportunities (through expanded port 
Honorable Novelle E. Francis, Jr. 
Bill 35-0038 – VIPA Bond Increase 
Page 2 of 2 
 
 
 
 
 
 
operations), benefiting multiple sectors such as tourism, logistics, and retail. This could foster sustained 
long-term economic growth and strengthen the region’s resilience. 
 
• 
Increased Access to Capital: Raising the bonding limit gives VIPA greater flexibility to access capital 
for larger, more ambitious projects. If the funds are managed effectively, this could enhance the 
territory's creditworthiness, reducing borrowing costs. 
 
• 
Tourism Growth: Upgraded port facilities could accommodate more cruise ships, a key driver of the 
Virgin Islands' economy. The influx of additional tourists would stimulate spending in the hospitality 
and retail sectors, increasing overall tourism revenue for the region. 
 
Potential Risks: 
 
• 
Growing Debt Burden: A higher bond limit means more borrowing, which could increase the 
financial burden on VIPA and the Virgin Islands. VIPA must carefully manage the resulting debt 
obligations to ensure that port revenues can meet debt service requirements. Failure to manage this 
effectively could lead to financial instability. 
 
• 
Higher Interest Payments: Issuing more bonds would result in higher interest payments over the life 
of the debt. These payments could divert funds from other essential government services or future 
investments, creating trade-offs in public spending. The increased debt service could also limit the 
territory’s ability to finance future projects or fulfill other fiscal obligations. 
 
• 
Impact on Credit Rating: The decision to issue additional debt could negatively affect the Port 
Authority's credit rating, particularly if adequate and sustainable revenue streams do not back the 
increased borrowing. A downgrade in credit rating could lead to higher borrowing costs in the future, 
compounding financial challenges. 
 
• 
Environmental and Social Impact: Large-scale infrastructure projects, especially port expansions or 
construction, can have significant environmental and social consequences. Potential disruptions to 
local ecosystems, coastal communities, or even displacement could lead to public opposition, delays, 
or complications in project execution. 
 
Conclusion 
While increasing the Virgin Islands Port Authority’s bonding limit offers substantial economic growth 
opportunities, particularly in infrastructure development, tourism, and job creation, it also introduces 
considerable risks. The added debt burden, potential for fund mismanagement, and long-term fiscal 
implications need careful consideration. To maximize the benefits and minimize the risks, VIPA must 
implement strong financial oversight, strategic planning, and clear repayment strategies. 
 
 
 
Nikia A. Fleming 
Acting Post Auditor