Analysis of debt burden. (1) What has been the 10-year trend in general obligati

Question

Analysis of debt burden.

(1) What has been the 10-year trend in general obligation long-term debt relative to trends in population and revenue capacity?

            (2) Are significant debts of other governments (e.g., a school district, a county) supported by the same taxable properties? What has been the trend for this “overlapping” debt?

(3) Are there significant levels of short-term operating debt? If so, has the amount of this debt grown over time?

(4) Are there any significant debts (e.g., lease obligations, unfunded pension liabilities, accrued employee benefits) or contingent liabilities?

(5) Are any risky investments such as derivatives disclosed in the notes to the financial statements?

Government of the United States Virgin Islands Management's Discussion and Analysis The Government's capita assets include land, land improvements, buildings, building improvements, machinery and equipment, infrastructure, construction in progress, and intangibles as follows (expressed in thousands) Covernmental Activities Business-Type Activities Total tember 30 235,383 202,286 5,5265,526 240,909 207,812 580,178 Land and improvements Building and improvements Machinery and equipment Infrastructure Intangibles Construction in 500.764 191,610 79.506 541,578 197,441 337,595 621,084 276,576 337,595 313,472 20,974 20,974 20,974 55,645 63,836 Total capital assets Less accumulated 1,367,642 1,278,411 193,332 187,157 1,560,974 1465,568 Total capital assets, net 849,253 798,577 128,821 131,885 978,074 S 930,462 Note 9 provides detailed information regarding the capital assets of the primary govemment and the component units of the Government. Debt Administration The Government issues both general obligation bonds and revenue bonds. The Revised Organic Act [48 U.S.C. Section 1574 (b restricts the principal amount of general obligation debt that the Government may issue to no greater than 10% of the aggregate assessed valuation of taxable real property in the U.S. Virgin Islands. Following is a summary of bonds outstanding as of September 30, 2016 (expressed in thousandsj Bond issue Rates Balance 3.00-5.00 85,415 2015 Series Federal Highway Bonds 2014 Series D Revenue Bonds 2014 Series C Revenue Bords 2014 Series A Revenue Bonds 2013 Series B Revenue Refunding Bonds 2013 Series A Revenue Refunding Bonds 2012 Series C Revenue Bonds 2012 Series A & B Revenue &Refunding; Bonds 2012 Series A Revenue Bonds 2010 Series AB Revenue Bonds 2009 Serics A Revenue Bonds iCruzan 2009 Series A-1, B&C; Revenue and Refunding Bonds 2009 Series A Revenue Bonds Diageo) 2006 Series A Revenue Bonds 2006 Series A, B, C&D; Tobacco Turbo and Capital Appreciation Bonds 2001 Series A Tobacco Bonds Tctal bonds outst anding Plus (less): 2033 2034 2024 4.50-5.00 3.00 5.00 3.00-5.00 4.00-5.00 242,495 46,295 33,790 31,725 194,500 141,015 390,570 35.5 316,815 237,095 199,830 2032 2029 4.00 5.25 6.00-6.75 024,015 Bonds premium Bonds discount 57,799 (2,692 Net bonds outstanding

Explanation / Answer

question 4 answer

1)      US$ 3.1 million for reimbursing funds to VIWMA as per court order.

2)      $ 26 million to be paid for 8% salary reduction

3)      Contingent Liability is disclosure of expired temporary tax provision and high-risk guarantee status awarded by US department of labor for unsatisfactory performance in management of federal grants.

4)      Lease obligations are refinancing loan agreement, interim financing agreement and short-term loan with banco popular de Puerto Rico

5) the risky investments disclosed in FS are

a) loan agreement with carambola northwest llc. For condominium, hotel and golf resort. The loan is of US$ 15 million value for 5 years at interest of 10.5%. since carambola has defaulted under the loan agreement and GERS has exercised rights under loan agreement for preliminary disposition agreement. Since the appraised value of the complex is also only 8 million the investment is not sufficient to cover the loan and is a risky investment.

b) the other risky investment is US$ 21.1 million in life insurance policies in limited liability partner Attilanus. Since limited liability partners are not allowed to withdraw funds from the partnership this is a risky investment for GERS.

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