§1574b — Title 48 Territories and Insular Possessions | U.S. Code

Summary

The government of the Virgin Islands can ask the Secretary of the Interior to guarantee bonds or other debt it is allowed to issue. The Virgin Islands must give whatever information the Secretary asks for. The Secretary, with the Secretary of the Treasury’s approval, may guarantee debt only if the money is used for public works or capital projects, and specifically $28,000,000 must be used for water-producing and power projects (including power plant upkeep) and $12,000,000 for fixing and improving water distribution and storage. The Secretary must also find that tax revenues under section 7652(b)(3) of title 26 will cover principal and interest, that the territory cannot get reasonable credit elsewhere, and that repayment looks likely. Any guaranteed debt can’t mature past 30 years or beyond 90% of the useful life of the asset, whichever is shorter. The Secretary will charge fees to cover administration and put them in a special revolving fund in the Treasury. Guarantees count as government-backed and are final except for fraud or serious misstatement. Interest on guaranteed debt is taxable under the Internal Revenue Code. Total guarantees may not exceed $101,000,000. No new guarantees or uses of guaranteed but unused funds are allowed after October 1, 1990; any unused proceeds after that date must be repaid immediately, or the Secretary will deduct the amount from payments under section 7652(b)(3). If the fund lacks money, the Secretary may issue notes to the Treasury, which the Treasury may buy or sell; those notes are repaid from appropriations and carry market-based interest.

Title 48, §1574b

Territories and Insular Possessions — Source: USLM XML via OLRC

(a)When authorized under subsection (b) of section 1574a of this title, the government of the Virgin Islands may apply to the Secretary of the Interior (hereinafter referred to as the “Secretary”) for a guarantee of any issue of bonds or other obligations authorized to be issued under subsection (a) of section 1574a of this title. Any such application shall contain such information as the Secretary may prescribe.

(b)The Secretary is authorized, with the approval of the Secretary of the Treasury, to guarantee and to enter into commitments to guarantee, upon such terms and conditions as he may prescribe, payment of principal and interest on bonds and other obligations issued by the government of the Virgin Islands under subsection (a) of section 1574a of this title. No guarantee or commitment to guarantee shall be made unless the Secretary determines—

(1)that the proceeds of such issue will be used only for public works or other capital projects, except that $28,000,000 of the guaranteed bonding authority will be used for water producing and power projects, including maintenance and overhaul of electrical generating and distribution mechanisms, and $12,000,000 of the guaranteed bonding authority will be used for repair and improvements of the water distribution and storage systems;

(2)taking into account anticipated expenditures by the government of the Virgin Islands while the bonds or other obligations forming a part of such issue will be outstanding, all outstanding obligations of the government of the Virgin Islands which will mature while the bonds or other obligations forming a part of such issue will be outstanding, and such other factors as he deems pertinent, that the revenues expected to be received under section 7652(b)(3) of title 26 will be sufficient to pay the principal of, and interest on, the bonds or other obligations forming a part of such issue;

(3)that credit is not otherwise available on reasonable terms and conditions and that there is reasonable assurance of repayment, and

(4)that the maturity of any obligations to be guaranteed does not exceed thirty years or 90 per centum of the useful life of the physical assets to be financed by the obligation, whichever is less as determined by the Secretary.

(c)The Secretary shall charge and collect fees in amounts sufficient in his judgment to cover the costs of administering this section. Fees collected under this subsection shall be deposited in the revolving fund created under subsection (g).

(d)Any guarantee made by the Secretary shall be conclusive evidence of the eligibility of the obligation for such guarantee, and the validity of any guarantee so made shall be incontestable, except for fraud or material misrepresentation, in the hands of the holder of the guaranteed obligation. Such guarantee shall constitute a pledge of the full faith and credit of the United States for such obligation.

(e)The interest on any obligation guaranteed under this section shall be included in gross income for purposes of chapter 1 of the Internal Revenue Code of 1986 [26 U.S.C. 1 et seq.].

(f)The aggregate principal amount of obligations which may be guaranteed under this Act shall not exceed $101,000,000. No commitment to guarantee may be issued by the Secretary, and no guaranteed but unobligated funds may be obligated by the government of the Virgin Islands after October 1, 1990. After October 1, 1990, any unobligated proceeds of bonds or other obligations issued by the government of the Virgin Islands pursuant to this section shall be repaid immediately by the government of the Virgin Islands to the lenders with the agreed upon interest. Should there be any delay in the government of the Virgin Islands’ making such repayment, the Secretary shall deduct the requisite amounts from moneys under his control that would otherwise be paid to the government of the Virgin Islands under section 7652(b)(3) of title 26.

(g)(1)There is hereby created within the Treasury a separate fund (hereinafter referred to as “the fund”) which shall be available to the Secretary without fiscal year limitation as revolving fund for the purpose of this Act. A business-type budget for the fund shall be prepared, transmitted to the Congress, considered, and enacted in the manner prescribed by law (section 9103 and 9104 of title 31) for wholly owned Government corporations.

(2)All expenses, including reimbursements to other government accounts, and payments pursuant to operations of the Secretary under this Act shall be paid from the fund. If at any time the Secretary determines that moneys in the fund exceed the present and any reasonably prospective future requirements of the fund, such excess may be transferred to the general fund of the Treasury.

(3)If at any time the moneys available in the fund are insufficient to enable the Secretary to discharge his responsibilities under guarantees under this Act, he shall issue to the Secretary of the Treasury notes or other obligations in such forms and denominations, bearing such maturities, and subject to such terms and conditions, as may be prescribed by the Secretary of the Treasury. Redemption of such notes or obligations shall be made by the Secretary from appropriations which are hereby authorized for this purpose. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, which shall not be less than a rate determined by taking into consideration the average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of the notes or other obligations. The Secretary of the Treasury shall purchase any notes or other obligations issued hereunder and for that purpose he is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31 and the purposes for which securities may be issued under that chapter are extended to include any purchase of such notes or obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this subsection. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States.

Notes & Related Subsidiaries

Editorial Notes

References in Text

Chapter 1 of the Internal Revenue Code of 1986, referred to in subsec. (e), means chapter 1 (§ 1 et seq.) of Title 26, Internal Revenue Code. This Act, referred to in subsecs. (f) and (g), is Pub. L. 94–392, Aug. 19, 1976, 90 Stat. 1193, which enacted sections 1574a to 1574d of this title, amended section 1397 of this title, and enacted a provision set out as a note under section 1574a of this title. For complete classification of this Act to the Code, see Tables. Codification In subsecs. (b)(2) and (f), “section 7652(b)(3) of title 26” substituted for “section 28(b) of the Revised Organic Act of the Virgin Islands [68 Stat. 508]”, which was classified to section 3350(c) of former Title 26, Internal Revenue Code, on authority of section 7852(b) of Title 26, Internal Revenue Code, which provided that any reference in any other law to a provision of the Internal Revenue Code of 1939 be deemed a reference to the corresponding provision of the Internal Revenue Code of 1986. In subsec. (g)(1) and (3), “section 9103 and 9104 of title 31” substituted for “section 102, 103, and 104 of the Government Corporation Control Act (31 U.S.C. 847–849)”, and “chapter 31 of title 31” and “that chapter” were substituted for “the Second Liberty Bond Act” and “that Act”, respectively, on authority of Pub. L. 97–258, § 4(b), Sept. 13, 1982, 96 Stat. 1067, the first section of which enacted Title 31, Money and Finance. Section was not enacted as part of the Revised Organic Act of the Virgin Islands which comprises this chapter.

Amendments

1986—Subsec. (e). Pub. L. 99–514 substituted “Internal Revenue Code of 1986” for “Internal Revenue Code of 1954”. 1983—Subsec. (b)(1). Pub. L. 98–213, § 4(b)(1), and Pub. L. 98–146, § 100(1), made nearly identical

Amendments

relating to the use of the amounts of $28,000,000 and $12,000,000 of the guaranteed bonding authority. The text reflects the amendment by Pub. L. 98–213. Subsec. (f). Pub. L. 98–213, § 4(b)(2), and Pub. L. 98–146, § 100(2), amended subsec. (f) identically, substituting “$101,000,000” for “$61,000,000” and “1990” for “1984” in two places. 1980—Subsec. (f). Pub. L. 96–205 substituted provisions relating to prohibitions on commitments to guarantee by the Secretary and obligation by the Virgin Islands government of guaranteed but unobligated funds, and repayment by the government of unobligated proceeds of bonds or other obligations after Oct. 1, 1984, for provisions relating to entering into under Pub. L. 94–392, after Oct. 1, 1979, of commitments to guarantee.

§1574b Federal guarantee for issuance of revenue bonds or other obligations

Summary

Title 48, §1574b

Notes & Related Subsidiaries

Editorial Notes

References in Text

Amendments

Amendments

Citations & Metadata