PFA Advances Frenchman’s Reef Bond Deal as Audit Delays Require Workaround, Positioning $400M Hotel for Future Government Ownership

The Virgin Islands government is moving ahead with a complex financing structure for the Frenchman’s Reef Hotel that relies on a new V.I. Public Finance Authority subsidiary to issue tax-exempt hotel bonds, even as the government remains behind on required financial audits and continues to insist it has no intention of owning or operating hotels in the near term. The transaction, which ultimately transfers title of Frenchman’s Reef to the Government of the Virgin Islands after the bonds are paid off, sits at the center of a broader policy push to amend the Hotel Development Act and has prompted questions about long-term public risk and ownership. At its November 13 meeting, the PFA board approved a resolution authorizing the creation of the Virgin Islands Hotel Development Finance Corporation, a wholly owned subsidiary that will act as the issuing vehicle for hotel development bonds. Officials said the structure mirrors the approach used previously when the PFA created the Virgin Is...