Governor calls for overhaul of incentive programs
Published: December 3, 2013
Font size: [A] [A] [A]
ST. THOMAS - Gov. John deJongh Jr. submitted several pieces of proposed legislation to the Senate on Monday, updating and revising the statues governing the Economic Development Commission, Government Development Bank, Small Business Development Agency, Enterprise Zone, and the Sustainable Tourism Through Arts-Based Revenue Stream Production Act.
In a transmittal letter to Senate President Shawn-Michael Malone, deJongh said approval of the measures will provide the tools needed to create job opportunities, expand business development and ensure the competitiveness of the U.S. Virgin Islands.
"The collective impact of these measures is that it provides us with the tools to expand our private sector," he said.
The EDC tax benefit program, designed to attract business to the territory, originally was enacted in 1972. No comprehensive revision to the code has been done since, deJongh said. The statute must be updated to reflect changing business models, industry practices and advancements in technology, the governor said.
The proposed amendments will update areas of the current law that are considered outdated and cumbersome and do not allow for the current competitive marketplace, according to the governor.
One measure increases the benefit periods to 20 years for EDC companies operating in the St. Thomas-St. John District and to 30 years for the St. Croix District, if the beneficiary companies are in compliance with all provisions of the law, he said. Another measure would give an EDC company an additional 10 years of benefits if the company's initial investment is more than $10 million.
DeJongh wants to create a Commercial Zone program, similar to the territory's Enterprise Zone Program. The territory's Enterprise Zones are Savan, Charlotte Amalie, Christiansted, and Frederiksted. The program provides tax incentives to breathe new life into neighborhoods that have declined from once being socially and economically vibrant communities.
A Commercial Zone program would encourage specific types of development within a designated Commercial Zone, deJongh said. The program would not be limited by poverty level and would strip away unnecessary regulatory barriers to economic growth, deJongh said.
The Enterprise Zone Commission would designate Commercial Zone areas through resolutions passed by the body.
The creation of the Commercial Zone is to incentivize property owners and small businesses to make these areas financially attractive for investment and, by extension, places to visit and work, thereby broadening the tax base, according to a statement issued Monday by Government House.
"The revitalization and redevelopment of these areas for the ultimate benefit of the Territory as a whole is of critical importance to ensure all areas of our community participate in our ultimate growth and provide opportunities for those that want to take risk and enjoy the return," the statement said.
Government Development Bank
The governor also wants to change the name of the Government Development Bank to the Economic Development Bank and combine the operations of the Small Business Development Agency into the Economic Development Bank.
He said the two entities already share staff responsibilities and have the same governing board members.
"The proposed combination would not only place all of the functions and personnel under the Economic Development Bank without any disruption to operations, but it would eliminate duplication in administrative, loan servicing and collection efforts," deJongh said. "Additionally, it gives us a focus we need right now given the reluctance of our commercial banks to lend more to our small businesses or to even access U.S. Small Business Administration vehicles to expand commercial lending."
Senators passed the Sustainable Tourism Through Arts-Based Revenue Streams Act - STARS - in February 2012. It was signed into law in March 2012.
The law gives tax breaks to companies coming to the territory to make movies or record music. It also expands the role, authority and name of the V.I. Tourism Department's Office of Film Promotion, making it the Office of Filmmaking and Music Promotion.
DeJongh submitted a measure to clarify conflicting language about the role Tourism and the EDA must play in the administration of the program.
The proposed changes will allow Tourism to devote full energies to promoting the territory by letting the EDA administer the mandated tax incentive programs, according to the governor.
- Contact reporter Aldeth Lewin at 714-9111 or email email@example.com.