Senate overrides deJongh's veto of RT Park bill
Published: June 19, 2014
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ST. THOMAS - During Wednesday's legislative session, the Senate overrode the governor's veto of an amendment to protect the benefits of the University of the Virgin Islands Research and Technology Park tenants.
Senators then went a step further and amended the statute that deals with the tech park.
RT Park tenants do not pay Gross Receipts taxes and they get substantial reductions on their corporate income tax liability. Two recent opinions from the V.I. attorney general found many of the park's tenants are not eligible to receive the park's tax breaks because they are either not considered "knowledge-based" companies or they are not physically located within the tech park building.
The controversial amendment, which was offered by Senate President Shawn-Michael Malone at an April 24 Senate session and became known as the "Malone Amendment," attempted to fix the problem and protect the existing benefits for park tenants.
The measure, which did not go through the committee process, was an amendment to a bill the governor originally sent to the Senate merging the Economic Development Bank with the Small Business Development Agency.
To veto the RT Park measure, deJongh had to veto the whole bill.
Wednesday, senators voted to override the veto of the entire bill, which included the tech park amendment.
Opponents of the Park amendment - members of the Chamber of Commerce came out publicly against it in the press - are concerned that the government is giving away millions in tax breaks to companies that do not line up with the intent of the original statute.
The RT Park was established through legislation in 2002, but did not begin to produce significant revenue until 2009. It received substantial General Fund appropriations until 2012, the first year it was able to be self-sufficient.
Tech park tenants, in particular the territory's three largest Internet service providers - Broadband VI, Choice Communications, and Innovative's Internet and cable divisions - all are virtual tenants of the RT Park. They operate out of their own offices, and they do not pay any Gross Receipts taxes and very little corporate income tax.
A $13.5 million building, called the 64West Center, is on UVI's St. Croix campus and was built and opened last year. However, because the park was operational for a decade before it had a building of its own, many of the park's tenants do not operate out of the new building.
According to V.I. Attorney General Vincent Frazer's legal opinion, these "virtual tenants" are not legal.
The amendment addresses the attorney general's opinions by broadening the legal definition of electronic commerce and allowing virtual tenants to receive benefits.
However, after criticism that the definition of electronic commerce was too broad, the new bill passed Wednesday tightens it up a bit.
The new definition says e-commerce means transacting or facilitating business or providing the means to facilitate business on a communications network including, but not limited to, the Internet. The rest of the definition is the same as was included in the Malone amendment.
The bill also mandates the tech park to maintain a directory of all members including addresses, principals, contributors and programs with UVI as well as a listing of all available jobs and positions.
It also removes a section that included telecommunications, advocacy, business management and consulting services from the definition of e-commerce under the law.
Senators spent much of their debate time Wednesday talking about the tech park legislation.
"We need to protect the image of the Virgin Islands outside of the Virgin Islands," Sen. Nereida Rivera-O'Reilly said. "The message we send the rest of the world and investors is that we are open to do business. So, now the hostility and the anger must melt, the healing process must begin. I thank you colleagues for standing your ground."
Sen. Tregenza Roach said the new bill may be necessary, but it should have been heard in committee.
"The necessary review should take place in the committee to which it is assigned," Roach said.
Sen. Craig Barshinger said his main concern was that the governor wanted to "pull the rug" out from under the tech park tenants. He said the tenants had an agreement, and the governor wanted to use the attorney general's opinion to revoke that agreement.
"Maybe the opinion was written to reflect what he wanted to do," Barshinger said.
Sen. Clifford Graham had similar concerns.
"At the end of the day, it came down to one thing, and that's the impairment of contracts," Graham said.
"When you take the benefit away, who's going to repay them for the investment that they made? If we took the benefits from them, it would have tied this all up in litigation."
Malone denied that the tech park amendment was special interest legislation, and said he did not "twist" any senator into voting for the override.
He said nothing is perfect, and the law could be further amended in the future, but he could not stand by and let the attorney general's opinions bring the entire tech park to a "screeching halt."
"But there's still a whole lot of things we have to do, regarding tax benefit programs in general," Malone said. "A lot of what this is resulting from is poor tax policy."
The vote on the override of the amendment was won in an 11-4 vote.
Senators voting against the override were Donald Cole, Alicia Hansen, Roach and Janette Millin Young. All other senators voted in favor.
The bill was passed in the same manner, with those four senators voting against the measure and the rest voting in favor.
- Contact Aldeth Lewin at 714-9111 or email firstname.lastname@example.org.