St. Thomas – The Committee on Economic Development and Agriculture, chaired by Sen. Neville James, held a meeting at the Capitol Building on Monday, and voted to approve amendments to Bill No. 32-0136 as it relates to the Hotel Development Act, and Bill No. 32-0137 as it pertains to the Tax Incremental Financing Act.
The intent of the amendments of the bills, seeks to harmonize the Hotel Development Act and the Tax Incremental Financing Act by allowing both statues to collaborate for the development of hotels and infrastructures in the U.S. Virgin Islands.
“The Legislature is aware of the need of the Territory to make a commitment on all economic levels. For those who are not aware of our current financial status, in the past $9 million was appropriated for the General Fund. Those days may be long gone,” said Sen. James. “Recently, the governor submitted a budget that is significantly decreased. These two measures allow for the Virgin Islands to generate monies that can lead to economic and job growth.”
Sen. Kurt Vialet, Sponsor of both bills stated that the amendments to the existing bills are crucial to building the economy. “These amendments are designed to lure investors to the Territory and build new hotels on St. Thomas and St. Croix. At this point, St. Croix is in dire need of the development of a major hotel and it is also necessary to re-brand our tourism product on St. Thomas,” said Sen. Vialet.
“What are the benefits of these measures?” asked Sen. Sammuel Sanes. George Dudley, partner in the law firm Dudley, Topper and Feuerzeig, LLP and counsel to the Water Island Development Co., LLC said, “These amendments take on an even greater significance with the recent developments regarding the credit worthiness of the Territory by national credit rating agencies. It will unlock the key to allow the government re-emerge into the bond market.”
One of the revenue generating projects that will be positively impacted by the bills is the development of Water Island. “The Water Island Development Co., LLC will develop a hotel, a marina, veterans and mixed income housing, roads, underground utilities, a waste water treatment plant and other infrastructure on Water Island,” said Dudley.
“You stated that the cost of this development is $430 million and that it will be funded by private entities and revenue bonds. However, you mentioned without these amendments the revenue bond financing for the development is needed to start the development of Water Island,” said Sen. Tregenza Roach, “This is contrary to my assumption that all of the financing is already in place.”
In response, Dudley stated that the monies from private capital are there. However, the revenue bond financing is needed to develop roads and related infrastructures. “Revenues that are generated from both aspects are needed to bring the project forward,” said Dudley.
“What is the guarantee that jobs that are created from this project, will go to locals?” inquired Sen. Nereida O’Reilly. Dudley said, “Construction will be done using local labor and contractors. I am committed to ensuring this project will have a big impact towards local employment.”
In a line of questioning, Sen. Brian Smith inquired about the proposed number of local employees who will be hired, estimated acreage of the hotel and marina development and the time line of the start of this project. In response, Dudley said, “Hundreds of local people will be employed. There will be hundreds of acreages needed to build the development. Lastly, once the bills are passed, the project will begin 90 days after all permits are approved.”
Separately, Sen. James asked, “Can you explain how the tax increment financing will benefit the Virgin Islands?” In response, Dudley said, “There will be incremental increases in the homes that will be built, marina and hotel occupancies. The tax increase will be used to support the bonds. It is important to know that this revenue bond structure does not expose the Territory to liabilities or risks associated by the developer with the bonds.”
Ultimately, lawmakers unanimously voted favorably for both measures. All bills approved will be forwarded to the Committee on Rules and Judiciary for further consideration.