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Hotel Development Act Passed by the Full Senate Will Help to Restart
Several Stalled U.S. Virgin Island Hotel Developments

By Aldeth Lewin, The Virgin Islands Daily News, St. ThomasMcClatchy-Tribune Regional News

Sept. 21, 2011--ST. THOMAS -- The Hotel Development Act was passed by the full Senate Tuesday, bringing major hotel developments on St. Croix one step closer to breaking ground.

The bill, sponsored by Sen. Louis Hill, allows hotel developers to use a portion of their hotel occupancy and casino taxes to repay their long-term loans. Developers say the legislation will help them obtain financing, which would help several stalled resort projects planned for St. Croix. Multiple amendments were attached to the legislation before it was passed that:

- Limit the tax breaks to new hotel projects on St. Croix. St. Thomas or St. John hotels which have been derelict or abandoned for at least five years also can participate in the program.

- Raise the annual amount each development project must contribute to the Tourism Advertising Revolving Fund in lieu of the hotel occupancy tax from $200,000 to $500,000.

- Set aside $20,000 from the payment in lieu of taxes to fund scholarships for students majoring in hotel management. The scholarship will be split evenly between the two districts.

- Require all beneficiaries under both the Economic Development Commission and the Hotel Development Act to pay $2,500 annually to create and maintain a database designed to recruit Virgin Islanders living abroad.

- Mandate that while the hotel occupancy taxes are being used to repay loans, the hotels must have 80 percent of their staff be legal residents of the Virgin Islands for at least five years prior to hiring, or be a graduate from a Virgin Islands high school.

Hill first tried to attach the measure to an unrelated bill at an April Senate session. Senators, upset that such a comprehensive piece of legislation would be considered with no public debate, turned it into a bill and sent it to the committee of jurisdiction -- the Committee on Economic Development, Technology and Agriculture.

The bill was heard, passed on to the Rules and Judiciary Committee and eventually went to the Senate floor. During a June legislative session, the bill once again was returned to the committee for further discussion. It went through the committee process for a second time, and passed the full Senate in an 11-4 vote Tuesday.

Senators supporting the amended bill were Sen. Craig Barshinger, Sen. Carlton Dowe, Sen. Alicia Hansen, Hill, Sen. Neville James, Sen. Shawn-Michael Malone, Sen. Terrence Nelson, Sen. Nereida Rivera-O'Reilly, Sen. Sammuel Sanes, Sen. Patrick Simeon Sprauve and Sen. Alvin Williams Jr.,

Sen. Usie Richards and Sen. Ronald Russell, Sen. Celestino White Sr., and Sen. Janette Millin Young voted against the bill.

Senators voting against the bill said they were concerned that too much was being given away and that the Senate would not have enough oversight of the program. Some also were concerned that the tax breaks for new hotels would put existing hotels out of business.

The bill would provide the greatest benefit to St. Croix, where three major hotel and casino resort projects have stalled for lack of financing. The three hotel developments are Robin Bay, William and Punch and Golden Resorts. Representatives from the developments spent the day sitting in the Senate chambers waiting for the vote. They were not disappointed.

"We're very excited with the passage of the bill, and look forward to beginning construction in six months," Paul Golden said.

Kevin Rames, the vice president of development at William and Punch, said the Hotel Development Act will allow the development to move forward and break ground in early 2012.

"We believe the act will provide the impetus necessary to complete negotiations with our financing partners and to spark the investment of hundreds of millions of dollars into the tourism-based infrastructure on the island of St. Croix," Rames said.

Hill said it has been a long battle to get the legislation passed, and he hopes the developers will do their part to bring jobs and economic development to the territory.

"It is my hope that the governor signs the bill into law. Once that has happened, I sincerely hope that the developers, particularly on the island of St. Croix, will move expeditiously to secure the financing which this bill has created a mechanism for. Hopefully within the next six months, there will be some positive news of the projects begin financed," Hill said.

- Contact reporter Aldeth Lewin at 774-7882 ext. 311 or email alewin@dailynews.vi.

___

(c)2011 The Virgin Islands Daily News (St. Thomas, VIR)

Visit The Virgin Islands Daily News (St. Thomas, VIR) at www.virginislandsdailynews.com

Distributed by MCT Information Services NYSE:HIL,



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