|By Karen Hollish, The Virgin Islands
Daily News, St. ThomasMcClatchy-Tribune Regional News
May 25, 2011--ST. THOMAS -- The Senate Committee on Economic Development, Technology and Agriculture on Tuesday amended and approved a bill that seeks to jump-start three stalled casino resort projects on St. Croix by giving developers new tax breaks.
Sponsored by Sen. Louis Hill, the bill would establish a Hotel Development Program through the Economic Development Authority. Under the program, the government still would collect hotel room and casino revenue taxes from the projects, but it would put that money toward paying down the developments' debts.
The bill says the incentives will cease once the debts are paid down in full.
Supporters of the bill said the developments would bring much-needed jobs to the territory and that the temporary loss of hotel and casino taxes would be offset by an increase in income taxes. Detractors contended that the measure is unfair to existing hoteliers, who started their operations without the tax breaks and whose tax contributions fund the V.I. Tourism Department's marketing of the territory.
The legislation gives hope to Golden Resorts' Paul Golden, who has been trying for more than a decade to develop 297 acres at Great Pond Bay. Golden said banks will not consider funding his proposal without the extra collateral.
And the bill, Golden insisted, will help other resort developers, as well. "It think it's a public purpose," Golden said. "It's just jobs, jobs, jobs -- huge benefits."
That sentiment was echoed by Chris Elliott of William and Punch, which owns about 600 acres on St. Croix's northwest shore. That plan calls for two hotels on the site, one with a four-star rating and a second five-star option, Elliott said.
"Without this legislation, it will be extremely hard, if not impossible to finance a new resort development project on St. Croix in the foreseeable future," Elliott said.
David Kagan of Robin Bay Realty, which has proposed the 870-room Seven Hills Beach Resort, sent a letter of support of the legislation.
Lisa Hamilton, president of the U.S. Virgin Islands Hotel and Tourism Association, was less enthusiastic. In letters to the committee, Hamilton said the proposed developments should have been able to secure private financing.
"We are concerned that any company needing this type of guarantee will not be financially viable in the long term," Hamilton said.
Hamilton said the Tourism Department's Revolving Fund, which is used to market the territory as a vacation destination, is funded by the tax revenues under question. If the new developments are not paying into that fund, they should not benefit from its advertising, Hamilton said.
Assistant Tourism commissioner Brad Nugent also raised similar concerns.
He said that many believe this legislation lacks equity, puts the tax burden on our legacy hotels, establishes an unfair playing field, and jeopardizes future marketing resources to the Tourism Department.
Under current V.I. Code, room tax revenues go back into the Tourism Revolving Fund, while casino taxes fund a number of entities, such as hospitals and health (15 percent), education (16 percent) and the Tourism Revolving Fund (5 percent).
Percival Clouden, chief executive officer of the Economic Development Authority, also came out against the legislation in a letter to the committee.
Clouden said his authority is in "great support" of additional hotel developments but that he is worried that the legislation would set a dangerous precedent.
"This will quickly become an entitlement for all new hotels and similar facilities going forward, leaving no new tax revenues over a 20-year horizon," Clouden said. Hill said Clouden's testimony was based on an older version of the bill and not the revised amendment in the nature of a substitute he submitted for adoption Tuesday. The committee approved Hill's amended version and forwarded the legislation to the Senate Rules and Judiciary Committee.
Committee chairman Sen. Shawn-Michael Malone, Sen. Janette Millin Young, Sen. Patrick Simeon Sprauve and Hill attended Tuesday's meeting.
In other business, the committee also approved a bill sponsored by Sprauve that will remove the V.I. Code provision stating that a corporation must have at least three directors serving on its board. The bill proposes an amendment that will allow, in cases where a company has fewer than three shareholders, the total number of directors to be the same as the number of shareholders.
Tuesday's decision paved the way for the bill to be forwarded to the Rules and Judiciary Committee.
- Contact reporter Karen Hollish at 774-8772 ext. 304 or email firstname.lastname@example.org.
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