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REALTORS HEAR TOUGH TALK ON ECONOMIC GROWTH

May 14, 2001 – At the most recent gathering of local Realtors, private-sector economist Richard Moore and Licensing and Consumer Affairs Commissioner Andrew Rutnik both called for fundamental structural changes within the Virgin Islands in order to promote economic growth in the territory.
Speaking at the bimonthly meeting of the St. Thomas/St. John Real Estate Association Thursday, Moore, a longtime V.I. government economist now with the Caribbean Institute for Training and Development, shared a broad spectrum of information concerning the V.I. economy, with most indicators pointing to a community in decline.
The Virgin Islands has lost manufacturing jobs, with skilled workers leaving for better job markets, he said. Only a fraction of V.I. children get a good education, and vocational education programs to train and retrain a quality work force are lacking.
'Soft infrastructure' is lacking
Statistically, Moore said, the territory has many vacant jobs that pay well above average, for both the private sector and government. These jobs remain vacant due to a lack of basic education, "soft infrastructure" and self-confidence on the part of potential workers, he said.
He said "soft infrastructure" refers to the systems that need to be in place and accessible for people to work. As examples he cited "the ability to get to work, such as a vehicle or reliable and affordable public transportation" and "such other basic items as sufficient sets of work clothing and care for dependent children."
With regard to education, Moore said, the community refuses to acknowledge its children's need to compete nationally. Only a fraction of V.I. students take national exams, he said, and when they do, they rank among the lowest under the U.S. flag. In his view, the only vocational training program of any note in the territory is operated by Hovensa.
Also, he said, if people needing work believe they are not competent to work, they have preordained their own failure.
Universally, he said, the higher the educational levels of the work force, the higher the productivity and the higher the average worker income. Except for the position of bartender, he said, V.I. workers are among the poorest paid in the United States.
One positive thing about the local community, Moore said, is the number of "groups such as the Realtors' association and Rotary, where 60 to 70 business people give of their time to get together and attempt to find solutions to community problems."
'Trade diversion' no way to win at gaming

Gambling, Moore warned, "is not a panacea" for the territory's economic ills. He said he sees two problems: the need to distinguish between "trade creation" and "trade diversion," and "a regulatory structure which swallows profits."
About 90 percent of those gambling at St. Croix's Divi Casino, the territory's only casino, are Virgin Islanders. Gambling in not bringing new money into the territory, the economist said, but is causing residents to shift their spending to gambling. And, he said, "We have created a regulatory structure which gobbles up any gambling taxes with commission salaries and expenses."
Moore was most positive about new development, such as Botany Bay, planned for St. Thomas's West End. "This type of development reserves open space, provides long-term jobs within the capabilities of our work force, increases multiple taxes, and provides employment to areas where little existed before," he said.
Easier access is better government
Rutnik thanked the assembled Realtors for their support of the territorial licensure system. He said insistence by Realtors and homeowners on doing business only with licensed building trades contractors and subcontractors has produced marked increases in the number of licenses issued, the quality of the work force, and government revenues.
According to Rutnik, passage of Sen. Lorraine Berry's "one-stop licensure" bill has resulted in "cutting paperwork and increasing productivity." To implement the recent legislation, Licensing and Consumer Affairs has set up a web page at www.dlca.gov.vi that allows for online application and payment for business licenses. One promising feature, he said, allows an applicant to obtain all approvals including Internal Revenue Bureau tax clearance for a $5 fee.
Rutnik also said he plans to set up kiosks at various locations to handle business licensing transactions and consumer complaints. His department now responds to some 100 complaints per month; he thinks the number will greatly increase when the complaint process is streamlined and made more accessible.
Briefly, the commissioner discussed such items of concern to Realtors as villa rental managers and their classification as Realtors, and the new time-share room tax as it applies to fractional owners. He invited Realtors and the public to let him know the reasoning for their positions, either by e-mail to commissioner@dlca.gov.vi or by telephone at 777-1025. Good government, he said, depends upon the electorate letting officials — especially the governor, legislators and commissioners — know what they think their public servants are doing, right or wrong — and why.
Property rights, insurance concerns
In association business at the meeting, president Jeyan Stout called on Nick Bailey, who reported on the association's efforts in support of private property rights in light of the Drake's Seat vendors controversy on St. Thomas. According to Bailey, "It is the opinion of legal counsel that both the United States Constitution [Amendments 5 and 14] and the Virgin Islands Code protect private property owners from illegal taking" such as that he said has been exercised by "mobile vendors" throughout the territory. "Such taking affects all property owners, not just large and wealthy landholders," he said.
The Realtors are working with Sen. Donald "Ducks" Cole to draft a development law. Bailey said the bill is awaiting consultant input based on Planning and Natural Resources Department maps. Cole has written to PNR Commissioner Dean Plaskett, he said, but neither the Realtor board nor Cole "have been able to get any action."
With regard to the Realtors' concern about insurance availability, Bailey said, "the problem is the ability to obtain reinsurance throughout the Caribbean. The insurance industry needs a rate increase to make writing insurance profitable. Once insurance is profitable, other insurers will be interested in coming into the islands, which will produce competition. With competition we will get lower rates."
Bailey also reported on National Realtors Association efforts to persuade the federal government to develop national disaster insurance. Its availability would greatly impact the local market, making it much more attractive to own real estate in the territory, he said.
April Newland spoke about the ongoing controversy over "Regulation Y." This is a proposed federal regulation would allow banks to deal with real estate in the same way that Realtors do. The Realtors see this as a direct conflict of interest, given that the banks control the financing market.

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