July 8, 2003 – A company receiving tax benefits under the territory's investment incentive program sought at a show cause hearing on Tuesday to convince the Economic Development Commission that it should continue doing so.
An EDC official said Medical Air Services Association was the subject of the hearing because "we have to ensure the people of the Virgin Islands get a return on the investment that they're making."
MASA is a company that sells what is defined as insurance to cover the cost of emergency transport in case of accident, illness or death and operates the aircraft to perform such services. It was first granted what were then Industrial Development Commission benefits in the mid-1990s — a 90 percent exemption on income taxes and 100 percent exemption on gross receipts and excise taxes.
EDC compliance officers told commission members on Tuesday that the company has failed to comply with its agreement to hire 38 full-time employees and that it has failed to set up a corporate headquarters in the Virgin Islands.
Attorney George Dudley, representing MASA, said the company had missed the mark in failing to set up its corporate headquarters. But he said this occurred because the company got caught in a real estate crunch after Hurricane Marilyn while it also was awaiting an opportunity to build a hangar at the St. Thomas airport to house its aircraft.
Dudley also said that Medical Air does in fact employ the number of people called for in its EDC certificate but that some of the personnel are contract workers whose names do not appear on the company payroll.
According to Dudley, the commission's challenge of the size of MASA's work force is puzzling. "As a part of its business plan, from Day 1, it counted for the requirement of the 38 employed persons its agents, its independent contract workers, as opposed to its payroll workers," he said. "If you include the persons working for Medical Air as independent contractors with the persons working for Medical Air as payroll employees, you see that Medical Air has met the criteria of 38 employees."
EDC compliance officer Margarita Benjamin disagreed, saying her review of the company's personnel records found that many of the contract workers fell short of the minimum 32-hour work week needed to qualify as full-time workers. In some cases, she said, contract personnel logged only 10 to 15 hours a week.
Frank Halley, MASA chief executive and board chair, pledged at the hearing to act quickly to set up the required headquarters in the territory.
Halley also said that part of the under-employment problem would be corrected by the hiring of aircraft mechanics and maintenance people once a planned hangar is built at Henry E. Rohlsen Airport. The company currently maintains its aircraft in Puerto Rico and Florida. But even with the hangar crew added, he said, MASA can only realistically employ 25 people.
After hearing the arguments of both sides, Dean Plaskett, EDC chair, said the commission would review the documents submitted relating to the case and notify MASA of its decision.
Frank Schulterbrandt, Economic Development Authority chief executive officer and EDC assistant chair, said Tuesday's show cause hearing could have been avoided if MASA had contacted the EDC to request a modification in its tax certificate. "If Medical Air had filed a waiver or a modification notice to the EDC, this issue with employment should have never occurred," he said, "but that was never done."
The commission has several options in dealing with the case. It can revoke Medical Air's benefits; it can modify the company's certificate and adjust its benefits; or it can decide to take no action.
Schulterbrandt said the EDC wants to demonstrate to other beneficiaries and potential applicants that it wants to do business with them. For that reason, he said, when there are problems, the commission seeks wherever possible to encourage compliance without adopting an adversarial stance.
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