Gov. John deJongh Jr. has proposed changes to parts of the U.S. Virgin Islands Code that, if enacted, would change the territory’s economic development entities and allow the V.I. to grow its private industry, Government House said Monday.
The agencies that would be affected are the Economic Development Commission, Government Development Bank, Small Business Development Agency, Enterprise Zone, and Sustainable Tourism Through Arts-Based Revenue Stream Production Act, known as the STARS Act.
The proposed changes were contained in a letter from the governor to Sen. Shawn-Michael Malone. The letter was dated Nov. 20.
As outlined in the letter, deJongh said approval of these measures "will go a long way towards giving us the tools to capitalize on the opportunities to create jobs, expand business creation and ensure the competitiveness of the U.S. Virgin Islands. The collective impact of these measures is that it provides us with the tools to expand our private sector."
The governor said the proposal includes the first comprehensive revision of the Economic Development Commission since it was originally established in 1972.
The proposed amendments would update areas of the current law that are considered outdated and cumbersome in the current competitive marketplace, the Government House news release said.
One proposal increases the benefit periods to 20 years for EDC companies operating in the District of St. Thomas-St. John and 30 years for the District of St. Croix, if the beneficiary companies are in compliance with all provisions of the law.
Another suggested change would give an EDC company an additional 10 years of benefits if the company’s initial investment was $10 million or more.
The governor proposed creation of a commercial zone program, similar to the Enterprise Zone, which he said would encourage specific types of development within a designated commercial zone.
"There are areas throughout the territory which once were active with commercial and trade activity," the governor said. "However, due to the general economic downturn and movement of people, these locations lost their economic vitality and now need our focused attention for economic and physical revitalization."
The addition of a commercial zone program will provide governmental and tax incentives to induce private investment in these areas, the statement added.
The governor also proposed changing the name of the Government Development Bank to the Economic Development Bank and combining the operations of the Small Business Development Agency into the Economic Development Bank.
Noting that the two entities currently share overlapping staff responsibilities and the same governing board members, deJongh said, "The proposed combination would not only place all of the functions and personnel under the Economic Development Bank without any disruption to operations, but it would eliminate duplication in administrative, loan servicing and collection efforts."
He said it would also give the territory "a focus we need right now given the reluctance of our commercial banks to lend more to our small businesses or to even access U.S. Small Business Administration vehicles to expand commercial lending.”
The fourth area targeted for revision is the STARS measure, which the governor said "contains some conflicting sections and a convoluted interaction between the Virgin Islands Economic Development Authority and the Department of Tourism," as well as creating an unfunded EDA department headed by an employee of Tourism.
Adoption of the proposed language changes would allow the Department of Tourism to devote full energies to promoting the territory by letting the Economic Development Agency administer the mandated tax incentive programs.
