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Monday, May 23, 2022
HomeNewsLocal governmentSenate Sweetens Hotel Development Subsidies

Senate Sweetens Hotel Development Subsidies

Sens. Kurt Vialet and Positive Nelson confer during Monday's session. (Photo by Barry Leerdam, provided by the V.I. Legislature)The V.I. Legislature voted to broaden extensive hotel development tax incentives without debate Monday, one of many amendments to a bill appropriating money to repay the federal government for funds mismanaged by the Law Enforcement Planning Commission.

Without repaying the LEPC money, the territory would lose out on millions in federal grants.

Other amendments changed minimum wage, appropriated $1.5 million for an array of nonprofit organizations and changed election law.

Sen. Kurt Vialet proposed the measure, which would allow hotel developers throughout the territory to blend existing hotel development benefits and separate tax increment financing benefits.

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It would "allow flexibility to use both acts to help hotel development on all four islands," Vialet said.

The Hotel Development Act, enacted in 2011 over Gov. John deJongh Jr.’s veto, enables hotel developers to use future gross receipts tax, casino revenue taxes and other V.I. taxes to pay off loans. The developer ends up not having to pay for the loans, but the idea is that the government would only be paying revenues that would never exist without building the hotel, and the hotel would create jobs and tax revenue in the form of income tax.

The Tax Increment Financing Act, signed by deJongh in 2008, has some similar provisions but tighter accountability requirements, is not aimed at hotels and does not include casino taxes among the types of revenue it allows as loan collateral.

Vialet’s amendment allows tax money to be pledged not just for new construction or new businesses, but "for repair or remodeling of buildings … ."

Another amendment from Vialet changed how a recent increase to the V.I. minimum wage affects tipped employees.

When the Legislature increased minimum wage earlier this year, it increased the minimum wage for tipped employee from 30 percent of the minimum for other employees to 40 percent. (See: Senate Increases Minimum Wage in Related Links below)

"There was opposition from a number of groups," Vialet said. He met with them, but "was not willing to go back to 30 percent, so I offered a compromise." Vialet’s amendment requires tipped employees be paid 35 percent of the going minimum wage.

Another amendment increased the time judges may continue to serve after their term expires from 120 days to 180 days. Senate President Neville James sponsored the measure, saying it was needed to ensure that Judge Harold Willocks did not have to stop hearing cases before the Legislature acted on his nomination for another term in session later this month. Why it was better to change the law rather than to act to reappoint Willocks immediately was not discussed.

A measure from James itemized a long list of nonprofit organizations to receive appropriations from $1.5 million in rum tax revenues the Legislature previously appropriated to a newly-created Legislative Community Reinvestment Fund.

A measure from Sen. Novelle Francis allowed funds from a $10 million revolving loan for government vehicles to also be used for an array of police department needs other than vehicles.

Several small appropriations and an extension of time for a 2015 appropriation of $3 million for the Schneider Regional Medical Center were also approved as amendments.

All of the amendments were attached to a bill, requested by Gov. Kenneth Mapp, to reimburse the federal government $524,000 that it found the LEPC was not eligible for.

James said there was little choice but to pass it. "The government has seized over $7 million (in grant funding) and there is a May 27 deadline, James said.

Senators railed against the mismanagement of funds that led to the need. A federal audit led to the restrictions on LEPC funding. (See Undercurrents: LEPC Inches towards Relief from Grant Restrictions in Related Links below) but agreed there was no real option. A federal audit identified problems

Voting to approve the bill, with all its amendments, were: James, Francis, Vialet, Sens. Marvin Blyden, Jean Forde, Kenneth Gittens, Clifford Graham, Positive Nelson, Nereida Rivera-O’Reilly, Sammuel Sanes and Kurt Vialet. Sens. Myron Jackson, Tregenza Roach and Janette Millin Young voted no. Sen. Almando "Rocky" Liburd was absent at the time of the vote. 

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