A collaboration between the Senate and executive branch has yielded what officials described Monday as the “missing piece” of the puzzle in the territory’s ongoing disaster recovery effort: a new law that not only supports new investment but aids in the rebuilding of existing hotels damaged by the 2017 storms.
The Hotel Development Act was first passed under the administration of former Gov. John deJongh Jr. and amended by override under former Gov. Kenneth Mapp. The latest round of amendments, proposed by Sen. Kurt Vialet, cleared the Senate’s Finance Committee in August and since then, Gov. Albert Bryan Jr. said, there has been a concerted effort on both sides to finalize the language so that it spurs the building of new hotels, and helps in the reconstruction of old ones.
In proposing the amendments, Vialet said at a recent Senate hearing that after the two 2017 hurricanes, he found himself in a discussion with the owner of a St. Thomas marquee hotel about how the V.I. government could help spark the redevelopment of that particular property. He and the owner discussed whether it was feasible to increase the hotel occupancy tax with the owner using the difference to finance the improvement.
Among the most notable of the proposed amendments, but not the only one, is the Economic Recovery Fee.
The fee would allow hotels in the Virgin Islands to add 7.5 percent to their hotel occupancy tax, and to utilize three different tiers according to the developmental phase of the project. Developers would be able to use the money as leverage in order to receive financing or as leverage to recoup some of their original investment.
The bill also seeks to aid existing hotels in the territory.
“For those hotel projects where less than 70 percent of the units have not been able to be occupied due to natural events related to the hurricanes … 50 percent of the revenues generated from the designated hotel room occupancy tax and the designated casino tax on gross revenue and 100 percent of the gross revenue generated from the Economic Recovery Fee, if applicable, shall be allocated to and deposited into the project fund,” Vialet said when the amendments were proposed in August.
He also said developers would be able to utilize 50 percent of the hotel occupancy tax and 100 percent of the amount over 12.5 percent.
The last tier, Vialet said, would provide aid for hotel projects that require reconstruction and renovation of existing hotel sites where 100 percent of the revenue generated from the Economic Recovery Fee and no revenues generated from the designated hotel occupancy tax and casino tax on gross revenues would be allocated to and deposited into the projects fund.
During a ceremony Monday in which the amended bill was signed into law, Bryan added that in the case of proposed hotel projects – such as the one slated for Yacht Haven Grande on St. Thomas – these funds could be a new revenue stream, but there would be a process that both new and old hotels would have to clear in order to receive the money.