The headline emblazoned across the front page of the Virgin Islands Daily News on Thursday read "Prosser bails out the V.I."
The Daily News, one of the companies Prosser owns, reported that Prosser, through his Innovative Communications Corp., had cut a deal with the V.I. government to pay retroactive wages, build a new library in St. Thomas, give St. Croix a ballfield and drag strip and build a new multipurpose community center in St. John. The government will provide the land.
In exchange, Prosser wants long-term tax breaks for ICC totaling $180 million — $6 million a year for 30 years, the four-page newspaper report said. Prosser is the sole owner of ICC, which includes the Virgin Islands Telephone Corp., the Daily News, St. Thomas-St. John Cable TV, St. Croix Cable TV and various other entities.
Although the report, based on "sources," presented the deal as a fait accompli, it actually requires legislative approval. Senators said Thursday they have received no details, although Ed Crouch, vice-president of Emerging Communications Corp., soon to merge and become part of ICC, told St. Thomas Source late Thursday afternoon that the document setting forth the terms of the proposal is "circulating around St. Thomas." Crouch said the document had been drawn up by Gov. Charles W. Turnbull.
Crouch also confirmed that everything written in the Daily News was accurate though not complete.
An integral part of the deal involves development of the Carambola Beach Resort property on St. Croix that Prosser has a contract to purchase.
The newspaper said Prosser would donate 1,000 acres of the Carambola property to be subdivided and given to government employees as payback for the almost $200 million owed them in retroactive wages. Prosser would pay for the subdividing, build roads and develop the infrastructure, the Daily News stories said.
The Carambola property, which Prosser does not yet own, comprises 2,800 acres of land, according to Crouch. The parcel includes a golf course and land leased to local cattle rancher Han Lawaetz for cattle grazing. Crouch said the deal is scheduled to close in April. At the time Prosser initiated the purchase of the Carambola property, it was reported that the purchase would make him the largest private property owner in the Virgin Islands.
Part of the deal would be cancellation of the IDC benefits that Vitelco now enjoys. The Daily News story pegged the value of Vitelco's IDC benefits at $25 million, and noted that the company is limited to a five-year maximum benefit under the terms of IDC benefit packages. Others have estimated the value of Vitelco's IDC benefits as high as $35 million.
Crouch confirmed the current proposal would exempt ICC from all taxes for the 30 years: property taxes, gross receipts and income taxes. The only tax he was unsure of was the 10 percent federal excise tax.
Crouch said he didn't know who had approached whom initially on the deal, but added that at the time Prosser contracted to buy the land, Prosser had no plan to use it to help the government.
Crouch said the governor would submit a bill to the Legislature on Tuesday. He could not say who in the government put the bill together.
At least one senator, Adlah "Foncie" Donastorg, had an immediate response to the news, which had been kept very successfully under wraps until Thursday morning, the second day of a six-day holiday for government employees. Donastorg said this deal was executed on the backs of hardworking Virgin Islanders.
"If he hadn't been overcharging us on our phone bills and if he had been paying his fair share of taxes this deal never would have happened," Donastorg said. "Prosser is not giving us anything, but rather just trying to appease us — the people that he has already ripped off."
Donastorg last year requested an investigation of the Public Services Commission for approving rate increases for Vitelco in light of the company's IDC benefits. A report done by an independent contractor indicated Vitelco was charging too much, but the PSC ignored the report and action that prompted the resignation of its legal counsel, Maria Tankenson-Hodge.
Donastorg questioned Prosser's motives for giving up Vitelco's current IDC benefits, saying in a lengthy release from his office that Prosser is making such a proposal now to avoid or stall pending government investigations that would closely scrutinize his business practices.
Sen. Lorraine Berry called the reported deal very secretive, questioning who was speaking for the governor. She pointed out the governor had spoken at the Legislature's Economic Summit and several other public occasions in the past weeks and hadn't mentioned the pending deal.
"Who negotiated what the Daily News has reported about this," Berry asked? "What has been reported in not sufficient. He [Prosser] is the author of the paper."
Berry said she really couldn't say much until she saw the package.
"If it is a way to reduce our debt, I have to consider it," she said. "But if it means we have to forgo revenues I can't approve it."
"We've been down this path before," the chairperson of the Finance Committee said. "People agree to do things that don't get done."
The Daily News report quoted government sources as saying the government had reviewed the porposal and that the governor would go public within the next week with the terms of what the paper called the "joint venture."
Rudolph Krigger, special assistant on finances to the governor, said, when reached at his home Thursday night, that he could not confirm anything either in the report in the Daily News or stated by Crouch.
"I have no comment at this time," he said, "none whatsoever. I will comment at the appropriate time."
