The true test of the Turnbull/James team is here. Whether they will be like most other politicians and sell the people of the Virgin Islands down the river to curry favor with Jeffrey Prosser or whether they will stand firm for the people and the generations to come and say no to Prosser.
My bet is on Turnbull/James. I hope I am right.
The headline of the "Prosser Paper" that read "Prosser bails out the Virgin Islands" was anything but true. The deal that is being offered by Prosser is, in a word, "BAD."
First of all, let's look at what the proposed bill says we will get.
(1) 1,000 acres of land at the reasonable price of $8,000 an acre; that is $8 million.
(2) $4.5 million for infrastructure on the land.
(3) a baseball complex, library, drag racing strip and community center on St. Croix, a community center and baseball field on St. John, a community center, library, swimming pool and police/fire station on St. Thomas. In the bill the amount to be spent on these projects is a total of $9.95 million. So all totaled, the value of the "deal" is $22.45 million.
First of all, during these bad economic times we cannot afford to build all these projects and we would be better off to pay our debts than to spend more money on projects that we will not have the money to maintain and which will only deteriorate due to disrepair.
Second of all, the land that is being given has not yet been purchased by Prosser. It is further subject to restrictive covenants that in some areas make the minimum size of the lots 4 acres. If the government was to violate those covenants, under the law they would have to pay the surrounding landowners millions of dollars for the taking of the covenants. There is no provision as to where that money would come from.
Now let's look at what Prosser will get. It is a whopper! All of his companies, to include Innovative Communciations Corp., Innovative Communication subsidiary company LLC, ICREAL Inc., ICUSC Inc., ICOM Holdings Inc., Virgin Islands Telephone Corp., Vitelcom, Vitel Cellular Inc., Caribbean Communication Corp, St. Croix Cable TV Inc., and Virgin Islands Community Bank Corp., will get the following tax breaks for the next 30 YEARS:
(1) NO PROPERTY TAXES: This includes not only the land that they now own but any land that they purchase in the next 30 years and the Carambola land that Prosser is also buying, including the golf course. If the taxes due were only $200,000 a year, that is a $6 million tax benefit.
(2) NO FRANCHISE TAXES: Franchise taxes for all the companies, which at a conservative $150 a year times 30 years equals $4,500.
(3) NO BUSINESS LICENSE FEES for 30 years. At a conservative 20 business licenses at $1,000 a license is $60,000. And that is if in the 30 years, none of the businesses grow and get any additional licenses.
(4) NO EXCISE TAXES for 30 years. We know that the companies Mr. Prosser owns are building office buildings; he has plans for a luxury hotel on the Carambola property and perhaps a casino and who knows how many other building projects in the next 30 years may occur. For a business the excise tax on materials and equipment brought in the Virgin Islands is 6 percent.
If you conservatively figure $1 million a year for the 10 companies, including the phone company, which regularly brings in expensive equipment, that amounts to $30 million.
(5) NO GROSS RECEIPT TAXES for all of the companies for 30 years. At this point in time that amounts to about 4 percent of $27 million a year or $1.08 million. If none of the companies grow for 30 years, that is a forgiveness of $32.4 million in and of itself. If the companies only grow a conservative 10 percent a year, that adds on an additional $96 million for a total of $128.4 MILLION.
(6) NO INCOME TAXES for each of the 10 companies for 30 years. There is no prohibition for any of the companies to expand into other areas like casinos, hardware stores, internet companies, sex phone lines or the like.
If you just considered the existing taxes at $9 million a year and you take into consideration that with the IDC benefits he already has for the next five years, he already only has to pay $10 million instead of $45 million; that is a saving of $10 million. Thereafter he loses his Vitelco IDC benefits but retains the remainder which would have resulted in a tax due of $7 million a year for three years or an additional savings of $21 million; thereafter it is a saving of $9 million a year for 22 years or $198 million, OR A TOTAL BENEFIT OF $229 MILLION!
Again this assumes that none of the companies would grow over the 30 years. If they only grow a conservative 10 percent, then the savings to Mr. Prosser is in the range of $687 MILLION!
(7) NO INCOME TAXES for any of the shareholders or LLC of any of the companies on any dividends or income they earn from the companies for 30 years. A number of the companies are like subchapter S companies where the income is taxed directly to the shareholders. At a concervative income from the 10 companies of $9 million a year that equals $27 MILLION.
Again that does not assume any growth. If we assume a 10 percent growth over 30 years, then the number is a conservative $82 MILLION.
So what is the benefit to Mr. Prosser and his companies and their shareholders? Somewhere between $318 MILLION AND $933 MILLION!!
This is clearly not a fair deal so we can get $22.45 million. It is like paying 140 percent interest on a loan.
Now let's look at what the workers are actually getting. The land specified in the legislation is the worst land of the package that Mr. Prosser is buying (what a surprise).
Of the 2,800 acres he is buying only 1,000 acres will go into the deal. If you figure that 20 percent of the land would go to roads and the like, that leaves 800 acres to divide into the promised 2,800 lots that is 1/4 acre per lot. That would be possible if the land was flat. Unfortunately the land that has been allotted is not and it is extremely unlikely that that number of lots can actually be made from that land.
The legislation conveniently does not mandate any number of lots but only states "projected." The land is sloped and rocky and any building on most of the parcels will be extremely difficult and expensive. In addition it is not convenient to transportation, schools or shopping.
Mr. Prosser has never been known to give something for nothing and he certainly is not here.
We can no longer give up our tax base to get short-term gain. That is why we are bankrupt now. Under this deal we would not be able to tax in any manner the phone company, cable companies, newspaper, cellular phone companies or any companies that they may purchase for the next 30 years.
The greatest irony is that the very people that this deal is supposed to help are the ones who will be faced with repeated payless paydays and inability to gain fair wages because of the fact that we have no tax base.
At the minimum there needs to be an independent consultant hired to make an economic assessment of what damage this will due to our economy in the future (and unlike the Vitelco deal, this time we need to listen to the expert).
What is most disturbing is that Mr. Prosser has done his dirty work quite well. He has senators who will support it. Sadly it appears he also has some union leaders who will support it as well, unless we stop him.
Please call your senators and tell them, TELL PROSSER NO! Call them repeatedly. Call the governor, call the lieutenant governor and tell them TELL PROSSER NO! IF WE DO NOT STOP PROSSER NOW, HE WILL OWN US ALL IN 30 YEARS.
Editor's note: Lee J. Rohn is an attorney in private practice on St. Croix.
