Good morning this is your senator Lorraine L. Berry who believes in the maxim give light and the people will find their own way bring you another edition of the Lorraine L. Berry report.
Last Friday a dangerous precedent was set in the V.I. Legislature based on the turn of events. Eight senators – – Hansen, Bryan, Liburd, Golden, Baptiste, Bennerson, Jones and Cole approved 30 years of tax exemptions for Mr.Jeffrey Prosser's 10 companies at 2:25 a.m. in the morning without any cost benefit analysis on the impact of the treasury of the Virgin Islands.
The president responding to a petition signed by the aforementioned eight senators called the session and resolved into the committee of whole to take testimony but it only came from Prosser's representative and the public. The meeting was held to consider a bill that actually had never been formally introduced into the legislature. The bill which was not submitted by the governor, who is the only person who can negotiate on behalf of the people of the Virgin Islands, but was considered anyway, purported to authorize the governor to execute a proposal, which he did not negotiate, between the government of the Virgin Islands and Innovative communication corporation relating to Innovative 's acquisition of 2800 acres of land. Of this, 1,000 acres was to be turned over to the government, plus $4.5 million for improvements to the land and the financing of and the development of public projects in both districts for about $9.5 million. In exchange Prosser's 10 companies and its shareholders would receive tax breaks for 30 years. Testimony before the legislature by the public estimated the tax breaks to Prosser's 10 companies to be worth $180 million and given the growth rate in the telecommunications industry, the tax breaks could translate over 30 years to a $3.5 to $4.5 billion effect. The post auditor confirmed the proposal was very complex and certainly in excess of a $4.5 billion effect and he indicated that adequate evaluation of the proposal required expertise and consultation. He said, on its face it raises without limitation, issues of tax law analysis; contract law analysis, macroeconomic and eco metrics analysis; civil engineering and public survey analysis; and special industry analysis. The post auditor indicated that such requisite expertise are vital to the objective and effective evaluation of the proposal before us. He indicated it would not be prudent to proceed without this expert input.
Additionally, the legal counsel indicated there were serious legal deficiencies or concerns found in the agreement. However, all motions to have a financial analysis before action on the bill was voted down. Ironically, some of the most vocal proponents of this agreement have been vociferous opponents of tax breaks to investors, and others who supported it have indicated they are for good government but I guess when Mr. Prosser wanted tax exemptions that would affect our shrinking tax base, they didn't want to wait for an analysis before voting. We now know who runs things.
Some even justified their vote by bringing up HOVENSA, but what they didn't tell you was that the 22nd legislature didn't negotiate with Hess, the governor, who is the only person under our constitutional system of government, negotiated that contract; secondly an analysis was done by a consultant hired by the administration before it was sent to the legislature, and the legislature also hired an oil consultant who advised us on HOVENSA and they didn't tell you we spent one week in testimony divided between both districts discussing this information. So HOVENSA had the requisite scrutiny necessary to make an informed judgment. But that was not the case with Prosser's ICC. Senators stepped out of their roles and negotiated an agreement with Prosser and brought it to the floor by petition within two days without any testimony from the executive branch and with serious legal deficiencies found in the agreement by our legal counsels and no evaluation by post audit and other experts to determine the loss of revenues to the treasury of the Virgin Islands that is in serious deficit. Additionally, when other testifiers, who are from St. Croix, came before the legislature and raised these same issues, some senators who didn't agree with this exposure began to impugn the testifiers integrity, instead of addressing the concerns with the measure.
Let me give you a couple of examples. Only a breach of section II or II a of the agreement, the conveyance of the property and construction of public projects are actionable. Apparently, Innovative incurs no liability and the government has no remedy under the agreement for Innovative 's breach of any other part of agreement. It is interesting to note, that the other nine entities that will receive tax exemptions under the agreement are not parties to the agreement, are not obligated by the agreement, but are merely third party beneficiaries who may be able to enforce the agreement.
If Innovative declines to comply with applicable laws as required by section V of the agreement, it may not be considered to have breached the agreement and incurs no liability for its actions or inaction. Additionally, since the breach provisions covers only section I and II a of the agreement, Innovative 's failure to build the hotel will not be actionable.
It is my opinion there are too many issues of economic importance which remains unanswered. Some analysis must be had to determine when will the government begin, if ever, to receive economic benefits equal to that of Innovative and its entities. This cannot be known without knowledge of the land's value. Additionally, Innovative is obligated to escrow approximately $14.5 million by September, 2001. The private development of the hotel need not commence before the next five years and completed within seven years of the proposed agreement. What would the government have gained economically in this five to seven year period compared to the tax exemption Innovative and its entities would receive? If the economy is not to Innovative 's liking, it may be advantageous to forego the construction of the hotel five years hence. Particularly if the economic gain to it has been significantly greater than its expenditure of $14.5 million.
Unless you know the value of the proposed agreement to the government in comparison to what Innovative is receiving it was irresponsible to act without this information if we are protecting the people's interest.
Thank you very much for listening to me this morning, this your senator Lorraine L. Berry a voice of reason in your legislature wishing you a productive week.
