April 17, 2008 — For a second day, senators scrutinized Gov. John deJongh Jr.'s three-bill economic development package Thursday, and voiced concerns that part of the package would unnecessarily tie up future government revenues.
DeJongh's first proposal is built around a tax-increment (TIF) financing system, long used on the mainland to foster development in "blighted" or economically stunted areas, according to members of the governor's financial team. The governor's bill has been tailored to the territory, and involves a comprehensive approval process that involves both the Legislature and the Economic Development Authority (EDA).
In the TIF system, once a developer comes up with a proposal, their development plans are first examined by the EDA and then go through a public review and hearing process. If the development is ultimately approved by the Legislature, the anticipated revenues generated from the project — such as property taxes, or gross-receipts taxes that are expected to increase because of the development — would be pledged against bonds floated by the PFA to fund associated infrastructure costs such as roads, sidewalks and utility lines.
The project would also have to be located within a specifically designated TIF district — an area that the government has declared a public infrastructure zone, according to Nathan Simmonds, the governor's senior policy advisor.
While testifiers said Wednesday that the revenue collections would start flowing back into the General Fund once the bonds are repaid, senators argued during Thursday's Committee of the Whole hearing that the proposal would tie up revenues that could be used for other things, or factored into the government's annual budget proposal.
However, those testifying Thursday pointed out the government would not be losing any current revenues, but rather future incremental revenues that would only be generated as a result of the proposed project.
Responding to concerns about the need for an overall economic development strategy for the territory, EDA Chief Executive Officer Percival Clouden said his agency has issued a request for proposals for the development of a strategic marketing and development plan, including an evaluation of EDA's existing programs. The TIF feature hopefully would be incorporated into the plan to encourage future development, Simmonds said later in the meeting.
Senators said they would also like to see the Legislature have more oversight in making sure projects pass muster for tax-increment financing.
Present during Wednesday's meeting were Sens. Liston Davis, Carlton "Ital" Dowe, Juan Figueroa-Serville, Shawn-Michael Malone, Terrence "Positive" Nelson, Basil Ottley Jr., Usie R. Richards, Ronald E. Russell, James Weber III and Alvin L. Williams.
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