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Back to Drawing Board for Economic Development Authority Bill

June 10, 2008 — The Senate's Economic Development and Agriculture Committee unanimously agreed Tuesday to hold a bill for further work after several people testifying insisted that economic disaster would occur if the property-tax exemption were eliminated from the Economic Development Commission's benefit package.
"The proposed legislation will be catastrophic for continued investment and development," said Miles Plaskett, a Florida-based attorney representing the V.I. Hotel and Tourism Association.
Such a move would put the territory behind other destinations that grant tax breaks to attract investment, said Labor Commissioner Albert Bryan Jr., chairman of the Economic Development Authority board.
"And continually changing the law is confusing," he said.
St. Thomas attorney David Bornn took Bryan's remarks a step further.
"Each time we make a change suggests instability," Bornn said, noting that the territory's EDC program is already tarnished by the Internal Revenue Service's successful efforts to dilute the program.
People are watching the territory's every move regarding its EDC program, he said.
"Including this hearing," Bornn said.
Several people testifying suggested that if the property-tax exemption were removed from the EDC program, business owners would cut jobs, reduce investment or even leave the territory. Hotels, manufacturers and shopping centers would be particularly hard hit if the property-tax exemption were eliminated, they said..
"It would cripple our efforts to attract new hotels to St. Croix," said Michael Dembeck, director of the St. Croix Chamber of Commerce, echoing the remarks of others.
Dembeck suggested that two St. Croix hotels currently gearing up to begin development — the Wyndham flagged hotel and the development at William and Punch — would not have considered investing in St. Croix if they didn't think they'd be eligible for a tax-abatement package.
While the senators in general agreed that Sen. Raymond "Usie" Richard's proposal to eliminate all property taxes from the EDC program would cause havoc, some had harsh words for the
EDC program.
"I have not seen it benefit local businesses," Sen. Ronald Russell said.
The people testifying dished out numerous statistics. Companies that haven't yet activated their EDC certificates would generate 1,500 jobs, Bryan said.
Ninety-four companies currently receive EDC benefits, down from 121 at the end of 2007, said Percival Clouden, the EDA's chief executive officer.
Of those 94 companies, 39 get property-tax benefits.
In other action Tuesday,t he committee sent a bill changing the composition of the Economic Development Commission Board. It reduces the number of people appointed by the governor from three to two.
Sen. James Weber III chaired the meeting. Other senators attending were Richards, Russell, Louis P. Hill, Norman JnBaptiste, Terrence "Positive" Nelson and Basil Ottley.
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