The Senate Finance Committee advanced legislation on Thursday that, if signed into law, would allow the University of the Virgin Islands Research and Technology Park to award and disburse loans to eligible businesses.
For the loans, the bill sets up the Virgin Islands Catalyst Fund, which would be padded with an initial $5 million and a loan review committee within the RTPark tasked with the responsibility of reviewing applications.
“We are hoping this is going to produce a number of jobs where we will be able to have individuals paying individual income tax, where individuals are spending money in the economy; some will be collecting more gross receipts, more excise tax,” Sen. Kurt Vialet said. “But we cannot wait. We cannot continue to sit and think that everything is going to fall in our laps.”
Though the RTPark was created in 2002, it was stagnant until a change of leadership in 2018 placed Executive Director Peter Chapman in charge. Had this change in leadership not occurred, Vialet said, he would never think of assisting RTPark with the Catalyst Fund.
But accounting for the new management, Vialet said, “We need to begin with this seed money, and we’re hoping that after providing this seed money we are going to have some success and that the administration will see the importance of utilizing some of the CBDG money as a driver to expand the economy.”
RTPark Executive Director Chapman said the fund will be used in combination with other financing sources to offer a bridge between “the amount the borrower can obtain in the private market and the amount needed to support a project or business.” If a borrower is only able to obtain 60 to 80 percent of the needed project financing from conventional sources, Chapman said, “this is where the Catalyst Fund comes into play.”
The need for this type of gap financing in the territory is paramount, senators said, as the U.S. Virgin Islands is competing with every other state and territory in the nation, some of which offer attractive incentives to incoming businesses. Vialet told the committee if the 34th Legislature is not “aggressive, we are going to lose out to all those other jurisdictions.”
“The real story is that we have to remain competitive, and if we don’t remain competitive, they are going to leave the Virgin Islands and go to the next jurisdiction that are more competitive than us,” Vialet said. “Puerto Rico is super competitive. Matter of fact, the Puerto Rico program offers more than we presently offer.”
Vialet said several states also offer competitive incentives to attract new industries. In South Carolina, he said, incentives were offered to the “BMW plant that created thousands of jobs and transformed the area and transformed the university system because of job creation.”
“We cannot continue to want just hotel jobs where we have individuals cleaning rooms. We got to look at manufacturing. We got to look at jobs that are going to place people in that middle-income bracket,” Vialet said. “That is what we are seeking to do with this Catalyst Fund. That is what the whole overall idea is in terms of getting CDBG funds, and growing the economy, and luring companies here, and expansion of revenue collections – that is the overall vision.” Vialet was referring to federal Community Development Block Grant funds that can, under some circumstances, be used to help for-profit enterprises to carry out job-creating activities.
After the committee passed the legislation, it was forwarded to the Rules and Judiciary Committee for further review.
“The Catalyst Fund, although it is not a cure-all, it is ultimately about our community,” Chapman said. “It’s about addressing the need for a foundational issue which is jobs and job creation. When we look at what will bring our children back, they need real opportunities. It’s also about making us more competitive. There is nothing wrong with tourism jobs, but do we want our children to have more options? Do we want to give them a better future?”
Sens. Vialet, Donna Frett-Gregory, Marvin Blyden, Samuel Carrion, Javan James Sr., Dwayne DeGraff and Janelle Sarauw were present for the hearing. Additional non-committee members were also present.