A bill aimed a revitalizing some of the territory's most blighted downtown areas was passed by a senate committee Tuesday.
The Enterprise Zone Program Act of 1999 — which will give tax breaks to businesses and property owners who rehabilitate or construct new buildings, or open or expand businesses in Frederiksted, Christiansted and Savan — was approved 6-1 by the Senate Committee on Finance.
Sen. Roosevelt David, a sponsor of the bill, spoke of the ripple effect the bill would have.
"Our economic downturn, our economic plight, deserves some stimulus and that is basically what this measure intends to do. Businesses need a reprieve," David said.
"That indirectly, will affect consumers positively because prices will have a tendency to go down," he said. "And it enables businesses, then, once the noose has been taken from around their necks, to hire one or two additional people and that means more revenue for our treasury."
Along with David and Finance Chair Sen. Lorraine Berry, Sens. Gregory Bennerson, Anne Golden, George Goodwin and David Jones voted in favor of the program. Sen. Alicia "Chucky" Hansen voted against the bill, which now goes to the Rules Committee for consideration.
To qualify for the program's tax benefits, a business must make a minimum investment of $10,000 in an enterprise zone and employ at least two Virgin Islands residents. Beneficiaries are required to buy from local vendors provided the "bid" of a local vendor does not exceed the bid of a non-resident vendor by 25 percent.
Enterprise zone businesses will then be eligible for a gross receipts or income tax credit equal to 25 percent of the actual value of constructing a new building or rehabilitating an existing one; a gross receipts or income tax credit equal to 10 percent of money invested in machinery or equipment; and an overall 3 percent gross receipts reduction.
Business will also be eligible for a one on time $500 income tax credit for each job created and a one time property tax credit equal to the property tax increase caused by the rehabilitation of a building.
Beneficiaries will decide whether they want gross receipts or income tax credits and may chose to receive the benefits over a ten-year period.
Once the bill is passed, the governor would have the authority to declare enterprise zones in other areas of the territory.
Financial institutions who give loans to enterprise zone investors will receive income tax reductions on a five-year scale declining from 90 to 10 percent.
"We thought we should put it on a declining scale and use 90 percent up front to encourage financial institutions to make loans to individuals who are interested in investing in enterprise zones," Berry said.
The program would be administered by an Enterprise Zone Commission, which will be the same as the Industrial Development Commission except that Commissioner of Planning and Natural Resources will be the chair instead of the Commissioner of Tourism, and enterprise zone residents from each zone will be a members.
The IDC's staff will also serve as staff for the Enterprise Zone Commission.
Aside from creating enterprise zones, the bill would also raise the maximum unemployment benefit from $233 to $303.
"I believe that when you look at various facilities, especially in Frederiksted where we are trying to attract more people and develop more of the facilities in that area, this program will go a long way," Berry said. "This proposal I believe is economic stimulus for the three islands, two districts in particular."
Though he supported the bill, Bennerson said the territory is not attempting to stimulate its economy fast enough.
"While other countries and other islands around us — Barbados, Antigua, the Bahamas, you name it– are doing programs to enhance their communities, we in the Virgin Islands are falling asleep and watching everything," he said. "We have to not only make sure that our islands are well off, but that we are providing an investment atmosphere."
Jones, who also supported the program, said the enterprise zones should be expanded because other areas of the territory are in dire need of economic assistance.
"I do believe the entire Virgin Islands should be designated an enterprise zone because there are a number of blighted areas that go beyond the specific areas mentioned in this legislation," Jones said. "I think we need to declare a state of emergency in the Virgin Islands for economic reasons, because that is the only way we could attention from certain areas in Washington."
Enterprise zones are only one of the many economic recovery proposals the Senate majority is developing, according to David.
"This is only one or two of the factors that would really blend together with additional ones that we have from the economic summit in March, that will be coming to the table shortly to revitalize our economy," he said.
