March 28, 2001 — Nadine Marchena has a daunting task: educate would-be and existing investors, the Virgin Islands business community and the population as a whole about the changes that were recently legislated in the territory's industrial incentive program.
As assistant chief executive officer for Industrial Development of the newly created Economic Development Authority, Marchena recently hosted open houses on St. Croix and St. Thomas and has been speaking with community groups such as the St. Thomas-St. John Hotel and Tourism Association.
Created in the closing days of 2000, the newly formed authority incorporates the former Industrial Development Commission, the Small Business Development Agency, the Industrial Park Development Corp. and the Government Development Bank.
Under the authority, the investment incentive program will be more limited in many ways:
– The minimum capital investment — which had not changed since the program was instituted in 1972 — has been doubled from $50,000 to $100,000.
– A beneficiary must buy goods and services locally unless they are not available. Under the IDC rules, a company was only required to give local vendors a 15 percent edge when seeking bids.
– As in the past, the beneficiary is required to hire a minimum of 10 V.I. residents, but now the company also must submit to the government a plan for management training.
– The government can impose fees on a beneficiary for failure to comply with the terms of its agreement. Under the IDC, Marchena said, the government could only modify, suspend or revoke the tax benefits.
– The beneficiary must pay an annual fee (determined by the type of business) to cover the cost to the government to ensure compliance as well as for any extraordinary costs by the government to ensure compliance.
– Beneficiaries must pay an application fee.
Industries and businesses approved as beneficiaries must fall into one of the following categories:
– Category I — rum production, milk/dairy production, watch and jewelry manufacturing and assembly.
– Category II — product assembly, manufacturing, agriculture/food processing, aquaculture/food processing, marine industry, raw materials processing, hotel/guesthouses, transportation and telecommunications.
– Category IIA — service businesses, not limited to but including investment managers and advisers, research and development, business and management consultants, software developers, e-commerce businesses, call centers, high-tech businesses, international public relations firms, international trading and distribution, and any other businesses serving clients located outside the Virgin Islands.
– Category III — utilities, health care facilities, recreation facilities and other industries or businesses that may be deemed appropriate by the authority.
Marchena said she will meet soon with the newly appointed EDA board members to give them information about the program.
Last week Gov. Charles W. Turnbull named the members of the seven-member board. Only two require legislative approval: St. John businessman Craig Barshinger and St. Thomas attorney Ronald Belfon. Four are government employees and so do not need confirmation; they are Kent Bernier, the governor's assistant for economic policy; Willis Todman, assistant administrator of the Government Employees Retirement System; Planning and Natural Resources Commissioner Dean Plaskett, and Louis Willis, director of the Internal Revenue Bureau. The seventh member, former Sen. Mary Ann Pickard, does not require confirmation because she was a member of the IDC, Marchena said.
With five of the seven members in place, the board has a quorum and can begin to meet and take action.
Marchena said six applicants are awaiting a public hearing on their applications.
