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Home Depot Project Still On Track, Senate Panel Told

The planned Island Crossings Shopping Center on St. Croix to be anchored by Home Depot is on track and groundbreaking should occur soon, Percival Clouden, chief executive officer of the V.I. Economic Development Authority, said in Senate budget hearings Wednesday.
The development slated for 44 acres of undeveloped land off the Melvin Evans Highway across from Hess Road is estimated to ultimately involve about $40 million in capital investments and is the first major project in a new EDA "Tax Increment Financing" program, Clouden said. With TIF the V.I. Government actually pays part of the capital costs of a project through bonds secured by future tax revenues from the development. Used in nearly every state and territory to boost development in economically underserved areas, the theory behind TIF is if the public funding makes a project feasible that would otherwise not happen, the increased tax revenues it will bring in can justify and over time actually finance the upfront public expense, bootstrapping economic development.
In this instance, the developer is liable for the bonds if the tax revenues somehow don’t appear, theoretically protecting the government from losing money on the deal.
In the end, the total bond amount for the entire project is estimated at about $25 million, Clouden said. Financing is nearly completed and the project should start soon.
"We anticipate groundbreaking of the first project to occur within the next month and we are working to put the mechanism in place to … monitor this," he said.
EDA is made up of the Economic Development Commission, which confers generous tax benefits for new businesses, The Enterprise Zone Commission, created to revitalize run down and blighted communities, the Government Development Bank, the Small Business Development Agency, and the Industrial Park Development Corporation.
EDA personnel were at the budget committee hearing to defend their 2010 budget appropriation request of $5 million, reduced from their initial request to match the budget recommendation of Gov. John deJongh Jr.’s administration.
The request is a $500,000 or 11-percent, increase over the fiscal 2009 appropriation of $4.5 million. EDA expects $600,000 in revenue from fees and interest on its loans, for a total projected budget of $5.6 million.
Senate President Louis Hill asked Clouden to quantify the economic impact of the EDC’s tax benefit program on the territory.
"To listen to people talking, you would think it’s the worst thing in the territory because they are giving away everything," Hill said. "Someone has got to correct this misperception, what is your response?"
Clouden said in 2007, the total economic contribution to the territory of the 92 companies then receiving benefits was just over $422 million. To get that revenue into the economy, the territory gave up $155 million in taxes that would have been paid if the companies had set up shop in the territory without the tax program.
"The figures are there," he said. "We just need to publicize it some more, as we are doing today."
Hill said excessive criticism of the program "really steams" him.
"The EDA is in fact one of the things keeping us afloat right now in the territory," he said. "Without it hundreds more would be unemployed."
When asked, Clouden said EDC companies "support 8,300 jobs."
No votes were taken at the information gathering budget hearing. Present were Hill, Sens. Craig Barshinger, Carlton "Ital" Dowe, Wayne James, Nereida "Nellie" Rivera-O’Reilly and Sammuel Sanes.

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