Senators voted a bill out of committee Friday requiring those getting V.I. Economic Development Authority tax breaks to buy a home and hire at least one resident for every $1 million in annual revenue.
Current law requires EDC companies to hire at least 10 V.I. residents, so the new standard of one person per million dollars in net, pre-salary income, gives applicants more flexibility based upon their income levels. The home purchase requirement could be considered an extra requirement on EDA tax beneficiaries, however.
Sen. Neville James, who sponsored the bill along with Sens. Nereida "Nellie" Rivera-O’Reilly and Terrence "Positive" Nelson, said senators had been approached by businessmen living in the territory asking how the territory wanted to go about attracting new business. By tying the number of employees a company had to hire to its income, a larger number of small businesses might be able to benefit from EDA tax breaks and so be enticed into opening in the territory, James said.
The requirement to purchase a house would demonstrate a degree of commitment to the community and would generate jobs and revenue in the contracting and real estate industries, he said.
A few years ago, the EDA tax benefit program was seriously threatened by U.S. Internal Revenue Service concerns over residency requirements, James recalled. "We clearly had adverse economic consequences of that," James said. Purchasing a home should help demonstrate residency for EDA recipients, he suggested.
David Nissman, a St. Croix attorney who has represented numerous EDA recipients, testified those recipients would be very unlikely to bat an eye at purchasing a house. "I’ve frequently advised my clients to purchase a house and I’ve never had anyone refuse my advice yet," Nissman said.
While not a particular burden to EDA beneficiaries, requiring a home purchase could generate jobs and boost the economy by circulating more cash into and within the territory, he said. It is also a permanent, irrevocable benefit, he said.
“One thing I like about buying houses is if the business folds up and leaves, they still have an investment here,” said Nissman.
Michael Dembeck, executive director of the St. Croix Chamber of Commerce largely echoed Nissman’s view and said Chamber members endorse the move.
"This bill will arm the EDA with a fresh menu of tax incentives to attract enterprising entrepreneurs and emerging, nimble smaller companies with perhaps as few as two or three principals," Dembeck said.
The home-purchase requirement was widely welcomed by chamber members involved in real estate, he said. It would provide a needed shot in the arm to our stagnant real estate market, increase employment opportunities in construction, landscaping, home maintenance and other businesses too, he said.
"These … have the potential to eventually circulate millions of dollars a year through our now struggling economy through local retail, restaurant and miscellaneous purchases," Dembeck said.
In a letter, EDA CEO Percival Clouden testified against the bill, saying attaching hires to net income might encourage businesses to manipulate their net income to stay below the threshold where they would have to hire more people. The measure would also penalize successful companies who would have to hire more employees than they actually need, he said.
"As to buying a home, we do not believe that we should tie the hands of the beneficiary," Clouden said in the letter.
Voting to send the bill out of the Committee on Economic Development, Technology, and Agriculture for consideration by the Rules and Judiciary Committee were: James, Nelson, Sens. Janette Millin-Young and Chairman Shawn-Michael Malone. Absent were Sens. Alicia "Chucky" Hansen, Louis Hill and Patrick Sprauve.
The committee heard testimony, then voted to hold in committee a bill to pay fishermen a bounty based upon the weight and size of captured lionfish. The invasive species is a threat to fisheries throughout the Caribbean. Officials from the Department of Planning and Natural Resources and the nonprofit St. Croix Environmental Association testified against the bill, arguing that an eradication program was unlikely to succeed, but that other, less costly efforts may nonetheless help.
“The fact must be acknowledged that the lionfish cannot be eradicated from our waters as we are surrounded by a vast ocean," said Assistant DPNR Commissioner Carmelo Rivera. "Although eradication is impossible, there is evidence that management of the lionfish population in local areas is achievable and can be effective at mitigating the impacts of lionfish.”
DPNR advocates identifying a small number of ecologically, culturally or economically significant and focusing on controlling the populations in those spots, he said. DPNR also urged working in conjunction with volunteer recreational dive groups such as the Caribbean Oceanic Restoration and Education Foundation, in shallower areas using spears or nets, to cut down on the lionfish population.
SEA Executive Director Paul Chakroff made a similar assessment. While killing off lionfish is important, cooperating with existing groups may be more effective and less expensive, he said.
"Financial support should not be provided through high dollar bounties," Chakroff said. "Such programs have proved to be prohibitively expensive and ineffective in other jurisdictions."
But funds could be leveraged effectively by making them available to offset the costs of lionfish removal "so that the goodwill efforts made by participating fishermen, scuba divers and others do not cost these dedicated individuals out of pocket for the tremendous community service they are providing," he said.
The bill was held in committee for further amendment by unanimous vote.