Some senators discussed possibly seeking new legislation restricting cash for gold businesses, which they criticized as a contributor to crime – and thus indirectly a drag on the economy – during a committee hearing Tuesday looking at challenges hampering business startups in the territory.
Sen. Kenneth Gittens raised the issue of cash for gold, asking Licensing and Consumer Affairs Commissioner Wayne Biggs to what extent his office tracks those businesses. Biggs said anyone can look up businesses by type or name at the department’s website and see what sort of licenses the business has.
"You can put in a search and get every licensed scrap metal dealer and gold dealer," Biggs said.
Sen. Myron Jackson said cash for gold "is a very serious issue we are sweeping under the rug and which we really need to deal with."
"As a society where gold has always been in the culture, and a lot of commerce is centered around the trade in jewelry, I think we really need to step up to the plate on this," Jackson said, later adding “I think we really need legislation that curtails it.”
Sen. Donald Cole said he agreed with Jackson on cash for gold. "It needs to be addressed and there has been legislation proposed to curtail it," Cole said.
Sen. Clifford Graham has proposed a bill to require that payments for cash for gold transactions be held for one week before completing transactions to lessen the likelihood of trading in stolen goods. That bill, however, was not before the committee on Tuesday.
Testifiers from DLCA, the Small Business Development Center, Department of Tourism and other agencies all agreed business startups in the territory have been hampered by many factors, including high energy costs, bureaucratic red tape and the overall national economy.
A lack of commercial lending is also a factor, they said.
"There seems to be a reluctance to lend," said Sen. Nereida "Nellie" Rivera-O’Reilly, asking for details from Leonore Dottin, state director of the SBDC, a branch of the Economic Development Authority which promotes commercial lending within the territory.
"As you all know, the commercial lenders have been very timid in the territory," Dottin said.
"Many of our clients have voiced their frustration in terms of funding," she said, recommending a detailed study of what types of lending are and are not being approved in the private sector.
Asked if the lack of lending was a national problem or more tied to local conditions, she said it was a mix of both, but said banks also appeared to her to be a little too cautious locally.
Dottin said she did not "want to step on any toes," but said the Puerto Rico Small Business Development Authority is giving out proportionally more loans than are being given out locally.
EDA Chief Executive Officer Percival Clouden said he supported what Dottin said, adding "we are having great difficulty with the local banks."
The federal government has granted the EDA $1.3 million to use to support commercial lending through loan guarantees and other assistance. But to date only $558,000 had been disbursed, through eight loans, after about one year, Clouden said.
Clouden has met with the banks and has recommended the Division of Banking and Insurance within the Office of the Lieutenant Governor get involved, he said.
Senate President Shawn-Michael Malone said he had spoken to two of the larger V.I. banks and was told that too much of their money is tied up because of delays in foreclosures.
"So (loan) guarantees are not even attractive to them because the courts are not dealing with this money," Malone said.
"The foreclosure process is the problem," Clouden agreed.
Malone asked if the Legislature could help with a change to the law, and Clouden replied "yes you can.”
Meanwhile, the EDA is working to streamline its tax benefit application process.
"We are encouraging the scheduling of pre-application meetings with applicants which not only provides us the opportunity to meet our investors up front but also to provide information on our program and the application process. We are also reviewing our current online tools to ensure that the application is user friendly and pertinent. These initiatives are helping us to reduce the processing time for an EDC application," Clouden said.
The DLCA is also working to make it faster and easier to get and renew a business license, Biggs said.
When a prospective business applies for a license at the DLCA website, required approvals are now automatically requested electronically from partner agencies, like the V.I. Police Department, V.I. Fire Services and Bureau of Internal Revenue, he said. Recently farming and fishing licenses issued by the Agriculture Department have also been linked to their system, Biggs said.
"Now farmers and fishermen no longer need to visit the Department of Agriculture for approval sign-off and then come to DLCA for their license. With a single visit to Agriculture, they can process their farmer’s or fisherman’s license," he said.
Talks are continuing to bring the insurance and banking licensing overseen by the Office of the Lieutenant Governor, as well as medical licensing, onto the same digital platform, Biggs said.
No votes were taken at the oversight hearing on St. Thomas. Present were Graham, Jackson, Malone, O’Reilly and Sen. Janette Millin Young. Absent were Sens. Diane Capehart and Sammuel Sanes.
