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Friday, March 29, 2024
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Companies Activating EDC Benefits as National Economy Improves

A growing number of companies previously approved for V.I. Economic Development Commission tax benefits are beginning to activate their benefits, reflecting a gradually improving national economy, V.I. Economic Development Authority Executive Director Percival Clouden said during budget hearings Friday.

The EDA oversees a variety of economic development programs, including the EDC, the Industrial Park Development Corporation, the Small Business Development Agency and the Enterprise Zone Commission.

In the first nine months of Fiscal Year 2013, six new EDC applications were filed, with a minimum of 63 jobs, more than $3.1 million in wages and $2.2 million in capital investment expected if, and when, they are approved and activated, Clouden said. This number is down from 15 new applications Clouden reported during last year’s budget hearing.

But those numbers are only part of the story.

"Business confidence is up and there is no better way of telling than when we see beneficiaries with approved benefits finally activating them," Clouden said.

"So far this fiscal year 13 new applicants have elected to commence benefits," he said. Those companies are expected to add a minimum of 315 full time jobs, spend an estimated $146 million in capital investment, make annual charitable contributions of approximately $628,000, and pay over $13.9 million in wages. These 13 new businesses are anticipated to contribute about $156 million in taxes, if they perform as projected for the five year period, Clouden said.

One major beneficiary to activate benefits this year is Wyndham Development Company, which purchased the former Renaissance Grand Hotel and plans to convert the rooms into about 145 timeshare units. This is expected to employ 126 full time employees and invest over $77 million over the next three years, he said.

Several senators pressed Clouden on efforts to collect on its troubled loan programs.

In April, an audit requested by EDA, found 383 of the 453 loans, 84.5 percent, in EDA’s nine loan programs were past due at least 30 days. Most of those – 365 loans totaling $8 million – were past due more than 120 days. Of that, $7 million is classified as "uncollectible" because it is delinquent more than a year. Some prominent citizens, including one current and several former senators, were among those who owed, according to the audit.

Sens. Donald Cole and Terrence "Positive" Nelson both had Clouden confirm they were not delinquent borrowers. Sen. Myron Jackson criticized the EDA for not disclosing the names of senators who owed. Clouden and EDA Chief Operating Officer Jennifer Nugent-Hill both pushed back, saying they threatened to publish names unless debtors came in to make payment plans, so it would be unfair and improper to turn around and publish the names of those who made payment plans.

"The EDA cannot reveal their names after they came into the office to make payment arrangements as requested," Nugent-Hill said.

Clouden requested a General Fund appropriation of $5 million, which is $326,000 or 6.9 percent more than the FY13 appropriation. The increased funding will provide the required local match of $120,000 for the $1 million business incubator grant and allow VIEDA to advertise the EDC Incentive Program more.

Wages and salaries comprise $2.4 million of that total, and employer benefit contributions another $737,000. Advertising and promotion is projected to cost $262,000. Professional services consume another $741,000. Rentals cost $216,000 and "all other" services and charges another $523,000. VIEDA is setting aside $182,000 for utilities this year.

No votes were taken during the information gathering budget hearing.

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