Senate Panel Supports Reducing WICO Alternative Tax

The West Indian Company will see its payment in lieu of taxes go down from $700,000 per year to $250,000 per year, all of which will be used to maintain and operate the historic Estate Catherineberg structure as a museum, if a measure OK’d Tuesday by the Senate Finance Committee is approved by the Senate.

As a result of the proposed law, WICO’s net contribution to tax coffers would be zero, and the historic structure would become general government property and, if all goes well, a museum.

WICO operates and maintains the territory’s largest cruise ship port, the WICO dock, and also manages the adjacent Havensight Mall, which is owned by the Government Employee Retirement System. Set up in the form of a corporation, WICO is wholly owned by the Public Finance Authority, a V.I. government agency. Hence, it and all of its assets are ultimately owned by the government.

WICO has long paid a set fee – a payment in lieu of taxes, of $700,000 per year – instead of paying corporate income tax, property tax or gross receipts taxes. Up until 2006, WICO paid its PILOT in full, but since then has made partial or token payments. It has fallen millions of dollars behind in its payments and currently owes $6.65 million.

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During budget hearings in 2016, Chief Executive Officer Joseph Boschulte asked senators to consider reducing the PILOT, saying it was too high in light of reduced WICO ship calls and direct competition for ships by docks run by the V.I. Port Authority, a semi-autonomous government agency that runs the territory’s airports and oversees and in some cases directly operates its seaports.

From 2003 to 2006, WICO averaged more than 1.65 million passengers annually, Boschulte told senators. But then, the VIPA-owned Austin “Babe” Monsanto facility opened in Crown Bay, and two major cruise lines were given lower fees than at WICO in exchange for long-term berthing agreements, he said.

Then the travel industry was hit by the world-wide recession of 2008.

Between 2007 and 2014, WICO averaged slightly more than 1.2 million passengers, a reduction of more than 450,000 passengers, or 27 percent, annually, he said.

“This translated into $2.5 million in lost marine revenue to WICO per year. As a result, since the opening of the Monsanto Pier in 2006 and the attendant erosion in revenues, WICO has been unable to meet its annual PILOT obligation,” Boschulte said during budget hearings.

The Estate Catherineberg building was constructed by 1831. The Danes considered it for a governor’s residence, but decided instead to rebuild the existing Government House, starting in 1864. WICO, then a private company, purchased the property in 1917.

The government purchased WICO in 1993. At that time, WICO began renting the historic former Danish consulate to the government for $1 a year, ostensibly as a residence for the V.I. governor. Federal law declares Government House on St. Thomas the official residence of the governor. Gov. Charles Turnbull resided at Catherineberg for a short time and is the only governor to have done so. While it is an important historic structure, built in 1831, it remains musty and unsuitable for family life or entertaining.

The bill, sponsored by Sens. Janette Millin Young (D-STT) and Kurt Vialet (D-STX), authorized the government to buy the property and offset the cost from the past-due PILOT payments. As amended, the bill would require WICO to pay the costs of making the structure into a museum. All of the reduced PILOT payments would go to maintain the museum.

Voting to send the measure to the Rules and Judiciary Committee were: Vialet, Sens. Marvin Blyden (D-STT,) Dwayne DeGraff (D-STT,) Neville James (D-STX,) Nereida “Nellie” Rivera-O’Reilly (D-STX,) Tregenza Roach (D-STT) and Brian Smith (D-At-Large). All members were present.

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