Home News Local news Senate Rules Committee Keeps WICO Alternative Tax Unchanged

Senate Rules Committee Keeps WICO Alternative Tax Unchanged

WICO President Clifford Graham testifies. (Photo by Barry Leerdam courtesy of the V.I. Legislature)

Members of the Senate Rules Committee on Monday sent a bill to buy the historic Estate Catherineberg house from the West Indian company on for a final floor vote after taking out a provision that would have cut WICO’s statutory payment in lieu of taxes from $700,000 per year down to $250,000 per year.

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 originally dedicated all of WICO’s remaining PILOT – payment in lieu of taxes – to setting up the house. 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.

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Several senators said they favored making the structure a museum but not cutting the PILOT so drastically.

“My only heartburn with this particular bill is that we are reducing the PILOT to the $250,000, which is really 26 percent of the $700,000 that was there and I think that it should be rather gradual, and I think that we should first start with 50 percent at $350,000 then let’s meet somewhere in the middle at some point. But I think that the drastic reduction to $250,000 is problematic,” Sen. Novelle Francis (D-STX) said.

“We are financially strapped as a government,” Francis added.

Newly installed WICO President Clifford Graham, a former V.I. senator, largely reiterated the points his predecessor, Joseph Boschulte made in April about WICO’s declining revenues making it difficult to pay the PILOT. Graham said WICO’s receipts declined once the VIPA-owned Austin “Babe” Monsanto facility opened in Crown Bay in 2006.

He also told senators that he did not think WICO should have responsibility for setting up the house as a museum, because it lacked expertise in that field.

Senators largely favored having WICO set up the museum and offset the costs from its PILOT.

“I would tend to agree with my colleagues … that WICO should be responsible for the promotion of this particular property,” because WICO already has extensive sales and promotional arrangements with cruise companies, Senate President Myron Jackson (D-STT) said.

He asked Graham what the property cost WICO to maintain. Graham said the costs range from a high of $220,000 to a low of $60,000, in various years, depending on what needed to be done.

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.

Despite being owned by the government and despite a V.I. Supreme Court ruling that it is effectively a government agency in many respects, WICO has refused to date to comply with the V.I. Open Records act and allow the public access to all its meetings minutes and financial records. The V.I. Daily News and particularly its reporter Jonathan Austin have done extensive coverage of its lack of response to repeated requests for documents and information, as part of a larger series on the lack of transparency in several V.I.government agencies.

“Have you spoken with your board about releasing more information and being more transparent?” Sen. Janette Millin Young (D-STT) asked Graham.

“I think my position is irrelevant because the board sets policy,” Graham said.

“That is a good political out. But I will maintain my position that WICO is not doing enough. The Daily News is fighting their own battle. … But it is very personal to me as a policy maker when WICO withholds financial information,” Young said.

Sen. Brian Smith (D-At Large) asked Graham what his salary is.

“A long-time policy of the WICO board is not to discuss any personnel matters in an open forum,” Graham said.

Without detailed information, it is difficult or impossible to determine whether WICO could pay its PILOT if it changed its fiscal priorities. For example, if several top executives are paid as much or more than the current president of the University of the Virgin Islands, who gets well in excess of $300,000, or the previous Water and Power Authority executive director, who made $300,000 per year, then paying them salaries more in line with the governor’s pay level of $150,000 per year could make the difference between WICO being able to pay what it owes its owner and being unable to pay. Similarly, highly paid legal counsel could make a big difference. Or not, depending on the actual data.

Francis asked Graham whether water taxis would be helpful to move tourist traffic from WICO to other parts of St. Thomas.

“One of the biggest complaints passengers have been talking about is the traffic,” Graham said.

Often they plan to leave early to be sure to get back to the cruise ship in time, he said.

“Any time in traffic is really taking away from their opportunity to get into our stores and spend more dollars,” Graham said.

He also spoke of the possibility of having a single fee to take multiple trips, so that visitors could easily see several attractions. (See “Water Taxis Coming At Last to Charlotte Amalie Harbor” in Related Links below.)

After amending the bill to leave the PILOT unchanged, the comittee sent the bill on to the floor. Voting to send the bill on were: Young, Jackson, Francis, Sens. Marvin Blyden (D-STT) Positive Nelson (ICM-STX) Jean Forde (D-STT) and Sammuel Sanes (D-STX). All members were present.

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