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May 23, 2008
DEJONGH CRITICIZES "NO" VOTES CAST ON LEGISLATION TO AID ECONOMIC DEVELOPMENT OF ST. CROIX Governor John P. deJongh, Jr. has expressed disappointment that four St. Croix district senators failed to see the potential for new investments in the territory when they voted against an Administration proposal that establishes tax increment financing in the Virgin Islands. "It is most unfortunate that Senators Terence Positive Nelson, Ronald Russell, Neville James and Juan Figueroa-Serville cast NO votes on legislation which represent economic opportunities that are best achieved through public-private partnerships that harness the energy and ingenuity of the private sector with the vast resources of the government. The Governor went on to commend the other eleven senators who voted to approve the Tax Increment legislation. "The Senators who voted in favor of the Administration’s proposal sent a strong message to the residents of our territory that we can work together towards the goal of identifying real solutions and creating better opportunities for economic development for us all. I commend them on their foresight and open mindedness for working with us and putting the interests of all Virgin Islanders first." DeJongh said the interest for this type of legislation is primarily because of projects that are slated to come on board on St. Croix. This legislation will serve as a vehicle to strengthen the relationship between the government and private sector. "It is truly unfortunate that four Crucian senators voted against key legislation designed to aid the economic development of St. Croix." When the legislative proposal was submitted in March, DeJongh described tax increment financing (TIF) as a proven approach for achieving the goals of economic expansion. "Many states and municipalities have implemented TIF legislation which has generated significant funding of public infrastructure improvements and other investments in support of a broad range of economic development projects." TIF works by allowing projects to be financed by pledging the increases in tax revenues that can be reasonably anticipated to be collected by government once the financed project or activity is completed, deJongh explained. Tax Increment Financing has become a widely-used vehicle for public financing of economic development projects in the United States. The first legislation of this type was passed in 1952 in the State of California, and as of today has been enacted in 49 states and the District of Columbia. In 2007 alone, over $1.0 billion dollars in TIF bonds and notes were issued, and over the last ten years the top 100 issuers of TIF bonds completed over 2,000 bond issues, with a par amount exceeding $33.0 billion, thereby indicating a strong acceptance by investors. The creation of TIF will follow a process that includes an application and review process through the Virgin Islands Economic Development Authority, approval by the Senate for the levying of a tax or approving the issuance of bonds, and approval by the Virgin Islands Public Finance Authority (PFA) for any bond issuance. Therefore, the entire process includes a review and approval process that maintains Senate authorization and PFA approval, but ultimately such bonds will be special obligation bonds secured solely by the pledge of the incremental revenues, and not the broader support of the credit of the Government or the PFA. Further, members of the public also have an opportunity to comment on the proposed projects, thus, making the process transparent to the community. |
