U.S. Virgin Islands Governor John P. de Jongh De Jongh has executed an executive order this past week laying the groundwork for new economic and cosmetic renewal projects in historic towns on St Croix and St Thomas.
“The United States Virgin Islands recognizes the importance of revitalizing these once-vibrant towns with an infusion of new business and economic opportunities, to renew their physical appearance, and to rejuvenate and diversify the local economy by providing incentives for business relocation and job creation,” de Jongh said in the order.
Accordingly, Government House will establish Enterprise Zones within those towns “in order to attract new businesses and provide incentives for investment in order to sustain the future preservation of these towns for the People of the Virgin Islands.”
The purpose of the locally funded enterprise zone program - which was created in 1997 by Executive Order and signed into law in 1999 - is to encourage the use of tax incentives to breathe new life into Virgin Islands historic neighborhoods that have declined from once being socially and economically vibrant communities. Through the program, businesses and homeowners can make improvements that will benefit their own properties and the entire neighborhood.
Under the original legislation, the enterprise zones in the Territory included Savan on St. Thomas; Christiansted; and the historic town area of Frederiksted on St. Croix. While Governor de Jongh's new executive order expands the zones in Frederiksted and Charlotte Amalie, the enterprise zone in Christiansted remains the same.
Now, the zone in Frederiksted will include the whole area to the south of the historic town - all the way to Queen Mary Highway."In Frederiksted, it's really a corridor to the main historic district," Enterprise Zone Commission Director Nadine Marchena Kean said. "So, we look at it that way. You don't want to go through something not so great to get to something beautiful."
On St. Thomas, the enterprise zone was small, encompassing only a portion of Savan in downtown Charlotte Amalie. Under the new designation, the areas known as "Up Street" and "Down Street" will be included in the program. The new areas include a portion of Back Street, Garden Street and Long Path and part of the Hospital Ground area.
The Enterprise Zone Commission works directly with community groups in the areas included in the zones, Kean said. Now that the zones have been expanded, the Commission will begin a "door to door" survey. Kean said her staff literally will go to each property in the enterprise zone and assess who lives there; who owns the property; what it is used for; how old it is; and the condition of the building or property. "You need to understand what's there first," she said.
The Commission then will work with community organizations to educate the owners and potential investors on the benefits available to them through the enterprise zone program.
The enterprise zone's one-time credits on either income or gross receipts taxes include:
- 25 percent of the total spent on new construction;
- 25 percent of the total spent on rehabilitation; and
- 10 percent of the total spent on new machinery and equipment for a business.
Hiring U.S. Virgin Islands also is encouraged under the program. Beneficiaries are allowed a one-time $500 income tax credit for every job created for residents. Program participants also pay reduced Gross Receipts Taxes for up to 10 years. The benefits allow a property tax credit that is equal to the amount the improvements caused the property value to increase. The credit also is good for a period of up to 10 years.
"With the expansion of the zones, it opens up the ability for more people to be eligible for those benefits," Kean said. During the last 5 years, enterprise zone beneficiaries annually spent an average of $1.1 million, which is money that circulates in the local economy, she noted.
Director Kean remarked that "35 new and expanded businesses - which is a 77 percent expansion in participation - were created as a result of the enterprise zone programs in Fiscal Year 2011. Enterprise zone programs were directly responsible for 93 jobs in 2011.".
While the program offers tax breaks - which mean less tax revenues going into the Territory's coffers - the program provides a major return on that investment, Kean said. "For every $1 not collected in taxes because of the program, $7.19 of direct investment has been expended in the local community."
Last week, Governor de Jongh completed a meeting with United States Department of Interior officials in Washington, D.C. having secured two capital improvement grants including $1.02 million for the Main Street Enhancement Project inthe capital city of Charlotte Amalie and $1 million for the restoration of the boardwalk in Christiansted, St. Croix.