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This is an Act to enhance and update the Enterprise Zone Program and to add a Commercial
Zone Program
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“Commercial Zone Program and Benefits”
BILL NO.
30-
THIRTIETH LEGISLATURE OF THE UNITED STATES VIRGIN ISLANDS
PROPOSED BY: GOVERNOR
SECTION 9: Title 29 is amended by adding a new subchapter “III” entitled
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SECTION 10:
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“Section 1015. Legislative findings.
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The Legislature hereby finds and declares that:
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(a) there exists in localities throughout the territory, areas that once experienced
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commercial and trade activity, but due to the general economic downturn are in need of
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economic and physical revitalization;
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Title 29, subchapter III, is amended by adding the following:
(b) these areas have displayed high levels of unemployment, physical deterioration, and
economic disinvestment;
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(c) the existence of such areas tarnishes the image and reputation of the territory in the
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eyes of its residents and visitors alike, reduces the desirability of these areas as places to visit and
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work, and substantially impairs the sound growth of business enterprises within these areas;
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(d) the revitalization and redevelopment of these areas for the ultimate benefit of the
territory as a whole is of critical importance;
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(e) the resources of the Government alone, without the aid provided in this chapter, are
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insufficient and often inappropriate, to successfully undertake the massive task of restoring the
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social and economic productivity of such areas;
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(f) the revitalization of these areas can only occur if the private sector can be induced to
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invest its own resources in productive enterprises that will ultimately rebuild the commercial
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viability of these areas and provide jobs;
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(g) in order to provide the private sector with the necessary incentives to invest in these
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areas, the Government should seek ways to facilitate and expedite fiscal and regulatory
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requirements and should seek to identify supportive actions that facilitate business investment in
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these areas; and
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(h) all powers conferred by this chapter are for public uses and purposes for which public
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money may be expended and such other powers exercised, and the necessity in public interest for
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the provisions of this chapter is declared as a matter of legislative determination.”
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SECTION 11:
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“Section 1016. Policy and purpose.
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(a) It is the policy of the territory to provide the necessary means to assist the private
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sector in creating the proper economic and social environment to induce the investment of
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private resources in productive business enterprises located in severely distressed Commercial
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Zone areas and to provide jobs. In achieving this objective, the territory will seek to provide
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appropriate investments, tax benefits, and regulatory relief of sufficient importance to encourage
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the business community to commit its financial participation.
Title 29, subchapter III, is amended by adding the following:
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(b) The purpose of this chapter is to establish a process that provides incentives by the
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Government to induce private investment in Commercial Zone areas by removing unnecessary
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governmental regulatory barriers to economic growth, and to provide tax incentive benefits.
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(c) The Legislature, therefore, declares the revitalization of Commercial Zone areas, through the
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concerted efforts of Government and the private sector, to be a public purpose.”
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SECTION 12:
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“Section 1017. Definitions.
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(a) "Commercial Zone" means the total area within the Territory that has been declared a
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commercial zone pursuant to a resolution issued by the Enterprise Zone Commission, which
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resolution shall include a detailed legal description of the area to be included in the specific
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Commercial Zone.
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Title 29, subchapter III, is amended by adding the following:
(b) "Commercial Zone Business" means any individual, partnership, corporation, limited
liability company, proprietorship or other business granted benefits pursuant to this chapter.
(c) "Commission" means the Enterprise Zone Commission.
(d) "Enterprise Zone Commission" means a public body created pursuant to section 1004
of this title.
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(e) "Real property" includes all lands, including improvements and fixtures thereon, and
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property of any nature appurtenant thereto or sued in connection therewith, and every estate,
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interest and night, legal or equitable, therein, including terms for years and liens by way of
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judgment, mortgage or otherwise and the indebtedness secured by such liens.
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(f) "Rehabilitation" means the reconstruction, alteration or repair of improvements,
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structures and buildings, in accordance with the requirements of the Virgin Islands Building
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Code, and other laws and rules or regulations pertaining to building, fire prevention, health,
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housing, and zoning and also the use of land, and the use and occupancy of buildings and
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improvements.
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(g) "Resident of the Virgin Islands" means:
(1) any United States citizen currently domiciled in the Virgin Islands for one (1)
year or more;
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(2) a person who attended a school in the Virgin Islands for at least five (5) years,
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was born in the United States Virgin Islands, is the offspring of a person born in the
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United States Virgin Islands, or is a high school or University of the Virgin Islands
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graduate and who is registered to vote in the Virgin Islands; or
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(3) the holder of an alien registration receipt card (United States Department of
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Justice Form No. 1–151) domiciled in the Virgin Islands for one (1) year or more. A
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person shall demonstrate that he has been a resident for one (1) year or more for the
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purposes of this chapter using the date of issuance information from a W-2 form, a voter
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registration card, a permanent resident card, or a Virgin Islands driver's license.”
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SECTION 13:
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“Section 1018. Commercial Zone Program Established.
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(a) There is established the United States Virgin Islands Commercial Zone Program.
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(b) The Program shall be organized and administered as a committee of the Virgin
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Title 29, subchapter III, is amended by adding the following:
Islands Enterprise Zone Commission, established under Section 1004 of this Title.”
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SECTION 14:
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“Section 1019. Powers and Duties of the Commission.
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The Commission, either directly, or through its staff, shall have the following powers and
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Title 29, subchapter III, is amended by adding the following:
duties:
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(a) Develop application procedures for demonstrating compliance with section 1020 of
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this chapter and for obtaining the benefits set out under section 1023 of this chapter, which may
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or may not include mandatory public hearings at the discretion of the Commission;
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(b) Review all applications (including financial records) for benefits, and grant the
necessary certificates;
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(c) Oversee and monitor the implementation of this chapter;
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(d) Determine compliance of the beneficiaries with the provisions of this chapter and all
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regulations promulgated hereunder;
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(e) Actively promote and publicize the Commercial Zone Program, including preparing,
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purchasing, and distributing by mail, the internet, or other means, materials concerning
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Commercial Zones;
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(f) Provide technical and business assistance related to tax incentives and the
development of alternative revenue sources to businesses within each Commercial Zone;
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(g) Coordinate Federal and Territorial business assistance programs and in cooperation
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with the appropriate Federal and Territorial departments or agencies, help streamline permit or
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license application procedures for businesses located in Commercial Zones;
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(h) Work with the appropriate Federal and Territorial departments or agencies to
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coordinate the Commercial Zone Program with other programs carried out in the territory,
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including without limitation, economic development programs, programs providing financial and
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other assistance to small businesses, programs providing transportation assistance, and job
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training programs;
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(i) Apply or work with beneficiaries of the Commercial Zone Program to apply for
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Federal and Territorial grants, loans, and services that can benefit businesses in a Commercial
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Zone;
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(j) Monitor enterprises that are established in or relocate to a Commercial Zone and that
qualify for the incentives provided for in section 1023 of this chapter;
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(k) Prepare and promulgate such rules and regulations as may be necessary to
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complement the provisions of this chapter, such rules and regulations shall have the force and
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effect of law upon approval by the Governor; and
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(l) Perform such other acts and functions appurtenant to its authority as may be required.”
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SECTION 15:
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Title 29, subchapter III, is amended by adding the following:
“Section 1020. Specific requirements for granting of benefits.
(1) In order to qualify and remain eligible for benefits provided under this chapter, an
applicant must fulfill the following specific qualifications and requirements:
(a) Establish or continue to maintain a business with valid licenses and permits
within a Commercial Zone;
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(b) Invest at least $75,000, or invest an additional amount of $75,000, in the
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rehabilitation of the building used by a business that will advance the economic well being of the
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Territory. The fair market value of all equipment leased for a term of at least five years shall be
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included in determining compliance with the investment requirement. The minimum investment
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required by this section may be reduced, if the Commission finds that the proposed business will
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provide sufficient employment or justify the lower investment.
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(c) In the case of a natural person, be a resident of the Virgin Islands as defined in section
1017(10) of this chapter.
(d) Be the actual investor in the Commercial Zone and not a contractor, subcontractor,
person or corporation acting as an agent or representative in a similar capacity to the investor;
(e) Meet such standards of ecological compatibility as may be established by Federal
and/or Territorial law.
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(f) Employ at least four (4) residents of the Virgin Islands and one (1) paid apprentice in
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such business directly or through subcontractors or, for existing businesses, add at least four (4)
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new employees and one (1) paid apprentice who are residents of the Virgin Islands. The
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Commission may waive this requirement upon a demonstration to the Commission that the
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employment of this number of persons in this particular enterprise would not be economically
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feasible or practical, and upon a further finding by the Commission that the desirability of the
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proposed enterprise outweighs the fact that it will not provide employment for a least two
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residents, or for two additional residents, as appropriate.
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(g) Comply with all Federal and Territorial laws, including anti-discrimination and
wrongful discharge laws.
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(h) For any applicant who proposes to do business on land adjoining any beach or
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shoreline of the Virgin Islands, agree to grant to the Government of the Virgin Islands a
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perpetual easement upon and across such land to the beach or shoreline to provide free and
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unrestricted access thereto to the public, which easement shall be duly recorded in the Recorder
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of Deeds upon the designation of the business as a Commercial Zone Business.
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(i) Agree in writing to notify the Virgin Islands Employment Service in writing as to the
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availability of employment by the business or its subcontractors, the number of employees
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required, the occupational classification of such workers, and the applicable wage rate.
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(j) Stamped copies of gross receipts tax returns, property tax returns, and income tax
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returns with the Enterprise Zone Commission, which returns shall be confidential information
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and shall not be released by the Enterprise Zone Commission except as provided under Title 33,
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Chapter 21, section 822, Virgin Islands Code, for gross receipts and property tax returns, and
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under section 6103 of the Internal Revenue Code of 1986, as amended, as applicable to the
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Virgin Islands, for income tax returns.
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(k) In the case of a Virgin Islands or foreign corporation, partnership, limited liability
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company, or other entity, be in compliance with all applicable Federal and Territorial statutes
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and any rules or regulations promulgated under this chapter.
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(l) Such other requirements, not inconsistent with this chapter, deemed in the interest of
the Program by the Commission.”
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SECTION 16:
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“Section 1021. Hiring of VI residents; competitive bidding procedures.
Title 29, subchapter III, is amended by adding the following:
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(1) Any business granted benefits pursuant to this chapter shall agree in writing to
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employ, and to require all contractors retained by the business to employ persons who are
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residents of the Virgin Islands.
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(2) Any business granted benefits pursuant to this chapter shall similarly agree, and must
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require all contractors retained by the business to agree, to contract for services with and
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purchase goods, materials and supplies from those persons who are residents of the Virgin
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Islands and those entities that are incorporated or registered under the laws of the Virgin Islands,
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and who are duly licensed to do business in the Virgin Islands and have been so duly licensed for
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at least one year prior to the initial date of any such purchase, contract, or subcontract, provided
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that the bid of such resident or entity does not exceed the bid of any nonresident person or entity
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by more than fifteen percent (15%). Each Commercial Zone business and all contractors and
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subcontractors of such business must invite competitive bidding for all services, goods, and
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materials pursuant to the publication requirements of Title 31, Chapter 23, section 236, Virgin
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Islands Code, and must apprise each bidder in writing of the name of the successful bidder and
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the amount of his bid within thirty (30) days after awarding the bid.”
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SECTION 17:
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“Section 1022. Economic Development Benefits Beneficiary Exclusion.
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(1) Beneficiaries of the Economic Development Program in Title 29, Chapter 12, Virgin
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Islands Code, shall not be eligible to be designated as Commercial Zone Businesses nor to
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receive benefits authorized pursuant to the provisions of this Chapter.
Title 29, subchapter III, is amended by adding the following:
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(2) An individual or entity that was formerly a beneficiary of the Economic Development
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Program can, however, apply for benefits as a Commercial Zone Business, and a current
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beneficiary of the Economic Development Program can apply for benefits as a Commercial Zone
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Business and terminate its benefits under the Economic Development Program as of the effective
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date of its benefits as a Commercial Zone Business.
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(3) A Commercial Zone Business can similarly apply for benefits under the Economic
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Development Program and, upon the receipt of such benefits, elect to terminate its benefits under
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the Commercial Zone Program as of the effective date of its benefits under the Economic
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Development Program.”
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SECTION 18:
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“Section 1023. Tax credits; tax benefits; benefit options.
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(1) Each Commercial Zone Business shall qualify for the following tax credits and tax
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Title 29, subchapter III, is amended by adding the following:
benefits:
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(a) A non-refundable gross receipts tax credit or an income tax credit equal to ten
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percent (10%) of the actual value expended within a fiscal year for construction of a new
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building within the Commercial Zone;
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(b) A non-refundable gross receipts tax credit or an income tax credit equal to ten
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percent (10%) of the actual value expended within a fiscal year for rehabilitation of buildings or
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other real property within the Commercial Zone. For the following activities the additional
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percentages indicated may be stacked, but in no event may benefits exceed 35%.
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1) Off Street Parking
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Level 1 (10-30 parking spaces) – 5%
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Level 2 (31-50 parking spaces) – 10%
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Level 3 (51+ parking spaces) – 15%
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2) Entertainment
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Restaurant – 5%
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Center for Live Entertainment – 5%
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3) New Residential – 10%
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4) Retail establishments that carry predominantly cultural or locally made
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products – 10%
(c) A gross receipts tax rate of three percent (3%) for gross receipts derived by the
Commercial Zone Business, pursuant to Title 33, Chapter 3, section 43, Virgin Islands Code;
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(d) A property tax credit against taxes imposed pursuant to, Title 33, Chapter 81,
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section 2301, Virgin Islands Code, equal to the increase in property taxes assessed due to
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renovation, rehabilitation, or construction of property within the Commercial Zone.
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(2) The Commercial Zone Business must indicate for the fiscal year that an expenditure is
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made whether it is taking the gross receipts or the income tax credit pursuant to subsections (a),
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(b), and (c) for such expenditure, and the credit must be taken on the appropriate tax return for
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the fiscal year during which the actual value was expended. A Commercial Zone Business that
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qualifies for more than one of the credits can elect to take one or more credits against income tax
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(for example, for new construction and another credit against gross receipts tax), but in no case
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can an expenditure be used in calculating more than one credit.
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(3) Any credit derived by an entity that is not taxable at the entity level, such as a limited
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liability company, partnership, or Subchapter S corporation, shall flow through to its owners as
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long as they are residents of the Virgin Islands as defined in section 1017 herein.
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(4) Only expenditures incurred over a consecutive five-year period can give rise to tax
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credits under this chapter, and each Commercial Zone Business can elect the commencement
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date of such five-year period (the "Benefit Period"). Each benefit must be utilized to the extent
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possible in a year before any balance is carried forward to the subsequent year with regard to
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credits and other benefits carried forward. However, a Commercial Zone Business shall make an
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election at the same time that it elects the commencement date of its benefits and such election
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cannot be subsequently changed.
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(5) The property tax benefit and the reduced gross receipts tax rate will apply only for the
benefit period.
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(6) Each Commercial Zone Business must obtain and maintain a valid license to conduct
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business in the territory for each year in which it receives tax benefits under this section, and if
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for any reason Commercial Zone Business does not have a valid license in place for one or more
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years, it will not be entitled to the tax benefits under this section without further action on the
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part of the Enterprise Zone Commission.
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(7) The Virgin Islands Bureau of Internal Revenue shall issues rules and regulations for
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the administration of subsections (1)(a) through (e), (2), (3), (4), (6), and (7) of this section; and,
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the Department of Finance shall issue rules and regulations for the administration of subsection
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(1) of this section.”
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SECTION 19:
The Enterprise Zone Commission may only award Commercial
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Zone benefits as set forth in Title 29 Virgin Islands Code, Chapter 19, Subchapter III, for a
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period of five (5) years commencing upon enactment of this legislation.
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Bill Summary
The Enterprise Zone Program was enacted into law in 1999.
Experience with the
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program and changing economic conditions require the program to be updated. This bill will
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update and enhance the Enterprise Zone Program so that it can be better utilized to revitalize our
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blighted and under or un-utilized areas.
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There exists in localities throughout the territory, areas that once experienced commercial
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and trade activity, but due to the general economic downturn are in need of economic and
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physical revitalization. These areas have displayed high levels of unemployment, physical
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deterioration, and economic disinvestment. The existence of such areas tarnishes the image and
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reputation of the territory in the eyes of its residents and visitors alike, reduces the desirability of
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these areas as places to visit and work, and substantially impairs the sound growth of business
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enterprises within these areas. The revitalization and redevelopment of these areas for the
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ultimate benefit of the territory as a whole is of critical importance. The resources of the
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Government alone, without the aid provided in this chapter, are insufficient and often
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inappropriate, to successfully undertake the massive task of restoring the social and economic
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productivity of such areas. The revitalization of these areas can only occur if the private sector
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can be induced to invest its own resources in productive enterprises that will ultimately rebuild
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the commercial viability of these areas and provide jobs.
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The purpose of the establishment of the Commercial Zone is to establish a process that
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provides incentives by the Government to induce private investment in Commercial Zone areas
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by removing unnecessary governmental regulatory barriers to economic growth, and to provide
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tax incentive benefits.
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