US Virgin Islands Hotel & Tourism Association

Ports of Charlotte Amalie Task Force Meets on St. Thomas

U.S. Virgin Islands Gov. Kenneth E. Mapp met with the Ports of the Virgin Islands – Charlotte Amalie Task Force on Feb. 20 for the first task force meeting of 2018 to discuss port maintenance and expansion, the Main Street road project, harbor transportation and a number of issues affecting the U.S. Virgin Islands hospitality industry.

Mapp told those assembled that the territory was able to secure millions of dollars in federal funds to assist with dredging the Charlotte Amalie Harbor in order to upgrade and expand the ports to accommodate Oasis-class cruise ships and other large passenger vessels.

“It’s been a ride since September,” the governor said. “It is time to catch up and coordinate on the things that we promised and share good news … we want our cruise line partners to know that our recovery is on schedule and that we are doing everything we have to do.”

Mapp said it was important that his team continue to communicate directly and regularly with the local business community so members are kept informed and the government can best respond to their needs.

Members of public sector who attended the meeting included Commissioner of Tourism Beverly Nicholson-Doty; Commissioner of Public Works Nelson Petty; Commissioner of Property and Procurement Lloyd T. Bough, Jr.; President and CEO of the West Indian Company (WICO) Clifford Graham; Chair of the Virgin Islands Port Authority (VIPA) Laurel Hewitt-Sewer; VIPA’s Assistant Executive Director and Director of Engineering Damian Cartwright; and Policy Advisor Samuel Carrion.

Private sector representatives in attendance included Pash Daswani, Vivek Daswani, John Woods, Filippo Cassinelli, Judith Watson, Shawn Stapleton, Michael Creque and Malorie Diaz.

Although this season has been challenging because of the impact of Hurricanes Irma and Maria, the task force agreed that the territory’s economic recovery remains promising.

Petty reported that after slow progress from previous contractors, the newly selected team had quickened the pace of the Main Street road project. Much of the tedious underground work is projected to be completed by late April, he said. Progress is also being made on transportation within the Charlotte Amalie Harbor and harbor transportation will begin service this October.

Nicholson-Doty reported that United Airlines will return to the territory in April; Delta Air Lines will start a second Saturday flight between Atlanta and St. Thomas and resume daily service from New York in May; while Spirit Airlines will begin nonstop flights from Fort Lauderdale to St. Croix towards the end of May.

Business owners shared some growing pains of the recovery process, but were hopeful. “We’re getting there. We’re getting good comments from our visitors. People coming to the restaurants are staying at villas and are positive about the recovery, so that’s a good thing. The visitors are sympathetic about the status of the island and are pleasantly surprised about the progress,” said Judith Watson, owner of Petite Pump Room, a popular restaurant on the Charlotte Amalie waterfront.

Gov. Mapp Reports VI to Benefit from More Resilient Energy System

Reiterating his commitment to rebuilding a more resilient Virgin Islands, Gov. Kenneth E. Mapp announced the territory will have a stronger energy system through the continued installation and substitution of composite poles.

At a cost of approximately $4,000 each, the composite poles are flexible and can withstand winds up to 200 miles per hour. If damaged, the poles have serial numbers trackable by the manufacturer through a GPS system.

“These are part of the systems that we are installing to harden the transmission and distribution system of the Water and Power Authority,” he said during a Feb. 7 news conference.

The governor added that $50 million of the $244 million Housing and Urban Development grant will be used to harden WAPA’s generation and distribution system. Wind generators will be installed to help lower the cost of power in the territory. Also, two generators will be installed on St. John in the Cruz Bay and Coral Bay areas. These will assist in maintaining power to St. John in the event of power disruption to the Randolph Harley Power Plant.

“This is not a pipe dream,” he said. “This is not three years away – we are already in the process of identifying land for this power generation unit.”

Further enhancing the territory’s power system, the roofs of the six new schools will serve as solar farms to generate electricity and placed in microgrids.

Mapp declared his administration will make the most of the current opportunity to work with federal partners and global nonprofit entities such as the Clinton Foundation and the Bloomberg Foundation to “build the territory in a much more hardened way, and smarter way, to reduce the negative impact to our lives as we go through hurricanes.”

Federal Emergency Management Authority Federal Coordinating Officer William ‘Bill’ Vogel reported 735,000 cubic yards of debris have been removed from the territory to date. He said $731 million has been issued for response and recovery operations. Of that, $64.5 million was allocated for housing and other needs, $258.8 million in public assistance, $404.7 million in Small Business Administration low interest disaster loans and $3.7 million in the national flood insurance claim program.

He reminded residents that Feb. 28 will be the final day for placing hurricane debris on public roads for collection. Placing debris on the roadside after this date will result in tickets being issued for littering.

Mapp estimated between 12,000 to 15,000 homes will benefit from the Emergency Home Repairs VI Project. To qualify, applicants must be the owner of the home, must be able to show damage from Hurricane Irma and/or Maria, must have a FEMA registration number and must use the home as their primary residence. Residents can call 844-813-9191 to register or visit www.ehrvi.com.

Congress Designates Billions for USVI Recovery

President Donald Trump signed an $89.3 billion supplemental disaster recovery spending bill into law Feb. 9, which includes $11 billion for Community Development Block Grant Disaster Recovery funding for the governments of Puerto Rico and the U.S. Virgin Islands and $142 million in additional Medicaid funding for the Virgin Islands health care system, Gov. Kenneth E. Mapp announced.

“Included in the 650-page bill are resources that will allow the Virgin Islands to rebuild our schools, hospitals, power system, roads and port facilities,” the governor said. “The bill also provides hundreds of millions of dollars to help the Virgin Islands rebuild our economy and to assist local farmers and small businesses.”

The governor said, despite his administration’s aggressive lobbying efforts in recent months, he was almost “overwhelmed” by this good news and the many opportunities it would provide to the Virgin Islands.

The bipartisan package also extends the territory’s temporary rum tax cover-over rate for five years which will solidify some $250 million in cover-over revenues during that period – the difference between $10.50 and $13.25. Until now, the Virgin Islands often had to make the request for this extension on an annual basis.

The supplemental bill includes billions of dollars in new federal assistance for areas hit hard by the 2017 disasters, including new funding for a wide range of federal agencies charged with assisting in disaster recovery.

“The funding announced this morning will allow us to continue on our road to recovery and will enable us to rebuild the Virgin Islands stronger and smarter,” the governor said.

The Mapp Administration has been working closely with the Trump Administration, federal officials and Members of congress over the last several months on building support for the territory’s funding requests in response to the massive devastation caused by Hurricanes Irma and Maria. The governor testified before congress in November 2017 and he has remained in regular contact with congressional leaders.

In addition to replenishing the Federal Emergency Management Agency disaster recovery fund with an additional $23.5 billion, the bill provides $28 billion in Housing and Urban Development CDBG funds, of which $11 billion is primarily intended for the Virgin Islands and Puerto Rico. Of that amount, the bill targets $2 billion for the repair and reconstruction of the electricity systems in Puerto Rico and the Virgin Islands. Mapp noted that these funds can be used to supplement other FEMA funds for which the territories would qualify, enabling each jurisdiction to rebuild a stronger and more resilient power system.

“I am delighted that this bill provides substantial funding for hardening of our electrical system,” he said. “I testified in support of these changes to our disaster policy last November before both the Senate Energy Committee and the House Natural Resources Committee. It just doesn’t make sense to rebuild something back to its pre-disaster condition, then experience another hurricane and have to do it all over again.”

The disaster bill also extends the period for which the government will qualify for community disaster loans and includes a waiver, requested by Mapp, of the local match for accessing federal Medicaid funds for two years. The waiver of the local Medicaid match will save the territory $142 million in scarce local funds, which can now be redeployed to other critical recovery functions.

The bill also provides $1.3 billion in emergency transportation funds to repair roads damaged by disasters while removing the $20 million cap on such funds for small territories. The Virgin Islands is expected to receive more than $30 million in emergency transportation funds during the next year. In addition, the spending package includes $14 million for the Special Supplemental Nutrition Program for Women, Infants and Children to help repair and replace equipment in WIC clinics.

Mapp praised the congressional action, commending in particular Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer for reaching agreement on the disaster funding measure and he thanked the president for signing the measure.

“This bipartisan agreement reflects congress’ recognition of the unprecedented severity and extent of the natural disasters and our country’s commitment to helping fellow Americans,” the territory’s chief executive said.

Mapp also commended Delegate Stacey Plaskett for her leadership in advocating for the territory’s recovery in the congress. The governor thanked Trump and his administration, Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, Speaker Paul Ryan, Minority Leader Nancy Pelosi, Members of the 32nd Legislature who worked and lobbied Congress and the Bloomberg Foundation.

Tax Court Rules in Favor of the U.S. Virgin Islands

In a long-awaited decision that has major ramifications for the territory’s Economic Development Commission program, the U.S. Tax Court in Washington, D.C. has rejected the arguments of the U.S. Internal Revenue Service and ruled that the federal statute of limitations applies to U.S. Virgin Islands taxpayers who file their income tax returns with the local Bureau of Internal Revenue, even if the IRS challenges the residency of the taxpayer.

“This is a huge win for the Virgin Islands Economic Development program and for all Virgin Islands taxpayers,” Gov. Kenneth E. Mapp said. “The court’s decision sends a strong message to the IRS that our EDC program is a lawful, congressionally sanctioned program that must be afforded respect and that our taxpayers are guaranteed the same due process and procedural protections that are regularly provided to taxpayers on the U.S. mainland.”

In a companion case to a landmark 2013 opinion, the full U.S. Tax Court issued a stinging rebuke to the IRS, which had asserted unlimited authority to challenge both the residency and tax credits claimed by local taxpayers participating in the territory’s EDC program. Beginning in 2004, the IRS launched an aggressive program of intrusive audits of virtually all participants in the EDC program, causing many to close their businesses and leave the Islands. The Virgin Islands Government thereafter intervened in a series of U.S. Tax Court cases to defend the EDC program and the tax sovereignty of the Virgin Islands, protect the institutional integrity of the BIR and ensure the legal rights of its taxpayers.

In 2013, the Tax Court upheld in a landmark case, Appleton v. Commissioner, that the statute of limitations applied to taxpayers who were conceded by the IRS, or adjudged by a court, to be bona fide residents of the Virgin Islands. The ruling by the full U.S. Tax Court addresses the major issue left unresolved by the Court in Appleton — whether the statute of limitations applied in cases where the IRS challenged the residency of the taxpayer.

In a 76-page ruling in Coffey v. Commissioner, 12 of the 16 tax court judges held that the statute did apply to protect local taxpayers. In the opinion of the court, Judge Mark Holmes and three other judges ruled that the summary tax information routinely shared with the IRS by the BIR was sufficient to trigger the statute of limitations. Eight other judges issued a separate concurring opinion that held that a mere good faith filing by a taxpayer who believed he qualified as a resident of the Virgin Islands was sufficient to trigger the statute. Four judges dissented, arguing that, where the IRS challenged a taxpayer’s residency, the taxpayer was required to file a return with the IRS in order to receive the protection of the statute of limitations.

Mapp said that the tax court decision would have “ripple effects far beyond the ultimate tax liability of a single taxpayer.” The governor added that in recent years the IRS had instituted hundreds of extensive and costly tax audits of individuals who participated in the territory’s EDC program for years that far exceeded the statute of limitations, putting enormous pressure on taxpayers and on the EDC program.

“Many EDC beneficiaries left the territory as a result and many individuals who were interested in relocating and investing in the U.S. Virgin Islands decided not to come,” the governor said. “The result was less investment, fewer jobs and falling tax revenues for the territory.”