US VIRGIN ISLANDS Trends and Developments Contributed by: Marjorie (Jorie) Roberts, Sean E. Foster, David Bornn, Lisa M. Wisehart and Duncan J.J. Kessler, Marjorie Rawls Roberts PC
of good cause. A full-time employee is someone who works at least 32 hours a week. A beneficiary must post all positions with the USVI Department of Labor (DOL) and notify the DOL when positions are filled, among other reporting requirements. At least 80% of the beneficiary’s employees must be USVI residents, unless a waiver is granted. Ben - eficiaries must purchase goods and services locally when available, make certain contributions to schol - arships and public education, and provide a plan for civic participation. Beneficiaries must also provide employee benefits and enact a management training programme. The application process requires a detailed applica - tion, including details of the beneficiary’s ownership, financial information, and a background check for beneficial owners with more than a 5% interest. Sub - mission of the application is followed by the appli - cation’s presentation at a public hearing before the EDC commissioners and a review of the application by the EDC commissioners. Since 2020, the public hearings have been held virtually and the EDC has not yet indicated when, if ever, public hearings will return to being in person. Upon approval by the EDC, benefits are available for initial periods of 20 years for investments on the islands of St. Thomas and St. John, and for 30 years on St. Croix. Beneficiaries that make an additional investment in the beneficiary business in infrastruc - ture, new construction or refurbishment during the term of their existing certificates may be entitled to extensions of their benefits upon the expiration of their certificates. Separately, a beneficiary may seek an extension of 100% of benefits for an additional ten years on the same terms. In recent years, new hotel applicants under the EDC Program have committed to constructing low-density developments, including “glamping”-style accommo - dation designed to promote environmental sustain - ability and low-impact construction. Other hotel ben - eficiaries have restored historic structures in the USVI to showcase local culture and traditions.
Hotel Development Act Program The Hotel Development Act (HDA) Program is also administered by the EDA, and was initially passed in 2011 to provide a means for financing new hotel development projects (and hotels seeking substan - tial upgrades) in the USVI. In 2019, the HDA Program was amended to provide for the development, con - struction, reconstruction and renovation of commer - cial facilities and other hotel facilities. The hotel room occupancy tax (HROT) can now be 100% utilised by developers of new hotels, or up to 50% of the HROT for existing hotels where at least 70% of the units were previously damaged – by hurricanes, for example – for the development, construction, reconstruction and renovation of the facility. The 2019 amendment also provides for the imposition of an economic recovery fee (ERF) to finance, fund or cover the costs incurred in the renovation, reconstruc - tion, construction, improvement and development of hotel properties and related facilities or infrastructure. The amount of the ERF is the difference between the percentage rate of HROT applicable at the time of the application (currently set at 12.5%) and a percent - age rate over such tax, not to exceed 7.5%, which is determined by the applicant and subject to imple - mentation protocols. The ERF can be collected and deposited into an ERF trust account for a period of 30 years, and is only available to applicants applying before 31 December 2028. Any funds remaining after completion of the approved project can be used by the developer for other expenditures for improving or enhancing the ERF project. Enterprise Zone Commission Program Businesses seeking to invest in historic preservation have additional opportunities available through the Enterprise Zone Commission (EZC) Program admin - istered by the EDA, which offers tax incentives to businesses investing in designated historic and com - mercial districts. The mandate of the EZC Program is to facilitate the investment of private resources in productive business enterprises located in severely distressed Enterprise and Commercial Zone areas on St. Croix and St. Thomas, and to provide jobs for the residents of these areas. Governor Albert Bryan Jr. expanded the areas that qualify for EZC Program ben - efits by Executive Order No. 542 to include additional
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