- March 13, 2019 at 10:32 pm #2322
The U.S. Virgin Islands finds itself at a cross-road in its development trajectory, a space in time created by the convergence of dire economic circumstances.
[See the full post at: https://underthemarkets.com/vision-and-planning/]March 30, 2019 at 4:17 pm #2353
A reader shared the following comment on economic development in the Territory:
“To me basic community development strategies would get economic activity in a higher gear. The government should immediately offer unused derelict properties, especially in districts with historic significance, for lease at terms and time frames attractive to the private sector. Concurrently a targeted outreach to property owners in distressed residential neighborhoods for the rehabilitation of affordable housing by offering a loan program where repayment is due upon occupancy of the rehabilitated units. This kind of initiative creates community involvement and adds no cost to the general fund.”
I will not comment on the affordable housing suggestion, as the Virgin Islands Housing Finance Authority has indicated that its housing program addresses a range of needs. As such, I will focus on the issue of government leasing “unused derelict properties”.
I have no problem with the idea of government leasing derelict properties to private interests. However, even with the damage to commercial units from the hurricanes in 2017, there is still commercial space for rent in the urban spaces. Many of the distressed and derelict properties in the areas of “historic significance” are privately owned, and thus can be rehabilitated by private interests without the intervention of the government. I would question the demand for derelict properties, even in circumstances where the government provides incentives.
The Enterprise Zone Program, operated by the United States Virgin Islands Economic Development Authority, provides tax credits and economic development program benefits for the rehabilitation of properties in four enterprise zones. The program is meant to build the economic viability of areas designated as depressed. Before embarking on a similar or expanded program, it would be useful to determine the extent to which the rehabilitation tax credit has generated economic activity.
Clearly lease of government properties to the private sector would have to be on terms attractive to the private sector. That implies a net positive financial benefit to the private entity. Is there to be a net financial benefit to the government from the lease agreements? If such leases do not generate revenues for the government, are there other public benefits that can be derived from the lease agreements?
The foregoing suggests that there is a need to evaluate programs that have been operational for more than a decade. It is important to ascertain whether the programs are producing the public benefits initially intended, whether the underlying assumptions are still valid, and whether it is necessary to make program improvements in order to sustain the delivery of economic and social benefits to the wider community.
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