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U.S. VIRGIN ISLANDS ECONOMIC DEVELOPMENT AUTHORITY 1 TESTIMONY BY WAYNE L. BIGGS, JR. 2 FISCAL YEAR 2019 BUGET HEARING 3 COMMITTEE ON FINANCE 4 LEGISLATURE OF THE VIRGIN ISLANDS 5 ST. THOMAS, VIRGIN ISLANDS 6 THURSDAY, JULY 26, 2018 7 11:00 A.M. 8 9 Introduction 10 11 Good morning, Chairman Vialet, members of the Committee on Finance, other 12 members of the 32nd Legislature, the U.S. Virgin Islands Economic Development 13 Authority team, ladies and gentlemen in the Chamber, and the viewing and 14 listening audience. I am Wayne Biggs, Jr., Acting Chief Executive Officer. With me 15 today are Ernest Halliday, Director of Administration and Finance and Tracy Lynch 16 Bhola, Esquire, General Counsel. Other members of the Authority’s management 17 and staff are also here in the Chamber with me today. These team members 18 include: Monique Samuel, Acting Director of Lending; Margarita Greenidge- 19 Benjamin, Director of Applications; Nadine Marchena Kean, Director of the 20 Enterprise Zone Commission; Mark Finch, Industrial Park Superintendent; Shanell 21 Petersen, Director of Marketing; Wendy Wheeler, Human Resources Manager; 22 Cusa Holloway, Incubator Program Manager; Kelly Thompson-Webbe, Budget and 23 Financial Analyst; Celina Morris, Executive Assistant; and Semele George, 24 Marketing/PR Specialist. Not present with us today is Claude Gerard, Director of 25 Compliance. If necessary, they are available to respond to any inquiries you may 26 have. 27 28 USVIEDA Organizational Structure 29 30 The U.S. Virgin Islands Economic Development Authority (“USVIEDA” or the 31 “Authority”) is an umbrella entity created to assume, integrate, and unify the 32 functions of the U.S. Virgin Islands Economic Development Bank (EDB), the Virgin 33 Islands Economic Development Commission (EDC), the Virgin Islands Enterprise 34 Zone Commission (EZC), and the Virgin Islands Economic Development Park 35 Corporation (EDPC). The Authority is governed under one executive board 36 comprised of seven (7) members to achieve maximum efficiency of operations, 37 avoid duplication of services, reduce cost of operations, and implement 38 comprehensive programs for the economic development of the Territory. The 39 entities maintain distinct identities and functions independently of one another, 40 only to the extent necessary to execute their specific mandates, but in all other 41 respects operate in an integrated fashion. 42 43 The administrative departments within the USVIEDA provide support to the four 44 (4) main pillars on which the Authority is built. The administrative departments 45 include: accounting and finance, legal, human resources, marketing and the 46 executive offices of the Chief Executive Officer and the Assistant Chief Executive 47 Officer. 48 49 Selected Accomplishments by Departments and Divisions-Fiscal Year 2018 50 51 Despite having a 12.5 percent reduction this fiscal year and the devastation 52 caused by two (2) Category 5 Hurricanes, the USVIEDA was able to accomplish a 53 significant number of its planned objectives within each department and division 54 during the first nine (9) months of this fiscal year (October 1, 2017 – June 30, 55 2018). 56 57 Selected Accomplishments of the Administrative Departments 58  Completed Fiscal Year 2017 independent financial audit, which resulted in 59 an unqualified audit opinion; 60  Completed the initial draft of rules and regulations for the Hotel 61 Development Act, with additional drafting now underway after the passage 62 of Act Nos. 8030 and 8056 by this Legislative body on April 4, 2018 and June 63 14, 2018, respectively; 64  Reviewed and proposed statutory amendments to accomplish the 65 mandates of the Authority; 66  Completed twelve (12) background investigations of EDC Beneficiaries; 67  Provided general and specialized training to all staff members on-site and 68 online; and 69  Featured the USVIEDA in numerous national and industry publications. 70 71 Selected Accomplishments of the Four (4) Pillars 72 Economic Development Bank 73  Reduced the total loan portfolio delinquency rate from 47% to 33%; 74  Surveyed the small business community in both districts to determine their 75 pre and post disaster needs; 76  Collaborated with the VI Energy Office to commence Phase II of the Sun 77 Power Loan Program; 78  Repossessed three (3) properties used as collateral for delinquent loans and 79 sold two (2) of those properties; 80  Referred ten (10) incubator clients to the Economic Development Bank to 81 secure financing for their businesses; 82 Economic Development Commission 83  Reviewed and analyzed seven (7) cases for public hearing including five (5) 84 new applications for economic development benefits; 85  Reviewed and presented eighteen (18) applications/petitions to the EDC 86 Governing Board in consideration of granting tax incentives and other 87 amendments to beneficiary certificates; 88  Presented nineteen (19) Beneficiary Petitions to the EDC Governing Board 89 for decisions; 90  Completed eighteen (18) beneficiary compliance reviews; 91  Performed nineteen (19) site visits to companies receiving EDC benefits; 92  Conducted damaged assessments of all major hotels in the EDC Program; 93 Enterprise Zone Commission 94  Conducted a rapid assessment survey of 250 hurricane damaged buildings 95 within the Enterprise Zones; 96  Held the 4th annual Business-to-Business event focusing on Bed and 97 Breakfast entities within the Territory; 98  Hosted the Enterprise Zone Commission Beneficiary and Stakeholder 99 Seminars in collaboration with the U.S. Small Business Administration and 100 the Federal Emergency Management Agency focusing on Client Disaster 101 Recovery; 102 103 Economic Development Park Corporation 104  Completed a micro-grid audit at the William D. Roebuck Industrial Park and 105 obtained a proposal for a solar photovoltaic-based micro-grid facility; 106  Increased tenant occupancy at both industrial parks from 75% to 89%; 107 Economic Development Authority 108  Applied for $5M in grant funding for a variety of projects; and 109  In addition to working with local agencies and stakeholders, we worked in 110 collaboration with the International Economic Development Council (IEDC), 111 the Minority Business Development Agency (MBDA), the Federal 112 Emergency Management Agency (FEMA), the U.S. Economic Development 113 Administration (USEDA), the U.S. Small Business Administration (SBA), the 114 U.S. Department of Agriculture-Rural Development (USDOA), the U.S. 115 Department of Health and Human Services (HHS), the U.S. Environmental 116 Protection Agency (EPA), and the U.S. Department of Interior (DOI) for 117 economic resilience. 118 119 Fiscal Year 2019 Budget Request 120 121 Based on information received from the Office of Management and Budget 122 (OMB), the Authority is projected to receive only $4,797,507 of its $5,482,865 123 Fiscal Year 2018 appropriation, a shortfall of $685,358 or 12.5%. 124 125 The USVIEDA’s Fiscal Year 2019 budget request is $5,882,865, which is the same 126 level of funding requested in Fiscal Year 2018. 127 128 The $5,882,865 request is comprised of the following amounts: 129 130 General Operations $5,482,865 131 Supplemental Marketing Funds $300,000 132 Supplemental Incubator Funds $100,000 133 Total $5,882,865 134 135 You may recall that in Fiscal Year 2017, an additional $500,000 was appropriated 136 for marketing USVIEDA programs. Of that amount, the USVIEDA received 137 $485,000 or 85% of the allotted amount. The Authority received no supplemental 138 marketing funding in Fiscal Year 2018. Therefore, we are requesting $300,000 in 139 supplemental marketing funds for Fiscal Year 2019, which is essential to 140 continuing our marketing activities both locally and abroad. 141 142 You may also recall that in Fiscal Year 2017, an additional $150,000 was 143 appropriated, but not allotted to support the Incubator Program and, as such, the 144 services were drastically reduced. In Fiscal Year 2018, no funds were 145 appropriated for the Incubator Program and services were further reduced. We 146 fully understand that small businesses are the backbone of the economy, thus we 147 are requesting $100,000 to partially restore the Incubator funding to build on past 148 successes of the Program. 149 150 We understand that a budget is a plan, and we intend to use the funding that we 151 are requesting to further the goals of the organization and accomplish meaningful 152 objectives in this coming year. 153 Some of these objectives include: 154 155 1. In collaboration with public, private and non-profit organizations, work to 156 develop a 20-year comprehensive economic development plan for the 157 Territory; 158 2. Form public/private partnerships to attract new investments in the 159 Territory using New Market Tax Credits, Opportunity Zones, and Tax 160 Incremental Financing (TIF) funding mechanisms; 161 3. Begin the modernization of the economic development parks to attract a 162 wide range of tenants; 163 4. Increase promotion of the USVIEDA’s performance bonding program to 164 help small contractors compete for local and federal jobs; 165 5. Continue to work with the local banks by providing guaranty support for 166 borrowers seeking business loans; 167 6. Continue to improve and update technology to be more efficient and 168 effective in carrying out the mandates of the Authority; and 169 7. Increase external investment into the Territory to continue diversifying the 170 economy. 171 172 The hurricanes that devastated our Territory just a couple of months ago have 173 provided us with an opportunity to rebuild a better infrastructure and economy, 174 and as we rebuild, residents must play a vital role in this effort. Our aim, 175 therefore, is to help create an economic environment in which local businesses 176 can develop and flourish, while at the same time attract new businesses to 177 Territory with the goal of improving the standard of living for our residents. It is 178 our hope that the objectives outlined in this budget for FY 2019 will continue us 179 on that path. 180 181 Thank you for your continuous support. We are available to answer your 182 questions. 183