(a)
(1) Effective with the first fiscal year beginning after December 31, 1995, an investment alternative tax is imposed on the gross revenue of the licensee in the amount of 2.5 percent of gross revenue, as defined in section 402 of this title. The tax imposed with respect to each fiscal year shall be due within 30 days following the last day of the fiscal year concerned. No investment alternative tax shall be imposed, however, on the gross revenues received by a licensee during its first fiscal year.
(2) A licensee shall pay to the Director of the Virgin Islands Bureau of Internal Revenue on or before the 15th day of the first, fourth, seventh, and 10th months of each year as partial payment of the investment alternative tax imposed pursuant to paragraph (1) of this subsection an amount equal to 1.25% of the estimated gross revenues for the three-month period immediately preceding the first day of those months.
The moneys received shall be placed in an escrow account and shall be held until the licensee directs that the moneys be transferred to the Economic Development Bank for the purchase of bonds issued by or offered through the Economic Development Bank or pursuant to a contract for such a purchase, be made available to the licensee for a direct investment approved by the authority, or be transferred to the Casino Revenue Fund as partial payment of the investment alternative tax imposed pursuant to paragraph (1) of this subsection. Any interest derived from the moneys in the escrow account shall be paid or made available to the Casino Revenue Fund. If a licensee fails to pay the amount due or underpays by an unjustifiable amount, the Casino Control Commission shall impose a fine of 5% of the amount due or of the underpayment, as the case may be, for each month or portion thereof the licensee is in default of payment, up to 25% of the amount in default. Any fine imposed shall be paid to the Economic Development Bank and shall be used for the purposes of this chapter.(b) Each licensee shall be entitled to an investment tax credit against the tax imposed by subsection (a) of this section:
(1) for the first 10 years of a licensee's tax obligation, in an amount equal to twice the purchase price of bonds issued by the Economic Development Bank pursuant to sections 535 and 536 of this title, purchased by the licensee, or twice the amount of the investments authorized in lieu thereof, and
(2) for the remainder of a licensee's tax obligation, in an amount equal to twice the purchase price of bonds issued by the Economic Development Bank pursuant to sections 535 and 536 of this title, purchased by the licensee, or twice the amount of the investments authorized in lieu thereof, and twice the amount of investments made by a licensee in other approved eligible investments made pursuant to section 546 of this title. The Economic Development Bank shall have the power to enter into a contract or contracts with a licensee pursuant to which the Economic Development Bank agrees to issue and sell bonds to the licensee, and the licensee agrees to purchase the bonds issued by or offered through the Economic Development Bank, in annual purchase price amounts as will constitute a credit against at least 50% of the tax to become due in any future year or years. The contract may contain those terms and conditions relating to the terms of the bonds and to the issuance and sale of the bonds to the licensee as the Economic Development Bank shall deem necessary or desirable. The contract shall not be deemed to be in violation of section 463 of this title. After the first 10 years of a licensee's investment alternative tax obligation, a licensee will have the option of entering into a contract with the Economic Development Bank to have its tax credit comprised of direct investments in approved eligible projects. These direct investments shall not comprise more than 50% of a licensee's eligible tax credit in any one year. The entering of a contract pursuant to this section shall be sufficient to entitle a licensee to an investment tax credit for the appropriate tax year.
(c) A contract entered into between a licensee and the Economic Development Bank may provide for a deferral of payment for and delivery of bonds required to be purchased and for a deferral from making approved eligible investments in any year, but no deferral shall occur more than two years consecutively. A deferral of payment for any bonds required to be purchased by a licensee and a deferral from making eligible investments may be granted by the Economic Development Bank only upon a determination by the Casino Control Commission that purchase of these bonds or making approved eligible investments would cause extreme financial hardship to the licensee and a determination by the Economic Development Bank that the deferral of the payment would not violate any covenant or agreement or impair any financial obligation of the Economic Development Bank.
(d) The license of any licensee which has defaulted in its obligation to make any purchase of bonds or investment in any approved eligible project under a contract entered into pursuant to subsection (b) of this section for a period of 90 days may be suspended by the Casino Control Commission until that purchase is made or deferred in accordance with subsection (b) of this section, or a fine or other penalty may be imposed upon the licensee by the Commission. If the Casino Control Commission elects not to suspend the license of a licensee after the licensee has first defaulted in its obligation but instead imposes some lesser penalty and the licensee continues to be in default of its obligation after a period of 30 additional days and after any additional 30-day period, the Commission may impose another fine or penalty upon the licensee, which may include suspension of that licensee's license. The fine shall be 5% of the amount of the obligation owed for each month or portion thereof a licensee is in default, up to 25% of that obligation; shall be paid to the Economic Development; and shall be used for the purposes of this chapter.
(e) A contract entered into by a licensee and the Economic Development Bank pursuant to subsection (b) of this section may provide that after the first 10 years of a licensee's investment alternative tax obligation imposed by subsection (a) of this section, the Economic Development Bank may repurchase bonds previously sold to the licensee, which were issued after the 10th year of a licensee's investment alternative tax obligation, by the Economic Development Bank, if the Economic Development Bank determines that the repurchase will not violate any agreement or covenant or impair any financial obligation of the Economic Development Bank and that the licensee will reinvest the proceeds of the resale in an eligible project approved by the Economic Development Bank.
(f)
(1) During the 25 years a licensee is obligated to pay an investment alternative tax pursuant to subsection (k) of this section, 60% of the total of the proceeds of all bonds purchased by a licensee from or through the Economic Development Bank and shall be devoted to funding of the Economic Development Bank created under Title 29, chapter 14, section 901 et. seq. of the Virgin Islands Code, and 40% of the total shall be devoted to funding the Economic Development Bank. Within 36 months from October 25, 1995, the Economic Development Bank shall determine the allocation of projected available moneys to the United States Virgin Islands Government, giving priority to the housing needs of lower and middle income residents of St. Croix. Government agencies and departments shall present to the Economic Development Bank comprehensive plans or projects for which the monies shall be used. The Economic Development Bank shall make a determination of eligibility of the plan or project within a reasonable amount of time not to exceed one year from the submittal of the application. If the Economic Development Bank makes a positive determination of any plan or project, whose total cost exceeds the amount allocated to that project for the first five years of the receipt of funds by the Economic Development Bank shall make available sufficient funds in subsequent years necessary to complete those plans or projects, or to complete that portion of the plan or project originally agreed to be funded through the Economic Development Bank in the years following the fifth year of the receipt of funds by the government.
(2) For the purposes of this chapter, “low income families” means families whose income does not exceed 50% of the median income of the area, with adjustments for smaller and larger families. “Moderate income families” means families whose income does not exceed 80% and is not less than 50% of the median income for the area with adjustments for smaller and larger families. “Median range income families” means families whose income does not exceed 120% and is not less than 80% of the median income for the area, with adjustments for smaller and larger families. “Middle income families” means families whose income does not exceed 150% and not less than 120% of the median income for the area, with adjustments for smaller and larger families. “Median income” means and income defined as median within the Virgin Islands by the United States Department of Housing and Urban Development.
(3) Notwithstanding any other law or section to the contrary, particularly this subsection regarding the waiver of the required percentages for housing in the Virgin Islands, subsection (i) of section 535, and sections 547, 548, 549, 550, and 552 of this title, nothing shall be implemented or waived by the Economic Development Bank which would reduce, impair, or prevent the fulfillment of the priorities established and contained in this subsection.
(g) If a person is a licensee with regard to more than one approved hotel pursuant to section 434 of this title, the person shall separately account for the gross revenues, the investment alternative tax obligations, and the investments for a tax credit against the investment alternative tax for each approved hotel, and the tax obligations of the licensee under this section shall be determined separately for each approved hotel. The licensee may apportion investments between its approved hotels; provided that no amount of investment shall be credited more than once. If a licensee receives the prior approval of the Economic Development Bank, the licensee may make eligible investments in excess of the investments necessary to receive a tax credit against the investment alternative tax for a given calendar year, and the licensee may carry forward this excess investment and have it credited to its next investment alternative tax obligation. If the Economic Development Bank approves of such excess investment and approves the carry forward of this excess investment, and a licensee elects to purchase bonds of the Economic Development Bank or makes direct investment necessary to receive a tax credit against the investment alternative tax for its current obligation, the licensee shall be entitled to a reduction of the amount of investments necessary in future years, which amount shall be determined annually by the Economic Development Bank, taking into account a current market discount rate from the date of the purchase or investment to the date the purchase or investment would have been required to be made.
(h) Each casino licensee shall prepare and file, in a form prescribed by the Economic Development Bank, an annual return reporting that financial information as shall be deemed necessary by the Economic Development Bank to carry out the provisions of this chapter. This return shall be filed with the Economic Development Bank and the Casino Control Commission on or before April 30 following the calendar year on which the return is based. The Casino Control Commission shall verify to the Economic Development Bank the information contained in the report, to the fullest extent possible. Nothing in this subsection shall be deemed to affect the due dates for making any investment or paying any tax under this section.
(i) Any purchase by a licensee of bonds issued by or offered through the Economic Development Bank pursuant to sections 535 and 536 of this title and subsection (b) of this section and all approved eligible investments made by a licensee pursuant to section 535 of this title and subsection (b) of this section are to be considered investments and not taxes owed or grants to the Government or any political subdivision thereof. As such, a licensee shall have the possibility of the return of principal and a return on the capital invested as with other investment. Investors in the bonds issued by or offered through the Economic Development Bank shall be provided with an opinion from a recognized financial rating agency or a financial advisory firm with national standing that each loan of bond proceeds by the Economic Development Bank has the minimum characteristics of an investment, in that a degree of assurance exists that interest and principal payments can be made and other terms of the proposed investment be maintained over the period of the investment, and that the loan of the bond proceeds would qualify for a bond rating of “C” or better. If an opinion cannot be obtained from a recognized financial rating agency or a financial advisory firm with national standing, an opinion shall be obtained from an expert financial analyst with national standing, selected and hired by the Economic Development Bank. In order to achieve a balanced portfolio, assure the viability of the authority and the projects, facilities and programs undertaken pursuant to this chapter, no more than 25% of the total investments made by or through the Economic Development Bank with the proceeds of bonds generated in each year shall be investments which would qualify for a bond rating of “C”, unless all holders of obligations in each year agree to waive the 25% limit for that year. Nothing herein shall be interpreted as limiting the Economic Development Bank from taking any steps it deems appropriate to protect the characteristics of its investment in projects or any other investments from not being real investments with a prospect for the return of principal and a return on the capital invested. Anything contained in this section shall not be considered a guarantee by the Government or any political subdivision thereof of any return of principal or interest, but any purchase by a licensee of bonds or approved eligible investments made by a licensee pursuant to this chapter shall be at the risk of the licensee. A licensee or the licensees purchasing an issue of bonds by the Economic Development Bank in any given year may arrange, at their option, for those bonds or the investments, made by or through the Economic Development Bank with the proceeds of those bonds, to be insured. The cost of any such insurance purchased by a licensee or licensees shall be paid by the licensee or licensees desiring such insurance.
(j) The Economic Development Bank shall promulgate rules and regulations deemed necessary to carry out the purposes of this section, other than subsection (a)(1) of this section. The Virgin Islands Bureau of Internal Revenue shall promulgate rules and regulations deemed necessary to carry out the purposes of subsection (a)(1).
(k) The obligation of a licensee to pay an investment alternative tax pursuant to subsection (a) of this section shall end for each licensed facility operated by the licensee 25 years after any investment alternative tax obligation is first incurred in connection with each licensed facility operated by the licensee, unless extended in connection with a deferral granted by the Economic Development Bank pursuant to subsection (c) of this section.