§ 1308. Hotel Development Trust Funds

(a) The Authority shall establish for each approved project a separate Trust Fund, which for the purposes of this chapter shall also be known as “the Project’s Hotel Development Trust Fund” or the “Project’s Fund”. Monies allocated to and deposited into the Project’s Fund from the hotel occupancy tax revenues and casino tax revenues generated from the approved Project must be made available as revenue to be utilized towards reducing the Hotel Development Notes incurred for the development of the approved Project. Existing hotel occupancy taxes and casino taxes may not be used to fund the Hotel Development Trust Fund.

(b) The hotel occupancy taxes, pursuant to 33 V.I.C. §  54 and the casino revenue tax pursuant to 32 V.I.C. §§ 514–515 generated from the approved Project must be deposited into the Project’s Hotel Development Trust Fund. For the purposes of this section, notwithstanding the provisions of 32 V.I.C. §§ 514–515, until the outstanding Hotel Development Notes with respect to a Project have been paid, the maximum casino tax rate may be increased to 35%. Once the debt is retired the casino tax shall return to 12% according to the provisions of title 32 V.I.C. § 515.

• (1) During the period that any hotel occupancy taxes or casino taxes are applied towards the payment of any Hotel Development Note with respect to a Project, not less than 80% of the persons employed in the operation, maintenance, and management of the Project facilities must be legal residents of the Virgin Islands for not less than 5 years prior to employment, or a graduate of a Virgin Islands high school; provided that upon application for a waiver from the Department of Labor:

  • (A) The Government, acting through the Department of Labor certifies that legal residents as defined under this chapter, with the necessary ability to perform the services required and in numbers sufficient to meet the needs for personnel for such employment are not available within the Virgin Islands for employment;

  • (B) The Department of Labor shall proceed to verify the facts stated in the application and unless it is determined that such application is without factual basis, promptly after the filing of such application, authorize the hotel operator to employ a greater percentage of non Virgin Islands residents for such period or periods that such non-availability of personnel exists;

  • (C) If the Government has not notified the hotel operator in writing within 14 days after the filing of the hotel operator’s application that it has determined such application to be without factual basis, stating its reasons for such determination, then the hotel operator’s application must be granted, subject only to the right of the Government to proceed to revoke the application as set forth in paragraph (2).

• (2) Any authorization by the Government pursuant to subparagraphs (A) or (B) of paragragh (1) may not be revoked except upon 30 days’ notice to the hotel operator and after opportunity for the hotel operator to appear and be heard and present evidence with respect to the revocation, which opportunity may not exceed 60 days after the date of the notice.

• (3) Notwithstanding any certification in effect by the Government, the Government shall cooperate with the hotel operator in an effort to make available for employment by the hotel operator and its affiliates a sufficient number of persons with appropriate aptitude, training and experience regardless of their nationality, domicile, residence or place of origin.

• (4) In constructing hotel facilities, the hotel operators shall give preference in employment to residents of the Virgin Islands.

• (5) Penalties. Any hotel operator found in violation of this subsection, after notice to the hotel operator and after opportunity for the hotel operator to appear and be heard and present evidence with respect to such violation, shall be have their tax subsidy decreased by 10% each month until the defect is cured. The decrease in tax subsidy shall be cumulative and shall be held in the Hotel Development trust fund until said defect is cured. The funds held may be released by the Authority upon notification from the Department of Labor that the hotel operator has complied with this section.

(c) The Authority may not expend, commit to expend or pledge an interest in any of the revenues held in the Project’s Hotel Development Trust Fund.

(d) The dedications and contributions of the hotel room tax and casino tax revenues may not impair the existing obligations of the Government of the Virgin Islands, the PFA or the Authority and may not include tax revenues that would violate the revised Organic Act of the Virgin Islands.

(e) Upon adoption of a Resolution by the Authority or the Notes Issuer, as applicable, following ratification of the Agreement by the Governor or the PFA, the Director of the Internal Revenue Bureau, as applicable, shall transfer to the Note Issuer for deposit in the Project’s Hotel Development Trust Fund or directly to the trustee of the Hotel Development Notes for deposit into the funds and accounts held by the trustee for the benefit of the holders, all tax revenues related to such Hotel Development Notes until the certification by the Authority, the Notes Issuer, or such trustee that all development costs to be paid from the Hotel Development Trust Fund including the Hotel Development Notes have been paid in full.

(f) While Hotel Development Notes remain outstanding, the tax rates may not be reduced, if the reduction would impair the ability to pay any costs to which the tax revenues have been pledged or otherwise committed by the Authority of the Notes Issuer, as applicable, including the timely payments of debt service on the Hotel Development Notes.

(g) Hotel Development Notes of every issue may, by their terms, be payable solely out of the tax revenues pledged to and received in connection with an approved Project and deposited to the project’s Hotel Development Trust Fund. The lien created to secure the Hotel Development Notes may not attach to any other assets of the Authority or the Government or the PFA and are special limited obligations of the Authority, the Government, the PFA or the Developer, as applicable payable solely from the pledged tax revenues of the Project. The holders of the Hotel Development Notes have no right to require the imposition of any tax or establishment of any rate of taxation in order to obtain the amounts necessary to pay and retire such Hotel Development Notes.