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Black Business Groups Urge Support Of U.S. Virgin Islands Economic Development Initiatives

African-American Business Groups Back USVI's Long-Term Partnerships Encouraged by Congress to Generate Business Growth

WASHINGTON,  -- The National Black Chamber of Commerce (NBCC) and its Floridachapter today sent a letter to Senate Majority Leader Harry Reid calling for him to join the African-American business community in support of the U.S. Virgin Islands' (USVI) public-private partnerships with the territory's rum producers.

"These agreements with Diageo and Fortune Brands significantly help the economy of this African-American-majority U.S. territory at a time of great need, while simultaneously keeping these companies on American soil and preserving their jobs and economic impact," NBCC President Harry Alford and Florida Black Chamber of Commerce President Eugene Franklinwrote in the letter to Senator Reid that announced their backing of the USVI.

The USVI's partnerships use a decades-old tool provided by Congress, the rum excise tax cover-over program, to generate revenue for economic development and infrastructure needs and to strengthen the United States' rum industry. The agreements will invest in clean, environmentally sustainable rum production facilities, stabilize the USVI government's finances, and provide a long-term foundation for local business activity. Several hundred million dollars of bonds have already been issued by the USVI government under the agreements, with construction now underway.

"Times are tough for everyone. When you see a governor create innovative partnerships that help his residents, improve the local business climate and strengthen the fiscal health of the nation's only majority-black territory, you realize that economic recovery is possible," commented Alford. "The NBCC stands behind these deals that grow the U.S. economy the right way and benefit African-American small businesses and employees."

In the letter, the Black Chambers of Commerce expressed concern about legislation promoted by Puerto Rican officials seeking to overturn the USVI's agreements. Puerto Rico has launched a misinformation campaign to undermine the USVI's long-term development strategy. Puerto Rico's anti-USVI legislation was criticized by the independent Congressional Research Service (CRS) as counter to the cover-over program's intent and damaging to both the USVI andPuerto Rico. CRS also reaffirmed that USVI has full control of its cover-over funds, which are considered local revenue.

"The USVI's plan enables it to recover from the global recession and thrive in the future using the tools Congress provided," Franklin said. "The territory deserves Congress' support for its proactive vision to improve its economy using the rum cover-over program. Bonds have been issued and construction has begun in the USVI, so this retroactive anti-USVI legislation cannot move forward."

Full text of the letter to Senator Reid follows:

February 17, 2010

The Honorable Harry Reid

Majority Leader

United States Senate

522 Hart Senate Office Building

Washington, D.C. 20510

Dear Majority Leader Reid:

On behalf of the United States' African-American business community, we are writing about a public policy matter of great importance to us and those we represent. The National Black Chamber of Commerce and the Florida Black Chamber of Commerce encourage you to support the public-private partnerships created by the U.S. Virgin Islands (USVI) under the rum excise tax cover-over economic development program. These agreements with Diageo and Fortune Brands significantly help the economy of this African-American-majority U.S. territory at a time of great need, while simultaneously keeping these companies on American soil and preserving their jobs and economic impact.

Under your leadership, the Senate is pursuing legislation that rebuilds our economy through better collaboration with and support for companies that benefit the U.S. economy and hire American workers. The USVI's partnerships with Diageo and Fortune Brands do just that, by locking in exclusive production for 30 years in the United States of three of the top-five selling rums. The territory's investments will transform the Caribbean rum industry, build modern, environmentally sustainable facilities, and generate substantial revenue returns as rum production grows each year. Governor John deJongh's strategy will create a stable foundation for the territory's economy, with billions of dollars in the coming decades for the USVI government to reinvest in its economy and residents. These agreements also ensure America's rum industry stays ahead of growing competition in foreign countries where environmental standards and labor costs and protections are lower.

The Congressional Research Service (CRS) recently reported that Congress created the cover-over program to generate economic growth in the territories. CRS reaffirmed that specific use of revenue is to be determined by the territories' governments, with no restrictions placed on local leaders. Finally, CRS stated that excise taxes on rum were implemented as equalization taxes on the territories' rum producers, so it is not considered a tax on U.S. consumers and is not intended to raise revenue for the U.S. Treasury. The USVI's long-term agreements follow Congress' intent and instructions.

Construction in the USVI is already underway, improvements to USVI infrastructure like schools and roads are planned, the American economy is growing because of these agreements, and U.S. jobs have been and continue to be created. In addition, hundreds of millions of dollars of bonds have been issued by the USVI, following the explicit instruction in the original cover-over legislation that bonds may be collateralized with future cover-over revenue.

We are well aware that Puerto Rico and its allies are working in retaliation against the USVI's partnerships. Legislation proposed in the House of Representatives by Puerto Rico Resident Commissioner Pedro Pierluisi (H.R. 2122) attempts to undo these agreements out of spite. Puerto Rico lost a business due to its own failure to provide competitive market terms. That does not justify the vitriolic and reprehensible attacks by Puerto Rico's leaders.

Moreover, CRS reported that this legislation would inflict undue harm on both the USVI and Puerto Rico. Federal efforts to block the USVI's partnerships send a distressing message about Congress' willingness to look out for all the territories' economic future. Congressional involvement in these local investment decisions is not needed and sets a dangerous precedent. Should the proposed anti-USVI legislation be enacted, any state with no stake in the business decisions of another U.S. jurisdiction could attempt to bring any public-private partnership under federal scrutiny. This type of intervention creates uncertainty and risk in operating in the United States, a troubling possibility as we try to keep Americans at work and strengthen the health of our businesses.

The National Black Chamber of Commerce, in partnership with our Florida chapter, empowers African-American companies and helps them find opportunities that will make them stronger in the future. The USVI has established strategic partnerships that set the territory on the path of immediate recovery and long-term, sustainable growth, while also benefiting the United States by creating new economic activity. We are proud to recognize USVI Governor John deJongh as an innovative African-American leader who is finding solutions to the global economic crisis. We hope you will join us in supporting the USVI's public-private partnerships.


Harry C. Alford


National Black Chamber of Commerce®

Eugene Franklin

President and CEO

Florida Black Chamber of Commerce


SOURCE National Black Chamber of Commerce

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