Every U.S. state and many local governments have economic development agencies dedicated to assisting new and established businesses start, grow, and succeed.
With one of my prior companies, I received financial support from the Iowa Department of Economic Development. The funding provided the means for that company to acquire patented technology. This technology, if commercialized, would make for an efficient medical device when detecting early signs of visual disorders in young, preverbal, and difficult-to-screen children. After completing all of the research and development, we commercialized the technology by manufacturing and distributing literally thousands of the most widely-used vision-screening devices in history.
Among my current interests are finding solutions that can provide developing countries with clean water for drinking and sustainable food production. I’ve invested in a company where water can be produced via a renewable energy source known as Ocean Thermal Energy Conversion, or OTEC. So, when researching economic development incentives for the company, it made sense to look at countries where this technology can both work and be of immense benefit.
One area where OTEC can be deployed is of particular interest to me. The U.S. Virgin Islands (USVI) is an unincorporated organized territory of the United States of America between the Caribbean Sea and the North Atlantic Ocean, east of Puerto Rico. The USVI offers conditions that would be near perfect to produce water and renewable power using the proven, environmentally-benign OTEC technology.
In March 2014, my Company Ocean Thermal Energy Corporation (OTE) signed an agreement with the USVI to conduct a feasibility study. The objective of the feasibility study is to understand if the territory can sustain an OTEC power plant which uses the temperature fluctuations of the ocean around the USVI coastline to generate clean water and renewable energy without the use of fossil fuels. Dr. Ted Johnson is Head of OTEC Programs at OTE and has said the study would look at a number of options, including a land-based plant – with pipes running down into the deep, cold water – or a floating plant. “The USVI is just rippling with energy; it’s all around you,” Dr. Johnson said.
After 18 months of studying these opportunities under the able direction of Dr. Johnson, OTE is now ready to provide the results of the feasibility study to the USVI Senate and the central government.
Heru Ofori-Atta, OTE’s USVI resident Senior Vice President for Caribbean and Africa projects, has done a wonderful job in coordinating my many interests in the USVI. In addition to supporting the feasibility study, he has led our discussions for potential USVI economic development incentives for OTE.
As OTE looked at opportunities in the USVI, we met with Dr. Gillian Marcelle, the new executive director of the University of the Virgin Islands Research and Technology Park (RTPark). Dr. Marcelle describes the RTPark as, “an economic development agency with a unique positioning – designed as a partnership between government, academia, and the private sector – and charged with fostering and facilitating economic diversification in a specialist area.”
The RTPark and the USVI enjoy a mutually beneficial partnership with the companies that bring their business to the Territory. In addition to the diverse economic advantages for the USVI, and the technological advantages for growing, knowledge-based businesses, RTPark also offers some attractive economic incentives. The RTPark attracts investment in knowledge-based economic activity and serves as an incubator for early stage firms. It also provides advisory expertise to the USVI’s political leadership.
Tax incentives for qualified businesses in the USVI are available through either the RTPark or the Economic Development Commission (EDC). Businesses are eligible for a reduction of up to 90% of personal and corporate income taxes and up to a 100% exemption on excise, business property, and gross receipt taxes.
Other benefits for businesses in the USVI can include 100% exemption on business property tax. Goods manufactured in the USVI may gain duty-free, quota-free entry into the United States. The product must be assembled from 70% or less of dutiable foreign materials and must be substantially transformed in the USVI. The 30% value-added requirement may include such soft components as profit and overhead costs. Some USVI products with as little as 10% direct processing cost can qualify for duty-free, quota-free entry into the United States and be labeled as “Made in the USA.”
Another positive aspect of the USVI is that they enjoy the protection of the U.S. flag and U.S. courts. The USVI describe these topics and economic development incentives on the EDC website (see ‘Why the USVI’ and the ‘EDC program’).
If you are considering the USVI as a place to do business, my advice is check out both the RTPark and EDC. As always, seek the professional advice of a competent attorney who is knowledgeable and experienced, such as USVI-based Marjorie Roberts, Esq.
With its pristine beaches, wonderful sunshine, great duty-free shopping, and intriguing historic monuments, the USVI may be more than just an ideal Caribbean destination for tourists: it could also be the ideal location for doing business and maximizing a company’s profits.