Tracy Leigh Development Corporation v. Government of the Virgin Islands

GARTH, Circuit Judge

concurring in part and dissenting in part.

I agree with the majority that Tracy Leigh is not entitled to subsidies arising from the actual construction of condominiums.1 I disagree with and hence dissent from the majority to the extent that its affirmance of the District Court judgment, precludes Tracy Leigh from “ownership” subsidies.

Act No. 2062 (33 V.I.C. § 4041(3) (B))2 provided for *255two separate categories eligible for tax subsidies or exemptions: (1) ownership, and (2) actual construction. Ownership applied to (1) housing projects, (2) factories, (3) industrial plants, (4) commercial warehouses, (5) industrial parks, and (6) condominiums (as defined in Chapter 33, Title 28, Virgin Islands Code) for the occupancy of others (emphasis supplied). Actual construction applied to (1) housing projects, (2) factories, (3) industrial plants, (4) commercial warehouses, and (5) industrial parks.

The subsidies pertinent to “ownership” are real property taxes and fees (33 V.I.C. § 4061(a) (1), (3)) and a percentage of income tax liability (33 V.I.C. § 4071 (a) (2)). On the other hand, the subsidies relevant to construction activities are excise taxes on materials and equipment (33 V.I.C. § 4061(a) (2)) and a percentage of import duties and taxes paid on imported materials used in construction (33 V.I.C. § 4071(a) (1)). The relevant portions of these statutes are reprinted in the margin below.3

*256The majority opinion deals mainly with the issue of construction subsidies despite what is to me a very evident abandonment by Tracy Leigh of its claim to the excise taxes and import duty subsidies relevant to “construction”. As I understand the Complaint, Tracy Leigh presently claims subsidies for having, in the first instance, established a business (condominiums) in the Virgin Islands, and for having maintained ownership of the condominiums until it sold the first 42 units built.

The grant of tax exemption and subsidies reads in pertinent part:

“Whereas, on October 26, 1967, the Virgin Islands Industrial Incentive Board received from Tracy Leigh Development Corporation ... an application for tax exemption and subsidies pursuant to the Provisions of the Code, as aforesaid, covering The Construction and Sale to First Buyer of Condominium Units at Estate Nazareth, St. Thomas, V.I., and,
Whereas, it has been determined that the required financial investment in the business or industry was completed by the *257applicant on February 11, 1969, and that the applicant otherwise qualifies under the provisions of this title, and will promote the public interest by economic development of the Virgin Islands; and,

* ❖ *

Now, Therefore, Be It Decreed by the Governor of the Virgin Islands, that the Grantee, Tracy Leigh Development Corporation is hereby granted tax or fee exemption and subsidies, in the name of the Government of the Virgin Islands, in accordance with the provisions of the Code, as aforesaid, covering The Construction AND SALE TO FIRST BUYER OF CONDOMINIUM UNITS AT ESTATE Nazareth, St. Thomas, V.I. the said grant being for a period of ten (10) years.”

* * . ❖

While it is true that the grant does not refer in specific terms to “the establishment of a business,” nevertheless it is inconceivable to me that a grant for Construction and Sale does not have implied within it both the facts of ownership and the “establishment of a business.”

The government’s position, taken at oral argument and in its brief, is that the “ownership” portion of the grant refers only to the owner of the condominium once the condominium has been purchased from Tracy Leigh. I cannot subscribe to such an argument, for it would mean that in order to qualify for such exemptions or subsidies, an individual purchaser would have had to expend at least $75,000 in the purchase of his condominium. In addition, he would have to be regarded as having “established a business” by his purchase, even though he was the resident and occupant of the condominium unit.

If we were to adopt the appellee’s argument and construe the statutes as both the appellee and the majority would apparently have us do, it would appear that: (1) the developer, Tracy Leigh, having established a business of condominiums for sale, could not obtain a subsidy; and (2) the individual who purchased the condominium for *258residence could not obtain a subsidy. The question is then presented: why specifically include in that portion of the statute referring to the “establishment of a business/’ the term “condominium” and then advocate a construction of that statute making it impossible for any exemptions or subsidies to be afforded thereunder?

There can be no doubt but that Tracy Leigh was fully qualified under the statute and grant as an owner, and as a corporation engaged in the business of owning condominiums which it then sold. During the period when it owned such a business (which it had established and in which it had made the requisite capital investment), it is entitled to ownership subsidies and tax exemptions as granted and as claimed.

I would reverse the judgment of the District Court.

33 V.I.C. § 4041(3) (B), as amended, provided:

A person, firm, or corporation, engaged in or about to engage in an industrial or business activity in the Virgin Islands, which industrial or business activity, in the judgment of the Governor of the Virgin Islands will promote the public interest by economic development of the Virgin *255Islands, may apply for the same [tax exemption], if such person, firm, or corporation meets the following requirements:
(3) undertakes to invest in an industry or business in the Virgin Islands. .. .
(B) at least $75,000 in the establishment of a business engaged in the ownership of housing projects . . . factories, industrial plants, or commercial warehouses, industrial parks, condominium as defined in Chapter 33, Title 28 Virgin Islands Code for the occupancy of others, including the actual construction of such housing projects, factories, industrial plants or commercial warehouses, industrial parks when such construction is engaged in by the owner.
This statute, operative at all times relevant to the instant case, has since been repealed.

33 V.I.C. § 4061 provided, in part, that:

(a) Each person, firm or corporation granted a certificate of tax exemption and subsidy benefits as hereinafter provided shall be exempt for a period of 10 years from the payment of the following taxes and fees:
(1) All taxes on real property to the extent that the same is utilized in the industrial or business activity with respect to which a tax exemption certificate has been granted.
(2) All excise taxes on building materials, tools, pipes, pumps, conveyor belts or other appliances and materials necessary for use in the construction, alteration, reconstruction or extension of the physical plant, or any extension thereof.
(3) All annual or specific license fees, except liquor license fees and *256automobile license fees; Provided, however, that in the case of a person, firm or corporation engaged in other industrial or business activity for which a certificate has not been granted, the full amount of all annual'or specific license fees shall remain payable with respect to such nonexempt activity. * * *
33 V.I.C. § 4071 provided, in part, that:
(a) In addition to the foregoing benefits a person, firm or corporation granted a certificate of tax exemption and subsidy benefits as hereinafter provided shall be entitled for a period of 10 years to the following benefits, as determined in accordance with the provisions hereof:
(1) A non-taxable subsidy equal to 90% of the amount (without deduction of administrative costs of collection) of import duties and other taxes paid into the Treasury of the Virgin Islands on raw materials brought into the Virgin Islands by such person, firm, or corporation for the purpose of producing or creating an article, goods or commodity as a result of industrial or manufacturing processing.
(2) A non-taxable subsidy equal to 75% of the income tax liability paid to the Government of the Virgin Islands during the taxable year. . . . In the computation of the non-taxable subsidy in the case of any person, firm or corporation under the provisions of this subparagraph, there shall not be considered as part of the base for such subsidy the taxes paid into the Treasury of the Virgin Islands on any income of such person, firm or corporation which is derived from sources within any of the states of the United States. * * *

These statutes, operative at all times relevant to the instant case, have since been repealed.