Plan allows a Public Finance Authority subsidiary to issue tax-exempt bonds; developers, not taxpayers, bear all obligations; public ownership preserved after the bonds are repaid.
U.S. VIRGIN ISLANDS — Governor Albert Bryan Jr. today announced proposed legislation to amend the Hotel Development Act to allow a wholly owned subsidiary of the Virgin Islands Public Finance Authority (PFA) to issue tax-exempt bonds for hotel projects. The measure lowers borrowing costs for hotel developers while creating no public debt or taxpayer liability.
The purpose is to pair existing program incentives with a proven, lower-cost financing tool. This approach helps move hotel projects from planning to construction, supports reinvestment in aging properties, and makes the territory more competitive for group, leisure, and cruise-adjacent markets without shifting financial risk to the public.
“This is a smart, no-debt tool,” Governor Bryan said. “We cut financing costs for private capital, protect taxpayers from liability, and secure a clear path for long-term ownership. That’s how you make hospitality investment work for Virgin Islanders.”
Application to Frenchman’s Reef
Under the proposal, the current owner of Frenchman’s Reef may use tax-exempt bonds to refinance and recoup its initial private investment in the property’s redevelopment by accessing lower, tax-exempt interest rates. This is comparable to industrial development bonds widely used across the United States.
The measure does not authorize or contemplate a government purchase, and the Government of the Virgin Islands will not run hotel operations. Davidson Hospitality is the existing manager of the resorts, and that arrangement does not change.
All bond payments and liabilities are 100% the owner’s responsibility; there is no pledge of government revenues or assets, no guarantee by the Government of the Virgin Islands, and no taxpayer backstop. After the expected 30-year bond term and full repayment, title to the property transfers to the people of the Virgin Islands. At that point, the government may sell or lease the hotel through normal public processes; it is not obligated to operate it.
Benefits to the territory
Aligning tax-exempt financing with existing program benefits strengthens the incentive for reputable developers to build and modernize hotels across the territory. Lower financing costs can accelerate new rooms and major renovations, supporting construction jobs, hospitality careers, and increased spending with local suppliers and service providers.
Additional and upgraded room inventory improves competitiveness for meetings, events, and family travel, giving visitors more choice and reliability. The framework maintains fiscal responsibility: there is no pledge of the government’s full faith and credit, no new public debt, and no taxpayer backstop; risk and repayment remain private.
The measure also secures long-term public value by providing for eventual public ownership after the bond term, creating options to lease or sell the asset in the public interest, all under existing law, PFA governance, and legislative oversight.
Governor Bryan emphasized that the government is not purchasing Frenchman’s Reef, is not assuming hotel operations, and is not guaranteeing the bonds. The developer and owner bear all bond obligations. Upon retirement of the bonds, ownership transfers to the people of the Virgin Islands, and the government may sell or lease the property.
The administration has transmitted the proposal to the 36th Legislature for consideration. If enacted, the PFA will establish the subsidiary and proceed with financing documentation consistent with law and oversight.
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