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UPDATE: Caneel Bay Resort's Future At Virgin Islands National Park In Limbo

Caneel Bay, Virgin Islands National Park/NPS

The fate of the luxury Caneel Bay Resort at Virgin Islands National Park could be decided by legislation that would extend a use agreement for 60 years/NPS

Editor's note: This updates with Environmental Assessment on hold until lease agreements are worked out with CBI Acquisitions, and that CBI has not been required to make any payments to the federal government for operating the lodge under the Retained Use Estate.

An idyllic, 170-acre setting inside Virgin Islands National Park is home to the Caneel Bay Resort, a high-end luxury resort with waterside rooms, massage services, weekly cocktail parties, fitness center, tennis courts, and several restaurants. Now in shambles following last fall's hurricanes, the resort's future could hinge on an eight-year-old law passed by Congress and current legislation that would circumvent that law.

Which direction is taken could impede efforts by the resort's owners to obtain financing for improvements, but also impact park natural and cultural resources and slight Laurance Rockefeller's desire to see the facilities donated to the park.

The resort's fate dates to 1956, when Mr. Rockefeller, whose contributions to the National Park System span the country, bought a large part of the island of St. John and donated it to the National Park Service. He held back the 170 acres for the Caneel Bay Resort, but in 1983 the Jackson Hole Preserve that Mr. Rockefeller had established donated the land to the park; it came with a Retained Use Estate agreement that gave the Preserve free use of the property and its facilities for 40 years. At the end of that four-decade period, September 2023, it was envisioned that the buildings and their improvements would be donated to the Park Service.

In 2010, Congress passed a law directing the Interior Department to weigh whether it was better to keep the facilities under the RUE or create a concessions agreement for the resort, which CBI Aquisitions, LLC, assumed from the Preserve in 2004. In taking over the RUE, CBI was not required to make any payments to the government for operating the resort in one of the National Park Service's most picturesque settings.

In 2013, the National Park Service, after studying which management approach made the most sense for the agency via an environmental assessment, recommended that the operating agreement be redefined as a long-term lease more in line with typical concessions agreements.

From the Park Service's viewpoint, under a concessions agreement "(B)eneficial impacts to natural and cultural resources are expected since there would be greatly increased NPS oversight of the property. Further, the terms and conditions of the proposed lease, as required by P.L. 11-261, will incorporate provisions that ensure the protection of the natural, cultural, and historic features of the resort and associated property, consistent with the laws and policies applicable to property managed by NPS."

Map of Caneel Bay at Virgin Islands National Park/NPS

This map, prepared for the Park Service's Environmental Assessment, outlines in yellow the property used by Caneel Bay Resort/NPS

By not converting the RUE to a concessions agreement, the agency's EA said, "(T)here is a risk of damaging resources at the resort since NPS would not be involved in the management of the resort before the expiration of the RUE. The RUE owner could undertake construction or other actions that may result in resource damage or loss."

The law passed in 2010 would prohibit any additional construction if the Park Service moved to convert the RUE to a lease.

The resort occupies a relatively small footprint on a peninsula on the island's northwestern shore, an area rich in cultural and archaeological resources.

"Culturally, Caneel Bay contains historic resources, and it reflects Rockefeller’s vision of a close community of man and nature," the Park Service said in the EA. "It also contains numerous archaeological resources and is under consideration by NPS for listing in the National Register of Historic Places as an historic district."

Among the archaeological resources is a site "noted for being one of the largest villages on the island," and there are historic remains associated with the Caneel Bay Plantation complex that dates to the early 1700s and which, during the Slave Rebellion in 1733, "served as a refuge for the plantation owners during four to six months" of the revolt, according to the Park Service.

The EA said there could be impacts to land use, archaeology, cultural and historic resources, and species such as sea turtles and corals if the RUE remains in place. However, it also said there could be negative socio-economic impacts if the property was managed as a concession and a new concessionaire reduced employment levels.

While the EA was released in 2013, it has not been finalized. Saudia Muwwakkil, the Park Service's assistant regional director for communications and legislative affairs based in Atlanta, said Sunday via email that, "(T)he EA will be completed once the final terms of a lease have been determined."

The Park Service and CBI Acquisitions have been trying since at least 2014 to reach an agreement to succeed the RUE; U.S. Rep. Stacy Plaskett, a Democrat who represents the U.S. Virgin Islands in Congress, says those talks so far have been fruitless. Believed to be one of the sticking points is who is responsible for cleaning up areas of the 170 acres used as dumping grounds in recent decades.

In December, Rep. Plaskett introduced legislation that would extend the current RUE for up to 60 years. That measure, which is to be reviewed by the House Federal Lands Subcommittee on Wednesday, wants to lock in a 1.2 percent fee on gross resort revenues for 15 years, after which the rate could be adjusted. It also would direct the revenues to the General Treasury, not the Park Service, another aspect of her legislation that is at odds with the 2010 law, which directed any lease revenues to go back to the park for "visitor services and resource protection."

"Caneel Bay is vital to the economic viability of St. John and the overall Territory, bringing 15,000 guests and $65 million in annual total spending on St. John," the congresswoman said in a statement issued by her Washington, D.C., office. "Additionally, the 500 jobs the resort provides makes Caneel Bay the largest employer on St. John."

While the resort's current agreement with the federal government runs through September 2023, the congresswoman said a new agreement is needed now to help the resort operator's "finance improvements and other projects. The timeframe for the expiration of the (Retained Use Estate) has become even more significant given the destruction Caneel Bay sustained from Hurricane Irma." 

Staff in Rep. Plaskett's office did not reply to questions pertaining to her desire to see the RUE extended rather than allowing it to expire in 2023 and transition to a concessions-type arrangement that the Park Service believed would be in the park's best interests. Park Service staff in Washington also declined to comment on the 1.2 percent return to the government proposed under her measure, noting that the agency has not yet provided testimony to Congress on Rep. Plaskett's bill.

Caneel Bay Resort, where room rates start at about $600 a night, has been closed since Hurricanes Irma and Maria struck last fall; when it will reopen has not been announced, but it's expected to be closed throughout 2018. Roughly 130 of the resort's 166 rooms were damaged by the hurricanes.

According to Rep. Plaskett, the resort owners have envisoned a lease agreement with the Park Service that "would have provided capital investment into the resort and monthly cash payments to the" national park, she said. 

“Given the urgency for Caneel to find capital post-storm, and recognizing the impact potential closure of the resort would have on the (Virgin Islands) economy, I have introduced a bill that would extend the RUE and would require Caneel to provide payments to the federal government for use of the land," she said.

Patrick Kidd, Caneel Bay's marketing director, said plans to rebuild the resort were up in the air.

“That timetable is really driven by many different factors. Our owners are working diligently with a lot of different constituencies, both at the local and federal level," he said during a call from his New York office. "They all have their own timetables. We have a lot of moving parts at the moment to come together before we can really start determine what that timeline is going to look like towards a rebuild and a reopening.”

How much of the repairs would be covered by insurance also was unknown at this point, Mr. Kidd said. Also a factor in the timetable, he said, was the amount of hurricane damage throughout the U.S. and British Virgin Islands and Puerto Rico that was demanding materials and workers.

“We are not at that stage where we are starting to secure contractors, but I’m sure it will be part of the moving parts that need to come together as we move forward," said Mr. Kidd.

CBI Acquisitions seems determined to secure a new RUE, rather than transition to a concessions agreement. While in recent years the privately held company has kept a relatively low profile before Congress, in 2017 it spent $330,000 on lobbyists tasked specifically to address "(I)ssues related to Retained Use Estate and National Park Services land."

While talks around the RUE and rebuilding continue, the resort's management team has entered into a working arrangement with the Hartling Group, a developer in the Turks and Caicos.

“While Caneel Bay crafts their beautiful turnaround story, we’ve brought on their expert team to help market The Palms and The Shore Club,” said Karen Whitt, the Hartling Group’s vice president of sales and marketing, in a written statement to Travel Agent Central. “Recovery is an ecosystem, happening in boardrooms and boots on the ground. Business as usual is the goal, but until then, it’s a collective effort."

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