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House Committee Approves Legislation Supporting Caneel Bay Resort


Legislation to allow a private equity firm to continue to run the Caneel Bay Resort at Virgin Islands National Park for 60 years passed out of the House Natural Resources Committee on Wednesday, but without language that would have required the company to ensure its activities were "consistent with all applicable laws and policies of the National Park Service.’’

U.S. Rep. Rob Bishop, a Utah Republican who chairs the committee, said time was of the essence in extending the "Retained Use Estate," a rental agreement unique not only to Caneel Bay Resort but apparently to the entire National Park Service.

The language in the RUE, which the late Laurance S. Rockefeller drafted and put into effect in 1983 after he donated some 5,000 acres to the government to create Virgin Islands National Park, allowed for the resort to be run as a private operation for 40 years. But in 2023, according to Mr. Rockefeller's document, the resort was to be turned over to the National Park Service.

Congress told the Park Service in 2010 to weigh whether it was better to transition the operation to a concessions arrangement rather than an RUE, and in 2013 the agency issued a draft environmental assessment that called for such a transition. That EA was never finalized, as the Park Service was trying to negotiate a lease with CBI Acquisitions, Inc., which managed the resort for Stoneleigh Capital, a private equity firm that assumed the RUE in 2004. Those negotiations have never been finalized, for reasons Park Service personnel have been unable to explain. 

Under CBI's management, the resort, with room rates starting around $600 a night, has brought an estimated $65 million a year to St. John and employed about 500, according to Congresswoman Stacy Plaskett, D-Virgin Islands, who in December introduced legislation to have the RUE extended 60 years so CBI could raise the money needed to rebuild the resort, which was battered last fall by hurricanes Irma and Maria.

During a hearing last week by the House Federal Lands Subcommittee, Gary D. Engle, Stoneleigh's CEO, said CBI needed a long-term commitment to make rebuilding the resort feasible.

On Wednesday, Rep. Bishop agreed.

“The devastating hurricane destroyed the building. So if they’re going to rebuild it, they have to know they’re going to be able to be there for a long period of time," he said, alluding to the upcoming expiration of the RUE in 2023. "Five years is not going to do it. This resort is important. Not only to the Park Service, but it’s extremely important to the Virgin Islands and to rebuild their economy. This is a significant issue and it should not be held up in any particular way.”

Congressman Bishop did amend the bill to have the rental fee determined by a fair market appraisal rather than just the 1.2 percent Rep. Plaskett sought.

Rep. Raul Grijalva, the ranking Democrat on the committee, tried to have the bill amended to give the Park Service authority to ensure that any construction or management activites at the resort or the 170 acres it sets on "are consistent with all applicable laws and policies of the National Park Service.’’

In compiling the EA in 2013, Park Service staff voiced various concerns over continuing to operate the resort under the RUE, in part because it didn't prevent resort expansion.

"(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 EA said, pointing to both archaeological and natural resources on the land.

Rep. Grijalva told the committee Wednesday that as written the bill "lacks some necessary provisions making it potentially unworkable and unlikely to be enacted by Congress.”

The effect of the RUE "is that a significant part of the national park, which is owned by all Americans, is open to only the very wealthiest visitors in the world," he said.

Additionally, Mr. Grijalva pointed out, the Park Service "was eventually supposed to own the resort as well. (It) has little or no ability to ensure the resort is operated consistent with the laws and policies governing all other national parks. In addition, the RUE allows a single private owner to enjoy a monopoly on revenue from the resort and to avoid any competition with other possible management entities that might be better positioned to provide the best services to visitors. HR 4731 simply extends the status quo, using the storm damage as a justification for failing to reexamine the RUE.”

But Rep. Bishop spoke against Rep. Grijlava's amendment, saying that language was too vague and gave the Interior secretary too much leeway to manage activities on the property. By voice votes the committee, which is controlled by the GOP, voted in favor of Congressman Bishop's amendment and rejected Rep. Grijalva's.

Not addressed by the full committee Wednesday was how much insurance coverage it had both for storm damage to the resort as well as for "interruption of business," and why CBI needed to raise $100 million.

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Again, Bishop showing how much he hates the NPS.

SO no revenue at all goes to the park?  This could have been done through a lease which also grants a 60 year term but has the benefit of provideing a revenue stream to the NPS for deferred maintenance at the park. 

No, Rep. Bishop wants a new appraisal to determine the rate...

Rep Bishop: Cui bono?

Greetings Mr. Repanshek. I have followed your excellent reporting through the News of St John blog where I sign in and post  as Capt. Morgan. I have a couple of questions for you since you seem to be pretty close to the Caneel developments. I actually attended the hearing on the Hill for HR 4731 and a depressing hearing it was. It sounds to me that the whole thing is stacked against the National Park and taxpayers. The conglomerate who has run the resort for so long (and not so well I hear) is requesting a pretty absurd deal and they may get it if nothing gets in their way. So here is my question. If a company came along with a track record of eco resort management and quality, is there a possibility that they could bid for the concession? A company dedicated to good service and sound management which offered a competititive deal might be better for taxpayers, the Park Service, guests and the island itself. Competitive bidding is how deals with the government are normally done. But is it unrealistic or too late for Caneel? 



Captain Morgan, you ask a great quesiton, one of many questions that haven't received the light of day. For instance:

* How much insurance does CBI/Stoneleigh Capital carry on the resort?

* The answer to that question is important so we can understand why CBI/Stoneleigh reportedly wants to raise $100 million. 

* Regarding that $100 million figure, why did no one on the subcommittee ask Stoneleigh Capital whether they wanted to raise that much to expand the resort's facility footprint, which they can do under the RUE but which the NPS would not allow under a typical concessions lease arrangement (as specified in the 2010 law Congress passed directing the Park Service to weigh the merits of letting the RUE sunset in 2023, which the agency decided in its draft EA to do)?

* Why were Reps. Plaskett, Bishop, and other Republicans on the House Natural Resources Committee so quick to accept Stoneleigh Capital's description of their talks with the Park Service towards a long-term lease as unsubstantial? 

* Why wasn't the NPS invited to testify, which might have introduced testimony from two NPS key personnel who went to St. John in 2010 to negotiate a long-term lease? I've been told that those individuals, including the Park Service's concessions chief, "were actively negotiating a sole source lease with them." Isn't that substantial?

* Why won't Rep. Plaskett or her staff respond to Traveler's questions about the entire deal? 

* Why didn't the House committee request the "800-page appraisal," according to Stoneleigh Capital, that pointed to a range of lease fees?

* Why did no one on the subcommittee ask Stoneleigh Capital's Mr. Gray whether CBI had taken steps to protect the resort's facilities from the damaging hurricane winds and rains, as the RUE seems to have required them to do?

Now, back to your question: It appears to be too late. The 2010 law, I believe, called for the lease to be negotiated with the holder of the, if the RUE is left intact, and Stoneleigh can't agree to NPS terms and the RUE sunsets in September 2023, then I imagine the NPS could open the resort to competitive bids...or demolish it.

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