The operator of the tattered Caneel Bay Resort has hired a Washington lobbying firm with tight connections to President Trump/Carolyn Sugg via Flickr
Hoping a voice friendly to President Trump will be able to convince the Interior Department to extend its management of the Caneel Bay Resort for at least 60 years, CBI Acquisitions has retained a new lobbyist in Washington.
Ballard Partners, whose principal chaired Trump's organization in Florida for the 2016 election and was vice chairman of the president's inaugural committee, will work to get Interior to extend the current Retained Use Estate long past its current September 2023 end.
The future of the Caneel Bay Resort has been up in the air since 2010, when Congress directed the National Park Service to determine whether it made sense to convert the RUE to a more traditional concessions lease. Three years later, the 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.
But negotiations between the Park Service and CBI's principal, Gary Engle, have failed to produce any concrete results; indeed, Engle told a House committee in 2018 that the talks never were substantive. CBI has maintained that an extension of at least 60 years is necessary to attract $100 million in capital to rebuild the resort.
National Parks Traveler continues to wait for the Park Service to completely fulfill Traveler's Freedom of Information Act request for details of those talks.
Back-to-back hurricanes in September 2017 largely destroyed the Caribbean resort's facilities, and while CBI received $32 million in insurance proceeds, it has not made any substantive efforts to rebuild. Instead, it has offered to walk away from the operation if the federal government would pay it $70 million and hold the company harmless for any environmental damage that might be on the resort's grounds.
Not only did hurricanes Irma and Maria heavily damage the Caneel Bay Resort, but they also exposed CBI to a $217,416 lawsuit brought by Bluewater Construction, of St. Thomas, stemming from 18 hotel rooms it built in the months leading up to the September 2017 storms but has yet to be paid for. Too, CBI was told early this year that the resort was “grossly underinsured.”
Court documents related to the Bluewater Construction case showed that CBI was underinsured by just about half of what it valued the resort at. CBI was successful in its $32 million claim for damages from Hurricane Irma, which struck on September 6, 2017. But when the company filed a similar $32 million claim for damage from Hurricane Maria, which struck less than two weeks later, Lloyds of London denied the claim on the grounds that the first claim covered the loss from both storms.
“There is no additional damage caused by Hurricane Maria that was not considered in the scope of damages from Hurricane Irma,” the claims management company noted in a September 2018 letter to Engle. In other words, the coverage for Irma would cover impacts from Maria, the claims firm concluded.
Laurance S. Rockefeller in 1956 donated the land on the island of St. John that today makes up Virgin Islands National Park. At the time, he held back a portion for the Caneel Bay Resort. In 1983, the Jackson Hole Preserve, which Rockefeller had established, donated the land to the park; but it came with the RUE 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, the RUE document dictated that the buildings and their improvements be donated to the Park Service.
CBI Acquisitions acquired the RUE in 2004.
When Rockefeller structured the RUE that allowed the Caneel Bay Resort to be operated for private profit, he inserted a provision into that document that required the resort operator to use and maintain the grounds in a way that is "consistent with the preservation of such outstanding scenic and other features of national significance, and preserve the Premises to the extent feasible in their natural condition for the public benefit, enjoyment, and inspiration..."
But according to initial documents Traveler obtained through its 2018 FOIA request, a 2014 environmental assessment of the Caneel Bay Resort property raised questions of contamination from SVOCs -- semivolatile organic compounds -- often related to pesticides, and arsenic.
"In addition, there are concerns for leachability of SVOCs, arsenic and mercury to groundwater," the report noted.
The surveys also found concentrations of total petroleum hydrocarbons and diesel range organics above acceptable levels set by the Virgin Islands Department of Planning and Natural Resources.
While the assessment called for more extensive testing to determine the extent of these contaminants -- both across the ground surface and to determine depth of contamination -- records Traveler obtained said CBI had refused to allow a contractor for the Park Service to access the grounds to perform further testing.
Since then, Park Service personnel have declined to discuss the status of the environmental condition of the property.
While Caneel Bay Resort remains in tatters, other Caribbean resorts that were damaged by Irma and Maria have rebuilt. A headline in the New York Times early this month noted that, "5 New Standout Resorts in the Caribbean | In the aftermath of hurricanes Irma and Maria, many hoteliers in the Caribbean have regrouped and rebuilt — and are ushering in a new age of hospitality."
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Comments
Well, in my last comments on this topic, I speculated that CBI would stoop to anything to get that 60 year extension in order to buy time to try to get out of or at least stretch out the costs of that environmental clean-up. Bringing in a lobbying group from Florida with connections to the Trump Administration and the party that backs it and inside knowledge of where the bodies are buried from that high priced, ultra-corrupt, inauguration definitely fits the bill...
It's frustrating how misleading framing continues to be the choice of this author. For instance, when bringing up other resorts that have rebuilt; the author should emphasize again that they own their land, and are thus in no danger of investing X million dollars in buildings they'd lose access to in a couple of years.
Ancestral Virgin Islanders should have rights to this
Land ... that is all!!
You might have a point, Mike D, but it should be noted that there are concessionaires in the park system that manage to succeed, if not flourish, under the concessions model without owning the land or buildings they manage. Xanterra Parks & Resorts back in 2013 renewed its long-running contract at Yellowstone, for 20 years, and agreed to invest roughly $135 million into park facilities, particularly with new lodges at Canyon.
The question that remains unanswered is whether CBI really tried to negotiate a concessions lease with the Park Service or was simply stalling until it could figure out how to get an extension to the RUE. Gary Engle maintains the talks were never substantive. Our NPS sources say they were. Hopefully, if our FOIA request is ever completely met, the paper trail will show who's right on that point.
You also should know, though, that under NPS concessions operations, if CBI invested millions in rebuilding Caneel Bay and didn't retain the lease down the road, it possibly would be compensated for its improvements. That's laid out under the Leaseholder Surrender Interest section of the Code of Federal Regulations.
Nevertheless, the RUE required that the facilities be maintained, and CBI had insurance for hurricane damage.
At the end of the day, the lawyers and the lobbyists will profit, not park visitors.
This is a national park. Their lease is expiring. It is over and they need to remove their junk from the park.
One of the issues that could arise. Is the fact that in this contract from the Rockefellers to the national Park service. The owners of the property have the right to take the property back to its original state. Which means they would take that large catchment up in the hills apart and they would dismantle the entire resort. They have the right to do that if they so choose or they could turn the entire property over to the national Park service for them to take care of. I don't think national Park service has the resources to run a resort. it's very sad the property is beautiful the island is beautiful the people that live there are beautiful and I really enjoyed all the time that I spent there.
CBI has never really come to the table to negotiate in good faith. They have had use of National Park Service land free of charge for 40 years while making lots of money and once they realized that a lease meant having to pay something for use of the lsnd, as well as actually comply with NPS regulations to protect and preserve the natural and cultural resources on the property, they started pushing for an unprecedented extension of the RUE. Meanwhile mistreating their employees in a variety of ways. CBI needs to be GONE so the Park can negotiate with a concessionaire.
YES
"if CBI invested millions in rebuilding Caneel Bay and didn't retain the lease down the road, it possibly would be compensated for its improvements."
If you were running a business, do you think your shareholders would accept "we MIGHT get compensated later if we spend tens of millions of dollars now"?
As usual with this topic, people are confusing what they wish would happen with what you would expect to happen given economic and legal realities.
Mike D, if CBI had converted to a concessions agreement back in 2013 when the Park Service decided that was the way to go, they would be compensated for their investments if they later lost the contract. It has been done elsewhere in the Park System (Grand Canyon, Yosemite, Shenandoah to name three parks).
I said "might" in my earlier reply because I'm not a lawyer and so not sure how the rules for the RUE might differ from those that apply to concessions agreements.
CBI knew back in 2004 when they acquired the RUE that it was to expire in 2023. They likely also know that the RUE is specific in requiring them to maintain the facilities, which they have not done even though they were insured for damage. Nor have they allowed the Park Service to further examine the grounds for environmental contamination.
Rockefeller was very specific in what he wanted for the Caneel Bay Resort (to revert to the NPS in full in September 2023). If the shareholders paid attention to the RUE, they would have known that. Maybe they did and agreed to the strategy to find some way to extend the RUE for at least 60 years.
But as of today it seems CBI has created a stalemate that looks like they will walk away with their $32 million in insurance proceeds and leave the Park Service with a mess to clean up and rebuild.
Again, hopefully NPS soon will provide the rest of the documents Traveler FOIAed for and that they will shed some light on whether there were substantive negotiations towards a concessions agreement. But it'd also be good to hear why CBI has not used the $32 million to repair the resort facilities.
A well-worn strategy. Point Reyes anyone?
This is, again, where it's important to distinguish between your personal feelings about what they "should" or "should have" done, and what they are likely to do given their business realities. There's in fact no requirement for most insurance payouts to be used to rebuild the structures that were insured! Most people do, of course. But you don't have to! (Think about your car insurance and how often an insurer just 'totals' your vehicle. It happens with houses too sometimes!)
So say that CBI knows that if they rebuild, there's a 50% chance they will not get the concession afterwards. (And don't dodge by saying "well, if they had switched to a concession in 2013...; we don't have a time machine available). Would it be a responsible use of the money for their shareholders to spend the insurance payout on the rebuild? Again, don't think "should"; think "what would they do given the incentives and disincentives currently on the table".
Mike, the RUE specifically requires the holder to "maintain the premises in such a manner that will (a) be consistent with the preservation of such outstanding scenic and other features of national significance and (b) preserve the premises to the extent feasible in their natural condition for the public benefit, enjoyment, and inspiration..."
So while you're technically right that an insurance payout doesn't necessarily need to be spent, the contract under which CBI has operated the resort requires the company to maintain the premises. The dilapidated state of the resort would indicate that is not being done and that CBI could be found in default.
You also seem to to be unaware, or are ignoring, Rockefeller's stated wishes -- both in the RUE that was set up in September 1983 and repeated in a letter to the Park Service in 1988 -- that the RUE be extinguished in September 2023 and the property and its facilities go to the NPS.
In November 1988 he wrote William Penn Mott, then NPS director, of concerns that CSX Corporation would sell the RUE to a company that would try to extend the RUE.
"...I am concerned that the Park Service may be asked to extend the term of the Retained Use Estate, which would have the effect of enriching the seller and defeating the foundation's intent to add the Caneel property to the Park as scheduled," wrote Rockefeller. "It is my sincere hope that you would not consider granting any request to extend the Retained Use Estate at Caneel Bay. At the time the gift was made to the National Park in 1983, it was my intention and expectation, and the intention and expectation of the Jackson Hole Preserve, that the Retained Use Estate would terminate no later than September 30, 2023. The deed under which the gift was made states in unambiguous terms that the Retained Use Estate would be terminated 'in order to carry out the longstanding objective of (the Jackson Hole Preserve) that the Premises ultimately be an integral part of Virgin Islands National Park under the jurisdiction of the Secretary (of Interior) for the use and enjoyment by visitors to the Park.'"
In response, Mott told Rockefeller that he "issued a Special Directive to Regional Directors, Superintendents, and others reinforcing that extensions may not be granted and, in fact, are not legally possible."
Furthermore, Mott pointed out that "(S)hould the National Park Service wish Caneel Bay to remain in operation beyond September 30, 2023, or some earlier date on which the owner of the reserved estate chooses to terminate it, the Service would, pursuant to terms of the 1983 conveyance of the property to the United States, provide a reasonable opportunity to the last holder of the retained estate to operate on a concessions basis under procedures then applicable." (emphasis added)
So you see, Mike, no time machine is needed. If CBI had done its due diligence, back in 2004 it would have seen the writing on the wall and worked to reach a concessions agreement with the Park Service in 2013, if not sooner. In light of Rockefeller's stated wishes, the details of the RUE, and the Park Service's position, it would have been in the shareholders' best interests to reach such an agreement.
Instead, what we're seeing is an attempt to circumnavigate Rockefeller's stated wishes, the Park Service's longstanding position, and congressional intent for a for-profit company to benefit at the country's expense. And why shouldn't they try to do so? Under the RUE they reportedly pay no rent, no franchise fee to the Park Service (https://www.nationalparkstraveler.org/2018/08/questions-and-answers-futu...). It's truly been a sweetheart deal in paradise.
Thank you Kurt! This detailed timeline explanation is precisely what is needed to raise awareness of the facts and dispel any doubt that CBI is not acting in good faith but in greed.
And, don't forget to complete a full environmental contamination investigation and develop plans and cost estimates for the clean up before CBI gets away. CBI should be and needs to be properly held fully liable for whatever is found to be their responsibility under the current laws and I'm pretty sure that's a bunch. Remember the rule of law? It used to be a thing here in America and we need to get back to that tradition, including fully and properly holding the Bundy family accountable to the full extent of the law and blocking Delaware North from any and every current or future federal contract. If CBI tries to evade their responsibilities, through bankruptcy or whatever; then the government, our government, needs to go after Stoneleigh Capital to cover the clean up debt. Enough is enough; villains should pay for their villainy.
"needs to be"; "should be"; etc.
These are, again, indicators people are arguing emotionally rather than on the basis of the law and/or predicting what businesses and other entities will or won't do based on their obvious economic incentives.
If it were as simple as "CBI must rebuild the property or be in default" then we'd see rebuilding already. Or, perhaps, best case for your theory, "default" carries fewer financial penalties than the tens of millions of dollars of money they'd lose if they rebuilt and then didn't get the follow-on (concession or RUE extension or whatever).
Again, stop saying what they "should" do. Start wondering why they didn't do that a couple of years ago and aren't doing that now. Then you might have a more fruitful path forward.
Despite what appear to be your continuing, transparent, efforts to defend CBI and deflect blame away from their seemingly blatant disregard for business ethics and their resulting dereliction of contractual responsibilities, I am actually not the one arguing emotionally.
CBI assumed tenancy of this piece of federal property with full knowledge that it was and is covered by the provisions of the RUE and that the RUE constituted and still constitutes a binding contract that governs the use of this federal property on the basis of the law. As Kurt Repanshek pointed out in his last comment on this topic, "the contract under which CBI has operated the resort requires the company to maintain the premises. The dilapidated state of the resort would indicate that is not being done and that CBI could be found in default." The resort has not been in any operational state for years; regardless of any truth by emphatic assertion on your part, that fact constitutes incontrovertible evidence of contractual default on CBI's part; and such contractual default is a matter of law. If we had a functioning federal government instead of this current corrupt clown show, CBI would have been formally declared in default and evicted long ago.
Despite any childishly imperious tantrum on your part, none of this indicates that anyone other than you are arguing emotionally rather than on the basis of the law. In fact, you seem to be the one here not arguing on the basis of the law, which you clearly seem unqualified to quote anyway.
As I and others, including Kurt Repanshek, have tried to patiently explain to you over and over and over again, CBI's clear dereliction of its contractual responsibilities to maintain the premises in an acceptable operational state constitutes contractual default. At this point, the proper course for the NPS on the basis of the law is to require CBI to vacate the site to enable the NPS to conduct a proper condition assessment, including a full environmental contamination investigation of this federal property. If the site is, as suspected, contaminated, then, on the basis of the law, CBI is liable for any clean up required on the basis of the law to return the site to an acceptable state as well as for any costs associated with that clean up. At this point, it only remains for CBI to be served and summoned for refusing to vacate, for trespassing on federal property, and for obstructing federal officials in the conduct of their duties. That is the basis of the law and, again, if we had a functioning federal government instead of this current corrupt clown show, the law would be upheld as it should be. I'll leave any discussion of "fruitful" paths to you since you seem to be a "fruitful" authority here.
PRIVATE NOTE TO NPT: I have been following this topic and Kurt Repanshek's reporting and comments with the assumption that a formal complaint has already been filed with the DOI OIG. I understand that there may be some reasons to avoid showing cards too soon and can also easily imagine that Greenblatt might be just sitting on such an existing complaint. However, the issue has already been publicized; there is some hope that there might be a new IG next spring; and neither Greenblatt nor his successor would be under any pressure to act until a formal complaint is pending. The last thing needed would be for CBI to get an extension; but, regardless of the delays due to a new contract being negotiated, the second to last thing needed would be for CBI, which has already revealed itself to not have the public's interests in mind, to be the concessionaire after the RUE expires. So, has a formal OIG complaint already been filed or does that need to be done and by whom at this point?
A long post with multiple bold and italic phrases definitely makes your point!
As with my own personal business interests, such as a leasing agent for one of our rental properties, rather than talking about what other businesses 'should' do, it's more important to understand what their incentives are, and hopefully make sure their incentives align with yours as much as possible.
Best of luck!
It is sad to see the hostages of local detracto shut down a place that has brought tens of thousands of people to St. John To hike, dine, shop and fall in love with the island.
Kk, you’re spreading a woefully confused, if not ignorant, interpretation of who the "owners of the property" actually are and what "rights" this Gary Engle has or doesn’t have. And, as has been said recently, faux expertise is even worse than simple ignorance. So, let’s look at the truth, which is that, because of his relationship with the organization then operating an existing resort at Caneel Bay, the late Laurance S. Rockefeller carved Caneel Bay out of what he originally gave the National Park Service (NPS) to create Virgin Islands National Park. However, instead of directly transferring any ownership right for Caneel Bay, he instead established, in 1983, a “Retained Use Estate” (RUE) providing for the continued operation of Caneel Bay, as a resort, for a period of not more than forty years as long as it was properly maintained in its natural condition and operated in ways that protected scenic and other features of national significance. The RUE very clearly states that, at the end of that forty years, Caneel Bay would be transferred to the NPS as part of Virgin Islands National Park.
So, in 2004, this Gary Engle character came into the picture. This is a guy who has operated, in different places and at different times, as a real estate speculator, leasing advisor, shipping investor, transportation and container broker, equipment reseller, and venture capitalist using a variety of fronts that have included Cobb Partners Development, Equis Corporation, PLM International, Capella Hotel Group, Semele Group, EHI Acquisitions, Stoneleigh Capital, and CBI Acquisitions. Contrary to popular, but entirely incorrect, beliefs, Engle does not “own” Caneel Bay. All he actually did, back in 2004, was acquire control of the less than twenty years then remaining on the forty year RUE left by the late Laurance S. Rockefeller. The RUE is essentially a lease/rental agreement on the property, and Engle acquired a sequential sublet of a lease/rental agreement that very clearly and very legally expires at the end of September, 2023, at which time the property reverts to the ownership and possession of the taxpayers through a previously agreed addition to Virgin Islands National Park And, Engle was clearly informed of the terms, conditions, requirements, and expiration date of the lease when he accepted them in 2004. Engle might now try his darnedest to leave the impression that he owns the place; but, he’s just a damned renter.
As far as Engle’s “rights” as a common renter are concerned, the RUE, the lease, the rental agreement, required Engle to maintain the property in such condition that it could continue to serve its function as a resort through to the expiration date of the lease, which he has not done since 2017. In fact, although Engle has obstructed NPS and Virgin Islands officials who have tried to gain access to Caneel Bay to properly assess environmental contamination found during a 2014 NEPA assessment, what the NPS and Virgin Islands already know about that environmental contamination would also constitute a failure to maintain the property in accordance with the terms and conditions of the RUE. Engle is, therefore, already guilty of multiple violations of the terms of his lease, his rental agreement. In most cases, violations of a rental or lease agreement are grounds for termination, which begs questions of whether this squatting renter has any rights at all to continue to obstruct access to this property. I’m not sure why he hasn’t already been evicted, which is what you are often forced to do with a deadbeat renter.
Now, let’s look at this deadbeat renter’s puffed up and defiant bad behavior. In 2019, Engle demanded, demanded, he demanded, that the American taxpayers "wire transfer" $70 million to EHI, one of the front companies that he uses, and that the US Department of the Interior indemnify CBI, another front company that he uses and that apparently has its name on the lease, from any liability for the contamination at Caneel Bay found during that 2014 NEPA assessment. Engle went on to threaten, threaten, he threatened the Amercan taxpayers that, if he didn't get that $70 million, an extorted ransom, that "fee title” to Caneel Bay would immediately and automatically revert to EHI, another of his front companies, and EHI would have all “rights of ownership” to Caneel Bay. So, exactly who does this chiseler think he is and is this where you get your faux expertise on the situation?
As far as whether this cheesy, overdressed, overslicked, two-bit hoodlum has the right to take the property back to its original state, I personally don’t give a hoot about what Engle does or doesn’t do with the catchment or the marina and the resort is in ruins anyway. I’m afraid that, at this point, I don’t even think it’s worth worrying about whether this deadbeat pays for the environmental mess. I just want see this swindler ejected from the property and from any further connection with our national government or my tax dollars whatsoever. He seems to be an accomplished con artist, which means he would use all his capabilities to turn any attempt to hold him accountable for his misdeeds into a time and money wasting circus anyway.
So, Kk, if you really don’t know what’s going on and your faux expertise is just going to misdirect folks, why voice a misleading opinion? Do you work for one of Engle’s front companies?