Hello everyone and happy Sunday! Last week we told you about the current situation over at Caneel Bay and how CBI Acquisitions, LLC, the company that is currently managing Caneel, is trying to obtain a 60-year extension on the Retained Use Estate (RUE) agreement with the help of Congresswoman Stacy Plaskett. There are so many things wrong with this. For starters, when Laurence Rockefeller signed over the Caneel parcel to the US government for $1 back in 1983, he did so under the assumption that the property, its buildings and its facilities would be turned over to the Virgin Islands National Park in 2023. CBI and Plaskett are trying to prevent that from happening. Second, in 2010, Congress determined that the current RUE agreement was not in the best interest of the VI National Park and that it should be converted to a concession agreement. CBI and Plaskett are trying to prevent that from happening. Lastly, they are trying to convince the government that it is acceptable that CBI pay a mere 1.2 percent return to the federal government. (They currently pay nothing.) Not only is this absurdly low, but it is also in direct contradiction to what Congress determined back in 2010, which was that the return should be given to the Park Service, not the General Treasury. So yet again, CBI and Plaskett are working together and Plaskett, who is the Virgin Islands elected representative, is clearly not working on our behalf but working hand-in-hand with the people who will profit off of Caneel. Makes you wonder why now, doesn’t it…
Caneel is also saying that it needs $100 million to rebuild. This is nonsense. Caneel had insurance. Caneel also has a two year interruption policy. And the icing on the cake- Caneel did absolutely nothing to protect its property despite the fact that one of the strongest hurricanes on record was barreling right toward it. They did not board up windows, sliding doors, nothing. Again, makes you wonder why…
So you may be wondering at this point how you can help. Well it’s simple. We need you to write or get on the phone and voice your concerns. Congresswoman Plaskett’s bill is set to go before the House Natural Resources Committee this Wednesday. At that time, they will make a FINAL decision as to what the future is over at Caneel.
Please either call the Committee of Natural Resources at (202) 225-2761 or email them here. By clicking this link, you can fill out a quick form to let them know your thoughts. Please refer to H.R. 4731. That is the name of Plaskett’s bill.
The National Parks Traveler published a great article this morning that details everything wrong with what Plaskett is proposing. They attempted to speak with Plaskett several times, but she’s refused. Please take a few minutes and read it in its entirety. And then please get on the phone or start writing. We truly need your help with this.
Traveler’s View: Corporate Welfare At Caneel Bay In Virgin Islands National Park?
By Kurt Repanshek, National Parks Traveler
A private equity firm with global operations that include luxury hotels, ski resorts, and transportation interests such as shipping and railcars is on the brink of what appears to be a sweetheart deal to operate a luxury resort inside Virgin Islands National Park for just about the rest of the century.
While Laurance S. Rockefeller intended for the Caneel Bay Resort, which he built on St. John in 1956, to transfer to the National Park Service in 2023, the principals of Stoneleigh Capital, LLC, have convinced U.S. Rep. Stacy Plaskett, D-Virgin Islands, that they’ll only rebuild the hurricane-battered resort if they can operate it for the next 60 years.
In return, Stoneleigh Capital subsidiary CBI Acquisitions, LLC, which generates about $65 million a year for St. John’s economy, will pay the federal government 1.2 percent on gross receipts.
But first, some history.
Mr. Rockefeller, a philanthropist and conservation giant whose support of the national parks movement spanned the country from Acadia National Park in Maine to Redwoods National and State Parks in California, fell in love with St. John during a cruise in the Caribbean. In 1956, he purchased 5,000 acres and gave it to the government to create Virgin Islands National Park, but held back about 170 acres on the island’s northwestern shore, the Caneel Bay Plantation, to create a resort.
Twenty-seven years later, on September 13, 1983, he signed the acreage over to the Interior Department, but crafted a “Retained Use Estate” to allow his resort to operate through September 2023. In that RUE document, he made clear his intent that the facilities eventually would become property of the national park.
Rep. Plaskett is willing to ignore his directive. Instead, she wants to extend that RUE for 60 years. And while it does call for CBI to pay the federal government 1.2 percent on gross revenues, her legislation would enable CBI to avoid paying the federal government anything if it spends money on preservation, maintenance, restoration, improvements, or repairs at Caneel Bay.
Put another way, if CBI builds additional facilities to serve the visitor base, those costs could be deducted from what would be owed the government. Routine maintenance — paint, gardening, repairing tennis courts, docks, etc. — all theoretically could be deducted from that fee.
And there’s a lot to maintain at the resort, where nightly room rates start around $600. Three restaurants, tennis and basketball courts, massage cabanas and beauty lounges, bars, a business center, a pool, a soccer pitch, trails, a dive shop, and a fitness center, plus 166 guest rooms. Most of those rooms were damaged by last fall’s hurricane duo, Irma and Maria. So much damage was done that the resort isn’t expected to open this year.
Nevertheless, simply maintaining and improving their bottom line could deduct from any revenues CBI would send the federal government for being able to operate from one of the most idyllic settings in the National Park System. So the deal Rep. Plaskett has put her name to isn’t that far off from the deal CBI has been operating under since 2004, when it assumed the RUE from Jackson Hole Preserve, a Rockefeller family nonprofit organization that had operated Caneel Bay. Under that deal, neither Jackson Hole Preserve, nor CBI, paid the government anything for benefitting from the tropical setting.
“In the amount of required capital and time required to redesign and rebuild, and the time required to reestablish a resort in a highly competitive marketplace, a minimum 60-year term is necessary,” Gary D. Engle, CEO of Stoneleigh and a member of the executive board that oversees Caneel Bay, told the House Federal Lands Subcommittee last week.
Mr. Engle uses the phrase “highly competitive marketplace,” but the fact is that Caneel Bay Resort is the only substantial resort on the island of St. John and the only one inside the national park. When one has to take a ferry ride to reach St. John and Caneel Bay, are hotels on St. Thomas or in the British Virgin Islands, hotels that also were damaged by the hurricanes, really competition?
There are a lot of holes in the existing RUE, and in the legislation Rep. Plaskett — who has ignored several requests from the Traveler to discuss the matter — to cause concern. There is nothing to prevent CBI from building new structures on the property, and no Park Service oversight to see that cultural, archaeological, and natural resources are not harmed, directly or indirectly, inadvertently or advertently.
And unlike other concession agreements in the park system, this proposal would run for 60 years — most Park Service concessions contracts typically run for a decade — and carries that absurdly low 1.2 percent return for the federal government (though after 15 years, it can be renegotiated, up or down).
How absurd is it? At Grand Canyon National Park, the Park Service sought a 14 percent franchise fee for concessionaires seeking to operate lodges on the South Rim before settling for 8 percent on a contract that runs 15 years. At Gulf Islands National Seashore, the Service sought a 9.2 percent franchise fee on retail operations. At Yellowstone National Park, the franchise fee is 4.5 percent, but the concessionaire, Xanterra Parks & Resorts, also has to provide a 6 percent annual contribution to a maintenance account. That contract, signed in 2013, is an outlier in that it runs for 20 years.
Beyond that, a St. John resident, Pam Gaffin, says CBI not only was insured for hurricane damage, but also carried “two years of business interruption insurance where they get paid to stay closed.”
“The other concessions in the park pay far more than what is being asked of Caneel — Redwoods, who actually invested money in Cinnamon Bay because Caneel had let it run down so bad, got a 15-year lease and has to pay 2.5 percent of gross receipts, Caneel Bay Watersports got a 10-year lease and pays 4 percent, Paradise Agua Tours has a 3-year lease and pays 3 percent,” Ms. Gaffin, who runs a tour business on the island, wrote in the News of St. John blog.
At the Coalition to Protect America’s National Parks, Phil Francis, who in recent days has talked to Park Service personnel involved in 2010 when Congress directed the agency to study converting the RUE into a concessions agreement, is concerned about Rep. Plaskett’s proposal.
“I have concerns about the length of the proposed agreement. I think that the fee should not be set in stone,” said Mr. Francis, who chairs the Coalition’s executive committee. “I think that periodic analysis should be done to detemine what the fee should be, just as would happen in a park concession.
“And I think if the RUE goes forward, there should be environmental protections included to ensure that the property within the boundaries of the Virgin Islands National Park are protected,” he added Friday. “And I think there should be some control over the type of facilities that are constructed there to ensure that they are consistent with the national park.”
Mr. Engle shouldn’t be faulted for trying to leverage the best deal he can. After all, as he told the committee last week: “Running the resort as we did, and as I think we can, has a positive return on capital. In other words, I can make money, which is my line of business. I can make money running the resort.”
But at day’s end, the resort lies within Virgin Islands National Park, which is owned by all Americans who, if a $600-a-night luxury resort is to benefit from that national park setting, should be adequately compensated, and the natural, cultural, archaeological, and historical resources on that 170-acre property should be protected by the Park Service.
On Wednesday, the House Natural Resources Committee will take final action on Rep. Plaskett’s bill.
Rep. Plaskett can be reached via email or by phone at 202-225-1790.