Caneel Bay: Breaking It Down

caneel bay entranceOk, so I believe that all of you read our story yesterday about Caneel Bay. There seems to be a bit of confusion as to what would happen if the proposed Bill does not pass Wednesday. Here is everything you need to know broken down:

  • If this Bill does not pass, it does not mean that Caneel Bay will be shut down forever, nor does it mean that the property cannot operate as a resort.
  • Congress decided several years back that Caneel Bay should operate under a concession agreement, not under a retained use agreement, which is what is has operated under since 1983. A concession agreement does not mean a hot dog stand for lack of a better term. Caneel can still operate as a full service hotel under a concession agreement. 
  • Plaskett’s proposed Bill calls for a 60-year retained use agreement and proposes that Caneel pay mere 1.2 percent to the federal government.
  • No other hotel located within the US National Parks operate under a retained use agreement as Caneel currently does. All operate under concession agreements. Again, this is what Congress deemed would be best for the USVI, the Virgin Islands National Park, and the people and employees in the USVI.
  • At the Grand Canyon National Park, the company that operates the hotels on the South Rim operate under a concession agreement. It is a 15-year agreement and they pay 8% back to the government. 
  • At Yellowstone National Park, the company that oversees it pays 4.5 percent, but they also pay a 6 percent annual contribution to a maintenance account. This is a 20-year agreement. They, too, operate under a concession agreement.
  • Back in the USVI, Redwoods, who runs Cinnamon Bay, was given a 15-year lease and pays 2.5 percent. Caneel Bay Watersports has a 10-year lease and pays 4 percent. Paradise Agua Tours (runs the rental hut at Trunk Bay) has a three-year lease and pays 3 percent.

So two of our largest hotels operating within the US National Parks operate under a concession agreement. Every other business operating within the Virgin Islands National Park does too. So why shouldn’t Caneel? The answer is, they should.

  • If the proposed Bill does not pass, the concession agreement for Caneel Bay would go out to bid in an open marketplace. This is a good thing. If this happens, it is extremely likely that the winning bidder would pay a significantly higher rate than the measly 1.2 percent proposed in Plaskett’s Bill. This money would go directly to the Park Service, which is dire straights these days.
  • If this proposed Bill does pass, Caneel can continue to operate as an EDC (economic development commission). EDC benefits are meant to bring new businesses to the USVI and as a thank you, they get tax breaks. This is meant to be a short-term thing. Caneel, however, has been operating as an EDC for decades. They have also been doing so illegally. For starters, in order to qualify as an EDC, you need to have a certain amount of full-time employees. Caneel lays off its employees every year from late August to November 1st; therefore they are not full time and do not qualify for EDC benefits, yet they continue to receive them. This has also contributed to the depletion of the VI Unemployment Fund forcing the USVI to borrow heavily from the federal government – all while the operators of Caneel Bay continue to line their pockets.
  • Because Caneel is receiving EDC benefits and will continue to do so if Plaskett’s Bill passes Wednesday, it does not have to pay property tax, income tax, excise tax or gross receipts tax to the USVI government. This equals millions of dollars a year.
  • Caneel Bay charges a 12.5 occupancy tax as required by USVI law. Caneel itself, however, does not pay this tax, the person renting the room does.
  • So if you stayed at Caneel just one night, you have paid more taxes to the USVI government than Caneel has the entire time it has been a resort.
  • People are concerned about jobs at Caneel. If this Bill passes Wednesday, it does not mean that the laid off employees will return to work.
  • Did you know that the gardeners who have worked for Caneel Bay for years only make $9 an hour? If Plaskett’s Bill does not pass Wednesday and a new company wins the bid for a new concession agreement, I am pretty certain that the employees will be treated more fairly than they have under CBI Acquisitons rule and they will be paid better.
  • When CBI Acquisitions laid off its employees permanently following the storms, it only gave severance to employees for the time it has managed the resort. That means that people who have worked for Caneel for 15, 20, 25 years and more did not receive the full severance they should have been entitled to.
  • Should Plaskett’s Bill pass, the 1.2 proposed fee sounds like it would be an improvement as they currently pay nothing. However the Bill also calls for them to be able to reduce this percentage by doing regular maintenance among other things. So in the end, they will continue to pay nothing.
  • If the proposed Bill passes, the Park Service will continue to have no oversight on the 170-acre parcel. That means that the operators could tear down the historical ruins on property, continue to cut off access to the public beaches and build high rises anywhere on the property if they’d like.
  • This tactic of shuttering the property and using it as a bargaining chip isn’t new for Caneel. They did so after Hurricane Marilyn too. Because Caneel Bay has two-year interruption insurance, they lose nothing by remaining closed. In fact, they remained closed for the full two years following Marilyn because they could. So who loses in this situation? Certainly not Caneel. We lose. The employees lose. The shop owners lose. The restaurants lose. The charters lose. Everyone loses but the operators of Caneel Bay.
  • Side note: Caneel is currently housing BBC employees and has been housing relief workers since September. It is receiving a very high nightly rate for these stays. The storm damage isn’t preventing them to continue to profit. This demonstrates that part of Caneel is currently habitable and therefore it laid off all its employees by choice, not because it was forced to.

So hopefully by now, you see why this Bill is not in the best interest of the USVI; it is not in the best interest of the VI National Park; it is not in the best interest of the former Caneel Bay employees; it is not in the best interest of anyone except those who are set to profit off of Caneel Bay and that is solely the CBI Acquisition group.

So again, I implore you to reach out to your Congressman or either call the Committee of Natural Resources at (202) 225-2761 or email them here. Here is the direct link: https://naturalresources.house.gov/contact/

Please refer to H.R. 4731. That is the name of Plaskett’s bill.

36 comments for “Caneel Bay: Breaking It Down

  1. Gary P. Moore
    March 5, 2018 at 10:45 am

    We stopped coming to STJ when Cinnamon Bay Campground raised their rates AND ruined the bare site campsites by putting them too Close to each other. Their rates ALSO became ABSURD. I would book my flight right now if Caneel converted to a reasonably priced campground. I’m not riff raff. I just prefer to camp and absorb every ounce of nature I can. I come to STJ for nature. I have plenty of money to spend on restaurants and provisions in town. I could care less about helping 500 locals (mostly from STT) get benefits and cushy jobs pampering the wealthy elite. Converting Caneel to a campground might not employ 500 on site, but it would have a HUGE positive impact on local businesses, which will in turn offset any job loss at Caneel. The number of campers would be tenfold or fifty fold the number of hotel guests Caneel resort can put up. Virgin Islanders can always move stateside and work if they aren’t happy with their job status.

    • John smith
      March 5, 2018 at 1:35 pm

      Gary

      Are you insane?
      Seriously, you believe that campers would be a better addition than the hotel guests?
      The reason the island of stj has such amazing restaurants and shops and can continue to flourish is because of the money that the hotel guests spend at Caneel and in town.
      Campers are cheap and complain about everything and always whine about costs, just as you are doing. The hotel guests spend $1000 a night and hundreds of dollars at dinner in town and will complain when the service doesn’t warrant the prices.
      Caneel brings affluent people to the island and they spend money. Many people that camp at cinnamon do so because that’s what they can afford.
      I was a manager at the resort for many years and you simply don’t know what u are talking about …

    • usvigirl
      March 5, 2018 at 2:50 pm

      Gary-
      Shame on you! How condescending of you to think that islanders who just experience two level 1 hurricanes can simply just pick up and move at their convenience! At the least this is ignorance; at the most, it is ludicrous and patronizing. The fact that you say you could care less about helping others makes me wonder why you are following this website, which serves to promote island optimism and progress, at all. Please take your negativity and misinformed comments elsewhere.

      • Brian
        April 30, 2018 at 6:43 pm

        Amen sister!

    • March 6, 2018 at 4:47 pm

      Wow…can’t even imagine Caneel as a campground! So many people who go to Caneel have been going for years, bringing kids and grandkids. Lots of seniors are not able to camp and/or would never choose to do so. Yes, Caneel always got its share of the very wealthy, but most of the people we’ve met on trips to Caneel over the last 40 years have been folks who went once and fell in love with the place and the people and may save all year or several years just to come back and bring family. So, no, I wouldn’t go to a Caneel Camp and don’t know anyone else who would be interested either. I hope things get worked out to the benefit of those who have put their energies into making this place unique and continue to keep Rockefeller’s vision. After all, if it had not been for that vision, this unique property wouldn’t exist in the first place.

  2. Angelic Atheist
    March 5, 2018 at 11:02 am

    Jenn,
    Thank you so much for your thorough explanations! As a long term annual guest of Caneel, this financial arrangement really rubs me the wrong way. It just sickens me think that the $$$ we save all year to afford to chill on their beaches isn’t ending up either in the hands of native islanders or being used toward the improvement of the NPS. Please know that if the bill does pass, I really don’t see high rises being constructed. Laurence Rockefeller’s vision of infrastructure commensurate with its natural surrounding will be respected or the resort stands to lose many loyal guests. Again, thanks so much for all the research and informative posts. My family and friends really enjoy them.
    Best to all on St. John!

  3. Cory Davies
    March 5, 2018 at 11:53 am

    Perhaps a naive question, but if Rockefeller put in his will or trust or whatever legal document stated that the land goes back to the NPS in 2023, why does the possibility of extending or creating a new RUE or possibly a concessions agreement even exist? Why is that up to Congress to decide? Did he leave wiggle room in these documents for such possible eventualities?

    I certainly understand the positions and arguments of both CBI and the locals who worked there and had their lives interrupted Sept. last as well as the people (locals and visitors alike) who are in favor of it simply going back to the NPS and seeing the land managed more like Trunk, Cinnamon, Maho, etc., but I don’t understand the position of people who want it to remain a resort, just under more lucrative terms and stricter oversight. That seems disingenuous to me, like having your cake and eating it too.

    If Rockefeller always intended the land to be returned the NPS and for that area to eventually more accessible to the public, then I think we should honor his intentions.

    • Linda
      March 5, 2018 at 12:49 pm

      Our thoughts, exactly. Seems to me, this could end up in court. I would think Congress should have to weigh this, heavily.

      • David
        March 7, 2018 at 4:58 pm

        It can’t and it won’t. He left his wishes vague enough.

  4. Robert Maxwell
    March 5, 2018 at 12:10 pm

    Jenn thanks for the well-researched articles about the situation with Caneel. Your reporting was very thorough and very much appreciated. I just sent an email to the National Resources committee via the link you provided. Hopefully things turn out well. Keep up the great work!

  5. Gina
    March 5, 2018 at 12:11 pm

    I sent a message to my congressional rep. I also sent him a link to this blog post so he can read all the pertinent information for himself. Thanx for the info Jenn. 😉

  6. Karen
    March 5, 2018 at 1:30 pm

    Thanks for the additional info. The damaged buildings keeps Caneel from fulfilling Rockefeller’s intent to give functional buildings for the Park to use. I, too, smell a lawsuit but I doubt Park has money to fight. Yes, Caneel has insurance, but that doesn’t mean they have to use the proceeds to rebuild.

    Caneel hired a lobbyist. Only the voters can take them on.

    The National Park is no angel, either, and they can’t fully maintain the Park. Not just this one but many.

    Will the committee meeting be shown on cspan?

  7. Jack A
    March 5, 2018 at 2:12 pm

    Thanks for outlining what you know about this. We used to come to STJ annually, but now only occasionally because it is becoming too much like STT. All the development over the past 15-20 years is eroding the charm and distinctiveness of the island. Very little remains of the original “off the beaten track” or “2/3s National Park” that everybody still brags about… I fear that opening up Caneel to competitive bidding would allow another Peter Bay or Grande Bay Resort or Westin time share instead of the relatively complimentary and unobtrusive existing structures…Those residents that want bigger and bigger hotels and conveniences will finally kill the golden goose…I can get all the big hotels and fancy restaurants in Mexico for a fraction of what I have to spend getting to and being on STJ. Maybe the best resolution would be to reclaim the property and return it to a more natural state? Same with many of the structures that no infringe on many borders of the park.

  8. Sandra Powers
    March 5, 2018 at 2:15 pm

    An excellent, well-researched and presented article. My email has been sent.

  9. Matt
    March 5, 2018 at 6:54 pm

    Very well done write-up. Thank you for the detailed explanation.

  10. Phil Lykens
    March 5, 2018 at 9:54 pm

    I am not sure what is the right course of action; but I am certain that it needs full consideration of all options. Rushing into a RUE or other agreement is not the best choice. As hard as it may be on the island’s economy, thought and a complete process needs to go into the bidding.

    Comparing rebuilding a resort to a fee agreement on a historic lodge that was built years ago ( Grand Canyon/ Yellowstone) ignores the capital cost of rebuilding. The real question is total return.

    The real issue is what is the best use of the property. That is up to the NPS, the USVI and ultimately Congress.

    If the use was as a resort and that generated fees for the NPS to maintain the park and provided jobs for residents than that might be the best use. If the fees and jobs provided were not enough to offset the benefit of allowing full access to the property than turn the property into part of the Park.

    Mr. Rockefeller had a grand vision for the island that many of us love. That vision has stood the test of time. It is now up to the NPS, residents of the USVI, and Visitors (deliberately last and least) to provide their view to the Congress. My hope is that the result will prove as visionary as Mr. Rockefeller’s gift

  11. Cap Hill
    March 6, 2018 at 12:17 am

    There’s so many bigger issues lobbyists are working on at conferences in DC now like the WIC program, for example. Ask a lobbyist about the Caneel issue and they will have no idea what you are talking about.

  12. Ena Brooks
    March 6, 2018 at 10:44 am

    Just called my House Rep and Committee on Natural Resources to oppose HR4731.
    Thank you for the clarification and your continued concern for our beautiful island.
    We went to Caneel Bay for our honeymoon in 1985 and want to keep the natural, low key beauty of the resort for years to come.

  13. Lee Hersh
    March 6, 2018 at 10:52 am

    Amazing job Jenn! You are a very competent journalist!!

    I called the CNR and sent them an email- let’s hope the bill fails to pass!!!

  14. Brian
    March 6, 2018 at 11:04 am

    Don’t kid yourself, the Rockefellers set up that situation so they could get huge tax deductions and have the public maintain the park that shielded what they retained from development. I’m sure they had to have some kind of limited term to further the tax benefits, thus the reversion provision

    That doesn’t mean it is isn’t/wasn’t wonderful for St. John, it has been great for St. John . It gives St. John a great undeveloped vibe that we all appreciate and the world class resort has made it possible for many st johnians to have employment on St. John.

    As bad as the current leaseholders may be, they are better than nothing
    A 10-15 year concession will never justify the investment required to build a world class resort
    It is my understanding that the park took 3 years to even present the current leaseholders a new lease, it concerns me that the park dragging its feet while looking for a “better solution” will result in no resort or another campground, which will be a huge economic blow to St. John
    Does the edc program get abused? Of course it does and we all know it, but we have no assurance another concessionaire won’t do the same.

  15. Mike
    March 6, 2018 at 2:30 pm

    A little confused. Doesn’t a concession agreement usually come into play when the structures are already built and the company taking the agreement is responsible for operating said facilities?

    In this case, facilities need to be (re)built. Is that not something that makes this a quite different case than most concession agreements?

    • Jimg
      March 6, 2018 at 3:50 pm

      They were probably required to have insurance. That is how this company will rebuild OUR buildings. Don’t forget that they belong to the people of the USA.

  16. Karen
    March 6, 2018 at 6:43 pm

    The buildings will only belong to the National Park after 2013 if no new RUE is approved. The insurance beneficiary was surely Caneel and not National Park so Caneel can do whatever it wants with insurance proceeds.

    Locals have NO SAY in what happens with Caneel. National Parks are federal controlled and rarely consider local input because territories congress reps can’t vote.

    Many VI businesses are struggling because hotels are closed. Non of them are posting here but they would probably prefer to see Caneel reopen as Caneel as soon as possible. Caneel is a known entity with brand recognition. Lots of value there.

    It would be nice if Honeymoon and Solomon could taken out of Caneel property and transferred to National Park as a compromise, but the Rockefeller transfer document may not allow that.

    • John T
      March 22, 2018 at 3:22 am

      I agree on Honeymoon and Solomon. I also agree that Caneel as it existed was compatible with the island and we should beware of what might replace it. I’d be interested to see the numbers. How much is the projected profit for the resort, what’s the cost to rebuild, how much of that cost is covered by insurance and what’s the revenue in dollars to the territory bases on the proposed agreement. Granted there is significant ancillary income from guests and benefits from employment but I wonder whether the lease holder is making money hand over fist while the territory is under compensated. My guy tells me their not but I would like to see the financial analysis of it exists.

  17. Salty John
    March 9, 2018 at 1:29 pm

    Most of the Caneel guests are shuttled to / from the property via private ferry. Most will never leave the property.

    It is a myth that Caneel is good for St. John. Workers are released each season; jobs are low-paying …

    There is no compelling reason for our government to allow this bill to come to a vote, let alone pass … Unless there is some money making it’s way back into their pockets (SOP down here)

    Ultimately it is the local full-time, tax-paying residents who will suffer. Massive construction projects at a time when labor and housing is tight does not help us rebuild OUR homes. This will only drive up the price up for building materials and labor.

    What about the demolition waste? Where is that heading? Our ferries and barges are already at the breaking point. The roads are a wreck. This may be on National Park Land, but it is our Island, our roads, our resources that will be depleted if this is allowed.

    I predict the new plans will break severely from it’s original intent. Expect more Sirenusa-style abuse of the landscape and skyline.

    And finally and most importantly: If you are a resident, register to vote. The only way to fix this is to vote the criminals out.

    • bob
      March 11, 2018 at 4:20 pm

      Sally John, You are so wrong. My wife and I have been coming to Caneel for 47 years and we go into town virtually every day, as do many of he guests, to shop, eat dinner or to explore the island. BTW, this bill will not only come to a vote but it will now easily pass for the full House of Representatives as well as the Senate. Not everyone wants to rent a villa or sleep in a campground. I work hard for my money and you should be happy that I choose to vacation on St John.

  18. Christopher
    March 10, 2018 at 5:25 pm

    BBC, FEMA,VAYA, and the NPS have all stayed at Caneel and never pay more than the approved US government per dium rate unlike the rates charged by villas and other hotels. You also neglected to mention Global DIRT, All Hearts and Hands and other NGOs and all the first responders who stayed there at no charge.

  19. V Irie
    March 11, 2018 at 10:47 am

    The author of the bill will likely attempt to refute your article. Are you prepared to defend?? Request an open debate on radio. The only thing that works in the VI is head to head

  20. Erik Petersen
    March 11, 2018 at 2:08 pm

    Thank you for the detailed explanation and insight / comparisons.

  21. Hank Vaccaro
    March 13, 2018 at 2:16 am

    As a Caneel newbie (5 visits in the past two years), and a former multi-visit Maho Bay lover, I will offer my perspective on its “wealthy” clientele. Many of us are not! We spend freely, and tip well because we are grateful for what the resort and especially its staff give us in return. We miss you Dian… And we look forward to our next hours-long snorkel off Scott Beach, followed by a mind-and-body numbing massage. Then a wonderful dinner in town. The rest of life is OK, but each stay at Caneel was simply beautiful.

  22. Elaine Estern
    March 13, 2018 at 3:52 pm

    Thank you Jenn for all of your investigating reporting. I have written a letter to go to every off islander I can. As a business owner, I feel the fault of the Interruption of Business clause is the fly in the ointment. Look at Wharfside, Westin and Caneel.
    Letter follows:

    This letter is to all St John lovers,
    It has come to my attention that the fate of Caneel Bay is being decided by a group of men, in Washington DC, that most likely have never stepped foot on island. CBI ACQUISITIONS currently holds the Retained Use Estate ( RUE ) for Caneel Bay. Their agreement to control and profit from the property is set to end in 2023.

    There are many opinions on what should happen at Caneel Bay in 2023. Lawrence Rockefeller who donated Caneel Bay to the Virgin Island National Park gave his opinion in a document signed and notarized September 13,1983.

    “the Premises ultimately be an integral part of the Virgin Islands National Park under the jurisdiction of the Secretary for the use and enjoyment by visitors to the Park of the outstanding scenic and other features of national significance located both within the Premises and in other areas of the Park.”

    CBI ACQUISITIONS does not agree. They have contacted DC Lobbyists and the Virgin Islands Representative to Congress to propose bill HR473.

    Bill HR473 would set fee of 1.2% on gross revenues for 15 years. Ultimately no fees could possibly be paid as CBI has asked for improvements (reconstruction) to the property to be calculated as an “adjustment” to the 1.2% fee.

    Bill HR473 is a 60 year agreement. If Congress passes this bill CBI will have control of all 170 acres and the improvements at Caneel Bay for 60 years. That is more that four time the agreement to run lodging at other National Parks like the Grand Canyon or Yosemite.

    Bill HR473 extends the special Retained Use Estate or RUE designation for Caneel Bay. This was never the intention of the original document. The RUE was a special designation that the Rockefeller organization gave themselves as they were in the process of donating 170 acres of land to the National Park. CBI ACQUISITIONS is not donating anything.
    There are many sides to this issue, but they all come back to money. And lots of it. CBI Acquisitions acknowledges that it did have insurance. But, they want this new agreement with Congress, to borrow another $100 million. Mr. Engle, CEO of Stoneleigh Capital, the management company for CBI, said to the Congressmen,”In other words, I can make money, which is my line of business.” “ I can make money running the resort. That is a substantial incentive.” Apparently, they have made a bit of it, as they have already paid over $330,000 in 2017 to lobbyists to continue and extend this present Retained Use Estate with the National Park.
    I think I would rather have the Caneel Bay Estate revert back to the National Park, rather than have a group of men, rebuild to their pleasure and potentially squander our resources. The National Park has done a superb job of keeping St John. Let’s give the people of America a chance to see those seven special beaches!
    PLEASE test, write or call your Congressman/ woman! StJohnians have no say!
    Elaine Estern
    Coconut Coast Studios,Inc

  23. Alana
    March 22, 2018 at 4:45 pm

    If Caneel transforms into a Westin-like or Campground-like property I will never return to it. I’m sure others feel the same. I am all for rebuilding of the rock and will support the local establishments but if Caneel goes in this direction I will have to go somewhere else.

  24. dylan falcone
    March 29, 2018 at 11:44 pm

    Apologies if the answers to these questions are obvious, but I’m not the sharpest tool in the shed.

    1. Why did Stacy Plaskett present this bill? Is she of the belief that STJ needs the resort industry to grow in order to fuel the local economy, and thus the employment it provides?
    2. What is the basis for straight up ignoring Rockefeller’s instructions? I’m not following the legality of disregarding his instructions.

  25. Janet
    April 9, 2018 at 8:38 pm

    The last thing St. John needs is a mega hotel on the property. So what if Caneel gets a tax break? Better Caneel than a trashy high rise resort.

  26. Joanna
    April 30, 2018 at 7:58 pm

    My husband and I have been vacationing at Caneel Bay Resort for more than 20 years. We are not super wealthy and would save up a few years and then visit in the summers, as I am a teacher. It was the most beautiful and welcoming and lovely place ever. We both loved the quiet and natural beauty.

    We often went into Cruz Bay and shopped and ate at restaurants there. We will be back in a heartbeat if it is rebuilt close to what it was in the past.

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