What is the fundamental issue between the U.S. Government, NPS and EHI/CBI Acquisitions? The following 3 Part Article will attempt to delve into some of the key components of the 1983 Indenture, scripted by Laurance Rockefeller in 1983, that outlines the Retained Use Estate (RUE) leasehold within that document which is central to both parties’ pending Motions for Summary Judgement. The author will do her best to explain the facts in detailing what has already transpired and what the future may hold.
I would like to preface this article by saying how much I miss Caneel Bay Resort and the magical times spent there. I was on island for the 2017 hurricanes which affected me profoundly. I cried when I saw the first flower, a sign of hope and renewal to come. I hold onto that hope for the future of Caneel Bay.
Both parties would like to see this jewel of St John restored. So why the conflict?
On one side we have EHI Acquisitions, a subsidiary of CBI Acquisitions, filing a civil lawsuit against the United States Government and National Park on June 30, 2022. EHI Acquisitions LLC, filed a “quiet title” claim to Caneel Bay Resort in U.S. District Court, arguing that it now owns the property pursuant to a “reverter” clause in the 1983 Indenture agreement, scripted by Laurance Rockefeller in 1983. According to EHI attorneys’ 26-page brief and their interpretation of Section 8 of the document, the “Premises” of Caneel Bay including all land, docks, structures and improvements “reverts” back to EHI (although they never had any land ownership rights) because in 2019 the United States refused to purchase CBIA’s remaining 4-year rights of the Retained Use Estate (RUE) for $70 Million. https://document-tc.galaxy.tf/wdpdf-1354q8szh19dr4sytvoe6yw2d/file.pdf? More on this later.
EHI claims on its Caneel Bay website that they are ready to rebuild but the US Government and NPS do not want to restore Caneel Bay and are stalling their process. However, the US Government and NPS have been trying to negotiate a lease agreement with CBI Acquisitions since 2010. The National Park Service would also like to see the Caneel Bay properties restored and open. However, the previous RUE agreement had definite shortfalls that would be detrimental to the maintenance and future of this magnificent, historically significant property. This included full rights without authoritative control or oversight by the Secretary of the United States or National Park Service to decide rates, location of facilities, nature, construction and design including any addition, changes and alterations, whether structural or otherwise. https://www.govinfo.gov/content/pkg/CRPT-111srpt146/html/CRPT-111srpt146.htm
EHI further states that they would be the greatest benefactors to the people of St John and the Virgin Islands, giving assurances that they would hand the priceless property over to the people of the St John should the company establish sole ownership. Essentially, such promises are tenuous as there is nothing requiring EHI to donate anything should they ever secure title. EHI has garnered some public favor through a campaign that it hoped would sway any decision in their favor. Much to EHI’s chagrin, the trial that was set for October 16, 2023 was cancelled by Chief District Judge Robert Molloy who said he “can resolve the issues in this case upon the written submissions of the parties,”. This means there will be no jury trial and Judge Molloy will rule on the case based on the evidence already presented.
The following is an excerpt of the Change.org petition on behalf of EHI:
“1. EHI will return the resort land to the people of St. John. After EHI secures title to the land, it will donate the land to a charitable entity established for the benefit of the people of St. John and managed by USVI residents.”
The Caneel Bay website currently states: “EHI has operated the Caneel Bay Resort since 2004 and is ready to rebuild now and restore Caneel Bay Resort to its former glory as a five-star luxury resort. EHI has committed to donating the Caneel Bay land to the Virgin Islands people. This can only happen if the NPS agrees to stop litigating and negotiates with EHI to immediately rebuild Caneel Bay Resort”. There should be some mention that EHI is requesting sole title and ownership to all lands, docks, structures and improvements.
The company has stated that they require ownership to secure additional funding for rebuilding which they have estimated to be around $100 million. However, the company has already received between $60 million – $140 million from its insurance claims after the 2017 hurricanes. CBIA has refused to give an actual number to that compensation. They have, however, stated their claims for both Irma and Maria amount to “upper 8 figures” (meaning $50 million to $99 million) for property damage and “low 8 figures” (meaning $10 million to $49 million) for business interruption. CBI’s total insurance payout therefore amounts to between $60 million and $148 million.
Yet the structures on the land are abandoned and left in the same devastated state they were in after the 2017 storms. Gary Engle, Caneel Bay’s principal owner under CBIA, told a local reporter that he was in a position of power with an insurance payout that did not require him to rebuild; “I could take that money and walk away, or I can take that money and reinvest and maybe put up a little more capital and turn this into something special,” Mr. Engle said. “Without Caneel Bay, St. John is going to implode.” https://www.nytimes.com/2020/01/20/travel/st-john-caneel-bay-resort.html
Although many folks are crying foul, EHI’s PR campaign has managed to secure support on a Change.org petition from a long list of previous guests longing to return to the former idyllic resort.
The US Government and NPS have been negotiating with CBI Acquisitions offering the company first rights to leasing and continued operation of Caneel Bay for a 40-year term. CBIA in turn demanded an extension of the existant RUE for an additional 60-year term which granted them overriding authority. The 1983 Indenture clearly stipulated that when the RUE expired in 2023, the owner of the estate must cease operations and donate the buildings and other property covered by the retained use estate to the National Park Service for inclusion to the Virgin Islands National Park. https://friendsvinp.org/wp-content/uploads/2020/09/Sept_30_1983_RUE_Caneel.pdf
The property itself was donated to Virgin Islands National Park that same year by the Grantee, Jackson Hole Preserve. This was known and accepted by CBI Acquisitions when the company purchased the lease in 2004. EHI is now boldly claiming title and ownership to everything; the land, the structures and the right to determine what is done with it all without input or interference from any outside agency including the US Department of Interior or the the National Park Service.
First Assistant U.S. Attorney Joycelyn Hewlett filed a motion to dismiss EHI’s lawsuit on September 20, 2022 responding that the company’s arguments are “rife with contradictions” and defy “logic and common sense.” The 2010 Senate Report states clearly that “The retained use estate will expire on September 30, 2023. The warranty deed stipulates that when the retained use estate terminates, the owner of the retained use estate must donate the buildings and other improvements to the NPS.” https://www.govinfo.gov/content/pkg/CRPT-111srpt146/html/CRPT-111srpt146.htm
On March 3, 2023 Hewlett and U.S. Attorney Delia Smith further argued that EHI failed to present the facts showing how it acquired the title to Caneel Bay saying EHI executives failed “to state a claim for which relief can be grant”.
With the end of the RUE approaching, the National Park Service undertook a formal process to plan for the redevelopment of Caneel Bay in 2021. It focused its early priorities on framing the stewardship, community and operational objectives for redevelopment and identified “the following goals:
- ensuring preservation and protection of Caneel’s natural and cultural features
- provide for economic development opportunities through commerical services
- maximize operational efficiencies
- ensure complaince with law, regulation and policy
The development and management of Caneel Bay will offer welcoming and equitable opportunities that promote access, visitation, employment, and use of local businesses at the Caneel Bay area to a diverse range of users.” https://www.nps.gov/viis/caneelbay.htm
Meanwhile, over 8 acres of land on Caneel Bay have been identified as having potential environmental concerns from the operation of the wastewater treatment plant, use of chemicals and other pesticides. The NPS is currently investigating this potential environmental contamination pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) .https://www.nps.gov/viis/learn/news/national-park-service-releases-caneel-bay-contaminant-study-results.htm
In January, 2023 the public was invited to comment on a NPS limited Environmental Assessment for the Redevelopment and Management of Caneel Bay at Virgin Islands National Park which basically had only two options. Alternative A – No Action (No Redevelopment) where the National Park Service “would minimally restore the site to allow safe access by visitors through existing roads and trails, including safe access to beaches. The NPS would not provide visitor services, including overnight lodging….”
or Alternative B – Proposed Action/Preferred Alternative (Redevelopment) “which aims to balance enhanced public access, recreational opportunities, resource protection, and Park operational efficiency while reestablishing an overnight experience on a portion of the original RUE that is consistent with the landscape as envisioned by Laurance Rockefeller.” http://npshistory.com/publications/viis/caneel-bay-redev-mgt-ea-2023.pdf#page14
https://www.nps.gov/viis/learn/news/caneel-bay-redevelopment-1-20-2023.htm. Further details of this can be found in the following News of St John article from August, 2023: https://newsofstjohn.com/caneel-bay-update-nps-announces-future-plans-for-resort-development/ Earlier this summer the Park Service approved the Alternative B redevelopment plan for the 150 acres that calls for a “21st century eco-resort” that could offer up to 166 overnight accommodations.
There currently has been no change at Caneel Bay. First Assistant U.S. Attorney Joycelyn Hewlett filed a motion to stay the trial concerning the September 30, 2023, expiration of the Caneel Bay Resort Retained Use Estate (RUE) as the court moves to resolve the case. The Federal court granted the motion on September 28, 2023. Virgin Islands National Park Acting Superintendent Penny Del Bene posted “The National Park Service (NPS) will comply with a federal court order issued Thursday….. In further compliance with the order, the NPS will not take steps to manage or assume possession of the property until receiving further notice from the court.”
It is unclear how the court will decide. Chief District Judge Robert Molloy was scheduled to convene a trial on Oct. 16, but Judge Molloy cancelled that date and said he “can resolve the issues in this case upon the written submissions of the parties,” according to the order. He stayed all deadlines “because the Court needs additional time to render its decisions upon the pending dispositive motions,” which include a motion to dismiss by the federal government, and motions for summary judgment by both parties.
On October 10, 2023 – EHI Acquisitions asked Judge Molloy to reject the government’s Motion to Dismiss its lawsuit, further requesting the court to grant EHI ownership of the 150-acre Caneel Bay Resort property on St. John.
For now the Caneel Bay Beach Club, located at Honeymoon Beach, continues to operate as normal through a concession agreement between CBIA and Mark Snyder. ZoZo’s restaurant, which is now located at the base of the dock on Caneel Bay beach, is still scheduled to reopen on December 13th, 2023 as planned.
Part II of this article will give a history of Caneel Bay and the 1983 Indenture examining what this RUE is all about.
Does the concessionaire at Grand Canyon NP own the canyon? Obviously, no.
“So why the conflict?” Follow the money.
EHI/CBI Acquisitions is desperately trying to squeeze any money it can from the Federal Government. The only interests they have are their own bank accounts.
Other St John entities have rebuilt from the hurricanes of 2017. EHI/CBI Acquisitions risked and gambled their investment with insufficient insurance, and lost. They do not deserve to be rewarded for inept stewardship.
Could not agree with you more.
EHI seem to be misconstruing Section 8 of the 1983 RUE.
In EHI’s view, Section 8 suggests that EHI can offer the improvements on the land to the USA in exchange for an amount equal to the “fair market value” of those improvements (they said $70 million at the time of the offer) and that if the USA did not accept such an offer, the land would revert to the EHI.
However, if you read Section 8, there is no mention of fair market value compensation or indeed any compentation. In fact, it discusses a “transfer” of assets, not a “sale”. It appears that Section 8 is simply saying that EHI can offer to transfer the improvements to the USA, and if the USA fails to respond or declines, then EHI would receive title in all of the premises.
EHI seems to be arguing that the only logical way to read Section 8 is to suggest that the exchange would have had to be for Fair Market Value of the improvements. I assume a judge will need to decide that, but given that there is no mention of remuneration and that the text suggests all mortgages need to have been paid off, it’s almost as if the original grantor contemplated that if the USA refused to take possession of the improvements (for free), then the land would revert back to the grantor.
It is the author’s belief that the Indenture changed when Jackson Hole Preserve donated the land of Caneel Bay to the Virgin Islands National Park in 1983 right after being granted all rights to the “Premises”. Only the RUE with right to occupy remained and could be transferred or sold by Jackson Hole Preserve after that transfer. Part II will cover this in more detail.
I agree with Island Guy! I never stayed at Caneel Bay but went every year that I came for the restaurants. A truly magical place. I like Alternative B.
Island Guy..we should sure follow the money..if you think the Federal Govt has a better plan for this property then I can’t help you..as a property owner in STJ I want this current administration as far away from Caneel as possible
This is as if you had a long term lease on a property and offered the owner a buyout of the remainder of the lease and the owner declined. Would the property now be yours??? Of course not!! What an absurd idea! Let’s just move on and let the Park restore the property (that they own) in the best way possible for the people and community of St. John. Engel be gone!!
Paul Mccarthy – what is your opinion on what should be done with Caneel Bay?
I was an annual guest at Caneel Bay not because I loved the resort, but because the land and beaches are some of the most spectacular I have ever seen. I felt a deep appreciation for its magic. However do not fool yourself CBI never paid a penny to the federal government or the Parks department. NY TIMES ” And the land agreement with the Park Service — which receives no payment for use of the federal property — along with long-extended benefits from the Economic Development Commission, made the resort’s business position enviable.”
If you think their claim that they would turn the land over to the people of St. John you are deeply deluded they never contributed anything to the land or community other than employment for many. CBI is all about revenue and none about community.
Poor Old Caneel. Abused by nature and man alike. I loved the entity that existed back in 1974 when I first came to the VI: it was a quiet, underdeveloped ( especially by today’s standards ) , spartan yet elegant property. We could dine there and enjoy the lavish holiday brunches, my favorite was Easter with towers of chocolate bunnies, yet we were restricted from access to much of the property used by paying guests and rightfully so. It employed many people on St John. It was a huge economic asset. If we wanted to hang out and play on beaches all day we had the entire park system with Trunk, Cinnamon and more just down the road. I miss the USVI the most when I’m there. So much change, none that I see for the better…..
As a child of the 60s and 70s who used to sail with her family through all of these islands, Caneel Bay was a favorite anchorage. On one memorable occasion, my mom realized she had forgotten to buy the toilet paper for our week’s trip so our Capt. Peter Jordan swam ashore with a baggie and absconded with a roll from the resort to get us through the next day until we could get to Tortola! Just one of my more fond Caneel Bay stories! It was a charming, unspoiled, beautiful spot. How I miss those days. Hoping for a resolution that brings it back to life and is good for the warm and wonderful people of St. John.
Unbelievable.
Just greed. EHI/CBI is just trying to manipulate the system.
Holding hostage the property and the community.
If they really had good intent they would have taken the insurance payout and rebuilt the property.
Sad stuff.
I AGREE WITH ISLAND GUY & RAFE. EHI ACQUISITIONS CONTROL OVER PARK LAND IS WHAT HAPPENS WHEN PEOPLE FROM AWAY MAKE DECISIONS FOR RESIDENTS OF ST JOHN.
WILL A HOTEL MANAGEMENT COMPANY CLEAN UP THE 8 TOXIC WASTE SITES AT CANEEL? NO
WILL A HOTEL MANAGEMENT COMPANY HIRE LOCALLY FOR GOOD PAYING MANAGEMENT JOBS? NO
ARE MOST HOTEL JOBS ANYWHERE LOW PAYING, MINIMUM WAGE JOBS? YES
WILL BUILDING CONTRACTORS LOW-BALL THEIR BID TO GET THE JOB, THEN LEAVE A PARTIALLY BUILT CONSTRUCTION SITE (LIKE THE POND BAY CLUB) WHEN THEY RUN OUT OF $? YES
WILL MARINE LIFE IN THE 7 PRISTINE BEACHES AT CANEEL BE ADVERSELY AFFECTED BY CONSTRUCTION RUN-OFF? YES
WILL WAPA BE ABLE TO HANDLE THE ELECTRIC POWER NEEDS OF SEVERAL THOUSAND MORE PEOPLE, WHEN THEY CAN’T HANDLE THE LOAD AT PRESENT EVEN IN THE OFF-SEASON? NO
WOULD THE ENTIRE HOTEL INFRASTRUCTURE HAVE TO BE REBUILT? YES
DO THE NUMBERS WORK (PROFITABILITY) FOR LESS THAN 250 HOTEL ROOMS? NO
CAN A NEW HOTEL BE BUILT ON THE FOOTPRINT OF THE OLD CANEEL (ROOMS BUILT ON SAND RIGHT AT THE WATERS EDGE)? NO
WILL THE NEW HOTEL BE A HIGH RISE? YES
WILL A NEW HOTEL BLOCK ACCESS TO SCOTT BEACH, TURTLE BAY, CANEEL HAWKSNEST AND PARADISE BEACH (COTTAGE 7) FOR ST JOHN RESIDENTS? YES
WILL A NEW HOTEL BUILT TO 2023 CONSTRUCTION CODES BE AN ECOLOGICAL DISASTER FOR CANEEL? YES
WOULD A NEW HOTEL ALLOW FISHING ACCESS FOR ST JOHN RESIDENTS (A TRADITIONAL WAY OF MAKING A LIVING ON ST JOHN)? NO
WHY IS JUDGE ROBERT MOLLOY SITTING ON HIS HANDS?
The lease has expired. The former tenant is just that-former. NPS has title . If anything NPS should sue for some of the insurance for cleanup. The beaches should be made available to visitors under a lottery system for day use and limited. The NPS has a dual goal and in this instance it is an opportunity for nature to take a turn.
NPS will prevail in its Motion for Summary Judgement. The lease term is clear: land and improvements revert to NPS in 2023.
I honeymooned at Caneel in 1990 and returned several times. It was great when it was a Rockresort and good while managed by Rosewood. Under EHI, it was still beautiful, but much more costly, out of the reach for the average person. EHI has milked the property and, by many accounts, not treated their employees well. Their claim of ownership is outrageous. I hope Caneel is rebuilt in a form that is more accessible and sustainable.
I have so many memories of this place. I was priviledged to visit three times in my younger days, starting when it was a Rockresort. I’ve not found another place with matching attributes as a resort. I truly miss it and want to return before I’m too old to truly enjoy it.
I think it’s a shame what’s happened and there is likely blame on both sides, as there usually is. I can’t imagine it being something other than what it was. The rooms right on the beach were just magical to me. I fear that rebuilding this resort with all the federal agencies putting their regulatory “touch” on it will result in something far less enjoyable. I don’t think Rockerfeller intended anything other than what it was, and another commenter put it well…..an underdeveloped, simple but magical place with beautiful grounds and views, and good service. A seasoned resort operator is needed to make that happen. The park service should have oversight to make sure the redevelopment is done to meet the aforementioned goals, but if the government does the work the result will probably resemble other government work….and generally I’m not a fan of their results.
The people that lived on the island and worked at the resort were great. I feel for them that a source of employment has been gone for so long. Truly a luxury-leaning resort is the only way I see to give them as high a standard of living as possible. If the price point is drastically lowered the clientele wont provide the level of economic support the island had come to enjoy if the underdeveloped nature is retained. If it’s not, it’s going to look like every other glass high-rise with crowded beaches and pools, and we’ve lost a truly unique treasure in the beautiful Virgin Islands. I hope the powers that be understand basic economics and have a desire to preserve what’s truly unique about this special place.
I AGREE. MY HUSBAND AND I WENT THERE SEVERAL TIMES WHEN IT HAD A NO CHILDREN RULE AND WE HAD NO CHILDREN. THEN WE HAD OUR CHILDREN AND WERE PLEASED THAT CHILDREN OVER THE AGE OF REASON WERE PERMITTED. WE ARE NOW IN OUR 70’S WITH TWO ADULT CHILDREN AND SMALL GRANDKIDS, AND WE WERE HOPING TO RETURN WITH OUR ADULT CHILDREN AND GRANDCHILDREN ONE DAY. SO SAD. I WILL KEEP HOPING.
After reading all the comments, my husband and I sit here shedding painful tears. We made 4 trips to Caneel Bay every July. We could have gone to the Hawaiian islands, but fell in love with our 1st visit. We would fly from L.A.and make Caneel Bay for lunch. Our very best 2 week vacations. We are now in our late 70’s and can only hope that we could return just one more time.