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.