Plaskett’s Caneel Bay Resort Bill Sparks Community Questions
This article was published in the St. Croix Source on April 3, 2018
The fate of St. John’s oldest and arguably most iconic tourism property, Caneel Bay Resort, is uncertain, and a bill that Delegate Stacey Plaskett says will speed up its reopening is raising some eyebrows. The bill, which was introduced in December without a public meeting on St. John, would extend, by congressional action, a soon-to-expire arrangement between the owners of the former Rockefeller resort and the National Park Service, which owns the land the resort sits on.
Caneel was badly damaged in Hurricanes Irma and Maria, and its owners, CBI Acquisition, say they need assurance of the resort’s longevity, and a favorable rent, to justify investing in a rebuild. CBI Acquisition is a holding company whose principals have international interests in basic industry, real estate, and financial services.
As it is, reopening the battered resort is likely to take up to two years, and Plaskett says she fears it could take between five and eight years if Caneel sees a transfer of ownership via the sort of concessions contract more common to businesses in national parks. That’s one alternative to the current arrangement, if it is allowed to expire in 2023.
The problem, critics say, is that the existing arrangement has for decades given the resort a wide latitude as to how it operates, under little oversight, on public land. That land happens to be loaded with valuable natural and historic resources. Others point to business practices they say makes the resort’s owners less than full community partners.
Territory-wide commercial groups such as the Chamber of Commerce and the Hotel and Tourism Association have applauded Plaskett’s bill for its efforts to jolt the V.I.’s recovery, while both national and local conservation groups say the bill prolongs a bad deal for preservation.
Meanwhile, many St. John residents are weighing the need for an integral part of St. John’s economy to return, against some misgivings about how the resort has operated in recent years, and concerns about what the future might hold.
What the Bill Does
The arrangement that Plaskett’s bill aims to extend is a “retained use estate” dating back to Laurance Rockefeller’s donation of the Caneel property to the NPS in 1983. Since then, the resort, under various owners, has paid no rent to the federal government for its use of park land, under the assumption that in 2023 the resort itself would transfer to park ownership.
Under Plaskett’s bill, that would change. The RUE would extend for an additional 60 years, and its holder, whether CBI Acquisition or a future buyer, would pay some rent to the U.S. Government.
The bill initially proposed a rent of 1.2 percent of gross revenues, but as it moved through committee an amendment was made to change that amount to a more open-ended “fair market value as determined by an independent appraiser.”
The bill specifies that the resort’s rent can be renegotiated, up or down, after 15 years, and expenditures for maintenance and improvement should be considered in that negotiation.
Because Caneel’s rent would be deposited directly into the U.S. Treasury, the money wouldn’t necessarily go towards funding park activities in the Virgin Islands.
The RUE does not prohibit expansion of improvements at Caneel Bay. There’s nothing to say that with an RUE extension, the owners can’t build more rooms, introduce a timeshare model, or sell the RUE entirely to another entity.
The resort owners operate almost entirely independently of the park service under the RUE, although the park has some law enforcement jurisdiction on the property. The resort is not required to submit records of its maintenance activities — logs of pesticides used in grounds keeping, for instance — to the park.
Why an RUE?
The resort and the park have been in talks for several years to transition from the Rockefeller RUE to a more standard lease, but at some point negotiations stalled. The reasons for that vary depending on who you ask. Plaskett, when reached for comment, laid the blame at the feet of the park service.
The slow pace of negotiations, she said, “leaves you to conclude that either the NPS does not see this key economic driver in our community as its priority, or they would rather not have a resort at Caneel Bay.”
But it isn’t true that the park has opposed the continued presence of the resort, or has been inert when it comes to the RUE situation. The official public stance of V.I. National Park leadership has for years been that it does not have the resources to maintain or run Caneel upon the RUE’s expiration, but the resort should continue to operate in some fashion.
After a law was passed in 2010 allowing the NPS to begin lease negotiations with the resort’s owners, a lengthy environmental assessment was undertaken by the park.
The recommendation of that report was a 40-year non-competitive lease agreement for Caneel’s current owners. While it is not typical for long-term leases of public land to be arranged without competitive bidding, the park service argued that Caneel Bay is an exceptional case.
Among the factors taken into consideration was the need for stability and continuity in a small island economy dependent on tourism.
The lease proposed by the park did aim to make the arrangement more favorable for the NPS by requiring the resort’s operations and maintenance be “conducted in a manner consistent with the preservation and conservation of the resources and values of the park.”
It also introduced a market value-based rent to fund NPS visitor services and resource protection. The lease also prohibited the expansion of the resort beyond its existing footprint.
That proposal doesn’t appear to have gone very far. At a congressional committee hearing held on Feb. 28, Gary Engle, one of the CBI Acquisition’s principals, said the resort and the park “never really got into a substantive discussion.”
Joe Kessler, president of park advocacy group Friends of the Virgin Islands National Park, said the reasons negotiations fell apart are easy enough to understand. But the discussion should be revived rather than abandoned in favor of an RUE extension, he added.
“We have no doubt that [the negotiation process] was a frustrating experience, as the two entities had different priorities,” Kessler said in a written statement on behalf of FVINP.
NPS was primarily concerned with the protection of the natural and cultural resources and CBI was presumably concerned with furthering a business model that maximized profits.”
“We urge NPS and CBI to resume their negotiations and work out their differences. We further suggest that the lease include provisions to ensure the soonest possible reopening of the resort,” Kessler’s statement concludes.
Rafe Boulon, former chief of resource management for the VINP, also said a return to the negotiating table for the two entities is the ideal scenario. Boulon retired in 2013.
“It enables the park to have at least some say on what’s going on on park land, and allow Caneel Bay to prosper as a resort,” he said. “They could certainly do that in 40 years, given the location, given the property, given the resources they have.”
Boulon expressed exasperation and bewilderment that Plaskett’s bill does not consider any of the findings from the park’s 2013 assessment.
“To have it just be open-ended, a free-for-all basically, with no restrictions with what they can do on the property when it’s National Park land is just unconscionable and untenable,” Boulon said.
Caneel’s Modern History
If the current situation at Caneel Bay Resort seems complicated, it’s partly because it’s the culmination of more than 60 years of history on which there is little consensus among St. John’s residents.
Heavily involved in that history is Rockefeller, who founded Caneel Bay Resort in 1956. In the 1950’s, Rockefeller and agents of his conservation non-profit Jackson Hole Preserve were instrumental in the purchase of large tracts of St. John for donation to the National Parks Service. St. John would become home to the 29th U.S. National Park, with Caneel Bay Resort, under the ownership of Rockefeller’s nonprofit, set up as an economic engine in a new era of tourism.
While some view Rockefeller as the altruistic and forward-thinking father of modern eco-tourism, others view his actions as an example of powerful outside interests steamrolling existing community.
While the latter impression may be particularly resonant in the Caribbean region, Rockefeller family conservation efforts often met similar reactions in the mainland U.S. While there remains disagreement on St. John over Rockefeller’s legacy, environmental conservation was one of his passions, and under his 30-years of stewardship of Caneel Bay Resort, preservation was part of the equation.
The resort’s design was relatively low impact, and that initial footprint has not changed drastically since 1956, even as some buildings and features have been added. The resort continues to advertise itself as a “destination in harmony with its natural environment.” Just as importantly, Caneel Bay’s ownership was placed under a subsidiary of Jackson Hole Preserve, with all the resort’s profits used to help fund the nonprofit’s conservation initiatives throughout the United States.
After donating the Caneel land to the park in the 1983, Jackson Hole Preserve sold the resort’s 40-year RUE when the nonprofit divested of all its Rockresorts branded hotels. While Rockefeller’s vision of a low-impact resort has continued in theory, the connection of a succession of new owners to conservation has grown more tenuous. CSX Corporation, an entity with major interests in U.S. railway lines, bought Caneel’s RUE from Jackson Hole Preserve. The RUE was later owned by Chicago-based real estate investment company VMS Realty. After VMS ran into financial trouble, the RUE ended up in the hands of Deutsche Bank.
CBI Acquisition purchased the RUE in 2004. Among its principals is Gary Engle, CEO and chairman of private equity firm Stoneleigh Capital. Engle was appointed to Gov. Kenneth Mapp’s V.I. Hurricane and Resiliency Advisory Group after Hurricanes Irma and Maria. Some St. John residents say an increasingly profit-driven model of ownership and management at Caneel in recent years has strained a more symbiotic relationship that once existed between resort and community. The same critics grant that global economic and cultural shifts around tourism may be responsible for the changes they see in the character of St. John’s sole industry, including at Caneel. Eleanor Gibney, who grew up on St. John’s north shore not far from the resort, and worked there as a horticulturist for 16 years, said that, while she acknowledges’ Rockefeller isn’t a universally beloved figure on St. John, she feels nostalgia for the Caneel of the Rockefeller era.
“Like everything, there was good and bad. But it really was run as a non-profit,” said Gibney. “It would have to be someone with deep-pockets to go back to that,” she continued. “I’m not sure if the entity now exists that would bring what I think would be best for St. John to the Caneel property. Our whole tourism product has to change.” Gibney said over the years the original vision of Rockefeller has noticeably diminished at the resort. In the early 2000s, she added, the resort also began to act less “neighborly” than it had in the past, making it harder for residents to access Caneel’s public beaches, and discouraging non-guests from spending time on the property.
Gibney acknowledged that this may have been response to a changing tourism landscape on St. John around the turn of the millennium. Between 2000 and 2015 the amount of people visiting St. John rose exponentially, she said. “So on that level, as a North shore dweller, I’m at least somewhat sympathetic to them.” With a more competitive economic environment and a greatly increased number of visitors and island residents, the character of employment at the resort has also shifted, according to Gibney and others.
In decades past, many of Caneel’s employees saw the resort as a lifetime career that offered substantial benefits. It was also one of the only sources of employment on the island for many years.
“A lot of the long-term employees are aging out of the property and there is now a higher turnover at the resort,” Gibney said. “The jobs have become more transient.”
Caneel policy is now to layoff a large number of employees for two months when the resort closes during the off-season, a subject of hot debate on St. John in recent years since local tax breaks the resort receives are given in part to help create stable full-time jobs in the territory.
Determining those tax break is the responsibility of the V.I. Economic Development Commission Board and the governor, and are not under the purview of Plaskett or her bill.
Alvis Christian Sr., president of St. John’s activist Unity Day Group, said the question of local taxes is nevertheless part of the overall environment in which Caneel issues are perceived.
St. John residents have been “crying out for help,” he said, with rising, and sometimes inaccurate, property tax assessments due in part to the scarcity and desirability of land around the park Rockefeller was so instrumental in creating.
“The delegate went all out for this Caneel Bay issue,” Christian said. “We want to know if there can be some deal between the local government and the Department of the Interior to ease the backs of St. Johnians.”
“On the one hand, you’re saying your doing this [Caneel bill] for peoples’ jobs, but is it a fair deal in terms of the way people are being compensated, and whether the local government is going to get its fair share? Who’s going to benefit? That I really don’t know,” said Christian.
Even if Caneel Bay Resort is no longer the “only show in town” when it comes to tourism jobs on St. John, it remains the largest employer on the island. Approximately 450 people find work at the hotel, about a quarter of whom travel from neighboring St. Thomas. That amounts to about seven percent of the territory’s total employment in the hotel and restaurant sector. The resort and its generally affluent guests contribute about $65 million to the V.I economy each year. For some, that is reason enough to facilitate the quickest possible reopening of the resort.
“Our main priority has to be getting people back to work,” said Leona Smith, former administrator of St. John. “I think it’s a good thing for the recovery.”
Smith said her mother was a long-time employee of the resort, and she knows families depend on Caneel. Many restaurants and shops too could potentially close or shed staff in the next year or two without the presence of Caneel’s guests.
Senator-at-Large Brian Smith said he supports Plaskett’s bill completely, although “there were things that could possibly have been handled differently.”
“There’s going to be a lot of stress and anxiety in the community until we can get our flagship hotels up and running, whether it be Frenchman’s Reef, the Westin Resort, the Ritz Carlton, or Caneel Bay. We have vacation villa rentals, and they’re doing a great job of accommodating our tourists, but we need the hotels back.” Smith, according to his bio on the Legislature’s website, was himself once a Caneel employee, under different ownership in the 1990s. Smith told the Source he is in the process reaching out to management at Caneel Bay to try to organize a town hall meeting. St. John residents, he said, need to be kept abreast of the resort’s status and have a chance to raise concerns.
Regulation and Oversight
One of those concerns would almost certainly be the lack of park oversight in the current RUE. According to Rafe Boulon, the document is vague from a legal standpoint on the park’s role on the property, and this has lead to disputes with the resort over the years. At a congressional committee hearing on March 7, Rep. Raúl Grijalva, a Democrat from Arizona, offered an amendment to Plaskett’s bill that would have given the Secretary of the Interior the ability to ensure Caneel is operating consistent with park policies. The amendment did not pass, at the urging of Rep. Rob Bishop, the committee’s chairman, a Republican from Utah. Bishop said the “broad and open-ended” amendment would likely lead to the same sorts of delays that previously held up lease negotiations.
The NPS’s scant oversight in the RUE doesn’t mean, of course, that the resort operates under no regulation at all.” All of the local and federal environmental regulations which applied during the operation of the Caneel Bay Resort before Hurricanes Irma and Maria are still applicable,” Plaskett said when asked by the Source about oversight concerns. That means Coastal Zone Management permits are required for construction and land disturbance activities at Caneel. Several species of animal and plant life on the property, and in the waters around it, are protected by federal and local law. Although none of the structures and archaeological sites at the resort are listed on the National Register of Historic Places, the property as a whole has been determined to be eligible, and that itself gives local and federal authorities some ability to enforce preservation and proper stewardship.
The park has said it plans to pursue a national register designation for the property regardless of what happens with the ownership and management of the resort. Caneel’s land is home to the remnants of one of the largest Taino villages on the island. Of the 128 buildings, sites, and structures at the resort, 109 have been found by the NPS to be contributing to the eligibility of Caneel Bay as a historic district due to their importance to pre-Columbian, colonial-era and post-transfer history. That news sounds mostly positive for preservationists, but there is also evidence that the Caneel Bay property may fall through oversight “cracks” due to its unique situation: privately-managed, federally owned, and located on an island with less of a local government presence than St. Thomas or St. Croix.
In the park’s 2013 environmental assessment, it is noted that multiple local government entities did not respond when consulted about their records of Caneel’s natural and historic resources. What’s Next for the Bill? On March 7, Plaskett’s bill to extend the RUE for Caneel Bay Resort cleared the House Committee on Natural Resources with amendment, but it still has a way to go. The bill will soon be considered, as amended, by the full body of the U.S. House of Representatives. It will then be considered by the U.S. Senate. If it passes it will be forwarded to President Donald Trump for his signature.