Caneel Bay has its own ferries to transport guests from St. Thomas to the resort/Fred Hsu, Wikipedia Creative Commons

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. 

Maybe.

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.

Now, Stoneleigh Capital, with Rep. Plaskett's help, is looking to toss Mr. Rockefeller's wishes in the trash, maintaining that it could not possibly make the needed repairs to the resort without a long-term agreement. 

"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, a St. John bookkeeper for 29 years and author of a St John Guide book (Feet, Fins and Fourwheel Drive), 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.