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HomeNewsArchivesKEY CROWN BAY QUESTION MAY BE 'WHO,' NOT 'IF'

KEY CROWN BAY QUESTION MAY BE 'WHO,' NOT 'IF'

Jan. 11, 2002 – The future of the proposed and highly debated Crown Bay shopping center and dock expansion took an unexpected turn Thursday night at a Senate Government Operations Committee hearing. There may be a compromise in the project's future.
Sen. Carlton Dowe asked if the development upon completion could be sold to the Government Employees Retirement System, which owns Havensight Mall. John Tercek, Royal Caribbean Cruise Lines vice president, said that it could.
Tercek said, "It's a new concept. If they want to buy it, we'll sell it to them, in the spirit of compromise." He noted such a move would be favorable to the community and would allow for a way to resolve berthing and other problems that have been standing in the way of the development's acceptance by the business community.
Confirming yet another alternative already in discussion locally, Edward E. Thomas, chief executive office of The West Indian Co., said WICO would be more than willing to lease the Crown Bay pier itself and develop it. And Carver Farrow, the chair of the GERS board, said his fellow board members have indicated informally a willingness for GERS to finance the development.
Sen. Emmett Hansen II, the committee chair, called the hearing to air opposing views of the project. Senate approval per se is not required for the development, set forth in an agreement between the semi-autonomous Port Authority and the two largest cruise lines serving the territory.
Royal Caribbean and Carnival Corp. signed a letter of intent with the Port Authority last August for the lines to develop a retail center and expand Crown Bay dock to accommodate more and larger ships. The cruise lines together have committed to invest $15.5 million on the dock expansion and another $15.5 million on the shopping development.
The only say the Senate would have is approving (or not) a Coastal Zone Management permit. Dowe and other senators have said they would hold up the permit if the project were not developed locally. Dowe said Friday morning that he had spoken to the cruise line officials before Thursday night's meeting, to test out alternative solutions to the present agreement between with the cruise lines and the Port Authority.
De Jongh: Problem not development but its effect
The hearing, which went until nearly 1 a.m., was sparked with lively debate. John de Jongh, St. Thomas-St. John Chamber of Commerce president, said, "I am somewhat uncomfortable in the position I find myself in, given my ususal stance of pushing for investment and development." In opposing a portion of the proposed development, namely the construction of a government-subsidized shopping center, he said, it might appear that the chamber does not support the cruise industry.
But, de Jongh said, that is not the case. "I make this distinction between cruise industry 'commitment' and 'investment,'" he said, "because they are, in fact, leveraging fees and charges that would normally be paid to the Port Authority, and utilizing these funds to repay the indebtedness of the project. This is a completely accepted method of project financing, but under no circumstances should it be characterized as investment."
"Let me be clear," de Jongh added. "We support the seaside development and [recognize] the limitations of relying solely on WICO's docking facilities, especially given the size and configuration of the new ships." He said his concern is the effect the proposed development would have on the downtown Charlotte Amalie and Havensight economy.
Sebastiano Paiewonsky-Cassinelli, A.H. Riise Stores and Isidor Paiewonsky Associates vice president, elaborated on de Jongh's concerns. He said the cruise lines are not making an equity investment but are leveraging per-passenger fees that would have been paid to The West Indian Co. — and taking business from Havensight as well. "This incentive to drive cruise traffic to Crown Bay will have disastrous consequences for the Havensight Mall, which is owned by GERS," he said.
The cruise lines have steadfastly maintained the Crown Bay development will not cause a decline in WICO traffic, but opponents of the project say there's nothing in writing to guarantee this. Tercek and Giora Israel of Carnival Corp. said contracts are being drawn up which will address the issue.
George Dudley, a local businessman and attorney for the cruise lines, said, "I would look like a babbling idiot if I thought this development would hurt downtown." Dudley's family owns Lockhart Caribbean Corp., which owns the recently renovated downtown Grand Hotel complex; most of the tenants operate tourist-oriented businesses. "We have $4 million invested in the east end of Main Street," Dudley said.
Offers from WICO, GERS to do it themselves
WICO president Thomas, long an outspoken opponent of the development, which he maintains will harm Havensight and WICO dock traffic, said The West Indian Co. has no issue with the cruise lines or the Florida-Caribbean Cruise Association.
In a lengthy statement, he quoted former governor Alexander Farrelly's comments when the V.I. government acquired WICO from The Danish West Indian Co. The issue for WICO, Thomas said, "is the appearance of an effort on the part of the Port Authority to destroy the spirit and intent of the acts of 1993 that created The West Indian Co. Ltd. as an instrumentality of the V.I. government."
However, he said, "If the Port Authority does not choose to develop Crown Bay itself, then WICO is poised to lease the pier and develop it ourselves."
The meeting began at 6 p.m. but it was not until after 9 p.m. that the senators began to have their say, with the exception of an earlier outburst by Sen. Adelbert Bryan, who objected to the absence of GERS representatives at the hearing.
Hansen read a letter from GERS administrator Laurence E. Bryan stating he had been directed by Farrow not to attend the hearing. Farrow said the GERS board had not taken an official position on the development and had not met to discuss the matter. Bryan nonetheless demanded Farrow's appearance.
Farrow did show up later and indicated under questioning by Bryan that the board would probably be amenable to either GERS or WICO managing the Crown Bay development. Further, he said, "Recently, I polled some GERS board members, and they are willing to have the GERS finance the Crown Bay project."
He did not touch on the fact that GERS officials have said in recent months that the system is facing a financial crisis because pay-in and investment income is not covering pay-outs.
Tercek and Israel said at one point in the hearing that the cruise lines would be going to the bond market to finance the Crown Bay project, not taking the money out of their pockets.
One issue that did not come up at the hearing is the fact that Royal Caribbean and Carnival are engaged in an unrelated battle to take over another cruise entity, P&O Royal Princess Cruise Lines. Israel indicated in a call-in to the Topp Talk radio show Thursday morning that although his company and Tercek's are "fierce competitors in the marketplace," they remain committed to developing the Crown Bay project jointly.
Sen. Norma Pickard-Samuel was among the senators bringing up the well-publicized differences of opinion between Gordon Finch, VIPA executive director, and WICO's Thomas. "They should be locked in a room to iron their differences out," she said. "They can come to lunch with me, and we will work it out. They are grown men and we all know they don't agree."
Pickard-Samuel suggested specifically that Finch and Thomas have breakfast together Friday morning. Thomas said he would be amenable to the idea, but he had a Friday morning appointment on St. John. Finch said he is operating under conditions set forth in a contract and a letter of intent which wouldn't provide for such a mee
ting. "I have to be governed by my board," he said.
Cruise exec assails Thomas, defends Finch
Although Tercek was amenable to a compromise on the development's future ownership, he was uncompromising in his remarks about Thomas. "The only reason we are here tonight is because Mr. Thomas has impeded this process," the Royal Caribbean executive said. "He is holding up this process, and he has done his best to attack the integrity of Mr. Finch. I strongly resent that he has taken it upon himself to interfere with the process. There is no need for him to have breakfast with Mr. Finch tomorrow or any other day. If I were Mr. Finch, I would not meet with him at all. He has done his best to humiliate him for a year."
Tercek continued, "I wasn't going to get into this tonight, but about 15 minutes ago Mr. Thomas told me, 'Don't worry; I've spoken to our attorney, and we've gotten word that we can terminate the contract.'" Tercek continued, "That's called tortious interference. I'm an attorney, and I know. I think we need to get this out on the table.
"For Mr. Thomas to say, 'I can go to the governor, and I can do this deal,' that's a megalomaniac taking the law and the authority on his own. I'm sorry to use strong words, but it's late, and we've been dancing around this all night."
Tercek added, "Hopefully, we can put this behind us, and Mr. Thomas can arrest his demons and apologize to Mr. Finch for what he has said in the press. Maybe Mr. Thomas and I can sit down together and sort this out. I've known Mr. Thomas for several years, and I've always had respect for him as an agent and dock owner, and that hasn't changed … I described earlier what a good working relationship we have with Antigua. There is no Mr. Thomas in Antigua."
Hansen asked Thomas if he wanted to reply to Tercek's comments, but Thomas declined the offer. However, Paiewonsky-Cassinelli took up the call. "Mr. Tercek is assassinating the character of Ed Thomas," he said. "The cruise lines cannot do what they want and get what they want, and so now they resort to this."
Israel mentioned in his testimony that Mexico's Yucatan port of Cozumel "is now the No. 1 cruise port in the world, and St. Thomas is No. 4." He added, "It's nothing that St. Thomas did wrong. It's a changing market for the Western Caribbean."
Last year, before the Sept. 11 terrorist attacks dissuaded many travelers from taking cruises that would entail flying to embarkation points, cruise lines serving the Caribbean began opening up new mainland departure sites — notably New Orleans, Tampa, Houston and Galveston — within driving distance of many markets. Most of the itineraries for these cruises cover the Western Caribbean, not the eastern and southern regional routes of which St. Thomas has been a staple stop.
Before the long night came to a close, Bryan took the floor to say, "The Paiewonskys and Cassinellis want to dictate what happens in this territory, and this has been happening for the past 30 years." His opinion, he said, is that "WICO needs to be put under the Virgin Islands Port Authority."
With that, Hansen called an end to the meeting. He said he would schedule another hearing in early February, with a GERS representative present to continue the discussions. "We got more than we anticipated tonight," he said. "We have to sit and chew on this for a while. Everything is out of the cupboard now."
All committee members — Bryan, Donald "Ducks" Cole, Roosevelt David, Dowe, David Jones and Pickard-Samuel — attended the meeting. Non-member Sens. Lorraine Berry, Adlah "Foncie" Donastorg, Almando "Rocky" Liburd and Vargrave Richards also were present.

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Jan. 11, 2002 – The future of the proposed and highly debated Crown Bay shopping center and dock expansion took an unexpected turn Thursday night at a Senate Government Operations Committee hearing. There may be a compromise in the project's future.
Sen. Carlton Dowe asked if the development upon completion could be sold to the Government Employees Retirement System, which owns Havensight Mall. John Tercek, Royal Caribbean Cruise Lines vice president, said that it could.
Tercek said, "It's a new concept. If they want to buy it, we'll sell it to them, in the spirit of compromise." He noted such a move would be favorable to the community and would allow for a way to resolve berthing and other problems that have been standing in the way of the development's acceptance by the business community.
Confirming yet another alternative already in discussion locally, Edward E. Thomas, chief executive office of The West Indian Co., said WICO would be more than willing to lease the Crown Bay pier itself and develop it. And Carver Farrow, the chair of the GERS board, said his fellow board members have indicated informally a willingness for GERS to finance the development.
Sen. Emmett Hansen II, the committee chair, called the hearing to air opposing views of the project. Senate approval per se is not required for the development, set forth in an agreement between the semi-autonomous Port Authority and the two largest cruise lines serving the territory.
Royal Caribbean and Carnival Corp. signed a letter of intent with the Port Authority last August for the lines to develop a retail center and expand Crown Bay dock to accommodate more and larger ships. The cruise lines together have committed to invest $15.5 million on the dock expansion and another $15.5 million on the shopping development.
The only say the Senate would have is approving (or not) a Coastal Zone Management permit. Dowe and other senators have said they would hold up the permit if the project were not developed locally. Dowe said Friday morning that he had spoken to the cruise line officials before Thursday night's meeting, to test out alternative solutions to the present agreement between with the cruise lines and the Port Authority.
De Jongh: Problem not development but its effect
The hearing, which went until nearly 1 a.m., was sparked with lively debate. John de Jongh, St. Thomas-St. John Chamber of Commerce president, said, "I am somewhat uncomfortable in the position I find myself in, given my ususal stance of pushing for investment and development." In opposing a portion of the proposed development, namely the construction of a government-subsidized shopping center, he said, it might appear that the chamber does not support the cruise industry.
But, de Jongh said, that is not the case. "I make this distinction between cruise industry 'commitment' and 'investment,'" he said, "because they are, in fact, leveraging fees and charges that would normally be paid to the Port Authority, and utilizing these funds to repay the indebtedness of the project. This is a completely accepted method of project financing, but under no circumstances should it be characterized as investment."
"Let me be clear," de Jongh added. "We support the seaside development and [recognize] the limitations of relying solely on WICO's docking facilities, especially given the size and configuration of the new ships." He said his concern is the effect the proposed development would have on the downtown Charlotte Amalie and Havensight economy.
Sebastiano Paiewonsky-Cassinelli, A.H. Riise Stores and Isidor Paiewonsky Associates vice president, elaborated on de Jongh's concerns. He said the cruise lines are not making an equity investment but are leveraging per-passenger fees that would have been paid to The West Indian Co. -- and taking business from Havensight as well. "This incentive to drive cruise traffic to Crown Bay will have disastrous consequences for the Havensight Mall, which is owned by GERS," he said.
The cruise lines have steadfastly maintained the Crown Bay development will not cause a decline in WICO traffic, but opponents of the project say there's nothing in writing to guarantee this. Tercek and Giora Israel of Carnival Corp. said contracts are being drawn up which will address the issue.
George Dudley, a local businessman and attorney for the cruise lines, said, "I would look like a babbling idiot if I thought this development would hurt downtown." Dudley's family owns Lockhart Caribbean Corp., which owns the recently renovated downtown Grand Hotel complex; most of the tenants operate tourist-oriented businesses. "We have $4 million invested in the east end of Main Street," Dudley said.
Offers from WICO, GERS to do it themselves
WICO president Thomas, long an outspoken opponent of the development, which he maintains will harm Havensight and WICO dock traffic, said The West Indian Co. has no issue with the cruise lines or the Florida-Caribbean Cruise Association.
In a lengthy statement, he quoted former governor Alexander Farrelly's comments when the V.I. government acquired WICO from The Danish West Indian Co. The issue for WICO, Thomas said, "is the appearance of an effort on the part of the Port Authority to destroy the spirit and intent of the acts of 1993 that created The West Indian Co. Ltd. as an instrumentality of the V.I. government."
However, he said, "If the Port Authority does not choose to develop Crown Bay itself, then WICO is poised to lease the pier and develop it ourselves."
The meeting began at 6 p.m. but it was not until after 9 p.m. that the senators began to have their say, with the exception of an earlier outburst by Sen. Adelbert Bryan, who objected to the absence of GERS representatives at the hearing.
Hansen read a letter from GERS administrator Laurence E. Bryan stating he had been directed by Farrow not to attend the hearing. Farrow said the GERS board had not taken an official position on the development and had not met to discuss the matter. Bryan nonetheless demanded Farrow's appearance.
Farrow did show up later and indicated under questioning by Bryan that the board would probably be amenable to either GERS or WICO managing the Crown Bay development. Further, he said, "Recently, I polled some GERS board members, and they are willing to have the GERS finance the Crown Bay project."
He did not touch on the fact that GERS officials have said in recent months that the system is facing a financial crisis because pay-in and investment income is not covering pay-outs.
Tercek and Israel said at one point in the hearing that the cruise lines would be going to the bond market to finance the Crown Bay project, not taking the money out of their pockets.
One issue that did not come up at the hearing is the fact that Royal Caribbean and Carnival are engaged in an unrelated battle to take over another cruise entity, P&O Royal Princess Cruise Lines. Israel indicated in a call-in to the Topp Talk radio show Thursday morning that although his company and Tercek's are "fierce competitors in the marketplace," they remain committed to developing the Crown Bay project jointly.
Sen. Norma Pickard-Samuel was among the senators bringing up the well-publicized differences of opinion between Gordon Finch, VIPA executive director, and WICO's Thomas. "They should be locked in a room to iron their differences out," she said. "They can come to lunch with me, and we will work it out. They are grown men and we all know they don't agree."
Pickard-Samuel suggested specifically that Finch and Thomas have breakfast together Friday morning. Thomas said he would be amenable to the idea, but he had a Friday morning appointment on St. John. Finch said he is operating under conditions set forth in a contract and a letter of intent which wouldn't provide for such a mee ting. "I have to be governed by my board," he said.
Cruise exec assails Thomas, defends Finch
Although Tercek was amenable to a compromise on the development's future ownership, he was uncompromising in his remarks about Thomas. "The only reason we are here tonight is because Mr. Thomas has impeded this process," the Royal Caribbean executive said. "He is holding up this process, and he has done his best to attack the integrity of Mr. Finch. I strongly resent that he has taken it upon himself to interfere with the process. There is no need for him to have breakfast with Mr. Finch tomorrow or any other day. If I were Mr. Finch, I would not meet with him at all. He has done his best to humiliate him for a year."
Tercek continued, "I wasn't going to get into this tonight, but about 15 minutes ago Mr. Thomas told me, 'Don't worry; I've spoken to our attorney, and we've gotten word that we can terminate the contract.'" Tercek continued, "That's called tortious interference. I'm an attorney, and I know. I think we need to get this out on the table.
"For Mr. Thomas to say, 'I can go to the governor, and I can do this deal,' that's a megalomaniac taking the law and the authority on his own. I'm sorry to use strong words, but it's late, and we've been dancing around this all night."
Tercek added, "Hopefully, we can put this behind us, and Mr. Thomas can arrest his demons and apologize to Mr. Finch for what he has said in the press. Maybe Mr. Thomas and I can sit down together and sort this out. I've known Mr. Thomas for several years, and I've always had respect for him as an agent and dock owner, and that hasn't changed ... I described earlier what a good working relationship we have with Antigua. There is no Mr. Thomas in Antigua."
Hansen asked Thomas if he wanted to reply to Tercek's comments, but Thomas declined the offer. However, Paiewonsky-Cassinelli took up the call. "Mr. Tercek is assassinating the character of Ed Thomas," he said. "The cruise lines cannot do what they want and get what they want, and so now they resort to this."
Israel mentioned in his testimony that Mexico's Yucatan port of Cozumel "is now the No. 1 cruise port in the world, and St. Thomas is No. 4." He added, "It's nothing that St. Thomas did wrong. It's a changing market for the Western Caribbean."
Last year, before the Sept. 11 terrorist attacks dissuaded many travelers from taking cruises that would entail flying to embarkation points, cruise lines serving the Caribbean began opening up new mainland departure sites -- notably New Orleans, Tampa, Houston and Galveston -- within driving distance of many markets. Most of the itineraries for these cruises cover the Western Caribbean, not the eastern and southern regional routes of which St. Thomas has been a staple stop.
Before the long night came to a close, Bryan took the floor to say, "The Paiewonskys and Cassinellis want to dictate what happens in this territory, and this has been happening for the past 30 years." His opinion, he said, is that "WICO needs to be put under the Virgin Islands Port Authority."
With that, Hansen called an end to the meeting. He said he would schedule another hearing in early February, with a GERS representative present to continue the discussions. "We got more than we anticipated tonight," he said. "We have to sit and chew on this for a while. Everything is out of the cupboard now."
All committee members -- Bryan, Donald "Ducks" Cole, Roosevelt David, Dowe, David Jones and Pickard-Samuel -- attended the meeting. Non-member Sens. Lorraine Berry, Adlah "Foncie" Donastorg, Almando "Rocky" Liburd and Vargrave Richards also were present.