TURNBULL HALTS CRUISE LINES-CROWN BAY DEAL

March 13, 2002 – Gov. Charles W. Turnbull said Wednesday from off-island that he has "canceled" the agreement between the Port Authority and two major cruise lines for expansion of the Crown Bay dock and development of an adjacent shopping center.
In a release issued from Miami Beach, Fla., where Turnbull is attending the 18th annual Seatrade Cruise Shipping Convention, he said he will instruct the Port Authority to cancel the letter of intent the authority entered into last summer with Royal Caribbean Cruises Ltd. and Carnival Corp. Turnbull said that although the agreement "has many merits, I believe it is important that the V.I. maintain full control of its harbor and harbor development."
The Port Authority executive director, Gordon Finch, who has staunchly defended the partnership with the cruise lines in the face of criticism from The West Indian Co. and Havensight Mall and downtown Charlotte Amalie business interests, is also in Miami Beach attending the Seatrade convention. He could not be reached for comment.
Nor could the executives who have represented the cruise lines in developing the plan — Giora Israel, vice president for strategic planning for Carnival Corp., and John Tercek, vice president for commercial development for Royal Caribbean. Nor could Edward E. Thomas, WICO chief executive, who also is at the convention.
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.
Turnbull's statement said, "I have also instructed The West Indian Co. and the Virgin Islands Port Authority to work together on the rapid expansion and development of the Crown Bay port facilities in order to accommodate the growing needs of the cruise lines for additional berths in the Port of Charlotte Amalie." The statement did not address financing for this effort.
The governor said he would instruct the two semi-autonomous agencies to "proceed quickly to undertake the work necessary to complete the upgrading of the berthing facilities."
WICO has indicated its interest in leasing the Crown Bay property and developing it on its own, but neither it nor VIPA has publicly expressed a desire to cooperate on the project.
Development of the port facility at the western end of Charlotte Amalie has been the subject of discussions for years. It's addressed in the Long-Term Operating Agreement with the Florida-Caribbean Cruise Association and its 13 member cruise lines negotiated over more than two years by the territory's Cruise Ship Task Force, made up of public- and private-sector representatives. That agreement, announced last August and signed by the governor in October, provides for the Port Authority to develop Crown Bay, with commitment from a "cruise line or lines" to an "incremental passenger flow" to enable VIPA to finance the project.
Turnbull's announcement was expected to send shock waves through the community. (One of the first responses came Thursday morning from George H.T. Dudley, attorney for both cruise lines. "I am dumbfounded that the governor would turn his back on a $31 million private investment,"he said.)
In his release and in his reading of the statement on local radio stations Wednesday, the governor noted the planned development has "met with strong opposition from many segments of the community." He said his decision was reached "after several meetings with VIPA, WICO, the St. Thomas-St. John Chamber of Commerce and many individuals."
There is general agreement on the need to expand the Crown Bay dock; objections have been raised to the concept of the retail development, and to the idea of the two cruise lines being in control of both projects. The St. Thomas-St. John Chamber of Commerce fears the development would do irreparable harm to tourist-oriented businesses both downtown and in Havensight Mall, a fear shared by The West Indian Co. and the Government Employees Retirement System, which owns the Havensight dockside mall. All three entities have recommended that the V.I. government take over the project.
John deJongh, St. Thomas-St. John Chamber of Commerce president, said Wednesday evening, "We are pleased that the governor adopted the position advocated by the chamber for some time. We think this decision shows the value of public-private sectors participation in developing plans."
At a January Senate committee hearing on the development, deJongh said, "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 was the effect the proposed development would have on the downtown Charlotte Amalie and Havensight economy.
At the same hearing, an alternative solution was proposed. (See "Key Crown Bay question may be 'who,' not 'if'). Sen. Carlton Dowe asked if the development upon completion could be sold to GERS, given that it already owns Havensight Mall. Royal Caribbean's Tercek 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.
At the same meeting, WICO's Thomas 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 had indicated informally a willingness for GERS to finance the development.
Turnbull said the project now will be undertaken in consultation with member lines of the Florida-Caribbean Cruise Association, who are the primary users of the facilities.

Editor's note: For more background on the Crown Bay development issue, type the key words "Crown Bay" or "cruise industry" in the search engine prompt at the bottom of the main news page.

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