May 25, 2003 – Gov. Charles W. Turnbull on Sunday called the Senate into special session for the second time in two weeks — this time for Tuesday, to deal with the planned Yacht Haven redevelopment on St. Thomas, which is not totally unrelated to his call for last week's special session to address the government's faltering fiscal condition.
In his letter to Senate President David Jones, the governor cited the "critical economic and financial challenges facing the government and people" of the Virgin Islands as his reason for drafting and submitting legislation that would immediately authorize a lease agreement between the government and IN-USVI LLC for submerged land at Long Bay.
The bill also authorizes and ratifies a Coastal Zone Management major permit for development of the submerged land adjacent to the derelict hotel and marina in Long Bay. The bill does not address permits for the land development, only the submerged lands issue.
IN-USVI, the local firm created by Insignia Nautica, a stateside company which acquired major interest in the Yacht Haven property last July, submitted its CZM application in January and made a formal presentation to the St. Thomas CZM Committee on March 3.
The presentation, application and accompanying environmental assessment report met with hearty approval from all quarters, including the League of Women Voters, one of the environmental watchdogs of the territory. The CZM Committee approved the application 10 days later.
The governor's call on Sunday afternoon — in the midst of the long Memorial Day holiday weekend — for the Special Session was in reaction to what transpired Friday night at a hearing of the Senate Planning and Environmental Protection Committee. The chair, Sen. Louis Hill, abruptly adjourned the committee meeting after only a half an hour when he was handed a 31-page legal analysis that Hill said raised "serious challenges to the permit and the lease."
(See the St. Thomas Source report "Meeting ends; Yacht Haven project on hold".)
Turnbull: Substantial research, critical need
In submitting his bill, Turnbull said: "Both the professionals of the Coastal Zone Management Commission and the CZM Division in the Department of Planning and Natural Resources as well as the Attorney General's Office have spent countless hours reviewing, researching and rendering memoranda of law and legal opinions on virtually every aspect of the lease and the permit, including research of substantially similar leases which have been approved by the Legislature prior to this one."
But, the governor said, none of the prior instances "has meant more to the economic advancement of this territory or potentially represented such negative repercussion as a result of the failure to approve the IN-USVI lease and permit now before the Legislature at this special session."
Turnbull took umbrage at Hill's adjourning the Senate committee meeting "without taking any testimony from the numerous individuals invited and present on behalf of the CZM committee, the Department of Planning and Natural resources and IN-USVI LLC." Further, he wrote, "Many months of work have gone into the preparation of these documents, including taking the precaution of obtaining several attorney general's opinions, which were discounted or simply ignored by legislative counsel without so much as a by your leave."
However, Yvonne Tharpes, the Legislature's chief legal counsel, received only part of the pertinent paperwork — the application and the permit, but not the supporting documents — about a week and a half before the hearing. And she received them only after Hill had asked the governor to have the documents "sent down" so the Planning and Environmental Protection Committee hearing could be scheduled.
Hill, who is on record as a strong proponent of the development project, said on Sunday that as soon as the papers were received, "we scheduled a meeting."
In the time between the Legislature's receipt of the initial Yacht Haven documents and the meeting of Hill's committee on Friday, the governor meanwhile sent down six multi-part taxing, borrowing and spending bills to be addressed in last Thursday's special session. Tharpes had one day in which to review the six bills.
Tharpes: Leasing of landfill, submerged land illegal
In her analysis of the Yacht Haven submerged lands and landfill lease presented to Hill at the start of Friday's committee hearing, Tharpes raised several concerns including:
– The fact that the lease of the filled land is for 90 years, which Tharpes called "patently illegal."
– The fact that the parent company of IN-USVI, Insignia Nautica, is a subsidiary of Insignia Financial Group Inc., a New York-based commercial property holding company that is about to be taken over by CB Richard Ellis, a California-based real estate service company specializing in investments and land deals. (See the St. Thomas Source report "Yacht Haven to change ownership again".) Tharpes said IN-USVI may not have a long-term interest in the Yacht Haven property after the deal goes through, which is expected to happen in June. She said the situation is inconsistent with CZM permitting.
– The fact that the deal calls for the government to lease IN-USVI the submerged land, which Tharpes said is illegal. The Coastal Zone Management division, she said, is authorized only to grant permits for the occupancy and development of submerged lands. "The CZM Act provides no authority for the grant of a property right in submerged lands," she wrote in her analysis.
Turnbull appears to have a lot riding on getting this and other development projects under way. In last week's special session, his financial team members said they were counting on both government and private-sector capital projects to stimulate the economy, with the Yacht Haven project pegged at $100 million and expected to begin in September.
The IN-USVI proposal calls for a new hotel and marina, retail and commercial facilities, and a boardwalk-style esplanade linking Havensight and Yacht Haven to downtown Charlotte Amalie. It also includes the rehabilitation of a public park at the west end of the land owned by The West Indian Co. along Long Bay Road that WICO has agreed to lease to IN-USVI.
The Yacht Haven Hotel was destroyed in 1995 by Hurricane Marilyn. An eyesore referred to after Marilyn as "Hotel Beirut," the complex of decrepit buildings has sat almost empty since then. Ownership has changed hands four times in the interim.
The property was taken over by Bank of Nova Scotia in bankruptcy proceedings after Marilyn. In 1997, the bank sold it to an Asian investor, Tan Kay Hock, who was brought to the table with great fanfare by then-Gov. Roy L. Schneider, for $5.5 million. Tan made no repairs, let alone improvements, to the property but turned it around in September 2000 for $8.5 million. The new buyer was PRM Realty, a Chicago-based real estate development firm with interests in hotels elsewhere, including Hawaii.
After receiving a CZM demolition permit, PRM sold its major interest in the hotel and marina last July to Insignia Nautica. Despite holding the demolition permit for nearly a year, Insignia Nautica's local subsidiary IN-USVI, also has done nothing to the property.
Insignia Nautica and CB Richard Ellis announced in February that they expected to close in June on a deal to merge the two firms into the world's largest commercial real estate management firm. But Elie Finegold, vice president of IN-USVI, executive vice president of Insignia Nautica and chief executive of Insignia Financial Group, said in March that the takeover would in no way affect the redevelopment of Yacht Haven.
Hill: Time neede
d to review legal analysis
Hill said on Sunday night, in defense of halting Friday's Senate committee meeting: "The permit and the lease for me are very important documents … We have a legal counsel in the Legislature who I must depend on for legal analysis. The analysis came to me about five minutes before the session started."
He said he'd had no idea "that it was going to be such a big document," nor that Tharpes "was going to raise so many questions."
His reaction, Hill said, was that "it was only fair to the people involved to have had Tharpes' analyses and time to review them to see what it was she objected to, and to give them appropriate time to respond to the issues she raised." He said this applied to the investors and developers as well as to the senators, "who needed to ask questions, based on Tharpes' opinion."
All parties involved, he said, "needed time to take the documents, analyze them and then have a proper understanding" of the issues raised by Tharpes.
At the time of adjourning the committee Friday night, Hill had said he would reconvene the body this week to address the Yacht Haven matters before it. He had not announced a specific day for doing so but said on Sunday night that his intention had been to call the meeting for Wednesday.
Hill did not want to comment on the governor's calling of this week's special session. He would say only that "the governor has the right to call a special session, and if that's what he has chosen to do, I have no objection to that."
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