[House Report 115-1049]
[From the U.S. Government Publishing Office]
115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-1049
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TO EXTEND THE RETAINED USE ESTATE FOR THE CANEEL BAY RESORT IN ST.
JOHN, UNITED STATES VIRGIN ISLANDS, AND FOR OTHER PURPOSES
_______
November 27, 2018.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Bishop of Utah, from the Committee on Natural Resources, submitted
the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 4731]
[Including cost estimate of the Congressional Budget Office]
The Committee on Natural Resources, to whom was referred
the bill (H.R. 4731) to extend the retained use estate for the
Caneel Bay resort in St. John, United States Virgin Islands,
and for other purposes, having considered the same, reports
favorably thereon with an amendment and recommends that the
bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. EXTENSION OF RETAINED USE ESTATE.
(a) Extension Required.--Not later than 90 days after a request by
the grantor, the Secretary of the Interior shall extend the retained
use estate in accordance with this section.
(b) Requirements.--The extension under subsection (a) shall--
(1) except as provided in paragraph (2), be effective for the
60-year period beginning on the date the retained use estate
would, but for the extension under this section, expire;
(2) be subject to the terms of the retained use estate,
including the right of the grantor to terminate the retained
use estate in accordance with the terms thereof; and
(3) require the grantor to pay to the United States, in
quarterly installments for the period of the extension, fair
market value rental for use of the premises for operation and
management of resort facilities and services in an amount equal
to--
(A) for each of the first 15 years of the extension,
a percentage of the gross revenues of the resort in
accordance with subsections (c) and (d) to be
determined no later than 90 days after the date on
which the extension is granted under subsection (a)
by--
(i) a written agreement between the Secretary
and the grantor; or
(ii) if the Secretary and the grantor are
unable to agree on such a percentage by the
date that the extension is granted under
subsection (a), through binding arbitration
using procedures specified in section 51.51 of
title 36, Code of Federal Regulations; and
(B) for each year of the extension thereafter, the
amount determined under subparagraph (A), except that--
(i) such amount shall be adjusted if
requested by the Secretary or the grantor;
(ii) any such adjustment shall be
determined--
(I) through a written agreement
between the Secretary and the grantor;
or
(II) if the Secretary and the grantor
are unable to agree on such an
adjustment after a 60-day period for
negotiation (or a longer period for
negotiation agreed upon by the
Secretary and the grantor), through
binding arbitration between the
Secretary and the grantor using the
arbitration procedures specified in
section 51.51 of title 36, Code of
Federal Regulations; and
(iii) no more than one adjustment may be made
under this subparagraph in any 15-year period.
(c) Calculation of Fair Market Value Rental.--The initial payment
required under subsection (b)(3)(A) and any adjustment under subsection
(b)(3)(B) shall reflect the fair market value of a land lease for hotel
use, as determined by an appraisal by an independent qualified
appraiser who is selected jointly by the Secretary and the grantor and
shall reflect--
(1) any restrictions on the use of the property or terms of
the retained use estate that limit the value or highest and
best use of the property;
(2) any amounts expended or to be expended by the grantor for
preservation, maintenance, restoration (including site
restoration), improvement (including construction), or repair
and related expenses to the extent that such amounts are for
the resort; and
(3) the remaining term of the extended retained use estate.
(d) Payments.--Payments under subsection (b)(3) shall--
(1) be due--
(A) except as provided in subparagraph (B), 60 days
after the end of the applicable quarter; and
(B) in the case of the last quarter of each calendar
year (or the last quarter before the retained use
estate expires), 90 days after the end of the calendar
year (or the end of the retained use estate in the year
that the retained use estate expires);
(2) be based on actual gross revenues for the preceding
quarter;
(3) in the case of a payment due under paragraph (1)(B),
include any adjustment that may be required after an audit of
the gross annual revenues for the preceding year; and
(4) be deposited into the General Treasury.
(e) Definitions.--In this section--
(1) each of the terms ``retained use estate'' and ``resort''
has the meaning given such term in section 1 of Public Law 111-
261 (16 U.S.C. 398d note); and
(2) the term ``grantor'' means the holder of the retained use
estate.
PURPOSE OF THE BILL
The purpose of H.R. 4731 is to extend the retained use
estate for the Caneel Bay resort in St. John, United States
Virgin Islands.
BACKGROUND AND NEED FOR LEGISLATION
Caneel Bay Resort, on St. John, U.S. Virgin Islands (USVI),
is located on a 150-acre peninsula on the northwest side of the
island and was originally developed by Laurance Rockefeller
beginning in 1956. Initially, Rockefeller donated over 5,000
acres of land to the National Park Service (NPS) and reserved
the 150 acres that is now Caneel Bay Resort for the Jackson
Hole Preserve, a Rockefeller family land trust. In 1983, the
Jackson Hole Preserve donated the 150 acres of land to the U.S.
government for inclusion in the Virgin Islands National Park.
The preserved land was transferred to NPS with a 40-year
retained use estate (RUE).\1\
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\1\``Caneel Bay Resort Lease.'' PEPC Planning, Environment & Public
Comment. Accessed February 21, 2018. https://parkplanning.nps.gov/
projectHome.cfm?projectID=43598.
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Since 1983, the Resort under the RUE has been owned and/or
managed by different companies. In 2004, Jackson Hole Preserve
sold the RUE to CBI Acquisition LLC, which currently operates
the Caneel Bay Resort. The RUE is scheduled to expire on
September 30, 2023.\2\
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\2\Ibid.
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As the largest employer on St. John, with approximately 450
employees, the Resort plays a significant role in the economy
of the USVI. It brings 15,000 guests and over $65 million in
spending to the island of St. John every year.\3\ The Resort
supports jobs and the local tourism industry, and accounts for
7% of the USVI total employment in the hotel and restaurant
sector.
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\3\Shimel, Judi. ``Caneel Restoration Awaits Congressional
Action.'' St. John Source. January 30, 2018. Accessed February 23,
2018. https://stjohnsource.com/2018/01/30/caneel-restoration-awaits-
congressional-action/.
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In 2006, NPS commenced consideration of the future
management of the Caneel Bay Resort property. In 2010, Congress
enacted Public Law 111-261, which authorized NPS, subject to
several limiting conditions, to enter into a long-term lease
with the holder of the RUE for continued resort operations upon
relinquishment of the remaining term of the RUE.
Following the passage of Public Law 111-261, NPS analyzed
the conversion of the RUE to a long-term lease. In addition to
the 150-acre Caneel Bay Resort, three additional parcels of
land totaling 3.01 acres outside of the RUE (but owned by the
holder of the RUE) were considered as part of the lease
negotiations. These parcels include a 1.01-acre area utilized
for three executive homes, a 1.69-acre area utilized for a 24-
unit apartment building for employee housing, and a 0.31-acre
marina used for ferry docking, maintenance, and fuel sales.
NPS finished an Environmental Assessment in 2013 that
analyzed the environmental and human impacts of entering a
long-term lease under the terms of Public Law 111-261. The
preferred alternative included the relinquishment of the
remaining term of the RUE and the award of a long-term lease to
the holder of the relinquished RUE under the terms of Public
Law 111-261. Despite nearly eight years of studies and
negotiations on the conversion of the RUE to a long-term lease,
NPS and the current holder of the RUE have not come to an
agreement on lease terms.
On September 6 and September 19, 2017, Hurricanes Irma and
Maria destroyed much of St. John and the Caneel Bay Resort. The
Resort was forced to cancel its entire November-to-August
season and lay off some 300 employees.\4\
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\4\Perez-Pena, Richard. ``After Irma and Maria: How 3 Spots on the
U.S. Virgin Islands Are Faring.'' The New York Times. November 10,
2017. Accessed February 23, 2018. https://www.nytimes.com/2017/11/10/
us/virgin-islands-hurricanes.html.
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H.R. 4731 requires the Secretary of the Interior to extend
the RUE by 60 years and requires the holder of the RUE to pay a
rental fee for use of the property. Extending the RUE provides
long-term certainty to the current holder of the RUE, thus
allowing the holder to realize a return on the significant
capital investments necessary to reopen the Resort and thereby
contribute to the economy and recovery of USVI. It will also,
for the first time, generate funds to the United States for the
use of the land.
COMMITTEE ACTION
H.R. 4731 was introduced on December 21, 2017, by
Congresswoman Stacey E. Plaskett (D-VI). The bill was referred
to the Committee on Natural Resources, and within the Committee
to the Subcommittee on Federal Lands. On February 28, 2018, the
Subcommittee held a hearing on the bill. On March 7, 2018, the
Natural Resources Committee met to consider the bill. The
Subcommittee was discharged by unanimous consent. Congressman
Rob Bishop (R-UT) offered an amendment designated #1; it was
adopted by voice vote. Congressman Raul M. Grijalva (D-AZ)
offered an amendment designated .080; it was not adopted by
voice vote. No additional amendments were offered and the bill,
as amended, was ordered favorably reported to the House of
Representatives by voice vote.
COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS
Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of
rule XIII of the Rules of the House of Representatives, the
Committee on Natural Resources' oversight findings and
recommendations are reflected in the body of this report.
COMPLIANCE WITH HOUSE RULE XIII AND CONGRESSIONAL BUDGET ACT
1. Cost of Legislation and the Congressional Budget Act.
With respect to the requirements of clause 3(c)(2) and (3) of
rule XIII of the Rules of the House of Representatives and
sections 308(a) and 402 of the Congressional Budget Act of
1974, the Committee has received the following estimate for the
bill from the Director of the Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 18, 2018.
Hon. Rob Bishop,
Chairman, Committee on Natural Resources,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4731, a bill to
extend the retained use estate for the Caneel Bay resort in St.
John, United States Virgin Islands, and for other purposes.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Janani
Shankaran.
Sincerely,
Keith Hall,
Director.
Enclosure.
H.R. 4731--A bill to extend the retained use estate for the Caneel Bay
resort in St. John, United States Virgin Islands, and for other
purposes
Summary: Under current law, the Caneel Bay resort in the
Virgin Islands National Park operates under a retained use
estate (RUE), an arrangement that grants a private entity that
is not the landowner managerial control over the resort. When
the RUE expires in 2023, the National Park Service (NPS) will
assume managerial control over the resort. H.R. 4731 would,
upon request by the current RUE holder, extend the RUE for an
additional 60 years.
H.R. 4731 would require the RUE holder to make payments
that would be deposited into the general fund of the Treasury.
Those payments would be recorded on the budget as offsetting
receipts, which are recorded in the budget as reductions in
direct spending. CBO estimates that enacting the bill would
reduce direct spending by $3 million over the 2019-2028 period.
Because enacting H.R. 4731 would affect direct spending, pay-
as-you-go procedures apply. Enacting the bill would not affect
revenues.
CBO estimates that enacting H.R. 4731 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2029.
H.R. 4731 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Estimated cost to the Federal Government: The estimated
budgetary effect of H.R. 4731 is shown in the following table.
The costs of the legislation fall within budget function 300
(natural resources and environment).
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By fiscal year, in millions of dollars--
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2019- 2019-
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2023 2028
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DECREASES IN DIRECT SPENDING
Estimated Budget Authority............... 0 0 0 0 0 0 * * -1 -1 -1 0 -3
Estimated Outlays........................ 0 0 0 0 0 0 * * -1 -1 -1 0 -3
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* = between -$500,000 and zero.
The bill would require an independent appraisal of the fair-market value of payments. CBO estimates that the appraisal would cost less than $500,000,
subject to the availability of appropriated funds.
Basis of estimate: For this estimate, CBO assumes H.R. 4731
will be enacted near the end of 2018 and that the current RUE
holder would request an extension of the agreement as provided
in the bill.
Direct spending
In 2017, the Caneel Bay resort sustained extensive damage
from Hurricanes Irma and Maria. CBO expects that rehabilitation
of the resort by the current RUE holder would be contingent on
a long-term operating agreement between the NPS and the RUE
holder. The two parties could enter into such an agreement
under current law or under H.R. 4731.\1\
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\1\For this estimate, CBO assumes that the NPS will not seek
appropriations to rebuild the resort or enter into a concession
contract after 2023.
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Options under Current Law. Under current law, the NPS is
authorized to enter into a long-term lease with the current RUE
holder upon expiration of the RUE in 2023. If the two parties
enter into a lease, the current RUE holder will be required to
make fair-market rental payments to the NPS that are equal to a
percentage of the gross revenues of the resort; those payments
would be recorded in the federal budget as offsetting receipts.
(Currently, the RUE holder does not make any payments to the
NPS.) Based on an appraisal of the property, CBO estimates that
under this scenario the NPS would collect, on average, $750,000
annually over the 2024-2028 period.
If the NPS decides not to enter into a long-term lease with
the current RUE holder, it will assume management of the resort
on October 1, 2023. CBO has no information about whether the
agency plans to rebuild and operate the resort if
reconstruction and operations are not initiated prior to that
date. Because we do not know whether the NPS and the current
RUE holder will enter into a lease, CBO assumes that the
probability of the two parties entering into a long-term lease
under current law is 50 percent.\2\ Adjusting for that
probability, CBO estimates that lease payments would total
about $2 million over the 2024-2028 period. Under current law,
any amounts collected by the NPS are available to be spent
without further appropriation for visitor services and resource
protection within the Virgin Islands National Park. Based on
historical spending patterns, CBO estimates that the agency
will spend $1 million, or about half of the expected
collections, at that park over the 2024-2028 period. Therefore,
CBO estimates that under current law, the expected net
operating expenses for that park will decline by $1 million
over the 2024-2028 period.
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\2\CBO endeavors to develop estimates that are in the middle of the
distribution of potential budgetary outcomes. In cases where there is
no clear precedent for predicting agency behavior under a legislative
proposal, CBO has adopted a convention of assuming a 50 percent chance
of an agency using its discretion under the bill. CBO takes this
approach in uncertain situations for the purpose of informing the
Congress about the potential costs of legislation.
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RUE Extension. Under the bill, CBO expects that the current
RUE holder would pay amounts similar to those expected under
current law ($750,000 annually, beginning in 2024) for a total
of about $4 million over the 2024-2028 period. Those payments
would be recorded as offsetting receipts, would be deposited
into the general fund of the Treasury, and would not be
available for spending unless appropriated. Thus, on net, CBO
estimates that enacting H.R. 4731 would reduce direct spending
by $3 million over the 2024-2028 period (the $4 million in
savings under the bill minus the $1 million that will be saved
under current law).
Spending subject to appropriation
The bill would require an independent qualified appraiser
to determine the fair market value of payments under the
extended RUE. Based on the costs of similar tasks, CBO
estimates that the appraisal would cost less than $500,000;
such spending would be subject to the availability of
appropriated funds.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. As shown in the table on page 2, the net decrease in
outlays that are subject to those pay-as-you-go procedures is
$3 million over the 2024-2028 period. Enacting the bill would
not affect revenues.
Increase in long-term direct spending and deficits: CBO
estimates that enacting H.R. 4731 would not increase net direct
spending or on-budget deficits in any of the four consecutive
10-year periods beginning in 2029.
Mandates: H.R. 4731 contains no intergovernmental or
private-sector mandates as defined in UMRA.
Estimate prepared by: Federal costs: Janani Shankaran;
Mandates: Zachary Byrum.
Estimate reviewed by: Kim P. Cawley, Chief, Natural and
Physical Resources Cost Estimates Unit; H. Samuel Papenfuss,
Deputy Assistant Director for Budget Analysis.
2. General Performance Goals and Objectives. As required by
clause 3(c)(4) of rule XIII, the general performance goal or
objective of this bill is to extend the retained use estate for
the Caneel Bay resort in St. John, United States Virgin
Islands.
EARMARK STATEMENT
This bill does not contain any Congressional earmarks,
limited tax benefits, or limited tariff benefits as defined
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of
the House of Representatives.
COMPLIANCE WITH PUBLIC LAW 104-4
This bill contains no unfunded mandates.
COMPLIANCE WITH H. RES. 5
Directed Rule Making. This bill does not contain any
directed rule makings.
Duplication of Existing Programs. This bill does not
establish or reauthorize a program of the federal government
known to be duplicative of another program. Such program was
not included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-139
or identified in the most recent Catalog of Federal Domestic
Assistance published pursuant to the Federal Program
Information Act (Public Law 95-220, as amended by Public Law
98-169) as relating to other programs.
PREEMPTION OF STATE, LOCAL OR TRIBAL LAW
This bill is not intended to preempt any State, local or
tribal law.
CHANGES IN EXISTING LAW
If enacted, this bill would make no changes to existing
law.
ADDITIONAL VIEWS
H.R. 4731 adds an additional 60 years to the Retained Use
Estate (RUE) for Caneel Bay Resort, a private hotel that
operates within the Virgin Islands National Park. The resort is
a high-end, world-class tourist destination and one of the top
employers on the island of St. John. Unfortunately, like much
of the Virgin Islands, the hotel was severely damaged by last
year's hurricanes.
The land associated with the Virgin Islands National Park
was donated to the United States by Laurence Rockefeller in
1956. Mr. Rockefeller retained a small piece of the island to
develop the Caneel Bay Resort, which was, ultimately, donated
to the Federal government to complete the vision for the park.
However, the donation of the resort initiated the RUE, a unique
legal arrangement that authorized the hotel to operate for 40
years before becoming part of the park.
In 2010, Congress authorized the National Park Service to
enter into a 40-year sole source lease with the owner of the
RUE.\1\ To honor the spirit of the original donation, the
authorized lease is required to include provisions that limit
expansion of the resort, prohibit the division and subsequent
sale of the property, and include provisions to protect the
park and the public interest. The operators of the resort and
the National Park Service have been negotiating a lease for the
last eight years and have not been able to agree on the terms.
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\1\Public Law 111-261 (16 U.S.C. 398d note).
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The hurricanes and the urgent need to rebuild the resort
led to the introduction of H.R. 4731, which bypasses the lease
negotiation process and simply extends the RUE. This removes
the National Park Service from the process and does not provide
any additional oversight or assurances that new construction
complements the management goals of the national park.
Natural Resources Committee Ranking Member Grijalva offered
an amendment that would have authorized the National Park
Service to ensure that the hotel's reconstruction and future
operation comply with all appropriate laws and regulations. In
the context of providing a 60-year license to continue business
as usual on property owned by the American taxpayer, this is a
fair request. Committee Republicans characterized the amendment
as overly broad and refused to incorporate it into the bill.
Rebuilding Caneel Bay Resort is a priority for the Virgin
Islands, and should be a priority for Congress, but this bill
lacks the necessary safeguards to ensure that the property is
managed in a way that complements the mission of the Virgin
Islands National Park. We hope to continue working with our
colleagues to ensure that the resort is developed in a manner
that honors its status as a piece of the park.
Raul M. Grijalva,
Ranking Member, Committee on
Natural Resources.
[all]