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ISLAND RESOURCES FOUNDATION STUDY OF WATER ISLAND ECONOMIC DEVELOPMENT OPTIONS March 1980 RED HOOK CENTER. BOX 33 • ST. THOMAS, U.S. VIRGIN ISLANDS 00801 • (809) 775-3225 ACKNOWLEDGEMENT Island Resources Foundation wishes to express its grati- tude for the truly extraordinary degree of cooperation and assistance that it has received from all of the peo- ple, agencies and organizations that have been contact- ed in the course of this study. The Virgin Islands De- partment of Commerce, our fellow contractors, other Vir- gin Islands government agencies, the Beach Management Corporation, and the people of Water Island have all been extremely generous with their time, understanding, information and patience. It is our hope that this study reflects the quality of assistance and support that we have received, and we would encourage broad dissemination of the study in order to support the dialogue that has been initiated. Errors, omissions and misunderstandings are clearly our own. However, it is necessary to understand that this study labors under the usual burden of incomplete, con- flicting and irrational data that affects every other quantitative study of the Virgin Islands. From the avail- able sources we have had to select the most reasonable available data, supplemented by our own estimates and as- sumptions. It is our firm belief that the data presented here is sufficient for the purposes for which it is employed. 1 Chapter One Chapter Two Section I Section II Section III Chapter Three Chapter Four Section I Section II Section III Section IV Section V Section VI Chapter Five Section I Section II Section III Section IV Section V Section VI Section VII TABLE OF CONTENTS Executive Summary Water Island Development History Chronology 1944 to Present Developmental History The Setting Pre Historic Period Historical Period to 1950 Water Island, Inc., 1951-1965 Water Island Hotel & Beach Club, Inc. 1966-1980 Footnotes Photo Survey of Water Island Economic Development Options Introduction Development Guidelines for Water Island Development Constraints Micro Planning District Development Options Summary Development Options for Water Island Sources and References Page No. 1 6 7 11 11 12 12 17 30 39 42 58 59 60 67 90 127 138 Water Island Questionnaire Analysis 148 Introduction 149 Respondents' Characteristics 150 Economic Characteristics 154 Water Island Development Responses 158 Questionnaire 165 Water Island Civic Association Guidance Letter 169 Summary Responses 171 ii -1- CHAPTER ONE EXECUTIVE SUMMARY - 2- Situated in the middle of St. Thomas harbor, the 490 acres of Water Island present a unique opportunity for comprehensively planned devel- opment. Owned by the United States Government, and managed under a lease which is due to ex- pire in 1992, the island is clearly underdevel- oped compared with the rest of St. Thomas. In spite of its proximity to the center of Charlotte Amalie, assessed property values, employment and population density on Water Island are only fractions of these factors for St. Thomas as a whole. The major impediment to development at this time is the short term and uncertain final disposition of the Water Island lease. Without a long term lease, or clear title to Water Island property, it is almost impossible. to secure financing for any development, including home construction. The lack of new capital not only will stifle new development, but also it may prevent the hotel complex from making the necessary investments to establish profitable operation. Adjusting the terms of the lease, or providing clear title to current property holders, will have direct implications for future development, especially as it affects the availability of the 280 acres of Water Island that are currently un- developed. There are three decisions involving future property rights that will be especially important: 1. The extent of the "hotel property", i.e., that portion of currently un- sub-leased land which would be re- tained by the hotel. This decision will determine both the role of the hotel in future development (it now holds the master lease for the entire island), and the ease with which it can secure financing. 2. The disposition of the undeveloped properties not assigned to the hotel. The method by which these properties are managed, and the terms, condi- tions and proceeds of their sale are all important issues for future de- velopment. unde.ve..tope.d pote.n;Uai. - 3- 3. The future development of the Sprat Bay Corporation, whose 37 members hold the sub-lease to nearly half of the un- developed property on Water Island. As part of the analysis conducted for this study, all of the potential uses of the undeveloped lands on Water Island have been examined. It is clear that the range of alternatives is greatly limited by the especially high costs of build- ing and working on Water Island, which has to import all materials, equipment, and most labor from St. Thomas. Even among the economically feasible alternatives, however, there are sub- stantial qualitative and quantitative differences in terms of the social and environmental impacts on the Virgin Islands. The most significant finding of this study for the Government of the Virgin Islands may be that similar investments can h~ve radi.cally different impacts on both Water Island and the wider Virgin Islands community. The clearly defined interest of the Virgin Islands means that whatever owner- ship, property rights and management models are eventually chosen for Water Island, there is both a legitimate role and a public need for Virgin Islands involvement in the choices of particular development options. The objectives of most con- cern to the Virgin Islands are: to increase the rate of new investment; to increase the prppor- tion of resident property holders on Water Island; and to use the island's natural resources to create permanent, new full-time employment for Vi rgin Islanders. Based on an examination of all of the possible uses of undeveloped Water Island property, and an assessment of the social and environmental impacts of maximum development strategies, a ten year development program is recommended. This recommended development option involves essen- tially a continuation and acceleration of exist- ing trends. The recommended option is designed to exploit the island's geographical advantages by promoting relatively labor intensive boating and watersports services, with a modern marina and boat yard complex to complement the hotel operation. Additional new proposals include VVtgbl. I.6.£..and6 Jto.£..e. Jte.c.omme.nde.d opUon - 4- the development of additional recreational beach areas, and a park and nature preserve on the is- land's eastern side. The recommended ten year development option lS described in detail in Sections IV and V 6f Chap- ter Four, below, but briefly, it includes: • • • • An increase in property value from $19.5 million to $39.9 million, implying a four-fold increase in the value of build- ings and other structural improvements. An increase of 200 dwelling units (from 220 to 420), plus the permanent loca- tion of 30 charter yachts in the marina. A projected increase in the number of permanent, year-round jobs from 83 to 255, in addition to construction and seasonal employment increases. It should be noted that many of these new jobs are more desirable than the labor- er and domestic and hotel service jobs that are now found on Water Island. The annual average .population on Water Island would increase from 280 to over 750, with a proportionate increase in the number of declared permanent (tax paying) residents of the Virgin Islands. The result of this level of development would be to bring Water Island to above the territorial property value average (based on 1977 assessments in "Comparative Growth Statistics'), and to the 1980 territorial average for the number of jobs per square mile. This is not bad performance for the low capital/low density development be- ing proposed. Finally, the development option proposed for this ten year program will hy no means result in a I!satuation" of the island's development poten- tial. By concentrating major new facilities in already developed and readily accessible areas, over two hundred of the island's 490 acres will remain essentially undeveloped. Although the pace of development over the ten year period -5- would be many times that of the past twenty years, it should be within the absorptive ca- pacity of the existing infrastructure. The proposed development strategy will result in a Water Island that will continue to present a wide range of choices and flexible management options to future policy makers. In conclusion, the current underdeveloped state of Water Island is an important resou~ce to the people of the Virgin Islands. Future develop- ment should be carefully managed to avoid unnec- essary compromises to this resource and to maxi- mize potential benefits (largely in the form of stable jobs and increased numbers of tax paying permanent residents). -6- CHAPTER TWO WATER ISLAND DEVELOPMENT HISTORY - 7- SECTION I: W,l, CHRONOLOGY 1944 TO PRESENT June 19, 1944 U.S. Department of Defense acquires Water Island from the East Asiatic Company/West Indian Company for $10,000 through condemnation. 1945-1950 Army constructs major military base on Water Island. 1950 Army vacates Water Island and turns it over to the Department of the In- terior by revocable permit. Depart- ment of Interior assigns permit to St. Thomas Development Authority. August 1, 1951 St. Thomas Development Authority leases Water Island for thirty-five years to Water Island, Inc., for de- velopment of a tourist resort. July 11, 1952 President Truman signed Public Law 511 (82nd. Cong.) authorizing trans- fer of Water Island from the Depart- ment of Defense to the Department of the Interior. November 3, 1952 General Services Administration dele- gates authority to the Department of Interior to lease Water Island. December 10, 1952 Water Island, Inc. signs new twenty year lease (with 20 year renewal op- tion) with the Department of the In- terior. January 1, 1954 Water Island Hotel officially opens for business. January 26, 1954 First major sub-lease executed by Water Island Inc. July 1, 1956 Largest single sub-lease executed by Clarence Doheny for 156.5 acres in the northern part of the island. 1957 Flamingo Bay Corporation established to operate twelve efficiency apart- ments as part of the hotel. -8- October 10, 1958 Clarence Doheny assigns his sub-lease to Warren H. Corning. May 2, 1960 Warren H. Corning sells his sub-lease to the Sprat Bay Club, Inc. for devel- opment as a residential housing com- munity. 1962 Water Island Civic Association estab- lished to represent the interests of residential property owners. 1965 Water Island, Inc. opens up a channel between Flamingo Bay and the Lagoon, and starts development of a marina complex. December 3, 1965 Water Island, Inc. sells the Master Lease to the Water Island Hotel and Beach Club, Inc. headed by Edward J. McCardle. 1966 Ambitious new hotel expansion program initiated by Water Island Hotel and Beach Club, Inc. 1967 Water Island Colony Club hotel officially opened for business with sixty-three rooms and more under construction. March 21, 1972 Bill No. 5382 introduced in the V.I. Senate by Alexander Moorhead, Jr. call- ing for a Legislative petition to the Secretary of Interior requesting the transfer of Water Island to the Virgin Islands Government. April 1972 Comptroller of the Virgin Islands is- sues Audit Report questioning whether Water Island was being developed in the best interests of the federal and ter- ritorial governments. June 10, 1972 Citizen's Committee in St. Thomas pet- itions President Nixon to turn over Water Island to the Virgin Islands Government for use as recreational and living space. -9- 1972 V.I. Legislature establishes a Water Island Commission to study the lease and other matters relating to the de- velopment of Water Island. January 1, 1973 Department of Interior renews Master Lease with Water Island Hotel and Beach Club, Inc. until December 1992. March 12, 1973 V.I. Delegate Ron DeLugo introduces Bill H.R. 5461 in the U.S. Congress authorizing the Department of the Interior to acquire some of the out- standing leasehold interests in Water Island and transfer the island to the Virgin Islands Government. 1977 Water Island Colony Club shuts down operation. Reopens in December as the Sugar Bird Hotel under the manage- ment of Beach Management Corporation headed by J. Robert Bishop. May 10, 1978 Beach Management Corporation requests the Department of the Interior to ex- tend the Master Lease for twenty years to facilitate its development plans. August 4, 1978 Water Island Hotel and Beach Club, Inc. assigns the Master Lease to Beach Man- agement Corporation under a contract- purchase agreement. February 15, 1979 Department of the Interior approves as- 5ignment of the Master Lease from Water Island Hotel and Beach Club, Inc. to Beach Management Corporation. WATER ISLAND MAP NO. 1 ( .' -11- SECTION II: DEVELOPMENTAL HISTORY THE SETTING Water Island, situated just off the south coast and with- in the greater harbor area of St~ Thomas, is the fourth largest of the u.S. Virgin Islands, with a total of 491.5 square acres. Volcanic in ori- gin, it has shallow soils of the Cramer grav- elly clay loam variety, a dense, semi-arid vegetation and a rather steeply sloping ter- rain. A primary ridge line 200 to 290 feet above sea level runs down the center of the Island in a north-south direction. Among the Island's outstanding natural fea- tures are rugged, steep cliffs along the south- ern and southeastern shorelines, some 10 sand or sand and gravel beaches, a number of small bays and peninsulas and four salt ponds with associated mangrove systems. There is limit- ed variety of wildlife: a colony of Bahama Pin-Tail ducks inhabits the Limestone Bay Salt Pond; there are 20 to 30 Red Bill Tropic Bird nests on the south shore cliffs; import- ed Bob-White quail roam the island, and large green iguana can be found in abundance. Be- cause of the absence of the mongoose, it is possible that many species rendered extinct by that predator on the other main islands may survive on Water Island. Water Island allegedly received its name from the fresh water once found in association with its several salt ponds. A 1719 map by the Dutchman Gerald van Keulen shows a "fresh water pond" at a location just south of Car- oline Point. It is likely that the existence of this pond drew the first European settlers to Water Island, for the same map depicts the house of one Albert de Ruyter in c1oseprox- imity to it. Today that pond is dry, and a stone wall at its edge has been filled up with debris. There is a possibility that this fresh water source, and any others like it through- out the island, might once again be tapped. wa..te./L -12- The potential of the island's ground water resources has never been explored. PRE-HISTORIC PERIOD Based on the limited evidence available, human occupancy of Water Island seems to have begun around the time of Christ. To date, archaeologists have found five Indian sites, all of which are located at sheltered bays along the western coastline (see Map No. 2 below). Pot shards, stone tools and other evidence recovered from very cursory surveys and excavations at these sites indicate small scale, casual occupation by itinerant fisher- folk and shell gatherers, rather than exten- sive i permanent settlement by agricultural- ists. Negroid skeletons have been found at two of these sites 2, but there is debate over whether they were intrusive or not. None of the five archaeological sites have been nominated to the National Register of Historic Places. However, the acting terri- torial archaeologist points out that three sites have not yet been systematically ex- vacated, and that the Elephant Bay site may be of considerable importarice because of the early Saladoid pottery found there during a recent exploratory dig. 3 HISTORICAL PERIOD TO 19S0 Information respecting human occupation and use of Water Island during the colonial period is diffi- cult to come by.4 A num- ber of legends and tales have grown up around Water Island, as with many other offshore is- lands and cays. There are stories of pirates and buried treasure; accounts of grand man- sions, luxuriant cane fields and ownership by a Hollenzollern prince. None of these, how- ever, could be substantiated from the records on hand, and most appear to be more fiction than fact. S The availability of easily accessible fresh water in sheltered bays may have attracted ~ve indian ~li~ ~;o * <0 MAP NO. 2 ARCHAEOLOGICAL SI . TE HISTORICAL :SITE SALT POND 66 48 -14- seafarers to the island well in advance of the actual settlement of St. Thomas, but no evidence is available to support this conjec- ture. The Island was, however, used by early settlers as a source of food. One of the first undertakings of the Danish colonizers who arrived on St. Thomas in 1672 was to stock Water Island with cattle and goats in order to insure themselves of an accessible supply of meat. This stock belonged to the Danish West India Company, which not only used it to feed its St. Thomas colonists, but also, in the early settlement years, marketed it to ships and neighboring colonies in exchange for exgortable commodities like sugar and to- bacco. By 1680 Water Island was reported to be well pop~ ulated with livestock, and, in consequence, much frequented by ships and foraging exped- itions from the nascent settlement at nearby Charlotte Amalie. Colonists also fished in the salt ponds, drugging the fish with a mix- ture of bark from the local stinkwood tree (Piscid- ia carthagenensis Jacq.) and lime mortar.7 The more well-to-do made outings to Water Is- land for both practical and recreational pur- poses. In 1686, for example, Vice-Governor Christopher Heins led a group of men and wo- men on a hunting and fishing party to the is- land. Using a seine, they caught plenty of fish, but brought back little game, even though in the words of one participant, there were "many wild bucks and goats as well as some wild cows, bulls and calves, /and7 in the bays there are man~ pelicans, flamIngoes, ducks and other birds." Although the Danish West India Company must have stationed some men on Water Island to prevent poaching, the earliest record ofhu- man habitation that could be found was the van Keulen 1719 map of St. Thomas Harbor, which depicts the house of Albert de Ruyter on a small hill overlooking Ruyter's Bay. By 1730, according to a map of that date, de Ruyter was operating a plantation at the north- ern part of the island. tiVeldoc.k. AlbeJd de Ruytef1. -15- By the end of the eighteenth century there were two plantations on Water Island: Car- olina~ Lyst, comprising the northern portion and Providence, comprising the southern part. According to title records found at the St. Thomas Recorder of Deeds Office, the two plan- tations were under separate ownership for the first sixty years or so of the nineteenth cen- tury. In the 1860's, they were consolidated under the single ownership of Joseph Danie1*, a wealthy local merchant. Water Island re- mained in the possession of the Daniel family until 1905, when they sold it to agents of the East Asiatic Company. The :re'cords are silent about what crops, if any, were cultivated on the two plantations. Nor are there any population statistics. There is evidence that Peter Tamaryn**, a free negro * Title records clearly refute the legend that Daniel received Water Island from the British because of his services to them during their occupation on St. Thom- as between 1807 and 1815. Daniel purchased Providence estate in 1850 and during the 1860's bought up par- cels of Carolina's Lyst from members of the Woods family. ** Peter Tamaryn is perhaps the most intriguing of all the oWners of Water Island. He was the son of Mingo Tamaryn, the free negro commander of the Free Negro Corps formed by the Danes in 1721 to help them police against slave unrest. Mingo and his Corps helped quell the St. John slave rebellion of 1733-34, and in later years were employed to track down and sub- due bands of runaway and rebel slaves. Peter took command of the Corps when his father died in 1765. See Kay Larsen, Dansk Vestindinien 1666-1917 (Copenhagen, 1927) p. 87. It is not known how Peter acquired title to his estate. Conceivably he or his father came in to ownership by virtue of their loyal service to the Danish Crown. -16- who owned Carolina's Lyst, had, at the time of his death in 1806, twenty-nine slaves and an undisclosed number of cattle on that estate. The Daniels are also reported to have raised go~ts and cattle, although they are said to have valued the island more as a summer re- treat and hunting preserve than as an econom- ic investment. 9 Little physical evidence of the plantation per- ioa has survived. Ruins of the Providence es- tate buildings, probably constructed by the Daniel family, can be found at Providence Point. Ex~ept for an old cistern, which is still in- tact, they have been incorporated into a pri- vate residence. Ruins associated with the de Ruyter/Carolina Lyst estate on the northern end of the island have been found by an Island Re- soprces Foundation survey team. These latter ruins are of historical significance because of their association with the Tamaryns, one of ol~est and most prominent free black families in the Virgin Islands. The East Asiatic Company, a Danish joint-stock company which purchased Water Island through its agents in 1905 and in its own name in 1911, planned to spend large sums to develop it into a major coaling and bunkering facility. Behind this ambitious development program lay two mo- tiyes: 1) to capitalize on the anticipated in- crease in St. Thomas commerce in consequence of the opening of the Panama Canal; 2) to capital- ize on a practice, originated under the Daniel's, whereby the Russian, French and German Navies 1e~sed the island as a base of operations for winter maneuvers and gunnery practice. 10 Al- though in 1905 the Company sent out a team of engineers to design extensive new facilities, for reasons that are unc1ear 11 nothing came of the scheme. World War I and the subsequent sale of the Dan- ish West Indies to the United States in 1917 put to rest the Company's plans for Water Is- land, although it did retain ownership until 1944, when the U.S. Government acquired it for $10,000.00 through condemnation proceedings. 12 - 17- The U.S. Government seized Water Island for the explicit purpose of establishing a coastal de- fence installation there. Title was vested with the Department of Defense, which immediat- ely set to work constructing a large army base on the southern part of the island known as Fort Segarra. Some fifty-three structures, in- cluding barracks, gun emplacements,watch towers, underground bunkers. and other mili tary facili ties soon appeared, as did an infrastructure of docks, roads, water, sewage and power systems.* The total cost of this massive development effort was offically put at $1,583,000.00,13 although local gossip placed it closer to $3,000,000.00+4 Buildings and infrastructure facilities con- structed by the Army still standing by 1953 are shown in Map II. When World War II ended, construction was abrupt- ly halted and the defensive garrison was replac- ed by a unit of the Army's Chemical Warfare Division, which used the island to conduct se- cret experiments with poison gasses for several years. After the Chemical Warfare Divison abandoned the Island in 1950, the Army turned it over to the Department of the Interior by revocable per- mi t for five years. In December 1951 the term of the permit was made indefinite, but it re- mained subject to revocation by the Army at any time. The Department of the Interior, in its turn, as- signed the permit to the St. Thomas Development Authority, an instrumentality of the territor- ial government, in the hopes that that body could negotiate a long-term lease with a pros- pective developer. It was at this point, in 1951, that Walter and Floride Phillips, a New York couple looking for a retirement bom~ appear- ed upon the scene. WATER ISLAND, INC. 1951-1965 The Phillipses had heard about the avail- ability of Water Island through Isidor Paiewonski, a St. Thomas businessman. After making an on- site inspection in March 1951, they joined forces *For a detailed description of improvements made by the Anny, see page 21 below. F olLt S e.g aJ1JW. .toc.a£. c.onvw.t WaLteJL and F.toftide. PhLitip~ .~ ~F - ...... S AIRPORT } '" / PROVIDENCE 21, FLAMINGO POINT / / / MAP NO. 3 ,/ / // /' // / 47, DOCK , " " , ARMY FACILITIES IN 1952 -- THOMAS .,.,- B 0 R .,......-c , -,," ''- ----- i, ----- '.'1 ,," I , I Building Number A· 29 26, 31, 32. 33, l 34, 35, 36 I 30 27 28 37, 38 B 41, 42, 43, 46 39 40 45 47 C '~'-" DESCRIPTION Located on Rainbow Point: ~I[ain Building or "Club Building' Buildings which can be converttd into rooms Employees Quarters and \Vorkshop Chlorinator Outdoor 1vfovie Theatre Booths Gun Emplacements Located on Providence Point: Buildings which can be convertec into rooms Salt \Vater Cistern Salt \Vater Pump House Gun Emplacement Dock // i DOCKS " BANANA Po'lNT " SA N DY PT . .-./"""J ~ 2, 3, 4, 6, 9, 10,} 11, 13, 15, 22 Located on Flamingo Point: Buildings which can be converted , , , , " ? - I BANANA BAY 14 into rooms Subleased for residential purposes Uncerground Concrete Fort Steel Observation ""rower BAY SOURCE: "\. POINT 51, 52 53 16 17 21 23 24 25 48, 49 Locatec! in other areas: Buildings whir.h can be converted into rOOms Base end station (elevated) Electric Po,"",,;oT" Pl~nt Sa!t Wrtt~r Pump House Main Dock \Vater Catchment Concret!' R~ser"Voir Salt \V:tter Cic.te.rn Underground C011crete Igloos Due to Jack of space, 1be numbers of iadiTidrz::l buildings intended to be converted into rooc::rs _r~ not shown on the map but the groups are indicateJ by A, Band C. MAP 0 F ·"W ATE R 1 S LA N 0 AND ST. THO MAS H ARB 0 R ~ seA L E OF ttl I L f 5 ~ . E-3 I'='=':::.-:"';-;:;;;:::=~ o 1 M~C~O~tA ROIIDS ========= GRAVEL ROADS WAT~R ISLAND INC,) OFFERING CIRCULAR (1953)p,8. (! ., . .... ..... :-. - 18- with two brothers from New York - Raymond and Edward Bill* - to form a local corporation called Water Island, Inc., which signed a lease with the St. Thomas Development Authority on August 1, 1951. Copies df the first lease are not locally avail- able, and th·erefore have not been examined. The Department of Interior has stated: 15 This lease was for an ini tial term of 35 years, with an option for the lessee to have an additional 25 years for a total of 60 years. The lease was draft- ed to accommodate the Water Island, Inc. development plan for the Island. This plan had two phases - short term and long term. The short term phase con- templated the expenditure of $200,000 to rehabilitate and convert existing dilapidated Army barracks into a resort hotel with not less than 50 rooms and related facilities. It was anticipat- ed that title to or full control over Water Island would eventually be ac- quired by the Development Authority and that, thereafter, the occupancy by lessee would be firm and no longer be subject to revocation by the Army. When that event occurred the lessee could then be expected to launch into its long range plan involving substantially increased investment for further hotel and residential development and con- struction. The initial $200)000 was considered to be high risk capital be- cause of the right of revocation by the Army. After that right was extinguish- ed, it was felt that the term of the lease would be readily mortgagable to provide the money for the long range plan. * There were three other corporate officers: Dr. Roy A. Anduze and Mr. and Mrs. Harry Loucks, all residents of St. Thomas. -19- According to an account given b~6Walter Phillips in 1956, the terms of the lease were that the Army should retain own- ership and give the developer a forty year (sic?) lease at a rental of $3,000.00 a year. In return, the lease- holder had to agree to spend $200,000 on improvements to the island and, with- in five years, provide fifty rooms of hotel space - the general idea being that such a development would contri- bute to the Virgin Islands tourist trade and provide employment for local labor. Although less than pleased with the terms of the lease, the Phillipses signed it "just to get things going". Once it had been signed, they immediately turned their attention not only to having it changed, but to having the island transferred from the jurisdiction of the Army to the Department of Interior. 17 The Phillipses had two main problems with their lease. In the first place they recognized that the Army's right of revocation would hamper even their short-term plans. Secondly, they feared that eventual transfer of the Island to the Virgin Islands Government might also be detri- mental to their development scheme. As Walter Phillips explained to the Department of Inter- ior in 1972: 18 It was felt that a lease from the federal government would be stronger and result in greater development of Water Island .... We believed people would be more inclined to invest in subleases and develop the Island if the deal was from the U.S. govern- ment. We wanted to get Water Island removed from the vagaries and change- ability of local politics. The Phillipses, assisted by Governor Morris de Castro and members of the St. Thomas Develop- ment Authority, spent the better part of the next twelve months lobbying to have the Army transfer Water Island to the Department of -20- Interior. On July 11, 1952 President Truman signed Public Law 511 (82nd. Congress) author- izing the transfer. On November 3, 1952 the General Services Administration delegated to Interior the authority to lease the property. On December 10, 1952 Interior executed a new lease with Water Island, Inc. The provisions of the 1952 lease, which have been discussed in a recent legal analysis by Arthur Pomerantz of St. Thomas, need not con- cern us here. The developmental framework which the lease mandates is, however, relevant, for it has largely determined the developmental process on Water Island during the past three decades. Like its predecessor, the 1952 lease was ex- plicitly intended to promote the Virgin Islands' economy. After affirming that the Island had been transferred from the Army to the Interior Department "so that it might be developed in such a manner as to contribute effectively to the economy of the Virgin Islands", the lease goes on to specify that "development of the area as a tourist resort appears to be the most effective use to which it may be put". Section 1 is even more explicit on the nature of the preferred development. "The leased pro- perty and improvements," it states, "shall be developed into a resort area." Yet, al though the lease seemingly restricts development to the tourist sector, it offers an extremely broad definition of what constitutes a "resort area", to wit: Comprising dwelling and recreational facilities and ancillary service fac- ilities and parts thereof may be de- voted to residences, whether private or cooperative or otherwise, agricul- ture, horticulture, the breeding and raising of livestock and poultry and other purposes. Moreover, Section 7 allows sub-lessees to en- gage in unspecified "commercial, revenue-pro- ducing purposes il providing the approval of the tr..MOtr..:t de.ve£opme.nt - 21- Secretary of Interior is first obtained. The latitude thus allowed is so great that Mr. J. Robert "Bud" Bishop, the current leasehold- er,has stated that he believes he could estab- lish light industries, such as watch manufac- turing, so long as the tourists had access to the facility. Despite the stated objective of creating a tour- ist resort complex on Water Island, the only tourist facility actually required by the lease was a fifty room hotel, which Water Island, Inc. agreed to have operational "through conversion of presently existing buildings or otherwise ll by January 1, 1958. No investment or capital improVement level was established, although Section 4 obligated Water Island, Inc. to have a mInImum paid in capital of $200,000.00 with- in ninety days from January 1, 1953. Dnce the matter of the lease had been resolved to its satisfaction, Water Island, Inc. turned its attention to Phase I of its development strategy - the establishment of a 50 room hotel resort. At this point a major difference of opinion arose between the Phillipses and their partners, the Bills, over the most appropriate development strategy. The Bills wanted to raise a large amount of investment capital in order to build an elaborate resort complex; whereas the Phillipses preferred a low-ke~ informal and simple operation, with a view to improving the existing facilities "on a sort of pay-as-you- go basis".19 The disagreement was resolved when the Phillipses bought out the Bills for $25,000.00. They then launched a public stock issue to raise $269,000.00 needed to complete Phase I of their development program. Water Island, Inc. 's hotel development program was based on converting the facilities left be- hind by the Army into a medium-size hotel oper- ation that would accommodate one hundred guests. The 1953 stock offer described these facilities as follows: 20 There are extensive improvements on Water Island which were built by the -22- United States Army during World War II. There are 33 single storied buildings with concrete foundations, concrete floors and concrete block walls, most of which are 22'8" in width and of varying lengths ranging up to 168'8". There is a water sup- ply system, consisting of a water catchment area of 90,000 square feet of concrete and transite, with a cov- ered concrete reservoir of 250,000 gallon capacity and water distribu- tion mains; a power plant with three diesel-operated generators with total capacity of 45,000 watts and electri- cal clistribution lines; a sewer system; a salt water system for flushing toi~ lets. There are about 7 1/2 miles of roads, partly macadam and the remain- der gravel. There are two docks and a telephone cable to the mainland of St. Thomas. Reputedly, the estimated market value of the en- tire installation was only $60,000.00 in 1952,21 The Phillipses arrived in September 1953 to over- see the work of remodelling. After reactivating the Army's water, sewer and electric systems, they concentrated on converting a cluster of buildings on the Rainbow Point promontory into hotel rooms, restaurant, bar, kitchen and other facilities. The development program effected consisted of converting the largest building (168'8 11 x 22'8 11 ) into a "Club House" containing a ki tchen, din- btUlcUYLg C.OYLve.M.,tOYL ing room, lounge, lobby, bar, office and ter- races for outdoor dining and dancing. Several nearby barracks buildings, measuring 96'8" x 22'8" were remodelled, so that each contained eight hotel rooms. Several other smaller struc- tures in the vicinity were converted into staff quarters, workrooms, storehouses and a laundry, The Water Island Hotel officially opened for business on January 1, 1954. By that time thirty hotel rooms and two guest cottages, capable of hote£ accommodating fifty to sixty guests were avail- able for use. However, whereas significant -24- One major reason that the hotel failed to expand after 1953 was the Phi11ipses' dedication to mov- ing ahead with Phase II of their development scheme - residential development and construc- tion. They viewed the attraction of permanent settlers to their island home as far more "chal- lenging" and desirable than the operation of a hotel. Certainly by 1956 they saw long-term residents as their primary objective. "We needed the hotel," explained Mrs. Phillips in 1956, "so that the pro- spective settlers could have someplace to stay while they picked out their site and built their home." And Walter Phillips explained at the same time that with respect to the hotel their ultim- ate goal was to have facilities for no more than one hundred guests. 24 According to the Comptroller's 1972 Audit Report, between 1952 and 1966 Water Island, Inc. sold 121 sub-leases, comprising 298.02 acres for a total financial consideration of $403,835 and total an- nual rent of $3,075. The history of these sub- leases is documented in Table I below. The acre- age involved ranged from 165 to .50 acres, al- though the vast majority (101) were about one acre plots. The bulk of the sub-leases were executed between 1956 and 1961 when 246.25 acres were sold to seventy persons. The sub-lessees or "cottagers" acquired their lots for an "initial payment", which ranged from be- tween $2,500. to $3,000. per unimproved acre in the 1950's to about $3,500. in the 1960's. They also paid a nominal annual rent, usually about $25.00, for the duration of their lease. Lots with old Army buildings on them went for an "initial payment" of about $5,000. per acre. It is not clear exactly what the "initial pay- ments" were made for. Article 2 of the sub- leases states that these monies constitute full payment "for the possessory interest of the cot- tager". However, with respect to local tax sub- sidies, Walter Phillips has also taken the posi- tion that initial payments were not for a real estate transaction, but were prepayments of the cost of furnishing hotel services, were therefore Jte6lde.n:tLa.i de.ve£opme.n.:t .6 u.b-te.a.o e6 - 23- progress had been made during 1953 with respect to hotel development, little was accomplished in the years that followed. In 1958, when the lease required that the fifty hotel rooms had to be completed, Water Island Hotel only had 31 rooms and 2 guest cottages, according to the TRAVEL AGENTS HANDBOOK issued by the Virgin Islands Department of Tourism and Trade for that year. In 1959, twelve newly con- verted efficiency apartments, under separate ownership,* were added to the hotel's operation, but these were the only new additions made to the hotel between 1954 and 1965. 22** By 1954 then, hotel development by Water Island had virtually come to a halt, a fact underscored by figures which show that between 1956 and 1965 only about $4,000 was spent on building rem~~­ e1ing, compared to $121,035 in prior years. * The twelve efficiency apartments added in 1959 actually belonged to the Flamingo Bay Corporation, established by George and Richard Freeman. (George Freeman was a Director of Water Island, Inc. from 1958 through 1974.) In 1957 the Freeman's acquired a sub-lease for four acres containing four unimproved buildings for $21,475 ($20,600 as full payment for possessory interest and $875 as rent from 1957 to 1992). They were authoriz- ed by their sub-lease with Water Island, Inc. to oper- ate their own hotel, bar and restaurant. The Free- man's invested about $125,000 to convert two of their four barracks into efficiency apartments, and they signed a management contract with Water Island, Inc. whereby the latter agreed to manage the apart- ments and provide services in exchange for 40 percent of the profit. ** During 1965 Water Island, Inc. spent $178,779 on marina development in Flamingo Bay. A channel was opened up between Flamingo Bay and the Lagoon. The Bay and the Lagoon were dredged and two buildings were constructed, one as a dining room, bar, kitchen and the other as a maintenance shop for cars and boats. uryvt.ted deVelopment Ftarnin.go Balj -25- part of the hotel operation and consequently were eligible for local tax subsidies.* The sub-leases were sold to individuals, almost all of whom intended them for residential use. Four of the sub-leases had buildings on them that had been remodeled by Water Island, Inc. Five others contained unimproved buildings. The vast majority of the lots were vacant, and many were left undeveloped by the sub-lessees. In 1972 (when the first figures became avail- able) 62 of 121 sub-leased parcels were still vacant. Others were improved into residences or apartment units. In 1972 there were 58 homes, 4 apartment buildings (with a total of 32 rooms) and 1 duplex. In 1972 only 25 of the sub-lessees were permanent residents. The largest sub-lease, comprising about 156.5 acres (as surveyed by the Department of the Interior in March 1978) in the northeastern part of the island, was executed with Clarence Doheny on July 1, 1956. Two years later this sub-lease was assigned to Warren H. Corning, who in turn assigned it to the Sprat Bay Club, Inc. on May 2, 1960. Sprat Bay Club, Inc. was formed as an exclusive residential housing pro- ject which sold sub-leases as shares to its mem- bers. By 1972 thirty-five families owned shares approximating 80 acres. The remaining 80 acres of land had been set aside as open space, a natural area (40 acres around Sprat Point) roads, beaches and other common use facilities. In 1972 only four owners had built residences, the remainder were undeveloped and vacant. * The U.S. Comptroll~r's office has taken exception to the fact that V.I. tax subsidies have been allowed for the "initial payments" on the grounds that these cannot be construed as part of the hotel operation. Walter Phillips has contested that opinion and has refused to repay the subsidies. As of 1980, the issue remains un- resolved, and is currently before the courts. SpJW..t Bay - 26- TABLE I: WATER ISLAND SUB~LEASES 1954~1966 NO. OF NO. OF TOTAL AVER. COST SUB- ACRES J\MOUNT PEP. ACRE YEAR LEASES LEASED RECEIVED OF LAND NOTES 1954 3 4 18,5001 9,2501 l. For two acres of land, each with one remodeled building. The other two acres were sold in con- sideration for architectural services. 1955 8 10.45 35,6001 2,9292 1. Includes sale of 3.7 acres with 3 buildings, 2 remodeled for $16,000. 2. Calculated on sale of 6.75 unimpro~ ed acres for $19,600. 1956 10 175.51 53,500 2,4672 1. Includes one sale for 165 acres. 2. Calculated on sale of 10.5 acres for $25,900. 1957 15 18 61,9001 2,7932 l. Includes sale of 4 acres with 4 2. un'imrroved build'in.gs for $20,000. Calculated on sale of 14 acres for $41,900. 1958 9 8.5 22,335 2,628 1959 12 17.5 44,8001 3,4462 l. Excludes undisclosed sum received for 4.5 acres. 2. Calculated on 13 acres for $44,800. 1960 12 13 40,500 3,115 1961 12 12.75 37,500 2,941 1962 6 6 17 , 5001 3,5002 1. Includes sale of one acre for special considerations. 2. Calculated on 5 acres for $17,500. 1963 10 91 31,5001 3,5001 l. Excludes one sale for 1600 sq. ft. 1964 9 9 31,900 3,378 1965 10 9 30,5001 3,5002 1. Includes sale of 2 acres for special consideration. 2. Calcualted on 7 acres for $28,000. 1966 4 3.5 12,0001 3,429 1. Includes $5,150 paid to W.I. Hotel and Beach Club, Inc. SOuJLc.e-: U.S. ComrxfJw.fJ:.e-JL Ot the- VitLg~n I-6,ta,nc16, Au.cLLt Re-poJLt No. 356-72-99 (1972), Exlub~t B. - 27- Phillips justified his preference for permanent settlers on the following grounds: 25 It was felt that persons living here the year round or for extended stays would provide a much more stable and dependable type of business than tran- sient tourists, who would be here for only a few days. This type of custom- er would tap an entirely different market than the transient hotel guest. Furthermore, since they would give a substantial investment, their interest would tend to be permanent. Thus, if the sublessees paid for the construc- tion of the houses, this would permit a much greater development than would be possible from the sources of the Hotel alone. The construction of these houses provided employment to large numbers of workers and considerable business to suppliers of materials. The persons occupying them year round or for varying periods not only pro- vided business for the Hotel but gave employment to various types of workers, and business to local merchants supply- ing food, supplies, furniture, taxi- cabs and services. But one of the great advantages so far as the local economy is concerned, is that they pay their income taxes here, which stay in the Treasury of the Virgin Islands. Considerable controversy has arisen over whether the residential development program initiated by Water Island, Inc. after 1954 was in conformance with the development objectives of the lease. In 1972 the U.S. Comptroller argued that Water Island was being developed principally as a res- idential area and not as a tourist resort, as required, and therefore questioned whether the lease had been complied with and whether such development was in the best interests of the Virgin Islands. 26 Walter Phillips defended his emphasis on resi- den tial deve lopmen t by poin ting out that his original scheme, accepted by Governor Morris c.onbLovVL6 !:f - 28- de Castro, the St. Thomas Development Authority and subsequently the Department of the Interior, explicitly called for the establishment of a "cottage" type resort which would involve hotel rooms, as well as privately owned apartments and residential units. This type of develop- ment was allowed and explicitly protected by the 1952 lease. The sub-leases, he claimed, provided for the structures built on them to be part of the resort operation and the sub-leases were entitled to hotel services. 27 It is beyond the scope of this report to enter into the legal arguments surrounding this mat- ter. It is clear, however, that in terms of development Water Island, Inc. de-emphasized hotel operations in the strict sense and focus- ed on the expansion of residential units through- out the island. Whether these residential units were actually part of the hotel operation is open to question. Certainly the fragmentary evidence available suggests that relatively few of the sub-lessees actually made their private residences available to hotel guests. On December 3, 1965 Water Island, Inc., with the approval of the Department of Interior, sold its Master Lease with all its assets, rights and obligations to the Water Isle Hotel and Beach Club, Inc. The sale price was $645,160, accord- ing to Water Inc.'s Annual Report for 1965. During the fifteen years it held the lease, Water ISland, Inc. had made a substantial contribution to the development of Water Island~ Between 1952 and 1965 it had spent a total of $465,064 on improvements, most of which went to remodel- ing the old army buildings as part of the hotel. Employment opportunities for thirty-five to sixty- five persons had been created. 28 A base of services, including water, sewers, electricity, telephone, garbage disposal, mail distribution, roads and ferry transportation, had been esta- blished. While overall profits were not as sub- stantial as either the developer or Interior may have wished, they were nonetheless suffi- cient to keep the Corporation in business. The net worth of the Corporation itself grew from $106,990 in 1952 to $700,646 in 1965. Table II - 29- summarizes salient financial information for Water Island, Inc. between 1956-1965. The in- creased corporate assets for these years were due to equipment and furnishing acquisitions, rather than capital construction which had bas- ically been completed by 1955. TABLE II: SELECTED FINANCIAL DATA, WATER ISLAND, INC. 1956-65. GROSS INCOME- HOTEL YEAR ROOMS 1956 42,805 1957 54,280 1958 55,775 1959 70,347 1960 67,684 1961 102,643 1962 113,201 1963 80,705 1964 83,574 1965 93,086 GROSS INCOME- SUB LEASES NjA 65,095 31,535 51,809 47,425 35,376 17,451 44,075 24,578 37,408 GROSS INCOME- APTS. -0- -0- -0- 10,701 10,503 15,065 9,712 10,082 21,377 19,464 TOTAL GROSS RECEIPTS 71 ,962 122,643 104,104 138,396 145,078 160,842 105,170 135,029 120,113 160,318 NET ANNU/\L PROFIT BEFORE NET TAXES ASSETS 7,072 288,740 44,717 290,742 17,151 251,938 37,102 364,147 31,198 400,092 71,665 498,436 830 483,223 26,426 511,224 11 ,628 527,482 53,622 729,032 Source: Water Island, Inc. Annual Reports. Annual Reports for the years 1952-1954 could not be 1 oca ted. The most obvious developmental legacy under Water Island, Inc. was the spread of private residences and the settlement of some twenty families throughout the island. Residential expansion was heaviest along the ridgeline be- tween the underground fort and catchment hill, - 30- where there was already a high concentration of old Army buildings. But, by the 1960's the res- idential units also began to spread northward along the central ridgeline. Several roads were opened up to the northern end of the island, but only four houses had been built in that sector. WATER ISLE HOTEL & BEACH CLUB, INC. 1966-1980 Water Island under The advent of Water Isle Hotel and Beach Club (hereafter WIHBC) marked a radical departure from the development philo- sophy and pattern of Walter and Ploride Phillips. The Phillipses had come to Water Island seek- ing a retirement home, not an investment. In order to obtain a favorable lease to their own island in the sun they had to obligate them- selves to develop it as a tourist resort. Once they had gotten a medium sized hotel operation- al - the minimal development required by their lease - they concentrated on establishing a residential community, a goal more in keeping with their personal interest in Water Island. Under the Phillipses, development, whether ho- tel or residential, proceeded at a casual, care- fully modulated pace. "After all," Walter Phillips once observed, "the original idea be- hind this was to take it easy."Z9 Edward J. McCardle, President and guiding spir- it of WIHBC, was another kettle of fish alto- gether. A high-powered, well-capitalized, stateside businessman and developer, owner of the highly successful Pheasant Run Lodge in Illinois, he viewed Water Island as a prime in- vestment opportunity by which he could capital- ize on the 1960's tourist boom in the Virgin Is lands. Ends dictate means. Whereas the Phillipses em- phasized residential development as the basis of a cohesive, relaxed community life style, McCardle stressed the hotel and expanded fac- ilities for transient tourists as the engine of his profits. McCardle's concept of a re- sort complex, which harkened back to that of the Bills, contrasted sharply with that of the new phi...to.6ophlj E.J. Mc.CCV1.di.e. - 31- Phi11ipses. "We are planning a riviera on the Caribbean," he informed one Illinois newspaper. "When our·construction is complete," he contin- ued, "we will have the largest, most luxurious resort in the islands." McCardle's overall development plan called for an investment of $2,000,000 to create three multi-storied hotels capable of housing 800 guests, restaurants, 300 Mediterranean style villas, a shopping center, private yacht and tennis clubs, a boat harbor and marina. 30 McCardle initially focussed on expanding the existing hotel, which was renamed the Water Island Colony Club. Between 1966 and 1968 WIHBC spent about $2,000,000 on construction of four large hotel buildings (three of which were three stories high), all of which were clustered around the old hotel complex on Rain- bow Point. The Flamingo Bay marina was com- pleted and a deep water dock erected in the Bay just below the Hotel. A number of private vil- las were also constructed in the vicinity of the hotel overlooking the lagoon behind Flam- ingo Bay. Water Island Colony Club officially opened for business in 1967 with sixty-three rooms in op- eration and more under construction. By 1970, one further building had been added and the Hotel offered 110 rooms, three cottages (with a total of eight bedrooms) and 22 villas (38 bedrooms), making it one of the largest hotels in the Virgin Islands at that time. But as with so many other developers in the 1960's, McCardle's reach had exceeded his grasp. Whereas, he had projected a total investment of $2,000,000 for his entire project, the first phase alone had cost approximately $2,600,000 by 1970. Thereafter, investments fell off markedly and no new facilities were added. Moreover, hotel business did not live up to ex- pectations. Gross receipts soared to $1,313,190 in 1968, but the amount steadily declined in subsequent years, sinking to a low of $170,721 in 1977. Between 1966 and 1978 the resort hotel expaYl-6-Lol1 £aJLg e hotel - 32- operation only made a net profit in three years (1969-1971). Corporate assets, which stood at $2,694,091 in 1971, plunged to $1,884,560 in 1976. Financial data for WIHBC between 1965 and 1978 is summarized in Table III. Reviewer ratings of the Hotel were not favor- able. For example, the 1969-70 version of FIELDINGS GUIDE TO THE CARIBBEAN, praised the new ambiance, but its reviewer concluded: "Good potential; hasn't quite jelled yet." The 1973-74 FIELDINGS found the hotel lacking in nearly every respect: the grounds were dirty, the staff surly, service poor and the entire package grossly overpriced. "Something must be done," stated the reviewer, "to correct the massive operational shambles that plague the facility." Meanwhile, McCardle was doing little to pro- mote further residential development on Water Island. Between 1965 and 1978 only three new sub-leases, totaling 2.25 acres were sold, for total initial payments of $48,000, plus total annual rent of $300. In the same period, while 24 new villas had been constructed, just 10 were sold to private individuals, only one of whom was a permanent resident. It should be noted, however, that since 1972 the number of homes has grown from 58 to 73, and the number of permanent year round resident cottagers from about 50 to 100. The overall resident popul- ation has increased steadily as well, to an estimated annual average of 170 to 250 persons, depending on the season. McCardle's economic problems were compounded by social and political troubles. Exc1usiv- ist and discriminatory attitudes, policies and actions by WIEBC from 1965 onward enraged many Virgin Islanders, who began to question a federal lease which reserved a substantial land mass for the exclusive benefit of a white enclave community. In 1972 a citizens commit- tee wrote to President Nixon urging that Water Island be turned over to the Virgin Islands Government for living and recreational space. These sentiments were echoed in a letter from politic.at cUn &i-c.u.ltie6 - 33- TABLE II I: SELECTED FINANCIAL DATA - WATER ISLE HOTEL AND BEACH CLUB, INC. 1966-1978 TOTAL TOTAL REPAIRS PROPERTY GROSS TOTAL AND NET AND EQUIP. TOTAL YEAR RECEl PTS INCOME PAYROLL MAUJTEN. PROFIT VALUE ASSETS 1966 125,323 140,247 49,611 9,259 -35,031 N/A 1,208,297 1967 237,314 -77 ,357 67,194 47,411 -123,777 N/A 1,786,461 1968 1,313,190 477 ,639 255,353 128,550 -53,000 1,878,283 2,066,261 1969 1,244,467 510,928 215,724 66,911 + 698 2,233,084 2,444,342 1970 1,076,944 433,104 174,723 54,497 +30,897 1,930,353 2,614,855 1971 1,138,860 569,375 191,320 75,199 +83,166 1,930,353 2,694,091 1972 not avail. N/A N/A N/A N/A N/A N/A 1973 1,028,262 321,286 277 ,983 137,988 -51,923 1,749,809 2,512,675 1974 289,775 118,969 69,784 50,762 -47,573 1,633,944 2,228,170 1975 245,458 97,219 61,357 71,632 -37,273 2,513,036 2,021,567 1976 314,905 109,411 76,545 50,461 -16,509 2,522,516 1,884,560 1977 170,721 -243,830 N/A 42,408 -148,436 2,286,384 2,189,617 1978 183,593 -3,779 N/A N/A -3,779 N/A N/A Source: Water Isle Hotel and Beach Club, Inc. Annual Reports - 34- Senator Percival H. Reese to Secretary Rogers C. Morton, and a Bill was introduced in the V.I. Legislature petitioning the federal gov~ ernment to transfer Water Island to the Vir- gin Island Government at the expiration of the twenty-year lease in December 1972. In 1972, the V.I. Senate established a Water Island Commission to investigate all aspects of the Water Island lease "so that the people of the Virgin Islands, through duly elected representatives, may have available factual information for the formulation of policy and an official position with regard to the renew- al of the Water Island lease and other matters pertaining to the future use and development of Water Island." After examining the evidence and conducting public hearings the Commission concluded that the lease appeared to be valid and had been complied with by the two holders of the Master Lease. However, it lamented the highly favor- able terms of the lease, and questioned wheth- er by granting exclusive and poorly defined developmental rights to a solitary developer, the federal government had acted in the best interests of the people of the Virgin Islands. 31 Despite public outcry in the Virgin Islands and a 1972 Audit Report by the u.S. Comptrol- ler questioning whether heavy emphasis on res- idential development was in accordance with the intention of the lease and in the best in- terest of both the territorial and federal governments, the Department of the Interior renewed the Master Lease without any changes, for a period of twenty years, starting January 1, 1973. Resolution of the lease question did nothing to improve the hotel's financial picture, which went from bad to worse. National recession and local socio-racial unrest which helped to slow down the Virgin Islands tourism econ- omy in the mid-1970's, combined with mismanage- ment, and poor marketing to accelerate the ho- tel's decline. Starting in 1974, the hotel operated on an irregular basis, and a number .6wdy c.ommM.6ion hotxd .6hu:tdown - 35- of employees were dropped from the payroll, which fell from $277,983 in 1973 to a mere $69,784 the following year. By 1977 problems had intensified to such an extent that the hotel actually shut down operations, and suf- fered a net operating loss of $148,436. The hotel reopened in December 1977 with a new name - Sugar Bird and under the new management of Beach Management Corporation, a Delaware group headed by J. Robert "Bud" Bishop, which had acquired a fifty percent interest in WIHBC on a management basis. In December 1978 Water Island Hotel and Beach Club, Inc. was liquidated into its parent or- ganization, Water Island Hotel and Beach Club, Ltd. On August 2, 1979 the Department of the Interior approved the assignment of the Master Lease from Water Island Hotel and Beach Club, Inc. to Water Island Hotel and Beach Club, Ltd. Meanwhile, on August 4, 1978 Water Island Hotel and Beach Club, Inc. had sold its interest in the Master Lease to Beach Management Corpora- tion, subject to approval by the Department of Interior. The sale price was $2,183,000 - a figure which has since risen to $2,883,000 because of complications in closing the tran- saction. Beach Management Corporation asked Interior not only to approve the assignment of the Lease, but to renew it for twenty years (later chang- ed to forty years to facilitate financing), plus implement over $600,000 in improvements. (See Appendix I for Beach Management Corpor- ation's letter request.) Virgin Islands Gov- ernor Juan Luis wrote to Interior's Office of the Territories on June 16, 1978 in support of a twenty year extension. On February 15, 1979 Interior approved the assignment of, the lease to Beach Management Corporation. 'Accordingly, a proposed lease was worked out along lines suggested by Beach Man- agement Corporation. It provided for a higher new ma.nage.me.nt - 36- minimum rent, guarantees that the hotel would be open year arou~d and would be kept in good repair, construction of new sewer lines and a sewage treatment plant, compliance with the local free beach law, and releasing the feder- al government from any obligation to purchase hotel improvements at the termination of the lease. Interior forwarded the proposed lease to the General Services Administration, which de- clined to approve it on the grounds that a high- er level of rent was called for and that the question of compensation for the possessory in- terests should first be resolved. While Interior and the GSA exchanged correspon- dence, memorandums and legal opinions on the matter, the Virgin Islands Government wrote to Interior that it wanted to be party to the re- negotiation process, and, through the concern of Rep. Phillip Burton, the u.S. Congress also became involved. In consequence of widening interest in the future of Water Island the fed- eral government has asked the Government of the Virgin Islands to carry out an extensive study of the legal and economic issues involved in transferring ownership to the Virgin Islands Government. Further federal action has been deferred until the results of the study are known. Most of the discussion surrounding Water Island during the past decade has concentrated on le- . gal (lease) or political (status) issues. In the last two years attention has centered al- most exclusively on the legal obligations of the federal government under Section 10 of the Lease and how these might be renegotiated. Little serious consideration has thus far been devoted to how Water Island can best be devel- oped in the socio-economic interests of the Virgin Islands, which, after all, was the ra- tionale of tile original lease. Nothing in the public discussion has encourag- ed Virgin Islanders to view Water Island as a basic development resource. During the 1972 lease renewal controversy there was a spontan- eous expression of local concern for the future of Water Island. An ad hoc Citizens Committee PJwp0.oed [eM e c.ha.nge.o w~de_rU.ng ~nteAe.o:t - 37- proposed that the island be used to expand flliving and recreational space" for Virgin Is- landers. Others suggested locating low income housing projects there. 32 The only develop- ment recommendation made by the Water Island Commission was that the Virgin Islands Govern- ment should designate any Sprat Bay Club, Inc. property it might acquire "perpetually as open space (greenbelts, outdoor recreation, wildlife preserves, etcJ'3~ All of these development alternatives were predicated on the assumption that title would pass from the federal to the territorial government. When that transfer did not occur and when Interior renewed the lease for an additional twenty years, local public opinion fell silent. For its part Interior has never deviated from the developmental strategy it prescribed in the 1952 lease (itself a compromise with the Phil- lipses) . In 1972 Interior renewed the lease without any alterations despite the fact that many Virgin Islanders openly doubted whether the hotel/residential pattern squared with lo- cal socio-economic interests,despite the con- clusion of the Water Island Commission "that the impact which the Department of the Inter- ior expected would be made on the economy of the Virgin Islands has not in fact been realiz- ed';34 and despLte the U. S. Comptroller's Report questioning the economic desirability of future residential development. Nor does it appear that the alternative development options sug- gested by Virgin Islanders at the time were given serious consideration. This predilection toward the status quo has conditioned Interior's position with respect to the lease renewal requested in 1978 by Beach Management Corporation. Interior's position vis a vis future development was summed up by ~Brewster Chapman; Jr., former Assistant Sol- icitor for Territorial Affairs, who wrote to Ruth van Cleve on July 5, 1978: 35 It seems, in realistically analyzing the problems created by Section 10 of the lease, that the current uses, im- provements and operations on Water loeal. de.ve1.opme.nt lde.CL6 - 38- Island will always be substantially as they are today. Consequently, in its negotiations with Beach Management Corporation, Interior did nothing to modify the vague, "tourist resort" develop- ment program outlined in the original 1952 lease, and required only that the hotel be open year round and .properly maintained. In- asmuch as Beach Management Corporation appar- ently submitted no .proposed long-term develop- ment plan as part of its request for an exten- sion, and is currently taking the position that it cannot formulate such a plan until the issue of the lease is resolved and short-term financ- ing obtained, Interior's precipita1e support for the proposed new lease can hardly be consider- ed a commitment to insuring that future devel- opment will promote the socio-economic well- being of the Virgin Islands. Meanwhile, development of any sort on Water Is- land has come to a virtual standstill. Within the last decade not one new residential lot has been sold. Given the uncertain status of the lease prospective homeowners hesitate to build and find it impossible to obtain mort- gages at any terms. The hotel continues to operate at a net loss (in 1979 it has an over- all occupancy rate of 46 percent), and its plans to upgrade existing faciltiies are stymied by the lengthy lease renegotiation process. (See statement from Beach Management Corporation in Appendix II.) - 39- SECTION I I I : FOOTNOTES 1. Bullen, Ripley P. "Ceramic Periods of St. Thomas and St. John Islands, Virgin Islands," The William L. Bryant Foundation American Studies, Report No. 4 (1962), pp. 34- 35 . 2. Buxton, L.H.D., J.C. Trevor and Alvarez H. Julien, "Skeletal Remains from the Virgin Islands;" MAN, Vol. XXXVIII, No. 47, pp. 47-51; Hatt, Gudmund, "On Pottery from the Virgin Islands," Ibid, pp. 52- 53; Steward, T.D., "Negro Skeletal Remains from Indian Sites in the West Indies," MAN, Vol. XXXIX, No. 5 2, pp. 48- 5 3 . - 3. Personal communication from Emily Lundberg, Office of Archaeological Services, V.I. Department of Con- servation and Cultural Affairs. The five archaeolo- gical sites, all of which are located in micro- planning district B, are potential obstacles to fu- ture development, since they are subject to federal laws governing cultural resources on federal propert- ies, including: Antiquities Act of 1906 (P.L. 59-209; 34 Stat. 225; 16 U.S.C. 431-433); the National Histor- ic Preservation Act of 1966 (P.L. 89-665); 80 Stat. 915; 16 U.S.C. 470); the National Environmental Pol- icy Act of 1969 (P.L. 91-190); Stat. 852; 42 U.S.C. 4321-4327); Executive Order 11593 of May 13, 1971 (36 FR 8921, 16 U.S.C. 470) and the Archaeological and Historic Preservation Act of 1974 (P.L. 93-291; 88 Stat. 174; 16 U.S.C. 469). It should be pointed out that to date none of these laws have ever been enforced on Water Island. 4. The only historical account of Water Island is Phillips, Walter H. "History of Water Island," The Daily News (St. Thomas), August 1, 1965, p. 67-68, which is gener- ally informative and reliable. 5. Most of the legends are pandered in Cochran, Hamilton, These Are The Virgin Islands (1937), p. 5, 44-49; see also Phillips, ibid. and J.C. Work, A Short History of the Virgin Isla:ncrs-(N.D.), p. 29. 6. Westergaard, Waldemar, The Danish West Indies under Company Rule ~67l-l75~ (1917), p. 43. 7. Br~nsted, Johannes, (ed.), Vore Gamle Tropeko1onier, vol. I (1966), p. 134. -40- 8. Ibid. 9. Ibid.; Richard Thruelsen, "An Island of Their Own," The Saturday Evening Post, December 1, 1956. 10. Ibid.; U.S. Consular Despatches, St. Thomas, Payne to Pierce, 4 Feb. 1904; 5 June 1905; The Bulletin (St. Thomas) 11 Feb., 14 Feb., 7 March,29 May 1905. The American consular representative in St. Thomas shared a prevailing opinion that the East Asiatic Company (reportedly controlled by Germany's Hamburg- American Steamship Line) was actually fronting for the German Government, which was surreptitiously endeavoring to establish a German commercial and naval base in St. Thomas. If this assumption was correct, the Company may have acquired Water Island in order to guarantee its long-term availability for the exclusive use of the German Navy. 11. It is likely that the scheme was given up because the East Asiatic Company acquired the West India Company Ltd. around the same time, and decided to concentrate on expanding and upgrading the docking and coaling facilities at Long Bay. 12. Although the East Asiatic Company, through its agent the West India Company, signed a stipulation that the condemnation was a "friendly taking" and waving all rights of appeal, it may well be that the Com- pany still has a claim to Water Island on the grounds that the waiver was signed under duress and that own- ership was protected by Treaty rights. Mr. Klav Thomsen, current Director of the West Indian Company, has suggested an interest in investigating this matter. 13. U.S. Comptroller of the Virgin Islands, Audit Report No. 356-72-99 "Report of Lessees' Compliance with the Provisions of Lease for Water Island", (1972) p. 8. It is not clear where the Comptroller obtained this figure, or whether it relfects both material and labor costs. 14. Thruelsen, op. cit. 15. U.S. Department of Interior Files (hereafter DOIF), C. Brewster Chapman, Jr., to Herman Marcuse, Depart- ment of Justice, May 29, 1979. 16. Thruelsen, op. cit. - 41- 17. Ibid. 18. DOIF, Walter Phillips to Thomas F. Dunn, 15 August 1972. 19. Thrue1sen, op. cit. 20. Offering Circular, New Issue, of Water Island, Inc. January 13, 1953, p. 4. 21. U.S. Comptroller of the Virgin Islands, op. cit., p. 8. 22. The 1963 Fodor's GUIDE TO THE CARIBBEAN stated that Water Island Hotel offered 31 hotel rooms, 12 ef- ficiencies and 2 cottages. 23. Information taken from the Annual Reports of Water Island, Inc. 24. Thruelsen, op. cit. 25. DOIF, Walter Phillips to Thomas F. Dunn, 15 August, 1972. 26. U.S. Comptroller of the Virgin Islands, op. cit. 27. DOIF, Walter Phillips to Thomas F. Dunn, 15 August, 1972. 28. Water Island file, Industrial Incentive Division, V.I. Department of Commerce. 29. Thruelsen, op. cit. 30. Item in the Helen Auble Collection, Island Resources Founda tion, Inc. 31. Report of the Water Island Commission, September 22, 1972. 32. Information from the records of the. Water Island Commission in possession of Mr. Alton Adams, Jr., Chairman of the Commission. 33. Report of the Water Island Commission, September 22, 1972, p. 12. 34. Ibid, p. 7. 35. DOIF, Memorandum from C. Brewster Chapman, Jr. to Director, Office of Territorial Affairs, July 5, 1978. - 42- CHAPTER THREE PHOTO SURVEY OF WATER ISLAND - 43- This chapter begins with a March, 1978, National Ocean Survey aerial photograph of Water Island which clearly shows its relationship to St. Thomas and the current level of development. The only significant difference between this photograph and current conditions is a much higher density of yachts anchored in Honeymoon Bay, and along the West Gregorie channel. In addition, most of the wrecks, including the Cartenser Senior, which is clearly visible under water in this photograph, have been removed. The thirty-two photos which follow have been se- lected to illustrate major physical aspects of Water Island, ranging from the beach and shore- line areas to housing and the old Army installa- tions. The photographs are identified by their "micro planning district" location. The micro planning districts are identified on the map at the beginning of Chapter Four, Section IV. Xerographic reproduction o£ these photographs is not very satisfactory.. However, photographic originals are also being supplied to the Virgin Islands Department of Commerce where they may be inspected for detailed features. -45- PHYSICAL ELEMENTS OF WATER ISLAND 2. Eastern shoreline above Limestone Bay, looking south toward Flamingo Point. Note semi-arid scrub vegetation typical of this coastline. (MPD-C) *Micro Planning District 1. Flamingo Point at southern extremity of Water Island (MPD*-C) 3. Limestone Bay and salt pond, looking east. Note the fringing mangrove system, largest on the island. CMPD-C) -46- 5. Sand Bay salt pond (MPD-C) 4. Sprat Bay beach and beach house (MPD-C) 6. Beach at "Caroline Point Bay". Note the dry stream bed which enters the bay between the two wooden tables. Behind the narrow beach is the old de Ruyter fresh water pond (now dry) and well (MPD-B) 8. Elephant Bay salt pond, with mangroves (MPD-B) - 47- 7. Beach at Elephant Bay (MPD-B) - 48- CULTURAL ELEMENTS OF WATER ISLAND 10. Entrance to lIDdergrolIDd fort and glID emplacement atop Flamingo Point (MPD-C) 9. Water Island Botanical Garden, established and maintained by Walter Phillips (MPD-A) HOTEL FACILITIES 12. Post-1965 Sugar Bird Hotel buildings (MPD- B) -49- 11. Sugar Bird Hotel seen from Honeymoon Bay (MPD-B) 13. Sugar Bird Hotel: converted Army barracks (MPD-B) -50- 15. Sugar Bird Villas (MPD-B) 14. Sugar Bird Hotel and Villas seen from Flamingo Bay Pond (MPD-B) RESIDENTIAL FACILITIES 17. Private home, combining a converted military tower with new constructior (MPD-A) - 51- 16. Private home in converted Army building at Providence Point (MPD-B) 19. One of the largest and newest private homes located on Sprat Bay Corporation property (MPD-D) - 52- 18. Typical medium sized private home of recent construction (MPD-C) INFRASTRUCTURE 21. Gas storage tanks, near Flamingo Bay marina (MPD-B) - 53- 20. Concrete water catchment, built by the Anny (MPD-A) 23. Main ferry and cargo dock at Providence Point CMPD-B) -54- 22. Open garbage dump, Flamingo Bay. This dump serves the ent'ire island. CMPD-B) 25. One of the few concrete roads, the approach to Honeymoon Beach (l\1PD- B) -55- 24. Hotel surrey truck, connecting the hotel with the ferry dock 26. Unpaved residential road, privately maintained by Water Island residents MARINA FACILITIES 28. Flamingo Bay marina seen from the hoteL Note private residences and apartments converted from Army barracks in the backgromd (MPD-B) -56- 27. Sugar Bird Hotel dock at Flamingo Bay. Note hotel warehouse and open garbage dump in the backgromd (MPD-B) 29. Flamingo Bay marina (MPD-B) 31. Private Sprat Bay Corporation dock at Ruyter Bay (MPD- B) - 57- 30. Yachts at Flamingo Bay marina (MPD-B) 32. Yachts in Honeymoon Bay (MPD-B) - 58- CHAPTER FOUR ECONOMIC DEVELOPMENT OPTIONS -59- SECTION I: INTRODUCTION This chapter addresses Water Island development from three different perspectives. Section II is an explanation of four guidelines for assess- ing any development proposal. Based on both the general characteristics of small tropical islands, and on the specific conditions of the Virgin Islands, these guidelines provide a gen- eral framework for assessing both social and environmental effects. Economic and institutional constraints on devel- opment are discussed in Section III, with spe- cial emphasis on costs, property rights, and a management model for future Water Island devel- opment. Section IV is devoted to a detailed examination of alternative economic uses and development scenarios for each of the four micro planning districts on Water Island. The major use cat- egories in the maximum mixed use scenarios for each district are evaluated in terms of the de- velopmental guidelines. Section V summarizes all of the micro planning district data for Water Island as a whole and presents recommendations and conclusions. Section VI lists sources and references for Chapter Four. -60- SECTION II: DEVELOPMENT GUIDELINES FOR WATER ISLAND In order to assess development options for Water Island, it is necessary to establish a general framework, or guidelines, that address development issues in terms that are relevant to the Virgin Islands. Borrowing from previous works on other tropical island systems, we have identified four general guidelines: 1. Development must be geared to the minimum practical disturbance to the social and biological eco- system. 2. Development must be directed at alleviating existing stresses in the human and natural environment. Proposals should be carefully as- sessed to ensure that they do not inadvertently contribute to criti- cal stress factors. 3. Development proposals should spe- cifically contemplate the poten- tial effects of catastrophe. 4. Development projects should be self-contained, modular and time- phased to permit re-evaluation and adjustment based on changing conditions and new information. Before discussing the derivation of these guide- lines in detail, several general points need to be emphasized . • The guidelines are "pro" development ... they are predicated on the assumption that major development in the Virgin Islands should take place . • The guidelines are specific to the Virgin Islands ... they .are based on an interpretation of actual conditions in the territory, which differ sub- stantially from neighboring areas such as Puerto Rico and St. Martin. pJr.o- development - 61- • The guidelines are incomplete .. but they are sufficient to provide an initial basis for assessment, and a framework for more detailed standards and criteria that can a- rise from on-going planning and land use programs . • The guidelines are comprehensive, in that they cover both the social and physical environment. In their derivation and priorities, the guidelines owe more to social fac- tors; in their organization and analytical processes, the guide- lines owe more to the biological sciences and systems analysis. INSTABILITY Ecologists of both the biolog- ical and the sociological per- suasion have begun to realize that island systems in general are qualitative- ly different from the models that have been dev- eloped to describe system behavior for large continental areas. A major element to the qual- itative differences is the fact that island sys- tems generally lack the "buffers" provided by large land areas and large biological and social communities. This lack of buffering implies that the basic equilibrium conditions of island ecologies are intrinsically less stable than similar continental systems. Contributing to this basic tendency in the Vir- gin Islands is the extraordinary dependency of the social, political and economic systems on outside factors. There are innumerable studies and examples that can be used to illustrate the point, including the economic analyses of Jerome McE 1 roy 0 f theV. I. Department of Connnerce, but per- haps none is more graphic than the fact that born Virgin Islanders are a minority in the territory, at the same time that more Virgin Islanders live on the mainland than in the Vir- gin Islands. The biological processes of small tropical is- lands are also far more fragile than their tem- perate counterparts. The Virgin Islands are .{. nc.o mple.te unbunneJl.ed n.tr.agile en vVto nmen:tl.> - 6 2- chips of lava and coral in the middle of the ocean. The tropical oceans are not very pro- ductive, because warm water holds relatively little dissolved oxygen. Reef systems gener- ate a great variety of life, but they are sen- sitive to changes in water flow, water clarity, suspended solids and physical damage. Destruc- tion of the reef can lead to both the loss of large quantities of sea life, and to physical damage to adjacent shorelines. The terrestrial environment is almost as fragile as the sea, with special problems caused by thin erodable soils, highly variable rain and groundwater resources. It is possible to over-dramatize the fragility and instability of the Virgin Islands. There is a great deal of resilience in both the so- cial and biological communities. There are qualities of flexibility and adaptability that go far to compensate for the lack of large scale buffers. The critical point to appreciate is that the Virgin Islands, in common with a multitude of small tropical island systems, are both quantitatively and qualitatively less ro- bust than is assumed by most temperate, contin- ental development models. This lack of stability is most evident in a high propensity for irre- versible damage as the result of even trivial impacts. Given these conditions, any development strategy must pay special heed that the ecological sys- tems are not unnecessarily disturbed. As plan- ning and research proceed, areas of critical concern will emerge which demand special atten- tion. The Coastal Zone Management Act has al- ready established special provisions for select- ed areas of the coast. The focus on these spe- cial areas should not overshadow the fact that the inherent fragility of small island ecosys- tems demand continuing care and sensitivity for all forms of development in all areas. STRESS In addition to the delicate balance that exists in general for small tropical island ecologies, the Vir- gin Islands are especially affected by the high degree of stress that exists under current f.,:tJr.e,6f., ptw., lYL6 .:tabl.U:ty - 63- conditions. These two factors of instability and stress are distinct; it is the combination of instability and high stress that creates es- pecially difficult choices for development in the Virgin Islands. Few areas are faced with such fragile ecosystems and such high levels of stress. --- Examples of the highly stressed ecology of the Virgin Islands abound. The following list is only illustrative of the range of stress factors and indicators: -Both population growth and density are extremely high in relation to ab- sorptive capacity and the natural bearing capacity o£ the islands; -Over twenty-five percent of the pop- ulation is enrolled in school, with over half dropping out before grad- uation; -Higher volumes of tourism and retail trade appear to be returning less money to the local economy; - Real wages have declined signifi- cantly over the past decade: - Maj or elements of social capi tal infrastructure and public services have experienced significant decline over the past five years; - Populations and species diversity in both the terrestrial and marine en- vironments have declined noticeably; -Indices of tourist satisfaction and return visits have declined; -Crime rates and other indices of socio -pathology are high. The significance of these stress indicators is based on the notion that high stress brings an ecological system to a threshhold, which re- sults in a new definition of the equilibrium -64- of,the society: Invariably, this new equili- brIum results In a lower level of lI r esource" (i.e., energy, comfort, money~ or amenity) that is available to distribute a~ongthe members of the community. In other wcirds, ecological mod~ els of stress and change reveal that the pro- cesses are not smoothly changing relationships. Beyond a certain level of stress the total sys- tem "fallS" to a lower plateau, with a diminish- ed ability to satisfy all of the demands placed upon it. R~cognizing this principle, and the existing high levels of stress in the Virgin Islands, development guidelines have to avoid increasing stress wherever possible (e.g., self-contained water and sewage systems), and should actively seek to alleviate stresses (e.g.~ job creation, increased taxes,environmental rehabilitation, etc.). . . CATASTROPHE Apart from the "routine" stress factors evidertt in the Virgin Islands, there is a special ~ need to consider the possibil- ity of catastrophe. The combination of insta- bility and stress discussed above implies a special vulnerability in the Virgin Islands to any disaster. In addition, there is consider- able evidence that many different kinds of ca~ tastrophe are more probable in .the Virgin Is- lands than in other areas. The risk of hurri- ·cane is well known as an example; a recent study by the Disaster Preparedness Office indicates a high probability of major ea:rthquake' inthe·V:i.r- gin Islands. The extremely high volume of oil shipments through the Hess Oil Virgin Islands Corporation refirtery in St. Croix creates a sigT nificant risk of major oil spill or tanker ac- cident. The islands have already seen indica- tions of·the impact of major episodes of social or political unrest on the tourism base of the economy. And there is increasing local sensiti- vity to the potentially disastrous consequences of relatively minor shifts in energy, economic or political relationships between the Virgin Islands and the mainland North American systems, The fundamental difference between stress ef- fects and catastrophe for the purpose of dev-' elopment guidelines is the difficult matter of pILobab.e.e. iU44.-6teM I I II , ! I i i I - 6 5- weighing risk factors against the costs of pre~ vention and avoidance. For the purposes of evaluating specific development options on Water Island it is ;ufficient to highlight the special dangers and ris.ks implied by high den~ sity, high energy development options,espe- cially in light of prolonged isolation that can accompany a major catastrophe. However, from the standpoint of the wider community, a great deal of thought needs to be given to the range of potential catastrophies that could affect the Virgin Islands, and realistic steps taken to avoid, ameliorate and plan the recovery from their consequences. UNCERTAINTY In addition to instability, stress and catastrophe, devel- opment guidelines for the Vir- gin Islands need to be espe- cially sensitive to the problems of uncertain- ty. Because the Virgin Islands ecology is sub- ject to the interaction of so many external factors, it is extremely difficult to project long term trends or to predict the consequences of present actions. Examples range from the reliability of weather forecasts, to calculat- ing the maximum sustainable yield of the lobster fishery, to evaluating the alternative benefits of chartering planes to the Virgin Islands ver- sus spending more money on advertising. Uncertainty has been used to justify indecisive- ness and imprecision in development guidelines, which is unfortunate. There is a need, under conditions of uncertainty, to avoid unnecessary decisions, but this is a specific strategy which is very different from vacillation and conflict- ing standards. Under conditions of extreme un- certainty, development guidelines should require conservative estimates of input and return to justify specific proposals; the development pro- cess itself should be as self-contained as pos- sible; and it should be modular and time-phased to permit reassessment, redirection or termina- tion at specific points in the development pro- cess. anc.eJr;tcv[n.:ty no.t lndeeLolon -66- CONCLUSION In conclusion, development guidelines for the Virgin Is- lands need to reflect the unique ecological factors which affect both human and natural systems in the Territory. The major factors are a delicate ecological equilibrium, a highly stressed human and natu- T~ environment, a high potential for. catastrophe and a high degree of variability and uncertain- ty in measuring and predicting development ef- fects. Based on these factors, development guidelines for the Virgin Islands, which should be applied to development alternatives for Water Island, include: 1. Minimal disturbance of the (human and natural) ecology; 2. A specific strategy to minimize additional stress and to alleviate existing stresses in the ecology; 3. Provision for the possibility of natural or man-made catastrophe; 4. Conservative, time-phased and mod- ular development plans to permit reassessment and redirection. - 67- SECTION III: DEVELOPMENT CONSTRAINTS In addition to the imposed constraints estab~ lished by guidelines, there are a great many restraints on Water Island development which result from natural, economic, and legal fac- tors. Water Island property holders respond~ ing to a survey were quite explicit about the constraints that they see (see Chapter Five). In their responses, they cited the existing lease and associated financing problems, the high costs of building and living on Water Is- land, difficulties of access, problems created by the climate and terrain of Water Island, and a variety of other problems. These are all real issues, but they take on a different significance when viewed from the standpoint of public policy alternatives. The issue of the extra costs involved in develop- ment of Water Island is doubly bothersome - it affects both building and operating major gov- ernment services, and the cost-of-living factors faced by residents. Both of these elements have difficult political and social consequences. The disposition of existing property rights and the design of a management model for future de- velopment are equally complex issues. The purpose of this section is to highlight the major consequences of these three issues, and to indicate some of the trade-offs that are available to policy makers. It should be under~ stood that there are no "right answers" to these issues. Decisions will have to come from a de- termination of the long term economic develop- ment goals and negotiation of the interests of the several parties. COSTS As a small, isolated island, Water Island suffers many of the problems faced by the Virgin Islands in gen- eral, but accentuated because of its small size and dependence on St. Thomas as the basic source of supplies and services: - 6 8- • Supply lines are long, tenuous and complicated; • Transportation to St. Thomas is time consuming, costly and unreliable; • Labor sources are generally not available and specialty skills are hard to acquire; • Land resources are extremely limited; • Rainfall is sparse and variable; • Communications and electrical power systems are not reliable. The economic consequences of these factors are somewhat stark. Based on estimates provided by Alton A. Adams and Associates, and corroborated by Water Islanders, construction costs are 20 to 40 percent above St. Thomas levels, and basic maintenance costs are 50 percent higher (because even more transportation is involved). Development patterns that create even moderate stresses require disproportionate amounts of capital infrastructure, such as water provision, sewage disposal, special solid waste disposal systems, and extraordinary energy demands. In other words, any investment on Water Island is necessarily more capital intensive than on the mainland. This higher capital intensity is mul- tiplied, however, by an even higher marginal re- pair and maintenance cost, and a decrease in reliability. For example, on St. Thomas, it is currently es- timated that a mile of paved, 24 foot wide road can be built for approximately $269,000.00 and a calculation for annual maintenance would be $21,500.00 (8 percent) per year. On Water Is- land, the same road would cost at least $350,000.00, and the annual maintenance costs will run $42,000.00 (12 percent). Therefore, over a twenty year period, the same road getting the same use and the same mainten- ance on St. Thomas will cost $699,000.00 per 70% IUgheA -69- mile, and on Water Island it will cost $1,190,000.00, a difference of TO percent, When costs of this magnitude are compared with the modest potential of new real estate tax revenues ($146,000 per year, based on current assessments),the dilemma of publicly financed infrastructure is clear. However, it should be equally clear that forcing developers to bear these infrastructure costs only increases the basic cost td the consumer, and has little long term effect on the operating and mainten- ance costs of service delivery that government must bear. The high cost structure of Water Island has equally negative implications for private devel- opment. For example, agricultural development is virtually prohibited by the combination of inappropriate natural resources, high factor costs and transportation problems. A small measure of import substitution is possible through the development of home garden plots, but even these require a pool of under-employed labor (retirees, housewives or children), a rel- atively high level of technical assistance (be- cause of the marginal growing conditions) and stocks of seed and plant treatment supplies that are not always available on St. Thomas. Another troublesome example is presented by the case of moderate and low cost housing. With construction costs on Water Island over $65 per square foot, as compared with $50 on St. Thomas, it would require an extraordinary amount of sub- sidy to make housing on Water Island available to middle income people. In addition, the resi- dents - or some other public authority - would still have to bear the extra costs of transport systems on St. Thomas, on Water Island, and ferry service between the two. The hard reality of high costs on Water Island is a major stumbling block for many potentially attractive development alternatives. It is a problem both for programs which strive to ad- dress broad social needs such as housing and agriculture, and for investment schemes which underestimate costs and overestimate benefits. hOLUJi.ng hi.gheJl. C.O-6U, 6ewe.JL be.ne.6m PROPERTY RIGHTS - 70- The greatest 5,mped5,ment to devel~ opment on Water Island is the landholding pattern set by the Master Lease. Under the present lease, which expires in 1992, it is virtually impossible to secure financing for any major investment on Water Island, including home construction. Therefore, maintenance of the existing lease, even ~nder" a change in own- ership of the island, will have no constructive effect on development. It may, however, prevent the hotel property from securing necessary fin- ancing to conclude the pending sale, and to make a number of needed repairs. There is, of course, only one Master Lease, as- signed to Beach Management Corporation. Within this general lease, however, there are a variety of individual interests that need to be consid- ered. There are five main categories of land- holding on Water Island: 'The hotel properties; . Individual, developed properties; . Individual, undeveloped properties; ·The Sprat Bay properties; ·Unsubdivided lands. The resolution of long-term rights to each of these classes of land will determine the future development of Water Island. Broadly defined, and in literal agreement with the Master Lease, the hotel properties can be construed to include all land not otherwise sub- leased on Water Island. In a negotiation with the Department of the Interior on extension of the lease, the Beach Management Corporation identified Tracts "A" through "G" (see attach- ed map) as properties that would be critical to the development of the resort and associated facilities. These seven tracts comprise over 75 acres. A stricter definition, based only on existing hotel development and direct suppor4 would in- clude only Tract "B", with Tracts "C" and "E" reserved as public beach and dock areas. Tract "B" is approximately 34 acres, including the hotel. pfLopeJLt!f o plio no •• . HOTEL PROPERTIES THRU IIGII TRACTS"A II FL.A"'IHGO POINT BANANA. POINT - 72- undeveloped periphery of Flamingo Bay, Determination of the extent of hotel property must be conditioned by several factors: • The existing hotel/villa/marina complex is probably not economical- ly viable under current circum- stances. The hotel is small in relation to the high cost, highly competitive Caribbean market; de- ferred maintenance has created high operating costs; the marina facilities are too small for effi- cient operation; there is an urgent need for major new investments in Water and sewage treatment; and the recent irregular hotel operation has eroded the base of return visitors. (See Bishop letter attached to this section. ) • Future investment and management options are greatly enhanced by inclusion of a larger amount of "developable" property. • The hotel is the actual or poten- tial source of significant public services to other Water Island prop- erty holders (e.g., water, sewage, solid waste, transport, etc.). Again, this capacity is enhanced if the hotel assumes control of more property. • Currently developed hotel prop- erties (Tracts B,C and E) already account for 37 percent of the total property values of Water Island, and 52 percent of the assessed value of all buildings and other improvements on the island (including the villas). There are approximately 146 separate property holders on Water Island (including Sprat Bay Corporation members and villa owners). Half of these (73), representing 20 percent of the island's area, have built residences on the - 73- island (with some cottages and apartments). AI" though the number of dwelling units (93) on these 73 improved properties has remained rela- ti vely cons tan t over 'the pas t five years, the number of full-time residents has gradually in- creased. The increase comes from both a larg- er number of homes being occupied year round, and a number of families with children who have established themselves on Water Island (in part as a response to the tight rental market in St. Thomas). Currently, nearly half of the private residences are occupied on a year round basis. The average value of improvements for residen- tial properties is slightly more than $45,000 per acre, which is nearly twice the average value of improvements per acre for the island as a whole (see table below). Based upon ques- tionnaires returned, each residence generates approximately one-fifth of a job in direct em- ployment. For improved properties in general, and espec- ially for permanently occupied residences, the terms and conditions under which future property rights are determined is of key importance. Responses to the questionnaire sent to all prop- erty holders indicated considerable variation among all classes of prQ'perty holder about the terms under which they felt they should receive clear title (see Chapter Five). Over half of the property holders on Water Is- land hold sub-leases (or participate in the Sprat Bay Corporation) on property which is un- improved. (A few unimproved parcels adjoin residences owned by the same person.) Nearly all of the owners of unimproved lots are not permanent residents of the Virgin Islands. Acquisition costs of unimproved properties have been between $3,500.00 and $5,000.00 per acre. Current land values are assessed at nearly $20,000.00 per acre. The average unimproved sub-lease was purchased twenty years ago, and had been held by its current holder for thirteen years. There are 55 lots (61.9 acres) that are undeveloped sub-leased properties on Water Island. In addition, there are approximately impJwve.d pll.OpeJl.tieo - 74- PRIVATE DEVELOPED SUB-LEASES (including S p ra t Bay members) I~mp roved Dwe IIi n g District Proeerties Units(est.) Acres A 37 45 41 .80 B", 1 3 22 11.96 C 1 5 18 26.14 D 8 8 8.92 TOTAL 73 93 88.82 * Excludes hotel properties 83 lots (about 83 acres) that are undeveloped in the Sprat Bay Corporation properties held by individuals. The Sprat Bay Corporation is both a special case of a large number of unimproved properties, and the single largest sub-lessee (156.5 acres) on Water Island. The 37 members of the corpor- ation have purchased all of the 90 one acre lots that the corporation has set aside for develop- ment. The remainder of the property is roads, commonly held areas such as the dock on Ruyter Bay and the club house and tennis courts on Sprat Bay. In addition, the corporation has stated that a forty acre tract on Sprat Point will be set aside as a nature preserve and will be donated to a national group such as the Audu- bon Society. Of the 37 members, seven have built homes, one of which is occupied most of the year. The Sprat Bay Corporation has no intention of developing commonly held properties, or permit- ting members to develop their individual lots as other than single family residences. The process by which a member could sell either an unimproved lot or the buildings on an improved parcel are not clear, but presumably they would be governed by the rules for membership in the Value of Improvements $44,350/acre 63,563 34,962 66,569 $46,416 - 75- corporation. There is no evidence that the Sprat Bay Corpor- ation will come to an end at theteimination of the current Master Lease. In other words, un- less some other arrangements are made, there is every indication that the northern one-third of Water Island ~ill continue as a private residen- tial resort. A large part of the land on Water Island has not yet been divided into individual lots or devel- opment tracts (in many cases there is no mean- ingful distinction between some of the hotel tracts - e.g., liD" or "F" - and unsub-Ieased property). The issue of the control and disposition of the unsubdivided properties (which may amount to over 100 acres) is central to future develop- ment of the island. It is also the other side of the prior question of the role of the hotel in the island's development. These properties can be "given" to the hotel, or they can be managed by some other authority or agent of the island's owner, or they can be simply sold to the highest bidder. In summary, there are five different categories of property holding on Water Island: 'hotel property - from 34 to 75 acres; ·improved sub-leases - approx. 90 acres; .unimproved sub-leases - from 62 to 145 acres; .Sprat Bay Corporation - 156.5 acres; ·unsubdivided land - from 90 to 150 acres. A precise definition of the extent of each of these categories will aid in the selection of a development management strategy. For example, if the hotel property includes the bulk of the unsubdivided land on the island,then the sale or lease of the hotel land will become the pri- mary instrument for further development. Or, if it is determined that intensive development of the north end of the island is important, then the lease termination and management strat- egy must address the special interest of the Sprat Bay Corporation. Spnax Bay eo nilnue6 W16 ub cU.vided pJr.opeJt.ty MANAGEMENT OPTIONS - 76- The issues delineated above all point to the need to adjust Water Island property rights to conform to a development strat- egy which optimizes those fea- tures most desirable to the Government of the Virgin Islands. There are a variety of instit- utional mechanisms which can be employed to man p age the development of Water Island. These are not limited to the Government of the Virgin Is- lands, and they are not necessarily mutually exclusive. The following list is meant to highlight the range of management options that could be em- ployed to achieve the economic development op- tions. The federal government has a number of land man- agement options that could be used to fulfill many of the economic development objectives. Incorporation of Water Island into the Virgin Islands National Park is probably the most re- strictive alternative available to the federal government. The National Park is established to serve national purposes, primarily environ- mental preservation. Itis not an appropriate mechanism for further development involving in- creased use or higher residential densities. Two alternative existing mechanisms that appear to offer greater flexibility would be to declare Water Island a National Recreational Area or a National Seashore. Either mechanism offers a broader range of development opportunities and a management objective that is more sensitive to the needs of the local and regional commun- ity. Specifically, designation as a National Recreation Area or National Seashore would per- mit the National Park Service to manage Water Island in a way that would maximize its recrea- tional value to both residents and visitors. For example, hotel and camping facilities could be developed, as well as extensive marina and boat services, while leaving other areas for residences, camping and preserves. 6edeJuLt optiono - 77- Finally, there are a number of "tailor made" alternatives that can be established by legis- lation to create a special fedeTal authoTity or autonomous institution fOT Water Island devel- opment. These options could be self-financing and they could be used as models for otheT dev- elopment programs in the Virgin Islands and in the region. In addition to these direct man- agement options, there are obviously a wide range of federal assistance and grant-in-aid programs that can be used to support Water Is- land development activities. Local management options for development are restricted as long as the federal government retains control of Water Island. Basic land use controls, such as zoning and the V.I. Coastal Zone Management Act, may not be enforceable on the iSland, although there has been a high de- gree of voluntary compliance by Water Island residents. Enforcement authority and compliance procedures for the Clean Air Act and the Clean Water Act are not clear, and have not been exercised. In the positive area of incentives, the hotel has received industrial incentives in the past, and has recently applied for new subsidies, based on its new management plan. If Water Island is relinquished by the federal government, or transferred to the Government of the Virgin Islands, many different forms of development management become potentially feas- ible . • A "Water Island Development Authori ty" is the most obvious route. Given the mixed successes of semi-autonomous authorities in the past, however, it is not one that is likely to meet with great approval by current property holders or potential investors. The great advantage of the development authority option on an isolated site such as Water Island is that is pro- vides a mechanism for financing and procuring public services that would otherwise have to be provided direct- ly by public agencies, paid out of general revenues. 4pe.uetf le.g.-UlCLtio 11 loc.etf option;., de.vuopme.M acrth a tUX.1j - 78- • Controlled land sales (or long term leases) embodying specific restrict- tions and performance standards would be another possible route, especially appropriate to individual home sites. • Rigorous permit regulation through the Coastal Zone Management Program would be another management mechan- ism. This could be especially ef- fective if it were tied to a pre- viously endorsed (by CZM) concept plan for Water Island development. • The island could be handled as a special project within the Property Division of the Department of Prop- erty and Procurement, but this is well beyond the usual property man- agement issues handled by this agency. • The local government could also at- tempt to duplicate the federal gov- ernment's experiment, and convey Water Island in toto to a single private developer:--It is not un- reasonable to assume that this model could work to achieve real progress and local benefits, especially with the advantages of local accountabil- ity and continuous performance moni- toring that were lacking in the ori- ginal Department of Interior lease. Nevertheless, control of the lease holder will be a problem. • Finally, the local government could simply leave Water Island to be de- veloped as dictated by normal market forces, holding such lands as desir- ed for parks and other public purposes. Given the current high level of con- cern about growth management and the protections afforded by existing zon- ing and environmental restrictions, this would hardly seem to be an in- vitation to unregulated growth. p4Lvate deve.topeJL - 79- SUM~~RY Water Island is currently under- developed as a result of property restrictions and management pro- cesses that have been fostered by the lease arrangements from the Department of the Interior. Maintenance of the lease until its term in 1992 will stifle further develop- ment, and may promote unproductive speculative investments in short term sub-leases. The high costs characteristic of developing and living on Water Island do not preclude dev- elopment in the same sense as the lease, but they do impact the kind of development that is likely to occur, and the level of public ser- vices that the local government can afford to support. Termination of the existing ownership or lease arrangements must be accompanied by a resolu- tion of the multiple classes of property rights on the island, and a management model to guide future development. Only with both of these issues under control can the future development of the island be directed to provide optimum benefits and future flexibility. - 80- ATTACHMENTS #1 & 2 TO CHAPTER FOUR SECTION III - 81- Beach and Tennis Club .5t!jar I frd BOX 5157 - WATER ISLAND, CHARLOTTE AMALIE, ST_ THOMAS, V.L 00801 TELEPHONE: (809) 774·1213 or 774-1413,"- Ben Posner, Ph.D. Island Resources Foundation P. O. Box 33 Red Hook. Center St. Thomas, VI 00801 Dear Dr. Posner: 24 April 1980 The follo,\·ling information regarding the acti vi ties of Beach I.Ianagement Corporation as it may relate to the ongoing impact study is submi tted per your kin~d invi- tation t6 J. Robert BishoD, General Manaper. - Q Please find enclosed relevant documents arranged se- . quentially followed by a narrative description (addendum) and summation. Add en d1JJil : Because the Objections of GSA to the proposed new lease were not resolved, Beach vras unable to meet its closing deadline of 30 April 1979, thereby causing the purchase price of the lease and leasehold improvements to be in- creased from $2,183,000.00 to $2,883,000.00, this ~~ount to be paid OD or before 30 April 1984. During this period of approximately five years, Beach continues to operate the resort, assumes responsibility for all provisions and requirements of the present lease and must pay the seller $25,000.00/month. Additionally, because of the problems encountered in GSA, Beach was forced to release its lenders from their contractual Obligation to finance . . . . . this project. ,', " - 82- Ben Posner; Ph.D. During the first thirty months of operation, Beach has exerted every effort to meet its committment to the De- partment of the Interior to upgrade and operate the resort as 'a first class establi~r~ent. This has been avery difficult time for us because of a number of factors, sOhle of which are listed below: a) the unexpectedly extensive degree of deterioration of the physical plant at acquisition with the con- sequently increased cost of renovation and repair, b) the unexpected high cost of legal services necessi- tated by the protracted negotiations with govern- mental bodies, and c) heavy physical damage to the property and consequent reduction in occupancy as the result of hurricanes David and Frederic in August and September 1979. These above factors have required the commiti;;ment of substan- tial additional funds from the owners of BUC bringing their total.personal cash committment to well over one million dollars. On the positive side it may be noted that BMC, in the face of the above-described obstacles, has made substantial progress, to \'lit: a) Sugar Bird Beach and Tennis Club is now open the year round, thus converting what was a sporadic, uncertain employment picture into a steady, consis- tent one. b) c) After incurring heavy operating losses during the first 18 months of operation, Beach was able to show an operating profit during the past 12 months. During the past season we have given employment to an average of 125 Virgin Islands residents with a total annual payroll of over $800,000.00. Be~ Posrcr, Ph.D. - 83- \ d) Ir additior to payroll mories, our operatior is resporsible for the irjectior o~'approximately $2,000,000.00 i~to the st. Tho~as ecoromy ir ·the fo~n of goods ard services purchased by Beach ard those purchased by ourzuests. e) \'/e have been able to cortribute substartial sums of money to promote to~rism ir. ~he U. S. Virgin Islards. f) We have become actively irvolved in civic' affairs. g) Harmo~ious relatio~s with local eover~mertal age~­ cies have been established. h) negular ferry service betv/cer st. Thomas ar.d 'I'rater Isla~d has bce~ developcd a~d improved. Beach ~O, .. , hns vo.lid do-to. irdicatir~; tlw.t the profi t to be gcrcrated by the hotel resort as it row exists, at levels of occuparcy comparnble to other similar hotels ir St. Thomas, is irsufficie~t to service the lorg tc~a debt i~curred by the purchase price of the lease of' the crtire islard ard the lco.scl1old improvcf;lCrts. Therefore, i:f \';e are to remair viable we must be I)ermitted to wider our base of busiress activity to irclude: a) expo.rsior ~f thc existirg hotel:facility to othcr parts of the islard, b) the measured sale o:f additioral subleases for irdivid- ual home corstructio~, c) developmert of the marir.a facility. a~d the d) corstruction of additioral restaurant facilities. I Der Posrcr, Ph.D. paLe 4 SUi":1!;]atior: -84- We believe that the record of our perfonnarce to date estab- lishes our capabilities ard our integrity& A careful assess- ment of our currert positior, howeve~, irdicates that we have arrived at a critical poirt. Sourd busiress prirciples dic- tate that we should cortribute ro more persoral mo~ey to tllis obviously risky verture urless we ar~ able to obtair a long term lease on the property or a suitable mecharis~ is devised whereby we are able to obtain fee simple title. I~ either case, the owner of the islard whether it be the Departmert of the Irterior or the U. S. Virflir Islards will benefit as follo\'ls: a) the burdensome provisions ir Section 10 of the pre- sent lease 1,;/ould no longer be ar is~ue, ard b) i ncrea::3cd revenues lrom the erti re island CO;;lplex \'fill result. If one or the other of the above (long term lease or acqui- si tior of ti tIe) docs not occur, the al terrati ves as ' .. Ie see them arc probably only two: 1) failur~ to close by 30 April 1984 because of the laCK of long teU/Tl fi~arcing with reversior of the operation and property to the seller, with the re- . Quirements of·Sectior 1Q remaining in force, or 2) a success.ful operatior by m'IC to the termir.ation of the presert lease in 1992 with. the requirclIlerts of Section 10 in force. , .' Eer Posrer, Ph.D. p3.gc 5 I - 85- It is our hope thnt tllc'forc[;olrg ,'Jill provide you ":ith si;.~rificu.rt irforLiatior to bc l1::;ed il~ COiilpletirs y,)ur stuc1y. If we car Le of further help, please feel free to call upor us. EJD/rn Er.closures ". \ Respectfully yours, 6?~¢~?- Ed,'!ard J. Bi shop Prcsider.t Beach Marage8er.t Corporatior. . 7· ~.,. ) Mrs. Ruth Van Cleve" DIrector Offfee of Territorral AffaIrs - 86- U. S. Department of the InterIor Washington, D. C. 20240 Dear Mrs. Van Cleve: May lO" 1978 ThIs letter Is' beIng wrItten to you on the advice of . . Mr. Brewster Chapman and concerns our relatIonshIp wIth Water lsland" a property of the Departm9ht of Interior •. .... . Our group consIsts of three members ot our famIly, J. Robert Bishop" Alfred Votypka and Edward J. BIshop, organIzed to do . busIness In. the VIrgIn Islands as l!E3each ManagemenT Corporationfl_ By way of baCkground" we were chaJ leng~d by the sItuation .ct the Hote! on Water Island J as we found It, In. February J977, at the h~lghth of the tourist season" essential Iyerosed and tn nsed of mueh basic repair and renovatton. We learned that the hotel had been, for all intents and purposes, only partially funcTronal durIng the previous three years~ After much study and lengthy negotIatIons with the master lease holder (PheasanT Run" InG. - Mr. McArdle)~ we made a commltmen~ to operate the IsJand complex on a trial basts for one year, with an optIon to purchase a 50% Interest tn the lease If our Initial experience in management proved to be favorable. . . Our group advanced $200#000 tn cash for operational and promotIonal expenses and Pheasant Run'contrlbuted $200,000+ In renovatIon and capital Improvements. The resort" (ranamed nS ugar Bird"), ope'ned for the winter season on December 15,' 1977 under our (Beach Management Corporation) management~ wJth J. Robart BIshop and hts wlfe~ Mary~ living on the premIses. Overall" our initial experience has been favorable. startup was slow but we were able to show a profit during february and MarCh. During this period of time It became evident to us that wIth contInuous, on-site, owner-management the operatlo~ could be made proflt~ble. It was also ascertaIned that the eventual operation of the resort complex, as a first-class establJshment, wIll requIre additIonal expenditures of between $500,000' and $700600~ to provIde for the construction of acceptable methods of sewage ". "\ \ - 87- Nr~. ~uth Van Cleve, DIrector -2- U .. S. Department of tho InterIor May 10, 1978 and waste dIsposal; a 4esallnizatJon plant, and a~ independant source of electrIcal ~nergy adequate.to supply th~ rosort complex and the 80+ homes on the Island. We also came to believa~ after discussing the matter with numerous governmental representatIves In st. Thomas. resJdents on Water Island and representatIves of lending InstItutIons, ·that our efforts to rehabIlitate the reso~t and dev~lop the lsland would more likely be successful If we were able to purchase the entIre lease rather than a fractional I ntere!;t t nit. Our ballef that ~e can be successful J~ this venture is based .on the following concepts of operatIon and ownership: I. An owner-manager tn continuous resIdence on Water Island. 2. Year-round, contJnuous~ rather than the sporatfc s Eo; a son a lope r.a t ; 0 nth at t t has bee n I nTh epa s -t. This wll I ~nsura a more stable employment pattern and should Improve our Image. wIth our presenT and potentIal clientele, as welJ as Improve our relation- ship wIth Involved Travel AgencIes. 3. Active cooperation with the local VirgIn Islands. government and citIzenry • .. . . 4 •. A commitment to excel Jenca, of faci I itfes, food and food service. 5. Ii commitment to brl,ng the island and resorT "up .to . COd9~ In areas of sevBge:end waste water disposal. In this connection we. have authorIzed Mr. Don francois l AssIstant DireCTor of the Division of Natural Resources In st. Thomas, to prepare a detailed survey of·the tOTal energy requIremenTs of Water Island, and this has bgen completed. 6. A comm~tmant to provide our own eleCTrical energy through the use of conventional generators. We plan to Investigate the feasibIlity of the use of solar and wind energy to generate electrIcal power. 7. Ii systernat I c, measured deve·J opmant of the is I and. I.e., homesltes, hydroponic farmIng, aquaculture, otc~~ ".wrth care being exerc.fsed to preserve the natural beauty and quJetudaof the Island. I~ Is antIcIpated ~hat impreme~tatlon of the above concepts wIll result In rehabJlltaTJonof the resort complex and the @ lin .2 - 88- Mrs- Ruth Van Cleve. Director -3- :-tay 10# 1978 U. S. Department of the InterIor orderry development of the Island. On the basfs of our inItial experIence, we believe that 1$ Is valid to proJoct conserva- tively the total dollar contributIon of "Sugar Biron to the ST. Thomas economy TO be approxtlnately 1.2 TO 1.4 mJ IlIon dol lars per year. "In february and March we were e~pJoiJng 120+ St. Thomtans. many of whom (waiters~ maids l etc.) were on welfare prtor to being so employed. In order TO consummate thts transactlo~ and to permTt debt servl~e, along wIth developmental fundirig from operating p~oflts$ we wIll require long-ter~ (25 year) financIng. The principal Items of ~ncarn that have been voiced by potential lenders are severa I : I • The short~-"ess (14' yea rs) of the reffia tnt ng term of the lease. 2. What sorne regard to be ambiguities tn SectIon 10 of the lease. Ws# therefore, tn light of the "foregoIng consideratIons, ask your sympathetic understanding of our probleMs an~ your support. SpecifIcally, then, if we ale to be successful rn carrying out our program for Water Jsland~ we musT request the following f"rom you: I. Consent to the asstgnment of th~ entire lease to us. (Mr. McArdl~ has Indicated hIs willingness to do this.) 2. An extensIon of the lease. We must" ask for a 20-year extension for the following reasons: Representatives of tending InstItutIons, such as Savings and Loans, banks, Insurance companIes, etc • . Indicate That under federal and some state ls';fs a lease-hold mortgage loan ~ay only be made if the unexpired tarm of the lease Is 10 years longer than the term of the mortgage. Thus# If we are TO obtaIn a 24-year Term on our mortgage loan, the to~al lease" must be at least 34 years. SJ~ce the remaInder of the term of thIs lease Is 14 years, we will need a 20-year extensIon. I( -89- , Mrs. Ruth Van Cleve, Director -4- May 10. 1978 u. S. Dept. of the InterIor ·r 3. A statement setting forth the Interpretation of the Oepartment of the Interior of the provIsIons of Section 10 of the lease. Af~ar me~tln9 with numerous representatIves of many lending Institutions, It I; clear that if we are to obtaIn the nec~ssary fInancIng to Implement our proposed program for Water Island, the relIef requested of you in thIs letter is requIred. We realIze that the foregoIng Is a lengthy, convoluted description of a complex situation but we sincerely feel that with your support wa can turn the resort and Water Island around, so to speak, and make It one of the "fInest resort areas In the Carl bbean. " Inasmuch as time. is of the essence tn our negotIatIons wIth t·1r. r-kArdle, we win apprecIate knowIng 'your thoughTS on thes9 matters at your earliest convenIence. EJB:vp 17884 Beach Road lakewood, Ohio 44107 Respectfully yours, BEACH MANAGEMENT CORPORAtiON Edward J. BIshop, Prestdenr -90- SECTION IV: MICRO PLANNING DISTRICT DEVELOPMENT OPTIONS For purposes of analyzing specific development opportunities, we have defined 4 "micro plan- ning districts", as identified on the map on the following page. Each micro planning dis- trict has a unique pattern of existing land use and a distinctive physical character. Whenever possible, the boundaries follow logical features such as roads, ridges and drainage basins. The micro planning district boundaries do not, how- ever, follow property lines. Specifically, the Sprat Bay Corporation property includes all of District D, and part of Districts A, Band C. Major physical features, recent development pat- terns and projected development options are out- lined for each of the micro planning districts. After surveying the maximum intensity potential options, and assessing them in light of the de- velopment guidelines presented in Section II of this chapter, a description is presented of a recommended development option. The recom- mended option is intended to be economically feasible, in accord with the guidelines, and sensitive to the constraints discussed in Sec- tion III. In Section V of this chapter the de- velopment options are summarized for all of Water Island. DISTRICT A FEATURES District A is the geographical and residential backbone of Water Island. Running from the former pillboxes and gun em- placements of World War lIon the south, and including portions of the Sprat Bay Corporation hOldings on the north, District A includes approximately 115 acres of land and most of the island's road system. Terrain in District A ranges from moderate to steeply sloping, with a number of ridge and hilltop plateaus. The area is generally well ventilated by trade winds. Soils are thin and rocky, and support a variety of tropical, optioVL6 a,6.6 v.,.6 me.11t lte.c.omme.ndation -92- semi-arid second-growth forest. Natural vege- tation is interspersed with a wide variety of imports, many established during historic set- tlement of the island. Walter Phillips' Bo- tanical Garden includes a worldwide collection of tropical flora, including orchids, euphorbia and aloe varieties. There is no shoreline in District A, and there are no known natural water resdurces other than rainfall. DISTRICT A DEVELOPMENT District A includes many of the roads and ~uildings left on Water Island after the aban- donment of Fort Segarra in 1946. Therefore, many of the existing homesites (and rental apartments) were acquired and developed around {hese existing facilities in the early fifties. The 37 devel- oped properties in District A include most of the islands' permanent residents. Development of District A follows the original plan o£ one acre, individual ho~es very closely. There are 72 sub-leased lots in the district, averaging $41,300 in value (land and improve- ments), plus an undetermined number of Sprat Bay properties. It is estimated that there are a total of 43 housing units in the district, with approximate- ly half of them occupied by declared permanent residents of the Virgin Islands. Economic impacts of District A development on the Virgin Islands are relatively small. The most immediate and direct effect is the payment of income taxes to the local treasury by perma- nent residents. Increasingly, the housing re- sources of Water Island are being used by Vir- gin Islands residents who are employed on St. Thomas; but these are still very small numbers and will be limited by problems of commuting and cost. Employment impacts a:re limi ted t.o a small number of gardeners, laborers and dom- esticworkers, estimated at less than one work- er per four dwellings. However, this employment - 9 3- DISTRICT A DEVELOPMENT ALTERNATIVES UNDERD~'/ELOPED 1 2 MAXIMUM POSSIBLE Infrastructure USE 7S.c res Un its 3 Needs C Or·'~'E N T S 1. 2. 3. 4. 73 acres Al N.A. A2 5 3 hydro- Water, ponic capital intensive gardens B, C, I N.A. P 20 Nature t ra il s exhibits Rl-2 60 120 dwell- 5 m. "primary"road 4 ings 5 m. 2.!!.ia ry road 4 R3-5 40 800 dwell- Transit system, ings wc;tter/sewer, ferry Un~eveloped land includes both unimproved lots, and unpartitioned lands. No 40 acre tracts Business, commercial etc., sited in District B Also 30 parking spaces Solid waste problem, police/fire service Fo convenience, "use" is defined in accordance with V.I. zoning categories. Ge erally, maximum possible developemnt is based on topography, not economic feasibility. Up raded, existing roads. In the following table, the maximum levels of development for individual use categories have been combined within the constraints of the 73 available acres, and allowing for overlapping claims on the same pieces of land. For purposes of comparison, the current devel- opmen t of Dis trict A is also shown. (Note that this represents land use, not zoning, which is primarily WI over most of District A.) Pro- jected values of the development options are based on current construction costs as present- ed by Alton A. Adams and Associates. For low and high density (RI-2 and R3-S respectively) residential construction, two basic assump- tions have been used: low density housing will average $ 80,000 per house and high density housing will average $52,000 per unit - both factors are extremely conservative. For resi- dential options, value is added for a pro-rata share of business and commercial development that would be supported by District A's share of the total residential population (see Section V). e.xp.iana;:t[on 0(.; eo!:d. (.;ac;toM . ' " WATER ISLAND MICRO-PLANNING DISTRICTS PROVItI£NCE ""'NT D 11 II J F /I A 'Y LrPHANT 1mBfA· . ., LEGEND WIIJA District @ II District @ § District © GiJ ~--::. District @ District Boundaries -94- is generally on a year round basis. Vacation rentals are handled by stateside or Water Is- land-based agents. At the same time that they generate relatively little economic impact on the Virgin Islands (with the exception of income taxes paid local- ly), Water Island residents of District A also make relatively little demand on local public services. Roads are maintained by Water Island residents; there are no regular public safety, fire, water or sanitation services provided to Water Island; and other services are generally utilized at a lower rate than most other areas of the Virgin Islands. DISTRICT A OPTIONS District A consists of approxi- mately 115 acres of developable land, valued at $4~75 million. Thirty seven parcels of 42 acres are already developed. There are approximately 45 dwelling units on these 37 parcels, worth a total of $2~million. This discussion of development options focusses on the 73 acres of land with no improvements. At the present time, this land is divided into 35 different parcels, with an estimated land value of $25,200 per acre or $1.8 million for all un- improved property. The table below summarizes the maximum possible development that can occur on the 73 acres of undeveloped land in District A, for each of the relevant land use categories defined by the Zoning Act. (A definition of each category is attached to this section.) The estimates of the maximum acreage, and the density of development on those areas are based on field surveys of actual conditions in the district, and an assumption that the best avail- able design. and construction technologies will be employed. These estimates do not involve detailed considerations of economic feasibility, although clearly inappropriate uses, such as commercial and industrial activities in District A, have been ignored. A1 A2 B/C P Rl-2 R3-5 Wl W2 Land (acres) 42 -95- DISTRICT A DEVELOPMENT OPTIONS MAXIMUM MIXED USE SCENARIO EXISTING Value Units ( 1 ,000' 5 ) $ 2,907 45 Jobs 11 Land (acres) 5 57 40 Total Developed 42 2,907 45 11 102 Undeveloped 73 1,844 13 Total 115 $4,751 45 11 115 ---'--,-----'-~ .. ---." .. , .-----.-'-~~ .. - Within District A, development options are quite restricted because of the dispersal of available land throughout the district, the rugged terrain of the central ridge, and the lack of a shoreline or existing infrastructure to support or encourage other forms of devel- opment. There is no evidence that there is a market for 800 units of high or medium density housing, which would require extensive trans- portation services and costly water, sewage PROJECTED Value Units Jobs (1,000'5) $ 141 3 3 8,778 75 24 73,010 800 345 81 ,929 878 372 328 $82,257 878 372 .. -.- ------.~ ----'--------- - ----- ---------- -- --- -96- and solid waste disposal systems. The total housing resources projec-ted for District A are, however, well within the housing needs project- ed for St. Thomas over the next ten years by the Virgin Islands Planning Office "Comprehen- sive Housing and Land Use Planning Elements" (3300 units, 1980 to 1990). DISTRICT A ASSESSMENT Having established a maximum limit for potential develop- ment in District A (however ab- stract or improbable), it is now possible to provide a pre- liminary assessment of these options in the context of the development guidelines present- ed in Section II, above. The following table summarizes judgements about the developmental impacts of the "maximum mixed use scenario!! for District A, in terms of each of the four developmental guidelines, which are: 1. To minimize disturbance to the human and natural ecosystems; 2. To alleviate existing stresses, and to avoid contributing to critical stress factors; 3. To cope with effects of potential catastrophe; 4. To permit time-phased, modular deve 1 opmen t. It should be noted that the agricultural devel- opment option (based on intensive, probably hydroponic, cultivation of vegetables and pos- sibly flowers) is highly rated, but it is not known to be economically feasible. The high density residential option is seen to have sig- nificant negative impacts on three of the four guidelines. Both residential options are seen to be at least somewhat negative in terms of instability and stress, partly because of the risks associated with building on the steep terrain and partly because of a lack of positive impacts, such as significant job generation. Us~ CategJry Al A2 B/C P RI-2 R3-5 WI W2 Va i 'Jes Acres 5 57 40 - 9 7- DISTRICT A DEVELOPMENTAL ASSESSMENT MAXIMUM MIXED USE SCENARIO #1 Instabil ity 3 2 1 DEVELOPMENTAL GUIDELINE: #2 Stress 4 2 #3 Catastrophe 5 3 #4 Uncertai nty 3 4 3 COMMENT Economic feasibility suspect Lower density, more positive 1 Negative impact on any level of development. 2 Moderately negative impact, could be neutral or positive at lower levels or with special planning 3 Neutral or unknown impact. etc. 4 Moderately positive impact, could be neutral or negative at higher levels. 5 Positive impact at any level of development. As with all summaries and generalizations, there are a variety of individual exceptions or special opportunities that can modify these judgements subs tan tially. For example, a ma- jor nursing home facility could be a high den- sity residential option with considerable off- setting advantages in terms of stress and sta- bility factors. Nevertheless, it should be recognized that these ratings do represent gen- eral strengths and liabilities that need to be considered in the specific instance. (And, in passing, it might be noted that the strong neg- ative impact of high density residential devel- opment in. the face of potential disasters be- comes doubly significant for the nursing home example.) Finally, these ratings are simply aids to decision-making. There are a variety of political, social and economic factors which could generate overriding pressure or incentive for a development alternative that otherwise would seem to have major negative impacts. In e.xc.e.ptiOn6 -98- these cases, the ratings at least highlight critical issues that need to be addressed in the design and implementation of the proposed project. DISTRICT A RECOMMENDATIONS Extension of the existing pattern of low density, scattered-site residential development is the recom- mended option for Dis- trict A. In large part, this is a conclusion based on a process of elimination: • District A is an unproven site for agricultural enterprises, although the option should remain open . • Higher density developments create several problems in District A, rang- ing from the aesthetic issue of neg- ative visual impact (from St. Thomas), to the costs of providing water, sew- age and transportation services, to the less measurable, but nonetheless real, downslope impacts and risks oc- casioned by construction on the un- stable, steep upland slopes of the island, all of which are implicit in the assessment ratings discussed above. The principal obstacle to development in Dis- trict A is the lack of long-term property rights, which not only precludes securing outside fi- nancing, but also encourages speculative in- vestment .in short-term sub-leases. Given resolution of the property rights issues, it is projected that in ten years time, 39 ad- ditional homes and seven apartments, worth an estimated $4,600,000.00, will be constructed in District A. This will result in ten new full-time jobs (at minimum wage levels), and a roughly proportional increase in income tax- es paid by new full-time Virgin Islands resi- dents. DISTRICT B FEATURES -99- District B comprises 106 acres on the western~shore of Water Island from Flamingo Bay on the south to north of the Sprat Bay Corporation dock area. It is indented by two deep bays (Flamingo and Honey- moon or Druif) and a series of scalloped bays and beaches facing the Sub Base - Crown Bay area of St. Thomas. Slopes range from gentle beach areas to rocky points 15 to 50 feet above the water, to steep upland slopes adjoining Distri.ct A. The dis- trict is crossed by a number of runoff channels (usually dry), the largest of which served as the ground water source for the de Ruyter well in the early 18th century. Although the area is generally characterized by rocky, Cramer soils, some of the valley bot- toms have accumulated sediments and organic material. Vegetation is slightly more luxur- iant than over the rest of the island. Palm trees have been planted along Honeymoon Bay and other shoreline areas. District B contains most of the known historic and prehistoric sites on Water Island. Two large salt ponds have been destroyed since 1950: the pond behind Honeymoon Bay has been filled and the pond behind Flamingo Bay (which had been heavily impacted by Army activities) was cut open and partially dredged for a marina. Honeymoon Bay beach was extensively modified during the early fifties to provide a broad sand beach, in place of the rocks and cobble that characterized the northern portion of the bay. There are a number of environmental stresses threatening District B that can be eliminated with careful planning. Direct sewage discharges near shore in Flamingo Bay, off Ship Wreck Point, and from other, smaller sources threaten water quality standards. Overuse of Honeymoon Bay as a boat anchorage, recreational boating site, tour boat landing and recreational beach threatens both domestic tranquility and water quality. Poor management and saturation of the current dump site creates an unhealthy condition, con- tributes to air pollution, and has contaminated wateJt /1.eJ:, 0 W1.c.e. aJl.chae.o.to g,[c.aR.. f.JLteJ:, -100 - groundwater resources. (It has been suggested that this site was a disposal area for toxic chemicals during the Army occupation, but this is not verified.) DISTRICT B DEVELOPMENT District B contains the bulk of the former Army facilities that were developed into re- sort properties both on the present hotel site and in other vacation apartment complexes. Except for the private Sprat Bay dock, all other docks or bulkheaded areas are based upon sites used by the Army or dredged out of Flamingo Bay Lagoon in the mid-sixties. District B encompasses slightly over one-fifth of the land area, and nearly one-half of the estimated value of all Water Island property. District B also contains well over half of the dwelling units on Water Island. District B is the only area o~ Water Island with uses that are not residential or undevel- oped. Approximately one-third of the 106 acres are hotel/commercial/waterfront uses, in ad- dition to the purely recreational and natural beach areas. Flamingo Bay is surrounded with property used by the hotel: • The "deep water dock" and adjacent warehouse are used for heavy freight deliveries to the island. The bulk- headed pier has been filled and dam- aged by recent storms and is in need of repair. • Behind the warehouse is the dump which serves as the solid waste disposal area for Water Island. It is being manag- ed as a "pseudo-sanitary" landfill. Large volumes of wet garbage and ir- regular fill procedures lead to fre- quent fires and lots of flies and other vermin. -101- • The Flamingo Bay Lagoon was partially dredged for an S" acre marina in the mid-sixties. The entry channel was cut through stone on the south side of the lagoon. Although currently used to serve charter boats and small- er motor boats of Water Island resi- dents, the Lagoon has refilled over a considerable area, and storm surges have partially filled the entrance channel. Vessels with over six foot draft cannot use the lagoon at all. • The access road to the marina and gas dock is also the site ·of the ho- tel's propane storage tank (loaded direct from the Tropigas barge) and the salt water intake from the toi~ ltlflushing system in the hotel. It is also the proposed.site for a ter- tia:ry treatment plant. Hotel and vil- la effluents are cur~ently discharg- ed directly into Flamingo Bay or the West Gregorie Channel. • The finger pier at the hotel has depths of up to 15 feet along half of its length, and is most appropri- ate for short term use loading and discharging passengers on yachts. It is subject to surge and is not sturdy enough to stand regular use by ferries. • The hotel/villa complex includes 99 habitable rooms, 15 villas available for at least part time rental, and several other out buildings. The ho- tel has as many as 16 additional rooms which could be rented after ex- tensive repairs. • The commissary (liThe Pantry!!) run by the hotel is regularly used by Water Island residents. There is also a "mail room!! which serves as the dis- tribution and collection point for Water Island postal service. (The USPS delivers and picks up mail from -102- a locked box at the Sub Base land- ing for the ferry. There is no on- island mail delivery. Responsibi- lity for sorting the mail is rotat- ed among Water Island residents.) • The hotel property also includes the 2 acre catchment and 250,000 gallon cistern built by the Army. Depending on rainfall and the ho- tel occupancy rate, it is estimat- ed that this catchment and cistern supply about 70 percent of the ho- tel complex's need for potable water. The estimated value of the properties surveyed above is over $6.5 million (including land), which is one third of the total estimated value of the island. The land area, ex1usive of Honeymoon Beach, be- tween the hotel and the ferry landing at Prov- idence Point is mostly private residences and apartments. The improved Honeymoon Beach area includes the filled salt pond and the adjacent hillside. There is a beach bar which provides equipment rentals, food and drinks and washroom facili- ties. A $46,000 beach house at the northeast- ern corner of the bay was destroyed by waves from Hurricane David. Because of its natural beauty and attractive beach, Honeymoon Bay has become the preferred yacht and charterboat anchorage on Water Island. Since 1973, the number of boats regularly an- chored in Honeymoon Bay. has increased from three or four to fifteen or more. Waterskiing and three to four-time-a-day visits by the tourist barge, Kon Tiki, are leading to over use of the bay and beach. At the same. time, recreational use of the beach on weekends by St. Thomas fam- ilies and seining for bait fish in the bay has greatly decreased. Water barge deliveries to the hotel cistern are also made at Honeymoon Bay, by means of a pipe that runs from the shore to the catchment cistern Hon.e.ymoon. Bay -103- at the top of the ridge. Pumps on board the Waterhaul barge provide the motive force for raising the water from the bay to the cistern. The ferry landing at Providence .Point is the major point of entry to the island. The con- crete dock is served by two boats run by the hotel - The Saint, which also ferries trucks and cars and other heavy equipment, and the South Wind, which can carry up to forty pas- sengers. Regular Water Island residents usu- ally drive to the ferry landing and leave their cars there while visi ting St. Thomas. (Some residents also have a car on St. Thomas. Most use taxis.) Hotel guests are carried back and forth on a safari bus or a van. The road con- necting the ferry dock and the hotel is the only "primary" road on the island. From 7 am to 11 pm, the ferry provides hourly service. Access to the ferry service is guar- anteed to sub-lessees, but twice in the past four years ferry service has been totally ~us­ pended when the hotel closed for the summer. In both cases, the Water Island Civic Associa- tion arranged for small boats to provide pas- senger service. The current costs of ferry service to residents is $2 per trip (each way) or $25 for a monthly ticket. The hotel states that it is losing money on this service. The area of District B north of the ferry dock is largely undeveloped. It includes "Tract F", identified as potential future development prop- erty by the hotel, some privately held plots, and a piece of Sprat Bay Corporation property that includes the private pier and storage shed. Since the clearing of wrecks and submarine scrap by the Army Corps of Engineers, the. shallow bays along the West Gregerie Channel have become more popular as anchorages for yachts and charter boats. There are at present no shoreside facil- ities on Water Island servicing these boats, al- though they can easily cross the channel to the Sub Base area for supplies and entertainment. District B accounts for most of the employment on Water Island. At season peak, approximately -104- 145 people are employed - 115 of them by the hotel. However, this is reduced to 60 during the off-season periods (and much less if the hotel closes, as it has in the past). Ninety percent of these employees live in St. Thomas and commute by ferry. Some of the charter service employees live on boats anchored ln Flamingo Bay. In addition to the tax revenues generated by employees, the hotel complex pays taxes, al- though it currently is applying for subsidy and exemption benefits unde.r the Industrial Incen ti ve Act. Additional economic linkages of District B with St. Thomas include the in- come taxes paid by the 15 to 18 permanent res- idents, and the purchase of tourist goods and services by the (estimated) 3,000 visitors to the hotel, apartments and private homes each year. DISTRICT B OPTIONS The following table demonstrates the diversity of. development options that are available in District B. Although only 45 acres are identified as unde- veloped, it should be noted that there are large areas of hotel property in Tracts "B" and "C" which are also available for more in- tensive development. The potential business and commercial options are dependent on the amount of on-island res- iden tial deve lopment that will occur. (As ex- plained previously, the value of business de- velopment and the jobs derived from it are counted within the low and high density resi- dential options.) If there is a great deal of residential development, especially at the north end of the island, it would be reasonable to es- tablish a second commercial center there; the main business center would be in the vicinity of the Flamingo Bay complex. This series of alternatives also mentions the need to consider additional infrastructure on St. Thomas, to support the transportation needs of Water Islanders. At the present time, seven e.c.oI1.0mc. ,[mpaw st. ThomM ,[mpac.:t6 UNDEVELOPED US E 45 acres Al A2 B , C P Rl-2 R3-5 Wl -105- DISTRICT B DEVELOPMENT ALTERNATIVES MAXIMUM POSSIBLE Infrastructure Nee ds Acres Units N.A. 10 10 N.A. 30 30 30 25 4 ga rdens Irrigation, transport 2 centers Transport, docks, wa rehouse, etc. 2-3 sites 180 dwell- ings 6 m. 2i!E.ary roads 1200 dwell- 5 m. primary roads, ings fer~y, water/sewage, SOlld waste, transit 4 facili- Dredging, dock, ities,hotel transport, water, marina,ship- sewage, sol id waste, yard, 2~ police/fire marina, etc. or eight of the permanent residents on Water Island maintain cars on St. Thomas. In addi- tion, workers on Water Island also need park- ing for their vehicles. With much greater lev- els of development and employment, parking and transportation systems on St. Thomas will be- come significant factors in the overall devel- opment scheme. The following table spells out one of the more plausible maximum mixed use scenarios for Dis- trict B. It should be recognized, however, that because this district includes the main access and service centers for the rest of the island, there is a great deal of inter-depen- dency between District B options, and the other districts. In formulating this scenario, priority was given to the more labor intensive (WI) use categories. In addition, major dock and storage facilities to support other development options in other districts were included. C or~~IE N T S No 1 a rge tracts Depends on resident population Beach, recreation Parking on mainland problem 250 room hotel 150 slip marina boat yard 1 small marina Al A2 B/C P Rl-2 R3-5 Wl W2 To ta 1 Developed Undeveloped Tota 1 Land (acres) 15 3 43 61 45 106 $ $ -106 - DISTRICT B DEVELOPMENT OPTIONS MAXIMUM MIXED USE SCENARIO EXISTING Value Units (1 ,000 IS) 1,043 27 1,001 23 6,458 99 8,501 149 1,057 9,558 149 Jobs 5 54 65 65 La nd (acres) 5 20 21 48 94 12 106 PROJECTED Value Units .jobs (1 ,000 IS) $ 2,738)1 2centers (50) 1 3,117 40 8 33,824 840 lEO 24,422 200 rms 277 (100 51 ips) 61 ,363 1080 4L5 282 $ 61,645 1080 445 1. These values are counted under values and jobs generated by new residential construction. DISTRICT B ASSESSMENT The following table provides the guidelines ratings for the maximum mixed use scenario. Two major factors are worth noting in this assessment. The impacts for high density residential (R3-S) de- velopment are significantly more positive than were seen in District A. This reflects both the more favorable terrain, and the specific opportunity to cluster high density housing around landing areas and adjacent to the hotel facilities in ways that will minimize the -- Us€ Category Al A2 B!C P R 1- 2 R3-3 WI W2 Values Acres 5 20 21 48 -107- DISTRICT B DEVELOPMENTAL ASSESSMENT MAXIMUM MIXED USE SCENARIO #1 Instabil ity 2 2 2 2 DEVELOPMENTAL GUIDELINE: #2 Stress 3 3 2 4 #3 Catastrophe 3 3 3 #4 Uncertainty 2 4 3 2 1 Negative impact on any level of development. COMMENT Better management should re- lieve stress on beaches! anchorages. Relatively labor intensive. 2 Moderately negative impact, could be neutral or positive at lower levels or with special planning 3 Neutral or unknown impact. etc. 4 Moderately positive impact, ~ould be neutral or negative at higher levels. 5 Positive impact at any level of development. secondary development impacts of roads, water, waste disposal and so forth. The second factor worth mentioning is that the "WI" use category includes such a wide variety of end uses that it is somewhat difficult to assess them simultaneously. In an application of this technique to a more critical decision- making process, it would probably be desirable to separate the WI category into several dis- crete elements, such as beaches, resorts, and marina/dock areas. It was not felt that this step was necessary for this exercise. DISTRICT B RECOMMENDATIONS Because this is an Well over half of the to- tal development projected for Water Island over the next ten years is recom- mended for District B. area that is already stressed -108- in certain sections by existing development it is critical that new investments be made to correct existing deficiencies as well as to prevent unnecessary further degradation of the natural environment or the quality of life for residents and visitors. Viewed geographically, the development options recommended include: improvements and further development of the Flamingo Bay area; restrict- ing further exploitation of Honeymoon Bay; de- velopment of medium density residential sites near the ferry dock; and more balanced use of beaches and near shore waters along the West Gregerie Channel. Apart from the direct investments involved in these various proposed developments, consider- able additional benefits will accrue from in- creased year round employment, less dependence on seasonal tourism, improved transportation and access between St. Thomas and Water Island, and a higher proportion of permanent residents. Because of the costs and specialized management requirements for the recommended development options, it is generally suggested that they be carried out as private investments under concession rights, lease or private ownership, rather than as public enterprises. (Note that this is not a recommendation with regard to the overall management of Water Islan~ it is only a specific suggestion in reference to the individual development options discussed here for District B.) Development of the water and land resources of the Flamingo Bay area offers the greatest po- tential for both economic benefit and environ- mental improvement of any area on Water Island. The major elements of this proposal are outlin- ed below. Dredging, bulkheading and docks for the marina, basically completing the facility begun in 1965. The marina would provide dockage for at least 25 boats, which could be considerably expanded in phases by the construction of piers and moor- ing pilings. It would provide full time, year pJUva.:te. de.ve1.opme.n;t H.am{ng 0 Bay lagoon malUM -109- round employment for 10 to 30 people. In ad- dition, charter boat, fishing and diving ser- vices located at the marina would support an- other 12 to 18 full time and 10 to 20 seasonal workers. The boat yard would be located at the south- eastern corner of Flamingo Bay and should in- clude both 40 ton travel-lift and 100 ton rail- road lift capabilities. This would support 25 year round workers. Lagoon and associated hotel improvements would also include provision of additional freshwater, (probably by installation of a 10 to 15,000 gpd reverse osmosis unit), a tertiary sewage treat- ment plant and proper management of the sani- tary 1 andfi 11. Both marina and boat yard facilities would con- tribute to meeting excess demand for these ser- vices in St. Thomas. Because of the obvious market potential, and the millions of dollars of lost territorial income from boats that go to Puerto Rico or Tortola for service, these facilities should be fully and rapidly devel- oped. It should be noted .that a study of rec- reational fishing for the Caribbean Fishery Manage- ment Council (by David Olsen, Island Resources Foundation) indicates that the local multiplier of boat- ing expenditures may be higher than many other investment alternatives. The development of direct St. Thomas commuting service through the lagoon marina should be used to support clustered housing and apart- ments within walking distance of the docks. These units cannot be low cost, but given the increasing demand for Water Island housing by certain classes of St. Thomas workers (water sports oriented, young professionals), they can serve to meet this demand, while minimizing the adverse effects and extra costs of dispersed development. As with the marina, the density and extent of the cluster development can be phased in ac- cordance with demand and available financing. Beyond the construction phase, cluster housing boat Ij OJtd maJUna. de.ma.nd -110 - will generate little additional employment, but it may contribute marginally to the total hous- ing stock of the territory. Renovation, rehabilitation and rationalization of the existing hotel facility will account for the moderate increase in available units. The development of the marina complex and shared infrastructure (water, sewer, etc.) will in- crease operating efficiency and will improve the hotel's marketing opportunities - especial- ly off season. (Linkage of hotel and marina facilities have long been seen as mutually ben- eficial. In the Virgin Islands boating demand is less seasonally variable than most other forms of tourism.) Among other proposals for Flamingo Bay, . there are several that can be developed in ad- dition to those highlighted above; upgrading the beach in Flamingo Bay (perhaps, with clean dredge spoil from the lagoon) and developing homesites on the unpartitioned hillside on the south side, with improved sanitation, solid waste disposal and reorganized hotel infra- structure. The hotel/marina complex is a log- ical base for greater development of special- ized tourist services for divers, deep sea fish- ing and so on. Lagoon-side private homes and private docks could be developed as a permanent berthing arrangement. These options, however, are given secondary e~­ phasis because they require prior development of the necessary infrastructure outlined above, and because they appear to offer less direct benefit and linkage to St. Thomas than other options. As illustrated by recent newspaper accounts, Honeymoon Bay is currently the site of some- times acrimonious debate over proper use of Water Island beaches. That debate is in part the result of a failure of normal development processes to open up new opportunities for beach use. It is recommended that Honeymoon Bay Beach be buoyed for a larger swimming area, with direct hotu e.xpa.no,[o n. otheJL Fla.mLn.go Ba.y optiono ba..ta.n.c.e.d b e.a.c.h U6 e. -111- beach access from the sea limited to a small boat channel. Controlled moorings in the har- bor, or site-selective enforcement of the new no-discharge marine head regulations would serve to maintain a high water quality for swimming, snorkeling and possible revitaliza- tion of local bait fishing by local fishermen. (These recommendations are similar to those be- ing considered as part of a water use plan for the coastal zone by the Department of Conserva- tion and Cultural Affairs.) Combined with these restrictions on Honeymoon Bay, however, should be public (or private) de- velopment of recreational beaches further north, along the West Gregorie Channel. Basic beach maintenance, bathhouses, snack bars and possib- ly lifeguards are all that would be required to substantially increase the available beach re- sources for residents and visitors. Even mod- est development could generate six to twelve full time jobs. Mooring and landing charges might be one way to help support these devel- opments. Further development of the slope behind Honey- moon Bay is not recommended because of the steep- ness of the grade and the distance from many necessary services and transportation to Sto Thomas. Inland of the beaches on the West Gregerie Chan- nel are a number of archaeological sites and two very small salt ponds. These signs of prior settlement and natural features could be devel- oped as part of a small, relatively easily ac- cessed park and recreation area. Beach development proposals are most sensitive to the potentially adverse effects of extensive dredging and further development of Crown Bay, and by accidents or major polluting incidents that could occur as a result of the operation of the West Indies Transport, Inc. barges, the Tropigas propane barge, or the Tropical ship- ping operation - all of which use the West Gregerie Channel in addition to thrice weekly cruise ship visits. open new beac.heA -112- The undeveloped areas adjacent to the existing ferry dock (especially around the unnamed cove to the east and northeast) provide another op- portunity for cluster housing or apartment de- velopment. Although this site is slightly more accessible to St. Thomas, it suffers the disadvantages of not being able to share in larger infrastructure investments for water or sewage treatment and occasional periods when the dock is unusable because of storm or swells (average three to five days per year) . In their survey responses, some Water Island residents have suggested that a dock and small boat marina could be located an Elephant Bay. Alternatively, the Sprat Bay dock could be open- ed as a public dock. Widely scattered residen- tial housing could be developed along the less precipitous slopes north of the ferry dock. The critical dimension of future development of District B, especially north of the ferry dock is that a variety of "small" uses need to be developed in an integrated, compatible forml and that development should be sensitive to the impacts of other uses of the Sub Base, West Gregerie Channel area. At the present time the u.S. Army Corps of Engineers claims that dredg- ing the channel and building a new deep water pier will have no adverse effect on water qual- ity or other environmental conditions on Water Island. Over a ten year period,and assuming the avail- ability of financing, the general scope of Water Island development along the lines outlined above will result in nearly $12 million dollars in new development and the creation of 140 new full time jobs on the island. Housing and hotel expansion will account for two-thirds ($8.3 million) of the new investment. This will include 116 new units, spread evenly among the three categories of private houses, apartments and new (available) hotel rooms. The annual average of 12 new units per year is tri- ple the rate of construction on the island over the past ten years. Population impacts will stem from both the 75 percent increase in nerv1..tj dock. rrU..vw - de v uo ping econorrU..c -6 wnmaJl.tj Jr...e-6ident[al. inc.Jr...eCL6 e -113- housing units, and from a substantial increase in the hotel occupancy rate and spin-offs of the year-round charter boat operation. Average annual population is expected to increase from 165 to over 450 people (see Section V). Infrastructure costs will be split between pri- vate investments for the hotel/marina/boat yard complex, and public investments for transporta- tion, trash disposal and emergency services. Private development costs include $500,000 for marina construction, $340,000 for water and sewage systems, and $1,000,000 for docks, moor- ings, piers, and boat yard facilities. Public costs include: $560,000 for ferry service; $1,000,000 for roads; $250,000 for solid waste collection and landfill; and $123,000 for an emergency service center with truck, tanker, radio and office. The increase in jobs will be divided between 60 new full-time hotel jobs as a result of both increased capacity and the increased year round occupancy rate, and new job categories in mar- ine services and water sports. The marina com- plex (with charter services) is estimated to contribute 25 new jobs, with 20 in the boat yard and 25 miscellaneous in beach operations, domestic service, ferry operations and so on. These recommendations provide for a greatly ac- celerated development process for District B, and Water Island as a whole. They provide es- sential infrastructure elements necessary to other development options, without creating gross imbalances in the overall system. They maximize the employment potential and housing possibilities of the district without destabil- izing other systems or exerting undue stress. Finally, the recommended options are compatible with additional development that may be deter- mined use£ul at any point in the future. DISTRICT C FEATURES District C includes the entire southern coast of Water Island, two windward bays (Limestone and Sprat) and two small penin- sulas (Carol Point, Sprat Point). As mentioned job.6 -114- before, it also includes the three large salt ponds. The terrain is generally rocky, including the vertical cliff faces that rise to nearly two hundred feet (and plunge to 95 feet below sea level) along the extreme southern end of the island. The somewhat lower profiles of Carol and Sprat Points are covered with sparse grass and semi-arid vegetation. The beach at Limestone Bay is subject to south- easterly swells, broken by the offshore reef; but it is often not suitable as a swimming beach (two visitors drowned in the surf here two years ago) and is covered with rough cobble and flot- sam over much of its length. Sprat Bay is bet- ter protected with a fine sand beach and is sometimes used as an anchorage by one or two yachts. It is used by the Sprat Bay Club, which also has a shelter and tennis court nearby. There are substantial coral reefs along the cliff face and offshore of Limestone and Sprat Bay. Although too deep and too exposed to wave and swell for snorkeling, this area currently is us ed for recreational SCUBA diving. (Cur- rents can be strong, however, especially around the extreme southern end of the island.) Although there is no known record of settle- ments in the district, residents have reported finding shards and other artifacts from the Danish colonial period on Sprat Point. The area of the World War II fort (Tract "A") which is immediately adjacent to District C at the south end of the island is of some interest, and there has been talk of designating it as an Historic Site. The geological features of this coast are of considerable interest, as they represent the oldest formations in the Virgin Islands. All of District C serves as an important visual facade for sea traffic into St. Thomas harbor. With the continued seaward development of the western districts of St. Thomas, this aspect becomes more important to creating a favorable first impression on the half-million or so be-ac.he;., -115 - visitors who arrive by sea every year. DISTRICT C DEVELOPMENT There are a total of 24 sub- leased lots (13 of which are developed) plus an unknown number of Sprat Bay Corpora- tion lots in District C. The bulk of the 134 acres of District IIC" are un- developed. The Sprat Bay Corporation has des- ignated 40 acres of Sprat Point as a nature reserve and intends to turn it over to a group such as the Audubon Society for perpetual man- agement as a natural area, when clear title is available. Due to the rugged terrain and bedrock outcrop- pings, housing has been widely scattered, and lots are larger than average. Aerial photographs from 1965 indicate that sand was being mined from the beaches south of the Limestone Bay salt pond, but there is no cur- rently observable effect of this activity. A report from the Sprat Bay Corporation indicates that the reef into Sprat Bay may have been breeched to permit access to the beach, but this also is not discernible. DISTRICT C OPTIONS development Given the developed there are alternatives. large tracts of un- land in the district, a variety of potential (See top of page116.) When competing uses are reconciled, however, with priority given to those options represent- ing the most labor and capital intensive op- portunities, the scenario on the following page emerges. An additional factor which influenced this scen- ario was the finding that the infrastructure costs of large tract animal raising (pasture, feed lots) were so high that they would have re- quired an enormous, technically unattainable, production to sustain the activity. Because of the distance from the entry points to the island, and the difficult terrain in the district, UtlDEVELOPED 108 acres Us e CateJJ~ Al A2 B/C P R 1 - 2 R3-5 Wl W2 Tota 1 Developed Undeveloped Tota 1 -------------- ------------- - -116 - DISTRICT C DEVELOPMENT ALTERNATIVES uS E Al A2 B, C, I P Rl-2 R3-5 Wl Land (acres ) 26 26 108 134 MAXHIUM POSSIBLE Infrastructure Ac res Units Nee ds 60 2 Water, storage, freight 15 3 Water, roads N. A. 100 Roads, trains 50 300 homes 8 m. 2.!!ia r y road, transit system, ferry, parking 30 800 apts Water/sewers, 8 m. primary road 5 (Broach, resort) DISTRICT C DEVELOPMENT OPTIONS MAXIMUM MIXED USE SCENARIO EXISTING Value Units (1 ,000' s) $ 1 ,351 18 1 ,351 18 1,803 $ 3,154 18 Jobs 4 4 4 -- - La n d (acres) 40 46 30 5 121 13 134 ---~---,--- ------ ------ - -- -------~--- COr'l~lE NT S Pasture Vegetables (District B) Natural a re as, camp Sprat Bay area ---~-- PROJECTED Value Units (1,000~ $ 904 1 center 8 9,513 138 37 54,501 800 258 3,077 1 center 46 67,995 938 349 217 $68,212 938 349 Use Category Al A2 BIC P RI-2 R3-5 WI W2 Values -117 - the costs of high density housing become rela- tively high (see Section V). This scenario also assumes that Sprat Point, with it's rela- tively less rugged surface, is used for devel- opment, with the park area shifted around and to the south of the Limestone Bay salt pond. DISTRICT C ASSESSMENT ted in the Acres 40 46 30 5 The problems and issues of District C development exert some costs, which are reflect- following assessment. DISTRICT C DEVELOPMENTAL ASSESSMENT MAXIMUM MIXED USE SCENARIO #1 Instabil ity 4 3 DEVELOPMENTAL GUIDELINE: #2 Stress 3 2 2 2 #3 Catastrophe 5 2 #4 Uncertainty 3 3 2 3 COMMENT Not on Sprat Point Less extensive better Isolation and remoteness es- pecially criticdl problems 1 Negative impact on any level of development. 2 Moderately negative impact, could be neutral or positive at lower levels or with special planning 3 Neutral or unknown impact. etc. 4 Moderately positive impact, could be neutral or negative at higher levels. 5 Positive impact at any level of development. It is clear that the general levels of devel- opmental impact are expected to be negative. What is not obvious from this specific assess- ment is that on a comparative basis, over all four districts of Water Island, these develop- ment options are even less desirable, given the -118- higher costs involved in developing this more remote area. DISTRICT C RECOMMENDATIONS continue to be It is recommended that no further residential or commercial development be permitted within District C, and that Sprat Point maintained as a natural perserve. The area from Sprat Bay west to the accessible southern portions of Tract liD" should be devel- oped as nature trails and possibly a small campground with a fairly extensive interpreta- tion program for St. Thomas residents, schools and visitors. Although the environments and ecosystems. of this district are not unique, they are relatively undisturbed, and would of- fer a useful alternative to the National Park Service programs at Hassel Island and on St. John. (The management and interpretation pro- gram of the District C park should be closely coordinated with NPS to assure that they are complemen tary. ) This development option would require a minimum of new investment (less than $200,000 for trails and facilities over ten years) and would gener- ate 8 to 12 new full time jobs for park mainten- ance and interpretation services. This recom- mendation can be seen in any of three differ- ent perspectives: as a move to preserve natur- al areas; as a holding action to avoid making major, irreversible investments at this time; or as a tactic to maximize investment returns by developing less costly/risky opportunities in other districts. All three positions have merit under the developmental guidelines. DISTRICT D FEATURES The 60 odd acres of District D fall largely within the cur- rent Sprat Bay Corporation property and comprise the hilly northeastern corner of the is- land. The shores of District D are rock cliffs or gravel beaches, unsuitable for development because of waves and swell. - 11 SJ- The terrain varies from hilly to broken ridges with thin rocky soils. Vegetation is of the semi-arid second growth tropical brush found over the rest of Water Island, but somewhat more luxuriant than in District C. District D faces St. Thomas harbor, and from the town area blends with Hassel Island to give a picture of virtually undeveloped natur- al hillsides. There is one account that the 290 foot hilltop in District D was the site of a Russian hospital in the 19th century, but little more is known about this site. DISTRICT D DEVELOPMENT Although the boundaries of District D are not the same as Sprat Bay Corporation, most of the recent development has been the result of that organ- ization's efforts. Sprat Bay corporation has divided its property into 90 one acre lots, which are held by 37 members. Thus far the Sprat Bay Corporation has invested a substantial amount in roads (over $500,000) and improvements to commonly held property such as the Ruyter Bay dock. However, only seven individual homes have been built on the Sprat Bay Corporation property. Only one of these is occupied by a permanent resident of the Virgin Islands. Sprat Bay Corporation homes are not rented out, and they do not have separate apartments. The value of Sprat Bay houses are among the highest on Water ISland, and they generally seem to employ more domestic service and laborers than other resi- dences. It has been said that there are firm plans to construct two additional homes in the Sprat Bay property (maybe even four) within the next year. SpJULt Bay hou.6e..6 DISTRICT D OPTIONS UNDEVELOPED 54 acres USE Al A2 B, C, I P Rl-2 R3-5 W1 -120 - As another undeveloped section of the island, District D also offers a variety of development alternatives: DISTRICT D DEVELOPMENT ALTERNATIVES MAXIMUM POSSIBLE Ac res Un its 50 5 N.A. 50 50 20 10 2 200 600 I nfras tructul'e Needs Secondary roads, water storage Water, roads, freight Trails, transport 10 m. 2~ary road 5 m. primary road, transit system, water/sewage Docks, breakwater, piers, warehouses The possibility of constructing a breakwater- protected "third port" for Water Island does open up some new options. If this facility were to be developed (and it would never provide as much security as the Flamingo Bay lagoon), it could lead to the establishment of a secondary development center in Banana Bay. Such a cen- ter would be a reasonable service and support base for a more intense level of development on the northern end of the island. /Such an option was not explored for District ~ because of the greater southerly exposure. The only possibility in District C would be to open one of the salt ponds. Apart from the en- vironmental question of destroying one of the few remaining salt ponds, the facility would still not be secure in storms, and would be subject to breaking waves in the entrance chan- nel and surge in the interior basin..:.7 Pasture Vegetables District B Hiking, camping Banana Bay Al A2 SIC P Rl-2 R3-5 Wl W2 Total Developed Undeveloped Total La nd (acres ) 9 9 54 63 DISTRICT D ASSESSMENT -121- DISTRICT D DEVELOPMENT OPTIONS MAXIMUM MIXED USE SCENARIO $ EXISTING Value Units (1 ,000' s ) 804 804 1,248 8 8 Jobs 3 3 Land (acres) 24 20 10 54 9 $ 2,052 8 3 63 The assessment of the maximum scenario for District D reflects the elements of risk and heavy $ PROJECTED Value Units .To bs (l,OOO's) 7,022 36,462 6,219 49,703 208 68 28 600 172 ( 50 dips) 36 668 235 $ 49,911 668 235 .-~~- .... ~~----~~~.- investment that would be required. Like other of the negative assessments that have been reviewed for other districts, the develop- mental implications of negative ratings are largely to emphasize risk and cost factors. Given other opportunities for investment, they should be preferred for their higher probable rate of return. Use Category Al A2 BIC P Rl-2 R3-5 Wl W2 Values Acres 24 20 10 -122- DISTRICT D DEVELOPMENTAL ASSESSMENT MAXIMUM MIXED USE SCENARIO #1 Instability 2 2 DEVtLOPMENTAL GUIDELINE: #2 Stress 3 2 #3 Ca tas trophe 2 #4 Uncertainty 3 2 1 Negative impact on any level of development. comlENT Exposed site 2 Moderately negative impact, could be neutral or positive at lower levels or with special planning 3 Neutra 1 or unknown impact. etc. 4 Moderately positive impact, could be neutral or negative at higher levels. 5 Positive impact at any level of development. DISTRICT D RECOMMENDATIONS It is recommended that the pattern of single family homes on large lots, char- acteristic of District A, be extended into District D. Higher densities are not desirable because of the physical and infrastructure limitations emphasized in preceeding sections. It is estimated that an ~gressive home build- ing program, which would necessarily require reconciliation of property rights,could result in the construction of 37 new homes, worth a total of $3,900,000 over the next ten years and the creation of 12 new full time service and laborer jobs. It should be recalled that all of the analysis for District D, and major parts of the other districts, implicitly ignores the position and role of the Sprat Bay Corporation. At the -123- present time, because there are only 37 mem- bers of the corporation, one might well assume that the maximum level of development would con- sist of 37 houses over the 160 acre holding of the corporation, and that the theoretical max- imum limit to development would be 90 resi- dences on the 90 one-acre lots in the corpora- tion's lease holding. -124- ATTACHMENT 1 TO SECTION IV -125 - ZONING CATEGORY DEFINITIONS Characteristics of the Virgin Islands zoning districts are summarized below. Agricultural Districts (A-l and A-2) - The primary pur- pose of the A-I District is to maintain potential agri- cultural lands. Each parcel of property must have a min- imum area of 40 acres. There is a maximum of two dwell- ing units per parcel. The A-2 designation is for acres suitable for small scale agriculture, such as truck farm- ing. The minimum lot size is two acres, with not more than two dwelling units per lot. Residential Low Density (R-l and R-2) - the minimum lot size for the R-l District is one-half acre. Up to two dwelling units per lot are allowed (maximum four dwell- ing units per acre). Minimum lot size requirement for the R-2 zoning is 10,000 square feet, with a maximum of two dwelling units per lot (maximum of eight dwelling units per acre). The maximum height for structures in both districts is two stories. Residential Medium Density (R-3 and R-4) - The R-3 District is primarily for medium density hotels and multi-family dwellings. The maximum number of persons per acre for res- idential structures is 80. The minimum lot size per parcel is 6,000 square feet, and maximum height for structures is six stories. In addition, at least 35 percent of the par- cel must be reserved for usable open space. The minimum lot size for R-4 is 3,000 square feet and the maximum number of persons per acre is 120. The height limitation is three stories. Residential High Density (R-5) - The maximum number of persons per acre is 160, with a minimum lot size of 10,000 square feet. Thirty-five percent of the parcel must be reserved for usable open space. The height limit is eight stories. Business Districts (B-1 through B-4) - The business zones range from B-1, the central business districts, to B-4, business-residential areas. -126- Commercial District (C) - The commercial zone includes those used which are business-oriented but with some characteristics of light industrial activities. For ex- ample, these uses include such activities as service stations, automobile dealers, warehouses, and laundries. Industrial Districts (I-land 1-2) - The heavy industry zone, I-1,includes those uses such as Hess Oil,Martin Marietta, and the Water and Power Authority plants. The light industry zone (1-2) encompasses a wide range of uses such as warehousing, light assembly, textile manu- facturing and contracting, as well as many of the same uses permitted in the commercial district. Waterfront Histricts (W-1 and W-2) - The law establishes two waterfront districts, W-1 Waterfront-Pleasure and W-2 Waterfront~Industrial. The W-1 zone is primarily a recreation zone, and permitted uses include marinas, mar- ine terminals, parks and recreation areas, hotels, and guest houses. The Waterfront Industrial District (W-2) permits a variety of marine-related and industrial uses. Public District (P) - Publicly owned properties fall into this category. Uses may vary widely, from recreational areas to schools, ariports, offices, sewage treatment and solid waste disposal. -127- SECTION V: SUMMARY DEVELOPMENT OPTIONS FOR WATER ISLAND RESOURCES The following table summarizes the improved and unimproved land holdings~ by micro planning district, on Water Island. Improved and Unimproved Properties ($ in thousands, acreages approximate, excluding roads, etc.) Total Acres Total Value Avg. Value/Acre Number of Parcels Improved Parcels Total Acres Total Value Avg. Value/Acre Dwellings (est.) Unimproved Parcels Total Acres Total Value Avg. Value/Acre Micro Planning Districts A 115 $4,751 $41. 3 72 37 41. 8 $2,907 $69.5 45 35 73.2 $1,844 $25.2 B 106 9,558 90.2 33 17 61.1* 8,501 139.1 149** 16 44.9 1,057 23.5 C 134 3,154 23.5 30 15 26.1 1,351 51. 7 18 15 108 1,803 16.7 D 62 2,052 33.1 12 8 8.9 804 90.1 8 4*** 54 li248 23.1 Water Island Total 418 19,515 46.7 147 77 137.9 13,563 98.4 220 70 280.1 5,952 21.2 * Includes 27 acres of unsubdivided land and 34 acres of hotel/marina facilities. ** Includes 99 occupiab~ hotel rooms, 23 condominiums (villas) and 13 residences (some with apartments). Excludes the equivalent of 35 "rooms" in facilities on board charter boats based on Water Island. *** Includes undeveloped Sprat Bay Corp. lots as one parcel. MAXIMUM DEVELOPMENT be reviewed: -128- Before proceeding to examine the combined results of all four micro planning districts, the assumptions underlying each step in the process need to Development Alternatives represent the maximum amount of a given use that could be achieved on the available undevelop- ed land. (Only in the case of "WI" use category is there any additional devel- opment assumed for land that is already partly improved.) No assumption is made about the use of the remaining unimprov- ed land. Maximum Mixed Use Scenario and Recom- mended Ten Year Scenario are both com- prehensive options, selected from among the available alternatives, for devel- opment of the 280 acres of unimproved land identified in the preceeding table. The "Recommended Ten Year Scenario" is designed to minimize the negative devel- opmen t impacts found in the maximum de- velopment option. As a simplifying as- sumption, neither of these options as- sumes redevelopment of already improved property, and both assume that the un- improved portion of the Sprat Bay Cor- poration would be available for devel- opment. (To a limited degree, these are self-cancelling assumptions.) Permanent Jobs are based on estimates of full-time, year-round employment. This is considerably less than average annual employment, which is boosted by short-term, seasonal jobs. Use Categories are defined in the at- tachment to Section IV of this chapter. Adding the various development alternatives for all of the micro planning districts, the list on the following page is generated. In addition to the amount of development possible, and the over- all costs, this table also displays the costs per -129 - WATER ISLAND DEVELOP~!ENT ALTERNATIVES Use Acres 1 New Investment 2 NeIV 3 Investment Category Direct Infrastructure Jobs Per Acre 4 ($000' s) ($000' s) ($OOO's) Al 110 $ 300 $ 1,545 8 $ 16.8 A2 40 726 400 20 28.2 P 200 408 763 30 5.9 Rl-2 180 64,000 (IV/above) 6,875 240 393.8 B/C 5 750 790 50 308.0 Total Rl-2 185 64,750 7,665 290 391. 4 R3-5 120 $198,900 29,620 900 1,904.3 R/C (IV/above) 10 3,250 2,225 120 547.5 Total R3-5 130 $202,150 $31,845 1,120 $1,800.0 WI 40 $ 20,350 $ 3,600 370 $ 598.8 1Based on totals of "District Development 1\1 ternati ves" 2Infrastructure may be publicly or privately huilt; costs based on A.A.A. estimates. 3permanent new jobs, not counting construction, or seasonal peaks 4Does NOT include value of land or existing development acre and the costs per job generated to demon- strate the relative capital and labor intensity of each alternative. Again, it should be noted that these costs exclude the value of the land itself, which would substantially increase the agricultural and park costs. The low and high density CRl-2 and R3-S), res- idential options each imply different levels of business activity; therefore, the business/ com- mercial developments for each are combined with the corresponding residential alternative. Investment Per Job ($OOO's) S2.30.6 56.3 .39.0 2~6'~ .) . 249. , 253.9 45.6 S208.~) $ 64.7 -130 - Neither the alternatives presented above, nor the maximum use options discussed below should be construed as "realistic" development propos- als. The purpose is to outline the possible limits to development under any condition. In matter of actual fact, these alternatives are quite improbable because they assume constant land costs. However, in the real world, as the intensity of development increases, the value of land will be bid so high that there is no longer an incentive to develop (i.e., growth can be self-limiting). The "worst casel! version of this same phenomenon occurs when a development program is so badly done that it actively devalues the entire area. The Estate Paradise public housing project in Saint Croix is an example of a medium density development option where it is no longer possible to even give away apartments. The high density residential alternative (R3-5) suggests a total investment of around $250 mil- lion (for over 3,500 housing units). Although this sum is unprecedented for the Virgin Is- lands, it is not unprecedented for high densi- ty resort areas, ranging from Isleta Marina in Puerto Rico, to the Spanish Riviera and Waikiki. Combining the various alternatives into one op- tion results in the ~cenario on the following page. This brobdingnagian vision of Water Is- land's future holds little attraction to those whose image of the Virgin Islands has been con- ditioned over the past generation. Neverthe- less, it should not be rejected out of hand. The level of development implied by the maxi- mum mixed use scenario would provide housing for less than 10,000 people. At current (1970 to 1980) rates of growth, that is the popula- tion increase for St. Thomas over the next five years. One alternative to the undisciplined growth pattern of the past three decades on St. Thomas is to focus new growth on one con- trollable site - hopefully one with minimal spillover effects. Given the intense concern in St. Thomas for "growth management," it does not seem inconceivable that one growth model for the future would consist of a moratorium on new developments on St. Thomas (no growth), 5 lje.aM gtLOWth gtLOWth ma.l1a.ge.me.nt Use Cate90r~ Al A2 B/C P RI-2 R3-5 WI W2 Values -131- combined with high intensity and carefully co- ordinated development of Water Island. Al- though this model has substantial economic costs, it does provide a solution to many dif- ficult political and social choices that have to be made if a growth management program is to be applied to St. Thomas (i.e., who loses and who gains). In addition, many of the in- creased costs would be borne by new immigrants to St. Thomas - a circumstance that is felt to be eminently fair by all current residents. The developmental assessment below highlights some of the potential problems of the maximum mixed use scenario: Acres 5 5 40 147 111 63 WATER ISLAND DEVELOPMENTAL ASSESSMENT MAXIMUM MIXED USE SCENARIO DEVELOPMENTAL GUIDELINE: #1 #2 #3 #4 Instabilit~ Stress Catastro~he Uncerta i nty 3 5 5 3 3 3 3 3 5 4 5 3 2 2 4 2 2 3 2 1 Negative impact on any level of development. COmlENT Economic feasibility suspect Depends on 1 eve 1 of other development Lower dens ity better Construction phase infra- structure a problem Site specific criteria ir- portant 2 Moderately negative impact, could be neutral or positive at lower levels or with special planning 3 Neutral or unknown impact. etc. 4 Moderately positive impact, could be neutral or negative at higher levels. 5 Positive impact at any level of development. -132- WATER ISLAND MAXIMUM MIXED USE SCENARIO EXISTING Value Units Jobs Use Cate~ Land (acres) (1 ! 000 's) La nd (acres) A1 $ A2 5 5 P 40 Rl-2 92 6,105 98 23 147 R3-5 3 1,001 23 6 111 Wl 43 6,458 99 54 63 W2 Tota 1 Developed 138 13,564 220 83 371 Undeveloped 280 5,951 47 To ta 1 418 $ 19,515 220 83 418 1. Estimated values and jobs for business activities are included u nd er '_"_-_0'"_-""" __ < . ~ _ .''' ___ '' _ C ' ~ ~ ~ _ ~ ~ ~ .. ~ ~ . __ • ______ PROJECTED Va 1 ue Units .j a b 5 ( 1 ! 000 's) $ 141 3 3 2 cen12rs 904 8 28,430 321 97 197,797 3040 935 33,718 200 358 (150 slilCS) 260,990 3560 1401 1 ,035 $262,025 3560 1401 the respective residential optic - _. ---------- -133- This assessment brings one new factor to light. At the level of $250 million dollars in new in- vestment (four times the size of the Harry S. Truman Airport construction project), the con- struction phase itself will overwhelm the exist- ing systems on the island. Even if this scen- ario is seen as the product of a 20 year devel- opment program, the annual rate of expenditure (or development) would average $13 million, which is well over the total investment in Water Island for the past 30 years. The aver- age workforce for 20 years would be over 250 construction workers (triple the number of per- manent jobs on Water Island now). Development on this scale will require the most sophisti- cated planning and project management techno- logies available. RECOMMENDED DEVELOPMENT The scope of development that is recommended for Water Is- land is an order of magni tude smaller than the maximum mix- ed use scenario. As describ- ed in the table below, this scale of develop- ment is closer to the aspirations and recom- mendations of existing Water Island property holders (see Chapter Five) than to the maxi- mum scenarios. The diversity of development opportunities does reflect the maximum scenario. This recommenda- tion, however, is considerably more "labor in- tensive!! than the maximum condition ($118,000 invested for each new job versus $184,000 in the maximum use scenario), as a direct result of a selection of options with the largest job generating potential. The major advantages of the recommended scenario, however, is its flex- ibility and the ability to carry it out within the existing infrastructure. These features are evident in the development assessment for the option printed below. The recommended scenario is not without risk or costs in terms of increased ecosystem stresses and the threat of a catastrophe. Although there is some potential for increasing the diversity of Water Island property holders and for e.o YL6 .t/w.e.tio n. de.man.do -134- WATER ISLAND DEVELOPMENT OPTIONS RECOMMENDED 10 YEAR SCENARIO EXISTING PROJECTED Us e Category La nd (acres) Value Units Jobs La n d (acres) Va 1 ue Uni ts .' Jobs (1 ,000 ' s) (1,000 ' s) Al $ $ A2 B/C P 66 3,737 Rl-2 92 6,105 98 23 148 18,166 R3-5 3 1,001 23 6 13 4,984 Wl 43 6,458 99 54 63 10,187 W2 Total Developed 138 13,564 220 83 290 37,074 Undeveloped 280 5,951 128 2,720 Total 418 $ 19,515 220 83 418 $39,794 ". __ .. _'"T_._' ___ , " _ ~ ~ _ . ~ ~ _ .. ___ ~ " . _ ~ __ ~ ______ ~ ~ > _ ~ _ _ _ _______ ~ ~ ~ ~ ______ increasing the proportion who are permanent residents of the Virgin Islands, the island co~ld still be seen as a protected enclave, contributing to increased. social and political stress. Based upon the detailed recommendations for the four micro planning districts, housing and pop- ulation projections for the ten year scenario are shown below. I -~----- 35 205 51 78 18 137 151 420 255 420 255 -135- WATER ISLAND HOUSING AND POPULATION PROJECTIONS Housing d ! District Homes Hotel/Villa Homes Hote l/V ill a A 37 75 B 13 122 45 C 15 15 D 8 45 Total 73 25 122 ISo Charter Boats Population Housing Current Type No. x Occupants x Rate Total 160 80 160 30 Projected NxOxR=T Homes 73 x 2.5 x .75 - 137 ,Apts. 25 x 2.2 x .60 = 33 Hotel/Villas 122 x 2.3 x .40 ::2~ , Charter Boat~ 180 x 2.5 x .75 - 338 80 x 2.4 x .75 = 144 160 x 2.3 x .70 = 258 30 x 4.0 x .15 = 18 Annual AVg. Populatlon 282 . Annual Peak Population 518 1 2 Historically the hotel occupancy rate has been much lower, often closing for four or five months in the summer. A small charter boat service is currently operating, but its population impact is minimal. The recommended ten year development scenario pr0vides one illustration of a phased develop- ment process that is supportable on Water Is- land and .in St. Thomas by the existing infra- sttucture and construction industry. Further- more, the style of development is generally compatible with the expectations of the exist- ing community and can be accomplished with min- imal dislocation. There is no need to insist that the particular recommendations in this sc~nario are the only path to prosperity and enlightenment. It is sufficient to understand th~t there are significant differences among th¢ potential choices and that solutions can be found to complex and competing needs. 758 1070 Use Category Al A2 B/C P Rl-2 R3-5 WI W2 Values Acres 66 148 13 63 -136 - WATER ISLAND DEVELOPMENT ASSESSMENT RECOMMENDED 10 YEAR SCENARIO #1 Instability 5 3 3 2 DEVELOPMENTAL GUIDELINE: #2 Stress 5 2 2 4 #3 Catastrophe 4 3 2 2 #4 Uncertainty 5 4 2 COW~ENT Concentration around Flamingo Bay increases ri s k 1 Negative impact on any level of development. 2 Moderately negative impact, could be neutral or positive at lower levels or with special plannin~ 3 Neutral or unknown impact. etc. 4 Moderately positive impact, could be neutral or negative at higher levels. 5 Positive impact at any level of development. CONCLUSION The Water Island development options discussed in this chap- ter range from creating 200 I acres of park or 100 acres of pasture to massive residential developments comparable only to the most densely developed resorts in the world. The examination of these alternatives and specific development scenarios has revealed great differences in their impact on; and contribution to the economic and social sy~tems of the Virgin Islands. It.is clearly in the best interests of the Vir- gin Islands to seek future development on Water Island which: increased the rate of new in- vestment, increases the proportion of resident property holders on Water Island, and uses the island's natural resources to create permanent new full-time employment for Virgin Islanders. -137- The challenge in the design of future devel- opment for Water Island, from the perspective of the wider Virgin Islands community, is to maximize the economic benefits to the terri- tory within an acceptable level of risk, as defined by the development guidelines. The Government of the Virgin Islands has a partic- ular concern that such development does not contribute disproportionately to the operating or capital costs of providing services to Water Island. The preceeding analysis and examples imply that these two objectives are potentially attainable. In short, economic development op- tions for Water Island are not a problem. The real problem facing the Virgin Islands re- gardless of the status of Water Island is the design of a process for managing and control- ling Water Island development. Federal own- ership and the historical master lease proce- dure do not appear to be sensitive enough, in themselves, to meet this need. It will be nec- essary to find mechanisms for increasing the decision-making and monitoring role of the lo- cal government, while maintaining the assur- ances and property rights that developers re- quire. :teNU:toJliM ob j e.c.tiVeiJ e.c.onomi..c. be.ne.6U low .6 eJLvic.e. de.ma.nd -138- SECTION VI: SOURCES AND REFERENCES DEVELOPMENT GUIDELINES There is a great deal of information on both economic development planning and environmental conditions. There is less material available which deals with the direct relationship of the en- vironment and development programs. Some of the seminal work in this general area has been addressed directly to the problems of tropical islands (by Towle and McEachern) and tropical coasts (Wm. E. Odum). However, there are major difficulties in most of the materials listed. One is that they are directed to conservation and environmen- tal preservation issues, rather than development. Sec- ondly, there is not yet a. systematic process for combin- ing consideration of social effects with the terrestrial and marine biological systems that are getting to be known. In drawing up the guidelines presented in Section II, the systems concepts of ecology and the biological sciences have been applied to the impacts that conventional devel- opment programs usually generate. Priority was assigned to those topics which represent major problems in the Vir- gin Islands. Major references include: McEachern, John and Towle, Edward, Ecological Guidelines for Island Development, IUCN, Morges, Switzerland, 1974. Towle, Edward L., "Environmental Management of Is- land Based Ocean Engineering Projects." Paper for the First Caribbean Oceaneering Conference, San Juan, Puerto Rico, 1973. Towle, Edward L., "The Coastal Zone Development Dilemma of Island Systems," in Proceedings of the 14th Biennial Wilderness Conference. Westview Press, Denver, Colorado, 1978. Odum, William E., Ecological Guidelines for Trop- ical Coastal Development, IUCN, 1976. Dasmann, Raymond F., John P. Milton, and Peter H. Freeman, Ecological Principals for Economic De- velopment, John Wiley & Sons, New York, 1974. -139- CONSTRAINTS Cost information was obtained from the report and consultation provided by Alton A. Adams and Associates, consulting en- gineers, from personal interviews with: Walter Phillips; Captain Robertson of the Sprat Bay Corpor- ation; Warren Pond, Wad Raye, K.C. Jones, and Ed Kreiger, all officers of the Water Island Civic Association; and from discussions with the Bishop family and. employees of Beach Management Corporation. In addition, OrlandoCanel, Director of Roads, St. Thomas; Ralph Blanchard, Director of Planning, V.I. Port Authority; Lou Becker, Director of Planning, V.I. Housing Authority; V .. I. Water and Power Author- i tYi and the Federal Aviation Administration housing coordin- ator for the Virgin Islands provided information on specific cost components. Property ownership issues were synthesized from a July, 1979, report by the U.S. Comptroller, "Water Island Subleases;" from a computer printout labeled "Real Property Tax Edit Listing," dated September 18, 1979, provided by the Vir- gin Islands Tax Assessor, Office of the Lieutenant Governor; and from a cadastral survey of Water Island produced by the Bureau of Land Management, Department of the Interior, and signed January 29, 1979, by Bernard W. Hostrop, Chief of the Cadastral Survey Division. A summary list of prop- erties and estimated values is attached to this section. In addition, an unsigned memorandum on Water Island Civic Association letterhead, dated July 27, 1979, entitled "Transfer of Water Island to the Government of the Virgin ISlands/Title in Fee Simple," provides a brief summary of property holdings. Alternative management options are based on discussions among all of the contractors working on the Water Island study and the Policy Planning staff of the Department of Commerce; an interview with Superintendent Joe Miller of the Virgin Islands National Park; and en the park "Management POlicies," 1978, published by the National Park Service, U.S. Department of the Interior. Information for the development options was assimilated from all of the preceeding sources, plus interviews with: the Coastal Zone Management Division, Fish and Wildlife Bureau, and the Archaeologist's Office of the Department of Conservation and Cultural Affairs; the Virgin Islands Planning Office; the Director of the Fire Service; the Assistant Commissioner of Public Safety; the Disaster Preparedness Office; various Water Island property holders including Jack McWilliams, Mark and Mary Marin, Bill Myers, Joe Paden, Emily Blackburn and ~1adelene Bateman. -140 - The completed questionnaires and their analysis provided additional information. Other information sources that were consulted for general background data or corroboration included: "Comparative Growth Statistics, 1960 to 1978" by the V.I. Department of Commerce, 1979. "Land Use and Housing Elements," of the Virgin Islands comprehensive plan by the Virgin Islands Planning Office, Office of the Governor, June,1977. "Water and Sewer System Recommendations, Sugar Bird Hotel," by Donald Francois, P.E., and Elton Chongasing, P.E., March, 1978. "Loan Application to Farmers Home .Adminis tra tion," Beach Management Corporation, December, 1978. "Solid Waste Resource Recovery Planning Study," Metrek Division, The Mitre Corporation, February, 1979. Resource Conservation, Economics and Policy, by S.V. Ciriacy and Wantrup, University of California Press, 1968. Environmental Administration by Stahrl Edmunds and John Letey, McGraw-Hill, 1973. Tourism and Development by John M. Bryden, The Uni- versity Press, Cambridge, 1973. The Hawaii State Plan, the Planning Department of the State of Hawaii, Honolulu, 1979. -141- ATTACHMENT 1 TO SECTION VI -142- Valuation of Water Island Properties Microplanning District "A" Acres Total Value Improved Lot 114 .94 $ 75,000e x 110 .51 68,700 x 109 1. 02 26,000e 106 1. 09 80,000 x 103 .76 60,000e x 98 1.13 58,800 x Plot A 1. 34 95,OOOe x B .75" 17,010 C .92 58,400 x D .86 59,SOOe x E .58 13,200 Lot 108 .91 85,000e x 107 .90 20,400 102 1. 01 22,900 101 .92 20,900 99 .81 18,400 97 .84 80,100 x 96 .59 13,400 93 .45 12,800 92 1. 00 47,900 x 91 .94 67,000e x 90 .47 13,300 89 .85 80,900 x 112 3.49 33,900 88 3.13 221,200 x 82 3.44 95,800 x 81 .57 51,600 x 80 .83 18,800 Parcel 128 .57 16,200 Lot 79 .92 70 ,200 x 83 .92 20,900 84 .78 17,700 85 .90 20,400 70 .89 20,000 69 1. 50 34,000 68 1. 04 23,600 64 .76 17,200 67 .95 46,100 x 66 .63 35,300 x 65 .58 13,200 Continued -143- Valuation of Water Island Properties Microplanning District "A" (Continued) Acres Total Value Improved Lot 40 1. 22 $ 27,700 41 1.10 85,300 x 39 1. 02 23,100 38 .95 47,800 x 42 .62 66,600 x 43 .73 18,400 44 .88 22,200 45 .73 18,400e 46 .89 111,400 x 47 .84 50,600 x 36 .93 71,900 x 35 . 72 18,100 37 1.16 98,400 x 32 .97 22,000 33 .91 41,800 x 34 .86 19,500 30 .71 16,100 31 .73 16,600 27 1.12 38,000 x 26 1. 08 72,500 x 23 .89 45,000 x 19 . 3.67 241,400 x 18 .65 50,600 x 17 1. 92 104,100 x 16 .93 66,200 x 15 .69 89 ,300 x 12 .74 124,200 x 14 .59 14,900 13 1. 09 65,000 x Tract A 4.50 93,600 Unpartioned 40.00e 1,120,000e Total 115.33 $4,751,400 Lot 7 25 24 Tract B Villas Tract C Lot 48 49 60 59 58 57 56 55 54 53 52 51 50 71 72 73 74 75A 75B 76 77 Tract "E" Lot 78 100 112 TractJlG" & -'F'" Ruyter Bay Club Other Unmarked Total -144- Valuation of Water Island Properties Microplanning District "B" Acres Total Value Improved .77 $ 14,500 .50 14,400 .57 12,600 34.·00e 5,535,300 x N.A. 1,001,700 x 12.00e 529,700 x .88 22,200 .47 34,400 x .99 64,000 x .71 23,900 1. 00 33,600 .76 94,400 x 1.36 111,700 x ~92 106,500 x .45 106,300 x .71 49,300 x .59 63,000 x 1.03 34,600 .85 28,600 1.20 34,000 1.20 89,600 .54 12,200 .66 42,100 x 1.18 69,600 x 1. 85 173,600 x 1.54 80,400 x .66 56,300 x .75e 204,800 x 1. 07 32,400 1. 99 40,100 3.49 33,900 9.50e 215,800 2.41 178,300 x 18.00e 414,000e 106.4 $ 9,557,800 Lot 1 2 3 4 5 6 8 9 10 Parcel III Lot 20 21 22 28 29 61 62 63 86 87 94 95 104 105 Tract "D" Caroline Point Sprat Point Other So. Club Area Main Club Area Total -145- Valuation of Water Island Properties Microplanning District "C" Acres Total Value Improved 1.93 $ 31,200 1. 01 66,000 x 2.20 45,200 3.18 88,300e x 2.12 44,000 .71 17,900 2.38 47,700 3.88 117,800 x .82 20,700 .50 13,400 2.74 185,900 x 1. 46 79,100 x 1. 37 41,400 1. 30 94,600 x 1. 39 101,400 x 1. 72 85,800 x 1. 97 93,300 x .69 67,300 x .71 56,000 x .94 28,400 1. 64 49,600 1. 03 82,200 x .86 94,500 x .94 53,000e 14.50e 74,300 10.00e 280,000e 40.00 515,300 28.00e 543,200e 1.1 19,400 x 3,,10 117,100 x 134.19 $3,154,000 Lot III 113 SB # 12 & #13 SB # 21 SB # 26 SB # 40 SB # 44 SB # 45 SB # 64 No. Club Area Banana Bay Other Total -146- Valuation of li'Jater Island Properties Microplanning District "D" Acres Total Value Improved 1. 65 $ 41,600 .64 65,000e x 2.03 134,700 x 1.06 98,000e x 1.10 103,000e x 1. 01 66,500 x 1. 06 102,000e x 1. 02 95,800 x 1. 00 138,900 x 1.14 34,500 2.60 77,200 47.5ge 1,094,600e 61.9 $2,051,800 Micro District A B C D Total -147- Acres 115.33 106.40 134.19 61.90 417.80 Summary Total Value $ 4,751,400 9,557,800 3,154,000 2,051,800 $ 19, 515 , 000 e = estimated, other values are current assessed values -148- CHAPTER FIVE WATER ISLAND QUESTIONNAIRE ANALYSIS -149- SECTION I: INTRODUCTION The following section of this report is a detail- ed examination of the results of the question- naire mailed to all property holders on Water Island, including Sprat Bay Corporation members and villa owners. One hundred fifty-three ques- tionnaires were mailed out, additional copies were provided to winter residents on request. Four questionnaires were returned as undeliver- able by the Postal Service. As of this date, seventy-three questionnaires have been returned to IsI~nd Resources Foundation. Seventy-two of them had been received by April 2, 1980, and form the basis of this analysis. (The ques- tionnaires had been mailed on January 28, 1980.) The main analysis of questionnaire responses is presented below in Sections II through IV of this chapter. Portions of this analysis have also been used in other chapters of the paper. Section II examines the characteristics of Water Island property holders. Section III examines their economic circumstances and impacts on the Virgin Islands. Section IV details the respon- dents reactions to development issues for Water Island. -150 - SECTION II: RESPONDENTS' CHARACTERISTICS Questionnaires were mailed to 153 property hold- ers, from addresses taken from membership in the Water Island Civic Association (WlCA), to share- holders of the Sprat Bay Corporation, and owners of the hotel condominiums (villas). A total of 72 completed questionnaires (47%) were received by April 2, 1980. The rates of return from various categories of property hold- er were substantially different: • 27 questionnaires were received from identifiable Water Island residents - out of a total of an estimated 35 per- manent Water Island residents (77%); • 20 returned questionnaires are identi- fied as being from among the 43 esti- mated improved properties owned by non- re s i den ts (47 %) ; • 19 returns were from among the esti- mated 70 to 75 property holders of unimproved lots or parcels (26%). Five questionnaires could not be identified for improvements or residency. Among these were two whose total responses consisted of: "We are not interested in making any changes. You may so inform your principals." "I wish no change." The summary of respondents' general characteris- tics is contained in the table on the following page. The main sub-groups that will be the subject of major interest in this analysis are "Residents", "Non-Residents" and the categories of Non-Residents with Improved Properties (ab- breviated "Improved Non-Residents") and Non- Residents with Unimproved Properties (obviously, "Unimproved Non-Residents"). -151- Virgin Islands Non-V. I. Unknown Resident Resident Residency Improved Property 27 20 1 Unimproved Property 1 19 Improvements Unknown 2 2 TOTAL 28 41 3 As soon as the questionnaire was received, the Water Island Civic Association circulated a guidance letter (see Section V) to all Water Island property holders. This letter, and the questionnaire were also discussed at the Gen- eral Meeting of the Civic Association in early February. These activities helped to stimulate a high rate of response, and allayed many mis- givings about the survey. This assistance, however, was not without some cost in terms of an artificial uniformity of opinion and posi- tion. As the same time, dozens of interviews and hundreds of hours of conversation affi~m that the IIguidance" offered by the Civic As- sociation is also a reasonable concensus and an accurate statement of the prevailing opin- ions and attitudes of the membership. DEMOGRAPHICS Water Island property holders are predominantly rich, elder- ly professionals and execu- tives, overwhelmingly white, many o£ them retired couples. • The average age of 61 total respon- dents is 62 years. • Average reported 1979 income for fifty property holders is $44,000. • Thirty-two of 65 respondents are retired, and many others identify themselves as semi-retired. TOTAL 48 20 4 72 • • • -152- Ninety percent of those who answer- ed live in two person households. One of the seventy-two respondents is black (it is known that there are three black property holders on Water Island). Only three of those answering listed occupations that were not executive, professional or managerial (or widows of same). It is interesting to note the significant dif- ferences among the major classes of Water Is- land property holder. These are detailed in the following table. Characteristic (n) Age Income Retired (61) (55) (65) DEMOGRAPHIC CHARACTERISTICS SELECTED DETAILS Virgin Islands Resident 66 28,800 75% Improved Unimproved Non-Res. Non-Res. 60 41,400 26% 58 61,800 29% As demonstrated above, there are significant differences among the various categories of property holder. Virgin Islands (viz., Water Island) residents are older, relatively poorer and much more likely to be retired. The non- residents are somewhat younger, more likely to be fully employed or "semi-retired", and have significantly higher incomes.. The significant- ly higher incomes reported for Unimproved Non- Residents may be confirming of the popular no- tion of Sprat Bay Corporation members as being especially wealthy (since only seven of the 37 Sprat Bay owners have built, they would be dis- proportionately represented in this category). The demographic data also contain some less ob- vious suggestions that merit consideration: • Fully one-third of the retired Water Island property holders are not resi- dent in the Virgin Islands. When TarAL 62 44,000 49% -153- this group is added to the signifi- cant number of "semi-retireds" who are counted as not retired, it is clear that the Virgin Islands are not reaping all of the benefits of a retirement haven. Retired Not Retired Virgin Islands Residents 21 7 Improved Non-Res. 5 14 *Includes one unknown residency Unimproved Non-Res. 5 12 • Given the relatively large number of property holders that they represent, the non-resident group gives every in- dication of being a powerful interest group in the bureaucratic/political realm. (In addi tion to the factors discussed above, many live in the D.C. area and have or have had senior government positions.) Given the ob- served differences between residents, and non-residents, it may be speculat- ed that a lease termination agreement acceptable to the lessee and the resi- dent sub-lessees could be easily frus- trated by the non-resident group. TOTAL 32* 33 SECTION I II: PROPERTY HOLDINGS of all Water -154 - ECONOMIC CHARACTERISTICS The information reported under various property holding categor- ies provides some confirmation that the respondents in this sur- vey are generally representative Islanders. The average size holding is about one and one- third acres, with most reporting the "standard" one acre lot. The average reported (60 answered) acquisition cost was $23,600, and the average date of ac- quisition was 1967. There have been a number of relatively recent acquisitions (eight in 1978) - all of which have been transfers of prior sub-leases, since the hotel has sold no new sub-leases in a decade. Given the short term of the lease, one can only wonder at the reason for the sudden activity - especially since the rate of new construction has not mark- edly increased. Twenty-nine respondents reported making property improvements worth an average of $35,800. This would imply a cost for developed homesites of around $50,000, which corresponds with current estimated values by the tax assessor of between fifty to ninety thousand dollars for developed residential properties. In part, because of the WICA guidance, and in part because no one really knows, there was very little response to the question of current land values, given clear title (Question 13). Seven- teen answered that umimproved property was worth an average of $8,200 an acre, and eleven said that their improved properties were worth an average of $80,500 per acre. (This overall val- ue coincides with the tax assessor's estimates, except that he values the land at twenty to thirty thousand dollars per acre. In other words, residents value improvements higher, and land values lower than the tax assessor.) ac.qui.6LUon. ,[mpfLovemen;U ECONOMIC IMPACTS properties. 155- The apparent economic effects of the current ownership and devel- opment patterns on Water Island are relatively small, and are gen- erally limited to the developed Thirty-four developed property holders report employing an average of .3 employees. The ac- tual employment figure is estimated to be some- what lower, because many of those who did not respond to this question should have indicated that they employ no one. The fact that one-fourth of the Water Island residents are not retired may surprise some people and implies a degree of linkage with the St. Thomas economy that was not previously ex- pected. (It has also been suggested that by omitting resident renters, the study has ne- glected a relatively large number of economi- cally active residents - some of whom have fam- ilies and have lived on Water Island for sever- al years.) The average residency for non-residents with improved properties was approximately two months. Most non-residents with unimproved properties regularly visit the Virgin Islands less than two weeks per year. Out of the total of 48 improved properties, 14 report renting 26 rental units for all or part of the year. (One property has eight apart- ments; several others have guest units that are rented.) Information on the number of annual house guests was not reliable, given evident confusion on the meaning of Question 7c. Pre- sumably, each developed property is host to several (5-20) "guest-weeks" of visitors each year, who do not pay for accommodations, but who do support other St. Thomas visitor ser- vices. The most significant economic impact of Water Island is probably the taxes paid by residents. A number of non-residents identified customs duties and gross receipts taxes as by-products of their periodic visits and maintenance of -156- their properties, but the amounts were consis- tently less than $1,000 per year. Twenty-six of the 28 Water Island residents who responded indicated payments of local taxes that average $6,700 per year. This is consistent with the reported average income of approximately $29,000 per year for Water Island residents. As pointed out previously a change in,residency by some of the non-resident property holders (especially those who are retired or semi-retired) could re- sult in a significant improvement in this key impact area. The issue of economic impact is directly link- ed, in Water Islanders' perceptions, with the issue of the use of puplic services. Many re- spondents emphasized that they use no Virgin Islands public services. This perception should be a matter of concern, because it will impact future status negotiations. This is discussed more fully under "General Development Issues", below. DEVELOPMENT PLANS When queried about their per- sonal plans for developing Water Island properties, most respondents were not very clear. In addition, despite the "lead- ing" nature of the questions, there was not an overwhelming sense of pent up development that would be released once a long-term resolution of property rights was achieved. Only 35 of the 72 respondents indicated any form of plan for developing their property, be- fore or after 1992. Of these 35, only 14 indi- cated plans to build essentially new structures. (The remainder were general property improve- ments, guest houses, apartments, etc.) A few respondents did specifically mention that clear title would provide them with the option of sell- ing their property. The same degree of restraint was evident in the question about plans to move to Water Island. Only 12 of the 41 non-residents indicated any such wish, and many of their comments were qual- ified or condi tional. (There were few responses to the question of estimated income upon moving to Water Island.) -157- Examining the demographic characteristics of property holders provides some partial explana- tions of these responses. Over a quarter of the non-resident property holders are already retired, and probably feel no need to change their current arrangements. The relatively ad- vanced age of all categories of respondents might imply a diminished enthusiasm for under- taking the "challenges" of a major new construc- tion project in the Virgin Islands. And the high income levels suggest that the investment and income generating potential of a new prop- erty are not major incentives for the bulk of the non-residents. e..xplic.atiol1 -158- SECTION IV: WATER ISLAND DEVELOPMENT RESPONSES Water Islanders may differ in their demographic characteristics and in their personal develop- ment plan, but they are unified in their vision and aspirations for Water Island development. In the key question on support for twelve dif- ferent development options, there is a .93 cor- relation between the preferences of Water Is- land residents and non-residents wi th unimprov- ed properties. This degree of consistency is not normally encountered in survey research. Undoubtedly the discussions and guidance letter from the Civic Association contributed to the consistency of responses .. Nevertheless, it is also clear that background, expectations and experience have formed a very cohesive view of the development potential for Water Island. Respondents: (1) Support acquisition of Water Island by the Virgin Islands -- but only if a transfer involves clear title to their leased land; (2) Want none or minimal government services; (3) Believe that there should be no further development of Water Island, or that it shoul.d be limited to nat- ural preserves and single-family residences on acre lots; (4) See clear title and financing (two sides of the same coin) as the big- gest obstacles to development; and, (5) Are opposed to the development of Crown Bay as a deep waterport for cruise ships. -159- TRANSFER Superficially it would appear that two-thirds of the 64 people ex- pressing an opinion would support the transfer of Water Island from the Department of the Interior to the Government of the Virgin Islands. It would also appear that Water Island residents are more favorably inclined toward Government of the Virgin Islands acquisition than non-re~idents (73% versus 58%). This conclusion is misleading, however, in that virtually all of this support is qualified or conditional on transfer resulting in the prop- erty holders securing a clear title to their leased land. In fact, there is almost no dis- tinction between those who support and those who oppose transfer, because the "opposers" would support transfer if they would get clear title at a nominal cost. It is not clear whether the respondents saw the transfer question as a means of setting forth an initial bargaining position with the govern- ment, or if these are "genuine fl sentiments re- flecting their minimum expectations of a fair settlement of the property rights issue. In either event, they would appear to have high hopes. The conditions most frequently set forth by re- spondents to these questions (in descending order) are: Clear title. As mentioned before, both supporters and opposers of transfer set the acquisition of clear title by les- sees and sub-lessees as a condition for transfer. Only two or three cited trans- fer issues not directly tied to property rights. Low/no cost. Almost all respondents al- so state that title should be available at low cost, or at a "reasonable fee". Given the large difference between prop- erty holders' and the tax assessor's land valuations ($8,000 versus $20,000 per acre, respectively) it is clear that "reasonable fee" is subject to dispute. f..UppotcX J.A C.Ol1dLtiOI1ai. hlgh hope.f.. -160 - Special tax rates. A number of respon- dents expressed the view that Water Is- land should be subject to special (low) tax rates because of the minimal demands that residents make on government ser- vices. It is also evident that many of those surveyed did not know the addition- al taxes, or the tax rates, that they would be liable for if the Virgin Islands assumed jurisdiction over Water Island. Political rights. Some misinformed re- spondents insisted that Water Island should become part of the territory only if it had local self-government, "the same as St. Thomas and St. Croix". Oth- ers stated that it should have a resident Senator-at-Large, such as is provided for St. John. (Some. non-resident re- spondents obviously did not know that Water Islanders vote in Virgin Islands elections.) Unconditional opposition. A few respon- dents indicated, sometimes vehemently, that they would oppose any attempt to transfer Water Island to the Government of the Virgin Islands. The views and opinions summarized above are not statistically significant, except that some are more common than others. With reference to the question for a "reasonable fee" for title to land, there was no discernible pattern of an- swers among the three categories of respondent. However, from the viewpoint of looking forward to some form of negotiated early termination of the lease in order to promote greater economic development of Water Island, they do provide some guidelines for a program of public educa- tion and information that could ease some of the misgivings and misinformation currently held by many Water Island property holders. GOVERNMENT SERVICES over Water The most frequent response to the question of what services would be expected if the Govern- ment of the Virgin Islands took Island was "none", expressed by 32 toted. Oppo.6ition e.ducation ne.e.d6 no hdp wante.d -161- of the 66 people who answered. There was a significant difference between those who live on Water Island (54% wanted no services) and non-residents with unimproved properties (30%). Obviously, familiarity does not stimulate de- mands for services. Among the 34 people who voted for one or more services, the most frequent choices were road maintenance, mail, trash collection, and pub- lic ferry service, in that order. The only really significant difference among the various sub-groups of Water Island property holders was that residents were twice as likely as non-res- idents to identify a need for mail service. (Many recognized that this was not a local gov- ernment service.) In general, even among those who identified service expectations, there was a sense of re- straint, with the average number of services checked at less than three per respondent. How- ever, there was one qualification appended by many of the people who identified no service needs ... "at this time." There is a distinct impression that further development of the is- land would bring increased demands for public services. DEVELOPMENT OPTIONS Sixty-seven respondents iden- tified 198 separate develop- ment options that they support- ed. Thirty-one percent of the total votes supported individ- ual private residences, twenty-nine percent identified reserved natural areas as a prefer- ence, and ten percent want no further develop- ment. The only other item to receive any sup- port of significance was marina and watersport developments. As mentioned previously, there was an extra- ordinarily high correlation (.93) among all categories of those who answered this question. twad;." mm, ttLa6h and 6eJrJuj a;t tlUJ., :time homv., DEVELOPMENT ROLES -162- The responses to the question of the development role of var- ious institutions and agencies were fairly standardized: • The hotel should encourage the development of more single residences on available land. General expansion of the hotel was seldom mentioned -- and then negatively. • The Sprat Bay CorporatiDn was often fault- ed for not having stimulated a higher rate of home construction by its members. • The Water Island Civic Association was most frequently identified as a vehicle for representing the interests of resi- dents -- with some responses specifying sub-lessees in general. (A few thought the Civic Association should build homes.) • The Department of the Interior was gener- ally assigned the responsibility for nego- tiating a termination to the leaseholding arrangement that includes fee simple title to current landholdings at mininal cost. Some cited an Interior role in environmen- tal conservation. A few felt Interior should adhere strictly to the terms of the original lease, only. • The Government of the Virgin Islands should approve the "equitable arrangement!! for the termination of the lease as spec- ified above. OBSTACLES Sixty-seven respondents identi- fied a total of 122 different ob- stacles to development. Water Island residents consistently cited a wider variety and more obstacles than other categories of property holder. The lack of clear title and the inability to finance developments given the short term of the lease were cited by three-quarters of the respondents. These two discrete issues were so directly linked by so many respondents that no tille., no mof/..tgage. -163- they were counted together. These issues were mentioned with slightly greater frequency (83%) by holders of unimproved properties. High costs and difficulties of access were men- tioned by about the same number of respondents, as major secondary obstacles (37i and 35%, re- spectively). The issue of costs tended to fo- cus on construction, although a number of peo- ple also mentioned the extra costs-of-living created by living on Water Island. In many ways the problems of access are simply another way of expressing the cost question. A number of responses did refer to the additional prob- lems of maintaining cars on both the mainland and Water Island, and the inconvenience of the ferry schedule for working people. The natural features of Water Island, including rugged terrain, rocky soils, low absorption rates and low rainfall, were identified as ob- stacles by a quarter of those answering. Ref- erences to problems created by these natural conditions pertained to both the obstacles created for private construction and to the im- plications for building infrastructure. Miscellaneous and other obstacles accounted for only about twelve percent of all the responses, but were cited by 42 percent of the Water Island residents. Some of the issues mentioned includ- ed: the lack of services; pollution created by the noise of overflying aircraft and overuse of Honeymoon Bay; the financial instability of the hotel; political attacks on. Water Island; and the unknown effects of chemical warfare exper- iments conducted by the Army. CROWN BAY Eighty-three percent of the re- spondents said that they viewed the Crown Bay development propos- al unfavorably, or that they felt that it would have a negative environmental im- pact on Water Island. Specific factors includ- ed both the short-term effects of lowered water quality from dredging, and the permanent impact of greater ship traffic, polluting discharges and accident risk. Several people also mentioned cOJ.:,.:t6, time. and haJ.:,J.:,le. e.nvifLonme.n.t.ai.. co ndLt[o V!.J.:, fiamiliaJr.i;ty le.ad!.:. ;to pUJ.:,,.[rn-Lom CfLown Bd,y (S;t. Thoma!.:.) fLe.je.c:te.d -164- the potential loss of a Water Island ferry land- lng site on St. Thomas, and the displacement of the Shoreline Marina. Non-residents with unimproved property were unanimously against the proposal, whereas one in four residents tended to favor it. CONCLUSION We have devoted considerable discussion to Water Island prop- erty holders' perceptions of de- velopment because it is obvious that they are going to exercise considerable in- fluence in the final determination of both prop- erty rights and investments in Water Island over the medium run. In addition to highlighting sig- nificant distinctions between the various classes of property holder, we have also tried to indi- cate areas in which public education and discus- sion can help to clarify key issues, particular- ly in the area of the current political rights of Water Islanders, and their access to govern- ment services. Furthermore, we believe that the informed opinion of those who have held prop- erty or lived on Water Island for many years should serve as useful guidance for the future. -165- :)bCT1UN V ISLAND RESOURCES FOUNDATION Red Hook Center, Box 33, St. Thomas, U.S. Virgin Islands 00801 (809) 775-3225 Dear Water Island Property Holder: The Virgin Islands Department of Commerce has asked the Island Resources Foundation to examine long term economic development options for Water Island. Key elements in such a study are the experience, plans and preferences of the existing property holders. In addition, we have been asked to collect information on the current and future impact of Water Island on the finances of the Government of the Virgin Islands. The attached questionnaire is a preliminary attempt to summarize the circumstances of Water Island property holders. Please answer, fold and return the postage paid mailer as soon as possible. We request that you do not sign the questionnaire. You may freely decline to answer any question; our principle concern is for what you want to tell us about the development prospects for Water Island, and their impact on the Virgin Islands. All responses will be kept strictly confidential. Data from the questionnaires will be used only in summary form. We request your cooperation, 50 that our results will be based on a complete and balanced assessment of development alternatives. We encourage any additional comments or suggestions that you may have to offer. In addition, we will be conducting a follow-up telephone or in-person interview of many property holders. If you wish to be called, please let us know by writing, or call (809) 775-3225. Sincerely, /It 4f~ aAJ Mary F. Moorhead Island Resources Foundation VVater Island Economic Development Options INSTRUCTIONS: The following questions are generally self-explanatory. In most cases a response may be indi- cated with a simple check mark or a short comment. A limited amount of space is provided for narrative responses. Please feel free to provide extra comments on a separate piece of paper, which may be stapled inside the folded questionnaire and mailed together. In some cases a property holder may inadvertently receive more than one copy of the questionnaire. We request that only one form be completed. 1. a. On what date did you acquire your property? b. What is its acreage? .................................... . c. What was its acquisition cost? ................... . 2. What is the approximate cost, nature and date of improvements you have made to your property since acquisition? $ ................................ nature .......................... . ....................................................... date .......... .. $ ................................. nature ......................... .. ....... ...... .......................................... date .......... . 3. Has your property been subdivided since you originally acquired it? ....................................... . If so, when? ..................................................... .. 4. Do you own your property as an inclividual, partnership or corporation? ............................. . 5. a. What kinds of taxes do you pay directly to the Government of the Virgin Islands (e.g., income, . gross receipts, business fees, cus- toms duties, etc.)? ...................................... . b. What do you estimate to be the total amount of taxes that you currently pay to the Government of the Virgin Islands? 0- 1,000 ........ 7,001 - 10,000 ...... .. 1,001 - 2,500 ........ 10,001 - 15,000 ...... .. 2,501 - 4,500 ........ 15,001 - 25,000 ...... .. 4,501 - 7,000 ... ; .. :. 25,000 and up 6. How many people do you employ full time or part time in connection with your 'property holding on Water Island? (Fractions are per- missible. For example, ".2" or "1/5" would be equivalent to one person one day a week.) 7. a. How many months of the year do you .Iive on Water Island? ......................................... . b. How many people regularly reside in your household? ................................................. . c. Do personal houseguests occupy the property for a major part of the year? ...................... . If so. can you estimate how many? ............ . Average length of stay ................................ . 8. a. How many "dwelling units" are on your Water Island property? ............................... . b. How many of these are available to rent for all or part of the year? .......................... . c. What is the average length of time a tenant occupies a unit? .......................................... . d. Approximately how many weeks of the year is the unit occupied by renters? ................. . e. How do you rent your property? 1. through a real estate agent .... . 2. through the hotel ........... . 3. through your own efforts ..... . f. What is the rental rate? $ ..................... per ................. (mo .• wk .• day) 9. Under the current lease arrangement which ex- pire in 1992. what are your personal plans for development of your property? a. Before 1992 ............................................... . b. Beyond 1992. if it is feasible for you to re- tain leasehold or title to your property ...... . ...................................................................... 10. Would your plans for development change sub- stantially if you had clear title to your property? ................ How? .............................................. . 11. a. If you are not now a Water Island resident. do you plan to move there? ........................ . When? ........................................................ . b. If you plan to move to Water Island. what do you estimate your annual household in- come will be atthat time (in current dollars)? 1. less than $15.000 .......... . 2. 15.001 to 20.000 .......... . 3. 20.001 to 25.000 .......... . 4. 25.001 to 30.000 .......... . 5. 30.001 to 35.000 .......... . 6. 35.001 to 40.000 .......... . 7. 40.001 to 45.000 .......... . 8. 45.001 to 50.000 .......... . 9. 50.001 to 75.000 .......... . 10. 75.001 to 100.000 ......... . 11. 100.001 to 125.000 ........ . 12. more than 125.000 ......... . -166- 12. If you had clear title to your property. what would you consider to be a fair annual rental for the land (exclusive of buildings and improve- ments) ? $ ........................ per acre. If you had clear title. what would you consider a fair annual rental for your property including all improvements? $ ........................ per acre. 13. If you had clear title to your property. what would you consider to be a fair market value-for the land alone? $ ........................ per acre. If you had clear title. what would you consider to be a fair market value for your property. including buildings and other improvements? $ ........................ per acre. 14. In general do you oppose or support the transfer of Water Island from the Department of the I n- terior to the Government of the Virgin Islands? Oppose .............. Support ................ . Why? ................................................................ . If you oppose. under what conditions would you support such a transfer? ............................ . 15. If the Government of the Virgin Islands took title to Water Island. what government services would you want to be extended to Water Island? a. Road maintenance ............. . b. On-island police patrols ......... . c. On-island fire service ........... . d. Garbage and trash collection ..... . e. Potable water service ........... . f. Public ferry service ............. . g. Ambulance boat ............... . h. Emergency clinic .............. . i. Schools ...................... . j. School transportation ........... . k. Mail delivery .................. . I. Other: ............................................. . -167- 16. In the following list of possible development options, please indicate your personal prefer- ences on a scale from one (strongly oppose) to. five (strongly favor): a. b. c. d. e. f. g. h. I. j. k. I. ~ I , L' Oppose / Support Reserved natural areas 1 2 3 4 5 Developed recreational areas, including campgrounds 1 2 3 4 5 Individual private residences 1 2 3 4 5 Condominiums 1 2 3 4 5 Medium density mixed housing 1 2 3 4 5 Selective intensive agriculture 1 2 3 4 5 More intensive beach develop- ment 1 2 3 4 5 More watersport development 1 2 3 4 5 Medium-rise hotel development 1 2 3 4 5 More commercial/retail business (e.g. groceries, gas stations) 1 2 3 4 5 Other: ..................................... 1 2 3 4 5 ................................................. No further development 1 2 3 4 5 BANANA POINT 17. If you do favor certain development options for Water Island, on the above map please indi- cate the areas where these could most appro- priatelyoccur. Also, please indicate the location of your property with an "x." 18. a. In addition to the options listed above, there may be others which you feel strongly should or should not be undertaken on Water Island. Please list these along with the reasons for your opinion ...................... . . .. .. . . . . . . . .. .. . . . . .. . . .. .. . .. . .. . .. .. : ................................... ~ ................. . (continued overleaf) b. Specifically, what is your feeling about the role to be played in future Water Island de- velopment by: 1. The hotel (i.e., the main lease holder) 2. Sprat Bay Corp .................................. . 3. Water Island Civic Assoc .................... . 4. Dept. of the Interior .......................... . 5. Gov. of the Virgin Islands .................. . 19. Based on your knowledge and experience, what are the biggest obstacles to future development of Water island? (Indicate those you feel to be unique to Water Island, rather than those that might be generally applicable to the Virgin Islands.) ............................................................ , 20. The Port Authority's Crown Bay Development Plan under consideration by the Army Corps of Engineers proposes to construct docking, trans- shipping and maintenance facilities on 35 acres of new filled land which would extend from the "Miss Opportunity" barge to the present Water Island ferry dock in Sub Base. Crown Bay will Name ......................................................•...................... Address ......................... , .............................................. . City ........................ , ..................................................... . -168- then become a major cruise ship docking facility berthing 3 cruise ships and capable of providing turn around service to those ships. It could also be a major cargo faci I ity. Taking into consideration Water Island's prox- imity to Crown Bay, how do you feel this pro- ject will impact Water Island? . .......................................................................... . . ........................................................................... . .............................................................................. . ........................................................................... . ........................................................................... . .......................................................................... . 21. The following information is needed for demo- graphic purposes: a. Age of head-of-household ........................... . b. Sex. of head-of-househo Id ........................... . c. Number of people in household ................. . d. Approximate total 1979 household income: 1. less than $15,000 .......... . 2. 15,001 to 20,000 .......... . 3. 20,001 to 25,000 .......... . 4. 25,001 to 30,000 .......... . 5 .. 30,001 to 35,000 ........... . 6. 35,001 to40,000 .......... . 7. 40,001 to 45,000 8. 45,001 to 50,000 .......... . 9. 50,001 to 75,000 ..... ; ..... . 10 ... 75,001 to 100,000 ......... . 11. 100,001 to 125,000 ........ . 12 more tlian125,000 ......... . e. Where is the permanent residence of the household? ........ : ........................................ . f. How long have you lived at your permanent residence? ........................ ; .......................... . g. Race of head-of-household ......... , ................ . h. What .is/was occupation of the principal wage earner in the household? .................... . i. Is principal wage earner now retired? ........ . ~IRST CLASS PERMIT NO.2 CHARLOTTE AMALIE VIRGIN ISLAND 00801 BUSINESS REPLY MAIL NO POSTAGE STAMP NECESSARY IF MAILED IN 1'i-IE UNITED STATES POSTAGE WILL BE PAID BY ISLAND RESOURCES FOUNDATION Red Hook Center, Box 33 St. Thomas, U.S. Virgin Islands 00801 -169- SECTION VI Water Island Civic Association, Inc. Water Island 51. Thoma'>. U.S. Virgin 1~1,lnd~ (jOXOI February 6, 1980 Dear w~ter I~land Property Holder: The Island Resources FOundation questionaire recently sent to you has received much discussion by the TAG Committee as well as by all the Water Islanders in residence who attended the reconvened session of the annual WICA meeting on February 2, 1980. This letter is to apprise you of our collective comments and points of view -- not to tell you how to answer the questions. Should you wish to remain anonymous, then Q!:estions Ill-a and 11.6 should be answered in general terms with respect to time and acreage. Also, you should not mark "X" on your lot ~l!Ition ~j and the retur'n address should be WICA, P.O.Box 510, Water Island, st. Thoma,s, V.!., 01; or you can send the questionaire directly to the Civic Association secretary, l!)nily mackburn, who will see that your anonymous reply gets to Island Resources. ~estions #lac and #2 provide an opportunity to point out the kind ot invest- ment we have already put into Water Island. \lie do not think that nwnbers should be intlated, but include all your costs. The -dwelling unit" referred to in QUestion NS-a is a house, or apartment. or separate unit which could be rented. ~estiOn8 f). and 110. It has long been our opinion that residential deTelop ... ment ot Wa er rsIiiid has 'been held up bes:ause we lack title to our land, and we asswna that your develo~nt.~jil.au I6dJ.l oour ·Iifter'.pul.-jan -.... U.:u... Please note under r~9~ that there is nothing in the works at this time regarding a lease extension beyond • On the contrary Congressman Philip Burton is on record as opposing such an idea. 2!estions 1fJ.2 and ~3 reeeived much discussion. In general, it probably can be said none of us <roes or pans to rent land alone. To decide what is a fair rent§! or market value for our property and/or improvements is a real estate persontsjob 8nd generally beyond our individual judgement. In any event, we do teel this questionUre is not the place to lay any groundwork for these number8. ~.e.stion @. Most of us support the transfer of Wat.er Island to the Virgin Islands Government, under certain circumstances. Generally, we w*nt to have already negotiated the terms of obtaining fee simple title with the Department of the Interior before such a transfer. If you favor such a transfer, are you interested in obtain- ing title to your property? O:>taining title means that you would give up lease Tights and come under property taxation. Also, please indicate whether you are only interested in an even exchange, or would you be willing to pay a nominal or a substantial sum to obtain title... ' ~stion H!2. Most everyone would like to see water Island remain pretty much as its; hence, after a transfer to the V.I.Goverrurent, the fewer government services that come over, the better chanye we have to keep our island as is.. "None at present" might be an appropriate answer, if you agree. 2iestion #l~ also gives us an opportunity to express our desire tor individual private residences, as opposed to commercial or government expansion. Reserved natural areas could, and would also benefit our island. Qlestion ~8-b is another chance tor us to express views which will help our future. We wouldk; (and the hotel has expressed the swne view) the hote1 to develop their unused land for single tamily residences on 1 acre (prox.) plots. Sprat Bay is already sub-divided and we would hope these owners would build ... (over) -170 - - 2 - . \ \ further 1 we would like the Department of the Inter-jor to set. fair terms for the acquisition of our propert.y and for the transfer of Water Island to the Virgin Islands. We want the Virgin Islands Government, to approve such fair tenll.g of transfer. ~estionlJ:.9.:.. Wit.hout question, the biggest obstacle to development on Water Island is the shortness of the lease and the inabHity t.o get. financ:ing .. 'I'hese are followed by such factors as high cost of const.ruction, convenience of *cccss a.nd (lther-S. ~stion J/2... The Crown Bs,.'V development would take pages to explain. In a word, the pfan cIs for the creation of 32 acres of new land along the St. Thomas shore, opposit.e Water Island, for increased ship activ:i.. ty" The proposal has no provision for a new Water Island ferry dock, or relocation plans for waterfront bus1.ness and/or marinas. Nor are specific plans for wilat will be put on the 32 acres a PFt of its approval. so~ feel the north side of Water Island will be badly affected .. The general feeling is very negative. ~lestion ~1. 1\lt::' image of Water Island is a millionaire sanctuaryo Perhaps the "answers tbe demographic questil'ns gives us a chance to indicate by c atagory that most of us are middle incoJ'lle people. Island Resources requests further comments and ideaa if you care to express t.hem. The room allocated to the answer to ill8l\V questions is lirni ted; hence fee 1 free to add paper as needed. The TAG Committee docs urge everyone to an.'3wer the queationaire as best he can. If you have specific objections to certa.in questions, by all rnean..'i leav8 them blank. Please feel free to contact any member of the TAG Committee for advice or help :In answering any question. Respe\tfu~~.!. submitted: ~. ~. \(~~\r..~ H.w.R.aye, Chal-fman E .L.Robertson Ed Krieger K.C.Jones Warr'e n Pond ,I Item 1. , 3. -I. 5. 6. s. 9. 10. 11. l~. 13. 1-1. 15. 16. 1 ~. IS. 19. 171 - SECT! 0~J VI I Sl1\lMARY OF QUESTIONNAIRE RESPONSES Description _-\\-erage size _-\\-erage cost Year acquired Cost of improvements Sub -di \-ided Q,nership _-\verage tax payment A\-erage employees Residencv Improved' property A\-erage rent Rent broker Planned improvements Title change plans Retire/move to Water Island Retirement income Land rent value Land 1,'i th buildings rent Sale value of land Sale \-alue of improved land Support transfer Services expected Development options _-\reas for development De\-elopment roles Obstacles Croh11 ]3a\- A\~erage age Sex. \tunber in hous eho1d .-\n'ra~e 1979 income Residence Time at residence Race Occupation Retired Responses (n) 66 60 64 29 26 34 54 48 14 12 35 36 41 6 2 8 17 11 64 66 67 62 58 61 63 61 50 69 48 60 55 65 Factor 1_37 acres $23,610 1967 $35,800 $ 6,700 .31 6. 7 mos. /yr . 14 w/26 apts. $860/mo. self No Value Affirmative 12 $8,200/acre $80,500/acre 42-yes/ 22-no 32-none/ 26-roads 62-homes 58-preserves 20-no develop. Cormnent 8 in 1978 1 affirmative 2 partnerships/l corporation V.I. residents only domestics/gardeners Rents $250 to $1400/mo. Unreliable 2 use hotel pre or post 1992 Mostly advance date of #9 Affirmative Not reliable Not reliable Not reliable Marginally reliable 18 listed more than 3 services no significant response see narrative 47-title/financing 23-high costs 22-access IS-natural feature I5-other 48-against 62 years 59 male 2.0 average $43,960 41 off island Some inferred 13 years average 1 black See narrative 32 retired