Government Signs Water Island Hotel Lease

Gov. John deJongh Jr. and Stephen Evans-Freke, managing partner of Water Island Development Company, sign a lease agreement Wednesday morning that will facilitate the development of a boutique resort on Water Island. (Government House photo)Gov. John deJongh Jr. approved a lease agreement to the Water Island Development Company to facilitate the redevelopment of the former Water Island Hotel property as a boutique resort.

The lease was signed Wednesday at a ceremony at Government House on St. Thomas. (The executive summary of the development plan can be seen here.)

The Water Island Development Company was selected through an Expression of Interest issued by the government in September 2013.

“Our interest in attracting a developer of a boutique resort was to achieve an economic activity on Water Island that would be consistent with the current community," deJongh said at Wednesday’s signing ceremony. "It would supplement the product diversification and re-branding that we are executing to broaden our tourism offerings while providing permanent jobs and creating business opportunities."

DeJongh said the previous hotel on the island, Sea Cliff Hotel, was built in 1953 as the Water Isle Hotel and destroyed in 1989 as a consequence of Hurricane Hugo. Since that time, there has been no meaningful economic activity on Water Island, he said.

The Expression of Interest process was led by the Department of Property and Procurement with input from the V.I. Department of Justice. The government engaged REVPAR International, a hospitality advisor and asset management firm, in 2012 to assess the viability of lodging development on Water Island. On November 29, 2012, after conducting a market study and financial analysis on the feasibility of the redevelopment of a hotel and marina on Water Island, REVPAR issued its assessment confirming that such a project was indeed feasible.

Property and Procurement Commissioner Lynn Millin Maduro described the proposal process.

“The EOI resulted in proposals from three developers: LAURENS GmbH, WIDC and RED Legacy, LLC. After reviewing the proposed submissions, the evaluation committee … along with REVPAR in an advisory role conducted two rounds of oral presentations to select the developer, in this instance WIDC.”

The evaluation committee was comprised of key stakeholders including the Office of the Governor, Department of Tourism, Department of Property and Procurement, Virgin Islands Economic Development Authority, and the U.S.V.I. Hotel and Tourism Association.

According to the news release announcing the signing, WIDC also has proposed constructing residential dwellings and villas in conjunction with a community center and commissary, to make the overall development more attractive to creating economic redevelopment on the island. While the government agrees that this will foster economic growth, the government as a general policy only leases land for business and commercial activity and not for residential development. For this reason, the governor wrote the Department of Interior for approval to offer certain parcels for residential development as part of the hotel project development.

According to Government House, Wednesday’s event marked the second time in as many weeks that deJongh facilitated the development of new hotel properties in the Virgin Islands. A week earlier, deJongh and developers introduced plans for the development of an upscale hotel resort at the Port of Mandahl on St. Thomas, marking the first time that a new hotel would be developed on the island in more than two decades.

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