For almost 35 years, a series of hurricanes and recessions have prevented developers from realizing their dreams of opening a beachside resort in Chocolate Hole on the south side of St. John.
Now, a New Jersey-based couple with experience in commercial real estate has completed constructing three luxury villa units within two buildings on the property known as the Pond Bay Club.
Villa Shangri-La and The Palms (with two units) are now available as short-term rentals, and Al and Marykae Scott are in the process of buying a third adjacent building, carving out a subdivision on the 15.8-acre Pond Bay Club property owned by Legacy Development Virgin Islands.
The creation of a subdivision on a property that has been planned as a condominium resort since 1985 is the cause of some concern for the Estate Chocolate Hole Landowners’ Association.
The association does not dispute the right of the developer to subdivide the property, but its board of directors wants to see a new master plan.
“ECHLA is still eagerly awaiting to see the plan for the subdivision that shows how the lots will be divided, how they’re getting water and treating their sewage and where the egress and ingress are,” said Kevyn Salsburg, president of the landowners’ group.
Aside from a sketch of a plan shown at an annual meeting years ago, they haven’t seen any drawings, according to Salsburg.
In November 2020, the board sent a letter through their attorney to Dan Lowe, Legacy’s managing partner. The letter cites a 1985 settlement agreement, which permits the owner to subdivide the property into one-half acre single-family lots – as long as those parcels become “an integral part of the Estate Chocolate Hole Subdivision, and all deeds will bear the same covenants and restrictions as those covering other lots in the subdivision,” Salsburg said.
David Olson, a vice president of Legacy Development based in the Virgin Islands, said, “Our attorneys are in communication with the Estate Chocolate Hole’s attorneys, and we all agree we can work this out. We’re proposing to build a small residential community. That’s what Dan [Lowe] proposed in 2017.”
Previous plans for the property included a reverse-osmosis plant to provide water and a sewage treatment system for the entire resort, but these systems were never completed. That means any buyer who purchases a portion of the property has to do some serious retrofitting of the infrastructure to get a certificate of occupancy.
“The association wants to approve the building plans prior to construction so that we can see that nothing will adversely impact the neighbors or the environment,” Salsburg said.
Olson said the developers were in communication with DPNR, CZM and the cadastral office (which refers to the recording of property boundaries, subdivision lines, buildings and related details) about ongoing changes, and both a terrestrial biologist and marine biologist were inspecting the property twice a year to make sure the permits’ environmental conditions were being met.
“We are very excited and optimistic about the future of Pond Bay and are heading toward a low-impact, residential community within our Chocolate Hole community,” Olson said.
Al and Marykae Scott Have Completed Two Buildings
Although Salsburg has not seen the plans, the Scotts have done extensive work, constructing a maintenance building near the villas with an above-ground cistern capable of providing water to all the units they own. An adequate septic system was already in place, Al Scott said.
The Scotts’ units are located along the beach in three of the 10 residential buildings which were partially constructed between 2008 and 2010.
Al Scott first caught sight of the location sometime around 2007, before the 10 buildings were started. He found the waterfront site so appealing he readily invested in fractional ownership of the proposed Pond Bay Club. Scott said he got his deposit back when the developer failed to complete the resort.
The Pond Bay Club, named for a nearby salt pond, has always been able to attract investors (see the brief chronology provided lower in the article). Luxury villas abound on St. John, but there are few that are situated right on a sandy beach only ten minutes from Cruz Bay.
When his attempt to become a fractional owner of the Pond Bay Club fell through, Scott bought other properties on St. John, including a nearby villa in Chocolate Hole.
In 2020, after spending an extended period of time on the island, the Scotts decided to try again for a spot on the beach at Chocolate Hole. They met with Olson, then they approached Lowe, who is based in Kansas.
Legacy Development purchased the Pond Bay Club property in 2016 after construction had been shut down three years earlier. According to Scott, Lowe bought the property intending to finish the project by partnering with an upscale resort management firm.
During the first five years of Legacy’s ownership of the property, hurricanes Irma and Maria ravaged the islands, slowing tourism and diverting construction materials and expertise toward rebuilding efforts. Then the COVID-19 pandemic hit, further impeding investors’ enthusiasm for a half-built property with a long history of unresolved infrastructure issues.
Since Legacy bought the property, passersby heading for the beach got used to hearing the hum of air conditioners but saw few signs of life in the shuttered buildings. Following Hurricane Irma in 2017, displaced residents and emergency responders were housed there, and FEMA and BBC, the stateside company replacing power poles, used the property as a staging area.
By the spring of 2020, Lowe became more amenable to the idea of subdividing, according to Scott, and Legacy worked out an agreement for the Scotts to purchase two buildings, each with enough land to meet the half-acre minimum required by the Estate Chocolate Hole Landowners’ Association.
The Scotts hired carpenter Steve Roberts, and this past summer beachgoers started noticing crews building retaining walls, painting exteriors and planting vegetation.
Local residents have said they’re glad someone is finally doing something with some of the 10 shuttered structures, which they characterized as eyesores. Others have expressed concerns that carving up the property in a piecemeal manner will lead to infrastructure problems down the road.
Throughout the years, there have been flurries of major construction at the Pond Bay Club site: roads have been cut, the landscape has been scraped and a 500,000-gallon concrete cistern was built and abandoned. Several architects have redesigned the resort’s plans, adding restaurants, swimming pools, spas, tennis courts and guest room units at various locations.
As the owner of the recently finished rental units, Al Scott is eager to allay his neighbors’ concerns.
“We love to take something that isn’t pretty and turn it into something nice,” he said.
The interiors and immediate surroundings of the Scotts’ properties at Pond Bay certainly meet the current standard of luxury villas on St. John.
The first property they completed is situated at the end of the road adjacent to the public beach parking area. Now known as Shangri-La Villa, it is a single-family, two-story structure with 4,400 square feet of interior space decorated in an upscale, contemporary style. The villa sleeps 12 and the dining room table was chosen to accommodate them all easily.
The previous developers intended this building to be as a spa unit, and so the second floor consists of three huge bedrooms, each with an adjoining bathroom showcasing a somewhat surprising feature – an enormous bathtub.
Doors on the first floor open onto a patio with a small pool and hot tub just steps from the beach and the lapping waves. The Scotts have set a high-season nightly rate of $1,700 plus tax for the five-bedroom villa and are taking bookings.
The one-story building next door, which is designed for wheelchair accessibility, is now known as The Palms and is currently divided into two units, but this may change because of unresolved legal issues.
In fact, legal questions abound. Is Pond Bay a resort or is it a subdivision? That question is the latest in the development’s long and complicated history.
A Brief History of the Development of the Pond Bay Club Site
Salsburg said Estate Chocolate Hole, comprising of 375 acres, was purchased in 1950 by Arsene Massac, who paid $2,000 for the entire property. He established the subdivision in 1985, reserving the beachfront area for a resort and setting boundaries for 272 lots for residences.
In 1986, the St. John Committee of Coastal Zone Management approved a permit for the developers of the St. John Beach Club to build a 70-unit resort at Estate Chocolate Hole for an estimated cost of $25 million.
The First American Development Corp. spent $1.3 million to buy the 12.5-acre site, which included 620 feet of beachfront property.
When the 1987 recession hit, the investors regrouped, and in 1988 presented a new plan for the resort – rebranded as the Pond Bay Club. Then Hurricane Hugo hit in 1989, followed by Hurricane Marilyn in 1995 and the project languished once again.
In 2000, after several years of planning, some of the partners regrouped again as the First American Development Corp./Carib Partners and presented their plan for a 62-unit resort at the cost of $50 million.
Bob Emmett, who had been a passive partner in the development earlier, was now the president and had a new ownership plan.
“The closest thing to describe it is as an equity country club membership, a concept that borrows from interval ownership and condominium law,” Emmett said. “Owners will buy into it like a club and rentals will be available to third parties when space is available. To the naked eye, though, it will operate like a hotel.”
The site already had “$4 million of infrastructure in it – pipes, footings and the world’s largest cistern – built in the early 1990s,” Emmett said.
“We think we’ve made a gentler concept, more suitable for St. John,” he said.
By 2000, however, St. John residents were becoming more wary of major development and the effects on the environment after seeing ground broken for multiple projects throughout the island.
As new permits were being considered, a committee of Chocolate Hole residents sent a four-page letter outlining their concerns to Coastal Zone Management. Those included issues regarding the resort’s infrastructure for water production, sewage treatment and solid waste removal, as well as effects of construction on marine life in the bay and adjacent salt pond.
Then the dot.com recession hit in 2001, and once again the project dropped off the public’s radar.
Around 2007, after several years of planning, Emmett regrouped again, got permits through Coastal Zone Management and construction began again in 2008. At that point, the project was estimated to cost $100 million.
Then the 2008 recession hit and by October 2009 the project ground to a halt.
According to a 2010 article in the Virgin Islands Daily News, a German Bank, WestLB AG, had loaned the developers $62 million to complete the project, but when the bank was restructured as a result of the global financial crisis, the New York-based luxury lending unit was disbanded, and the developers ran out of capital. Emmett said the developers had already spent $94 million and completed half of the first phase of construction.
In the fall of 2010, construction materials, fixtures and other moveable items went up for sale, according to an article in the Source.
Finally, in 2012 the property, which included 10 buildings in various stages of completion, went up for auction, and Legacy Development bought the property. (The graphic shown on their website does not match what is currently built on the Pond Bay property.) In 2017 Legacy Development also bought the .77-acre Lumberyard Complex in Cruz Bay, a thriving mixed-use development that was decimated by Hurricane Irma and now operates primarily as a parking lot.
Access to the Property Remains a Concern
Salsburg said Chocolate Hole homeowners are concerned that Legacy Development is moving forward without communicating its intentions. She said she met with Lowe this past spring and told him, “We need to see a plan. The survey does not show buildings or access. There’s not enough setback along the ocean or between the buildings. Where is the access to the units?”
The entrance to the Pond Bay Club is problematic. The entrance shown on the old plans is located near Route 104 (Southshore Road) at the opposite end of the property from the beach.
Without a change in plans, anyone who rents the Scotts’ villas must drive through acres of scrub-covered land past abandoned structures to reach the luxury beachfront units.
“What we fear is that Legacy will sell off all the buildings [near the beach], without the proper sewage and water systems in place, and the whole back area, with a falling down warehouse, will be left and it’s a huge eyesore,” Salsburg said.
This concerns both the Scotts and the board of the Estate Chocolate Hole Landowners’ Association. The Scotts want to put in an entrance closer to the villas, but discussions have not yet produced a resolution.
Salsburg has said that the homeowners’ association can accept Pond Bay as a condominium resort as planned since 1985 or as a subdivision with homeowners’ association oversight, but she says what’s there now is “a hybrid, and that is not acceptable.”
Al Scott said developing the property as a residential subdivision would be a positive outcome to the 35-year history of the project.
“A resort would bring in a lot of people, staff and noise,” he said.
By adding features such as Mongoose Junction-style stone and brick facing to the exteriors, Marykae Scott said they were doing what they could to set the tone for the rest of the development.
“When people come for a vacation that they’ve waited a long time for, they want it to be spectacular,” she said.
Although they will soon own three of the 10 residential buildings, the Scotts are not considering buying the rest of the property. St John is an expensive place to do construction and after almost 12 years of disuse, the condition of the hotel’s infrastructure is questionable.
“There are too many unknowns,” Al Scott said with a touch of regret. “I don’t have deep enough pockets for that.”