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The Palms at Pelican Cove and the Proposed Robin Bay Development in
St. Croix, Virgin Islands Gain Required Coastal Zone Permit
Extensions Needed to Move Projects Forward

By Joy Blackburn, The Virgin Islands Daily News, St. ThomasMcClatchy-Tribune Regional News

Oct. 07, 2011--ST. CROIX -- The St. Croix Coastal Zone Management Committee on Thursday unanimously approved yearlong extensions of major CZM permits for the Palms at Pelican Cove and the proposed Robin Bay development.

Both projects are stalled because of the current economic climate, representatives told the committee.

Pelican Cove Investments, doing business as The Palms at Pelican Cove, is wrapping up a renovation project to existing rooms that was part of the CZM permit. The renovation cannot proceed with the new construction of additional rooms that also is included in the permit until the economy picks up and room occupancy rates improve, representatives said Thursday.

For Robin Bay -- a proposed development on the East End -- the collapse of worldwide financial markets has created a challenge with securing financing, said attorney Maxwell McIntosh, who represented the development.

Robin Bay's CZM permit includes construction of an 870-room hotel and resort, along with condominiums, single-family homes, time share villas, a casino, water park, 18-hole golf course and a reverse-osmosis plant in an area encompassing parts of estates Cotton Grove, Mount Fancy, Little Profit and Mount Retreat.

In a letter requesting the extension, David Kagan, project manager for Robin Bay, wrote that arranging workable financing for the project has been "a major obstacle."

During the last quarter of 2010 and the first quarter of 2011, Robin Bay Realty held some "promising discussions" with institutional lending sources and hospitality management companies, the letter said.

"However, the ensuing political turmoil in the Middle East and the nationwide economic chaos and financial markets instability that resurfaced in the spring of 2011 have caused almost all those sources to pull back, if not stop, entertaining new construction lending and rethink market concentration," the letter states.

The letter describes an unfavorable lending climate for projects such as Robin Bay, but says that Robin Bay Realty is "hopeful that the current domestic and world economic problems will improve in time, and that financial markets will again open to new construction hospitality developments."

The letter also states that the recently passed Hotel Development Act of 2011 -- which allows hotel developers to use a portion of their hotel occupancy and casino taxes to repay their long-term loans -- "may well be helpful in bringing about a workable financing program" for the Robin Bay project.

It noted, however, that to receive the benefits enabled by the legislation, an application process must be initiated by Robin Bay and approved by the V.I. Economic Development Authority, and a funding source identified that is prepared to accept the future revenue stream generated by participating in the program.

That process could take six to 12 months to complete, the letter said.

Committee members Robert Merwin and Neil Simon and chairwoman Masserae Sprauve Webster had no questions for McIntosh and unanimously voted to extend the Robin Bay CZM permit for another year. It initially was awarded last year.

The Palms at Pelican Cove's CZM permit, which initially was awarded in 2008, is for renovation of existing hotel facilities and expansion from 38 to 104 rooms.

The hotel has spent more than $264,000 on the project, attorney David Bornn said. The renovation projects have employed local residents and two rooms have been added at this point, for a total of 40.

The hotel has delayed commencing major new construction, however, "due to the still faltering economy," Bornn wrote in a letter to the commission.

The letter noted that overall occupancy rates for St. Croix hotels was 41 percent in April 2011, compared with 38 percent in 2010 and 36 percent in 2009.

Even with the slight increase in 2011, the letter notes that the occupancy rates "are still far below economically viable numbers."

Palms at Pelican Cove general manager Julie Printy, who also is president of the St. Croix Hotel and Tourism Association, said that her colleagues in the association all are experiencing similar challenges.

Other services offered at the Palms at Pelican Cove -- such as banquets and weddings -- have helped subsidize the hotel operation, and so far, the hotel has managed to avoid layoffs, Printy said.

While there is hope that the economy will start to pick up, until it does, the new construction is on hold, she said.

Committee members asked a few questions, praised the hotel for avoiding layoffs, and unanimously voted to extend the permit.

- Contact Joy Blackburn at 774-8772 ext. 455 or e-mail


(c)2011 The Virgin Islands Daily News (St. Thomas, VIR)

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