Dec. 11, 2003 – The Senate Committee of the Whole heard testimony Thursday night on St. Croix on a bill that would amend the Casino and Resort Act of 1995 so that the new owners of Carambola Resort could automatically qualify for a casino license.
The law now states that a hotel is entitled to such a license if it has at least 150 rooms and a convention or banquet center and if the V.I. government has held at least a 25 percent interest in the property since Jan. 13, 1995.
According to Lt. Gov. Vargrave Richards, JS Carambola, LLP has entered into an agreement with the administration to invest more than $41 million and to give the government 25 percent interest in the property.
The bill seeks to remove the 1995 restriction, and thereby make Carambola eligible for automatic licensing.
Joe Sinicrope, JS Carambola managing partner, testified Thursday night that the resort is prepared to invest $41.3 million to add 100 new rooms, a 15,000-square-foot conference center, a 12,500-square-foot casino and a luxury spa, while also upgrading parking facilities and infrastructure. "There will be immediate economic stimulation of the St. Croix economy," he said, with "construction anticipated to begin in January."
Richards endorsed the government partnership with Carambola in a statement released on Wednesday. "The key to economic development in the Virgin Islands is to grow our economy through public-private sector partnerships," he said. "This partnership is a win-win for the people in the territory, especially given the dire economic situation on St. Croix. The economic impact of this project will be tremendous."
Gov. Charles W. Turnbull signed a limited partnership agreement with JS Carambola on Oct. 22 which provides for the acquisition, upgrading and expansion of Carambola Beach Resort, subject to ratification by the Legislature, Richards said.
Nathan Simmonds, director of the Office of Fiscal and Economic Recovery Implementation within the Office of the Governor, and Attorney General Iver Stridiron testified in favor of the bill Thursday night.
Simmonds said it's a challenge for the administration to find ways to revitalize St. Croix's economy but that supporting new hotel development is one way. He said the opportunity presented by Carambola needs to be encouraged and facilitated as long as the public interest is protected and the goal of attracting new investment to St. Croix can be achieved.
Eileen Petersen, Casino Control Commission chair, did not attend Thursday night's hearing. But in a letter to Senate President David Jones she suggested that the commission seek out the views of gaming industry officials, investors and the local community before the Legislature votes on the proposed amendment to the casino law.
Representatives of two gaming interests did testify, both in opposition to the bill.
Kevin Rames is a local attorney for Golden Gaming — one of two developers granted provisional approval by the commission two years ago for casino facilities that have yet to be built. Rames told the senators: "We believe that the proposed amendment will undermine the confidence of the public and investors in the casino regulatory system."
He said that the proposal "is fundamentally unfair to those casino operators and potential operators who have to date worked diligently to comply with current casino laws."
Golden Gaming has proposed to build a casino resort on Great Pond Bay. The other developer given provisional approval for a casino license is Robin Bay Associates, which proposed a half-billion-dollar Seven Hills resort on Robin Bay.
Asked by Sen. Ronald Russell to clarify Golden Gaming's objections, Rames said that "modification of time limits can lead to proliferation of casino licenses to be granted, and this concerns my client greatly."
Attorneys for Divi Carina Bay Casino and Resort, the territory's only existing casino operation, stated in a letter to the Casino Control Commission dated Dec. 11: "If a developer looking to build a casino resort on St. Croix wants to avoid having to comply with the Casino I, II or III requirements, it need merely grant the government a 25 percent interest in a 150-room hotel and 20 percent interest in its casino operation and it no longer needs to comply with any of the requirements of the act which were designed to foster development of additional hotels."
The 1995 Casino Control Act provides for no more than six resort-casino properties to be licensed, in four categories:
Casino I, of which one can be built, must have a hotel of 1,500-plus rooms with a casino of at least 20,000 square feet.
Casino II, of which two can be built, must have a hotel with 300-1,400 rooms and a casino of at least 10,000 square feet. Golden Gaming and Robin Bay Associates have these two licenses reserved.
Casino III, of which two can be built, must have a hotel of 200-299 rooms and a casino of at least 7,000 square feet. At least 51 percent of a level III resort/casino must be owned by a native Virgin Islander.
Casino IV, of which one can be built, must have a hotel of 150-199 rooms and a casino of at least 5,000 square feet. The Divi has this license.
The bill is on the agenda of for the legislative session scheduled for next Wednesday.
JS Carambola has applied to the Economic Development Commission for full tax benefits. Frank Schulterbrandt, Economic Development Agency chief executive officer, said last month that preliminary talks had been held and that licensing by the casino commission was one issue that would have to be resolved before an EDC decision could be made.
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