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Tuesday, September 27, 2022
HomeNewsArchivesFinancing Difficult for Planned St. Croix Hotel/Casinos

Financing Difficult for Planned St. Croix Hotel/Casinos

There is one common thread among developers of the three hotel and casino projects in the works for St. Croix: financing is tight. However, all three said at a meeting Wednesday of the Senate’s Government Operations, Energy and Veterans Affairs Committee that they expect to find the money needed.

“New lenders say when you have all the approvals and permits in place call us,” said Robin Bay Realty project manager David Kagen during the meeting held at the Earle B. Ottley Legislative Hall on St. Thomas.

The Robin Bay project, tentatively named Seven Hills Beach Resort and Casino, is planned to include two hotels, a casino, an 18-hole golf course and timeshare condos.

His remarks echoed those made by principals at Golden Resorts and William and Punch. He and the others all said that the poor economic climate was behind the stringent requirements.

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Wade Blackman, attorney for William and Punch—which is developing the Amalogo Bay hotel/casino project—said Wednesday that if the economy continues to improve, he’s “optimistic” that he’ll have financing within the next year.

Meanwhile, Kagen put his time frame for financing by the end of the year. Paul Golden of Golden Resorts said he plans to seek funding by the middle of April and would have it in place by the summer.

“Markets are opening up some, but lenders are careful about giving out new construction loans,” Golden said.

Asked if all the resorts could thrive once they are built, Kagen said that all three would mean more hotel rooms and consequently more airlift. Those three coupled with the existing Divi Carina Bay Resort and Casino, Renaissance Carambola Beach Resort and the Buccaneer Hotel will be the “rising tide that lifts all boats.”

The hearing highlighted some problems in the process. Golden learned that his agreement with the Public Finance Authority to fund $32.5 million for his resort’s convention center expired in 2008. Sen. Alicia “Chucky” Hansen, who chaired the meeting, told him and PFA Chairman Angel Dawson to meet to resolve the issue.

After making its way through the courts, Golden Resorts has its CZM permit. It will carry the Wyndham flag.

“My projection is September to the end of the year to start construction,” Golden said.

William and Punch has its CZM permit and is in the process of getting an Army Corps of Engineers permit. Blackman said it needs approval from the Legislature for its submerged land permit and needs to work out a land exchange with the local government so it can relocate the main road that runs along the waterfront, Route 66, to a loop behind the resort.

“To put a major highway between a resort and a beach is untenable,” St. Croix attorney Kevin Rames, who is a partner in the Mashantucket Pequot Indian-owned project.

Under questioning from Sen. Louis P. Hill, Blackman said that while the tribe’s Foxwoods Casino in Connecticut is in financial difficulty, he doesn’t see that the St. Croix project will meet the same fate. He said that the casino is only an amenity to the resort, it has a good location one mile from the Frederiksted cruise ship pier and is just 15 minutes from the Henry E. Rohlsen Airport. Additionally, he said that since many visitors come from the northeastern United States, William and Punch can cross-market with its customer base in the northeast.

William and Punch’s Amalogo Bay, which is the Latin name for the black wattle tree that grows on the property, does not yet have its license to operate a casino. Gizette Thomas, who is the chairman of the Casino Control Commission, said that the application is in place but that the agency can’t grant the permit until construction starts.

As the discussion ensured, Hansen brought up the issue of a Traxco racino given permission to operate on St. Croix at the Randall "Doc" James Racetrack. Thomas said that she gave Traxco permission to open the racino because the Divi Carina Bay Casino’s parent company, Treasure Bay V.I., which also owns Traxco, already had a license to operate the Divi casino.

She said she rescinded it two days later when the Attorney General’s office suggested that she hold a public meeting on the matter.

“You are a very bright woman, but you and you alone can’t give and you alone can’t pull back. It’s unfair to the racino people. It cost people money and embarrassment,” Hansen said.

Thomas was in this position because the Casino Control Commission has only two members – she and Violet Anne Golden.

It came to light that although it appears that the Legislature intended to reduce the number of members from seven to five, parts of the revised law call for six. If the number of members is five, there are three vacancies. Hansen said the quorum needed for decision would be four, but Thomas said she interpreted to mean that if there were only two members, that was a quorum.

Violet Anne Golden said that she disagreed with Thomas but attended the public meeting because no decision was to be made and she was there to listen.

Hansen started off the meeting by complaining about the V.I. Water and Power Authority surcharge on electric bills called the LEAC or Levelized Energy Adjustment Clause. It fluctuates depending on the cost of oil and is used by most utilities across the country to recoup the cost of fuel.

Hansen said that the people are suffering and major developments are sitting on the shelf because of the LEAC. She also said that it was not feasible to ask hotel guests to turn off the air conditioning and the lights to conserve power.

Violet Anne Golden also touched on the issue. She said that businesses in Christiansted and Frederiksted have closed because of high electricity costs. This in turn is a concern of developers.

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