Frenchman’s Reef resort on St. Thomas is slated for a soft opening Dec. 1 after being shuttered since 2017 when hurricanes Irma and Maria devastated the property, senators were told Tuesday as they considered ratification of an agreement with the V.I. government that will allow the new owners to recoup hundreds of millions of dollars spent on its refurbishment.
Total reinvestment into Frenchman’s Reef is projected to be $428 million, Peter Brogan, vice president of Hotel Asset Management at Fortress Investment Group, an affiliate of the new owner CREF3, testified before the Senate, meeting as the committee of the whole.
Frenchman’s Reef is expected to create more than 900 direct and indirect jobs annually in the territory and generate $1.1 billion in spending over the next 10 years, said Brogan. Of those 900 jobs, more than 400 will be full-time employees of the resort, with full benefits, he said. Additionally, Fortress expects the resort to generate $182 million in government tax revenue for the U.S. Virgin Islands over 10 years.
Construction is targeted to be completed late this year, with a soft opening targeted for Dec. 1, and a grand opening in the first quarter of 2023, according to Joe Gould, managing director of Hotel Asset Management at Fortress.
The resort, formerly Frenchman’s Reef and its smaller sister property Morning Star Beach Resort, will be known as the Westin Resort & Spa at Frenchman’s Reef (the Westin) and the Autograph Collection Resort. The Westin will have 392 rooms, including 28 suites, and the Autograph 94 rooms, according to Tuesday’s testimony.
Aimbridge Hospitality will manage the day-to-day operations, according to Gould.
CREF3 was before the Senate to request ratification of the redevelopment agreement first entered into by the resort’s former owner, DiamondRock, under the Hotel Development Act, which is administered by the V.I. Economic Development Authority.
Senators, meeting in legislative session, ultimately approved Bill No. 34-0299, ratifying the redevelopment agreement.
Under the Hotel Development Act, hotels may apply to impose an Economic Recovery Fee to assist with financing, construction, and renovations and to use a percentage of the Designated Hotel Room Occupancy Tax to reimburse a portion of the cost to reconstruct and upgrade a property.
Under amendments to the act in 2019, existing hotels may use up to 50 percent of the revenue generated from the occupancy tax to renovate their properties if at least 70 percent of their units were damaged in a disaster such as a hurricane. They may also impose an Economic Recovery Fee to cover costs incurred for renovations, reconstruction, and improvements.
DiamondRock’s agreement with the V.I. government, approved in November 2020, allowed it to charge a 2.5 percent recovery fee and receive 50 percent of the 12.5 percent room occupancy tax for 30 years.
CREF3, which purchased the shares of DiamondRock in April 2021, filed an application with the EDA that September, requesting to secure the same tax benefits, as well as approval to issue Hotel Development Notes in accordance with V.I. code, to assist with the financing of the reconstruction and renovation of the resort.
On Aug. 9, the EDA board voted unanimously to approve CREF3’s request for a period of 30 years, or until such time the direct investment of $244,940,000 is liquidated, whichever is earlier. The redevelopment agreement was submitted to the governor for review and approval on Aug. 17.
Ali Elam, managing director of Hotel Acquisitions at Fortress Investment Group, told the Senate that since acquiring the resort in April 2021, Fortress has invested $191.9 million in the project, with an additional $78.9 million remaining to complete construction and reopen. The total reinvestment into Frenchman’s Reef is projected to be $428 million, Elam said.
In other business, the Senate passed Bill No. 34-0300, a resolution to reorganize the 34th Legislature to fill a vacancy in the Majority Caucus.
The following nominees were all voted upon unanimously: Gerson Martinez to the V.I. Aquaculture and Mariculture Commission; Dale Brown to the Virgin Islands Conservation District; Carl Tesitor Jr. to the Virgin Islands Conservation District; Dr. Learie Lindsay to the V.I. Board of Medical Examiners; and Dr. William DeLeone to the UVI Research and Technology Park Board of Directors.
The following bills were all voted upon favorably:
Bill No. 34-0244, an act amending Title 27 Virgin Islands Code, Chapter 4, Section 191(a) and (d) to expand and clarify the definition of naturopathic medicine and the physical modalities used in the practice of naturopathy.
Bill No. 34-0301, an act repealing Section 2 of Act 8569 relating to the definition of an agriculture processing plant. The section would have allowed Raising Cane to construct an artisanal rum distillery on its Frederiksted property, Prosperity Farm, and drew heated backlash from neighboring residents because the zoning change came by way of an amendment to the act by Sen. Kurt Vialet and bypassed the public hearing process.
Bill No. 34-0289, an act amending Act No. 8474 relating to the fiscal year 2022 operating budget for the government of the Virgin Islands to appropriate $40 million to pay outstanding liabilities from the General Fund in the fiscal year ending Sept. 30. The money will be used to help repay $175 million in retroactive wages owed to government employees and retirees.
All senators were present at Tuesday’s legislative session.