STATEMENT OF KATHERINE H. STEVENSON, ACTING DEPUTY DIRECTOR, SUPPORT SERVICES, NATIONAL PARK SERVICE, U.S. DEPARTMENT OF THE INTERIOR, BEFORE THE SUBCOMMITTEE ON NATIONAL PARKS OF THE SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES CONCERNING H.R. 714, A BILL TO AUTHORIZE THE SECRETARY OF THE INTERIOR TO LEASE CERTAIN LANDS IN VIRGIN ISLANDS NATIONAL PARK, AND FOR OTHER PURPOSES.

JULY 15, 2009

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Mr. Chairman, thank you for the opportunity to provide the Department of the Interior’s views on H.R.714, a bill to authorize the Secretary of the Interior to lease certain lands in Virgin Islands National Park, and for other purposes.

The Department supports H.R. 714, with some minor amendments.

This legislation would allow the Secretary of the Interior to enter into a lease with the current holder of a retained use estate for property at Caneel Bay within Virgin Islands National Park after the termination of the retained use estate and donation of all improvements to the National Park Service (NPS). The Caneel Bay resort is one of two large resorts on the island of St. John. Located on a 150-acre peninsula on the northwest side of the island, this luxury resort has approximately 425 to 450 employees and serves as one of the primary economic engines for the U.S. Virgin Islands. A large number of employees travel daily to St. John from their residences on neighboring St. Thomas. The resort is also an Economic Development Center beneficiary and, as such, receives various tax exemptions from the Government of the Virgin Islands.

Lawrence Rockefeller established the Caneel Bay resort in 1956. In 1983, Jackson Hole Preserve, a Rockefeller corporation, donated the land at Caneel Bay to the United States Government for inclusion within Virgin Islands National Park and reserved to itself the right to continue its operations for 40 years under a retained use estate. Jackson Hole Preserve did not convey the improvements on the land to the United States at that time. The retained use estate will expire on September 30, 2023. The warranty deed stipulates that when the retained use estate terminates, the owner of the retained use estate must donate the buildings and other improvements to the NPS.

Enactment of H.R. 714 would allow the current holder of the retained use estate to negotiate a long-term lease, up to 40 years, with the NPS that could extend the Caneel Bay Resort operation well beyond the year 2023. Such an extension could allow the leaseholder to secure financing to undertake capital improvements that would most likely not be possible financially under the remaining term of the current retained use estate.

The NPS has evaluated various options for the future use and management of the Caneel Bay property. Based upon a value analysis, we believe that the continued future operation of Caneel Bay as a resort under a lease would provide the greatest advantage to the NPS and the U.S. Virgin Islands. A lease could provide economic and administrative benefits to the NPS and the lessee that are not available or not as viable as under a retained use estate or a concession contract, two of the other options that were examined.

Legislation is necessary because the NPS does not have the authority to enter into a noncompetitive lease under existing regulations (36 CFR §18, Leasing of Properties in Park Areas). The only exceptions to competitive leasing under the regulations are for leases to nonprofit organizations or units of government, and for leases of duration of 60 days or less.

We would like to stress that we are supporting this legislation because the Caneel Bay resort is an exceptional case. In general, where leasing has been determined to be appropriate in a national park unit, we support leasing through the usual competitive process, consistent with existing law and regulations.

H.R. 714 requires that the operations and maintenance of the resort be conducted in a manner consistent with the preservation and conservation of the resources and values of the park. Additionally, the lease authorized by the bill would address the continued protection, preservation, and restoration of the property’s structures, many of which are more than 50 years old, and may be eligible for the National Register of Historic Places. The lease also would address the fair market value rent of the property, constraints on development of property during the term of the lease, and the ability to transfer the lease in the future.

The legislation also provides for the rental proceeds to be retained by the Virgin Islands National Park and used for visitor services and resource protection. It would require congressional notification at least 60 days prior to the effective date of the lease, similar to the requirement for large concession contracts. And, it would require the property’s conversion to a concession operation after the lease expires if the Secretary determines continuation of commercial services at the resort to be appropriate. When the current retained use estate was created, there were three small properties that are integral to the operation of the Caneel Bay resort that were not included. These properties could be acquired by the NPS and included under the terms of the lease that would be authorized by H.R. 714.

We appreciate the many changes that have been made to this legislation since it was first introduced in the 110^th Congress to help assure that the interests of Virgin Islands National Park, and the general public, would be protected if the Caneel Bay resort property is leased on a noncompetitive basis. We would like to work with the subcommittee on a few minor changes that would further clarify the bill language.

Mr. Chairman, this concludes my prepared remarks. I would be pleased to answer any questions you or other members of the subcommittee may have.