ST. THOMAS, VI — Members of the 36^th Legislature of the Virgin Islands led by Senate President Milton E. Potter convened in Regular Session and Committee of the Whole at the Earle B. Otlley Legislative Hall. Lawmakers will receive testimony and consider a measure that will allow for a hotel and marina development project on Water Island. Approved items on today’s agenda will be sent to the Governor for further consideration and action.  

Lawmakers met in Committee of the Whole to hear testimony on Bill No. 36-0340; an act approving the Reinstatement and Amendment to Lease Agreement between Government of the Virgin Islands, acting through the Commissioner of Property and Procurement and Water Island Development Company, LLC to develop the Water Island Hotel and Marina. The bill was proposed by Senator Potter by request of the governor. 

Vincent Richards, Assistant Commissioner of the Department of Property and Procurement, delivered testimony advocating for approval of the reinstated and amended lease agreement with Water Island Development Company. Richards detailed how the executive branch restructured the 2014 agreement following past delays, partnering with Bluewater Global Advisors and Innovative Architecture to raise the required private investment minimum from $140 million to $300 million. The revised master plan includes an 88-key five-star resort, roughly 90 luxury residential units, employee housing, a retail center with emergency services facilities, and approximately $40 million in developer-funded public infrastructure upgrades covering roads, waste management, power, and desalination systems. 

To address financial returns and public resource concerns, Richards highlighted key lease terms, including initial ground rent stepping up to $240,000 annually after ten years, a 6% revenue share on residential sales expected to yield $16 million, and a $3 million performance bond for early-stage obligations. He emphasized that the agreement requires the developer to build 20 fixed-price $250,000 condominium units for local veterans and middle-income residents. Richards assured lawmakers that approving the lease establishes a legal framework without bypassing future regulatory steps, leaving all environmental, coastal zone management, and building permits subject to full public review before construction can begin. 

Alex Moskowitz, Esq. from Dudley, Newman, Feurerzeig, LLP presented testimony outlining the amended proposed lease amendment between the Government of the Virgin Islands and the Water Island Development Company. The developers highlighted an expected annual economic impact exceeding $10 million for the Government of the Virgin Islands through hotel occupancy taxes, property taxes, stamp taxes, and ground rent, alongside the creation of 200 jobs. To address public concerns regarding environmental impact and beach access, the revised plan removes proposed construction from Honeymoon Beach and hillside areas, reallocating those sections toward managed public spaces and inland parcels. The project plan integrates local infrastructure upgrades funded by the developer, including road improvements, wastewater, power, desalination systems, and a retail center housing emergency services and everyday amenities. While developer representatives noted previous community engagement efforts through public digital town halls and written responses, they acknowledged ongoing opposition from certain residents regarding island changes and overall development scale. 

Chuck Nestrud, President of the Water Island Civic Association, delivered testimony representing local residents and property owners, proposing a compromise framework for the proposed 99-year lease amendment. Nestrud emphasized that while the association supports redeveloping the replacement hotel and marina on the original 35-acre Flamingo Bay site, it strongly opposes transferring 180 of the island's 200 public acres to private developers. He noted that past feasibility studies concluded that a hotel and marina are economically viable without expanding into residential developments. 

To address resource protection and local community needs, Nestrud urged lawmakers to enforce existing territorial statutes by removing 60 acres designated for affordable housing and veterans from the lease and transferring them to the VI Housing Finance Authority. He criticized the developer's alternative proposal of offering 20 small, high-cost condominiums in a temporary construction area especially considering the units are only eligible to be sold for a two-year period before being sold on the open market. Additionally, Nestrud called for the removal of 144 additional acres from the agreement to uphold federal deed restrictions on environmentally and culturally sensitive parcels, advocating that these lands remain in public hands under the Territorial Parks System and Historic Preservation Office. Finally, Nestrud highlighted multiple unresolved concerns regarding the July 8 revised lease draft, including the bypass of future Senate oversight of sales and leases of public land and a lack of proper public town halls. He statedthat despite sending this compromise proposal directly to the developer, the association has received no response.  

Isaac Northup, an attorney and Water Island homeowner, delivered testimony detailing strong objections. Drawing on his legal background, Northup criticized the developer for failing to account for statutory land allocations. He further mentioned repeated errors in the project's mapping and proposed dock locations, pointing out that initial drafts placed infrastructure on privately owned and environmentally restricted properties without owner consultation or authorization. Addressing the financial safeguards of the agreement, Northup argued that the proposed $3 million performance bond is illusory and fails to protect the territory. He explained that lease terms allow the bond to drop to $1 million, or even lower at the discretion of the Department of Property and Procurement, once project plans are approved and before substantial construction occurs. Because the lease contains no performance bond guaranteeing full project completion or environmental site restoration, Northup warned that the Government of the Virgin Islands would be left with insufficient funds to remediate potential damage or incomplete construction if the developer defaults. 

Dr. Stephan Bitterwolf, Water Island native, called on lawmakers to reject the proposal, describing the plan as an unvetted land grab that threatens gentrification and the privatization of public assets. Bitterwolf criticized the developer's $440 million investment claim, pointing out that capital would be recouped by acquiring and selling 55 acres of public land into private luxury plots. He also highlighted financial drawbacks, noting that the developer's buildout is contingent on receiving 20 years of Economic Development Commission tax exemptions, while the proposed fixed rent loses roughly 75% of its real value over 101 years due to inflation. Bitterwolf urged the Legislature to terminate the agreement, conduct an open request for proposals, and select a partner that adheres to local law and respects public environmental resources.  

Rachael Ackley, a local business owner and lifelong resident of Water Island, delivered additional testimony expressing strong opposition. Ackley highlighted the island's active local economy, stating that existing resident-owned small businesses already generate substantial tax revenue for the territory. She expressed deep concern that a luxury project of this scale would trigger soaring land taxes, displace local residents, restrict public access, and alter the fundamental character of the island. Ackley stressed that key public resources, including historic sites and natural land, must remain accessible to all Virgin Islanders 

Lawmakers then convened into Legislative session and voted to add Bill No. 36-0332 (an act creating a temporary law enforcement integration initiative to increase police manpower, enhance public safety operations, and reduce violent crime throughout the Virgin Islands) and Bill No. 36-0343 (an act appropriating $2,917,519 to the University of the Virgin Islands for general operating expenses) onto the session agenda via special order. Senators approved Bill No. 36-0340, Bill No. 36-0332, and Bill No. 36-0343. 

Senators present at today’s Committee of the Whole and Legislative Session included Milton E. Potter, Kenneth L. Gittens, Marvin A. Blyden, Angel L. Bolques, Jr., Dwayne M. DeGraff, Ray Fonseca, Novelle E. Francis, Jr., Alma Francis Heyliger, Hubert L. Frederick, Franklin D. Johnson, Carla J. Joseph, Clifford A. Joseph, Sr., Avery L. Lewis, and Kurt A. Vialet. 

The Division of Public Affairs is committed to providing the community with accurate information on legislative proceedings and other events at the Legislature of the Virgin Islands. Visit legvi.org.  

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