With Civil Trial Pending, Caneel Bay Developers Claim U.S. Reneged on Retained Use Agreement

The proposed redevelopers of St. John’s oldest resort appear to be working towards an agreement over the future of Caneel Bay. Up until September 2017, Caneel was among the Virgin Islands’ oldest continually operating resorts.

EHI Acquisitions, LLC, filed a civil lawsuit against the federal government in 2022. The suit, filed June 30, 2022, in the U.S. District Court, asks for the 150-acre resort property to be awarded to them as the owners. The principals at EHI are also asking the court for reimbursement of legal fees and associated costs paid out to adjudicate the civil action.

Attorneys for the group say they went to court after Caneel suffered heavy damages from the passage of hurricanes Irma and Maria in 2017. At that time, the group said they invoked an indenture provision first granted to former owners Jackson Hole Preserve in 1983. Under the agreement, the resort was classified as a Retained Use Estate, allowing the preserve the “exclusive rights to use and occupy” the property.

The terms of the 1983 agreement are set to expire on Sept. 30. EHI representatives say the extent of storm damage from 2017 and the cost of restoration made the effort untenable. After making that assessment, the acquisition firm offered to sell its rights to the federal government for $40 million.