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Water Island Project Hit By Controversy

Work on the development of Water Is. as a tourist resort has hit a snag as a result of a controversy between the lessees and government officials regarding proposed changes in the lease.

If technicalities raised by the government should block progress we may feel compelled to reduce present activities as lessee to a skeleton caretaker basis until such technicalities are straightened out, regardless of whether this may take weeks, months or years, the lessees stated.

The Governor called to their attention that the lease requires them to construct and have in substantial operation within five years a resort hotel of not less than fifty rooms.

Although I approved the lease between the Development Authority and the Water Island Corporation, after discussions with the office of Territories, I believe that it will be necessary to make certain modifications in the lease in order to meet possible changing conditions, the Governor declared. He said the lease should be amended to provide for a review of rental at the end of each ten years, after inspection by the municipality of the accounts of Water Island, Inc.

Some such modification will be necessary if the lease between the Dept. of Interior and the Municipality is to be approved within the immediate future, he stressed.

The lessees, who disclosed that they have already put $50,000 of capital into Water Island, said the project requires the investment of a large amount of capital which can be amortized only over a long period of time. One of the difficulties in enlisting responsible, competent business people in the islands is the fact that many of the leases of government property run continued on page 4.
Water Island Project

for far too short a term and contain cancellation and other provisions which discourage all but outright speculators and promoters, they stated.

They emphasized that they were not agreeable to any revision in the existing lease or the making of a new lease