Statia Government defended Orange Bay arrangement, but key questions remain unanswered

ORANJESTAD, St. Eustatius – Questions surrounding the use of the former Orange Bay Hotel to accommodate Ballast Nedam workers date back several months and go considerably further than the concerns recently reported by BES-Reporter. Correspondence reviewed by BES-Reporter shows that local accommodation providers formally raised the matter with the Executive Council in May. Government defended the arrangement in June, but said it was still verifying regulatory and compliance requirements. A more detailed legal challenge followed in July. According to one of the hotel owners involved in bringing the matter to government’s attention, that final letter has never been answered.

The correspondence provides a more detailed picture of a dispute over the government’s decision to make the publicly owned Orange Bay Hotel available for workers involved in infrastructure projects on St. Eustatius.

At the centre of the disagreement is a fundamental difference in how the arrangement is viewed. The Executive Council says it is temporarily leasing public property to Ballast Nedam International Projects B.V. (BNIP) and is neither operating a hotel nor competing in the tourism accommodation market.

Accommodation providers represented by Columba Legal & Mediation Consultancy question whether that distinction resolves the issue. Their objections concern the actual use of the property, its compliance with zoning and regulatory requirements, safety and inspections, taxation and the possible competitive impact on private accommodation providers.

Concerns formally raised in May

The dispute can be traced in the correspondence to May 21, when legal consultant Monique Lundh wrote to the Executive Council on behalf of hotel and accommodation providers on St. Eustatius.

The letter raised concerns about what the providers regarded as the commercial use of Orange Bay Hotel for temporary workers, including personnel associated with Ballast Nedam and the harbour renovation project.

The accommodation providers did not dispute the importance of the harbour project or the practical need to house temporary workers. Their objection centred on whether this was being done within the same legal, regulatory and competitive framework applicable to private accommodation businesses.

They also stated that private accommodation providers had responded to inquiries concerning housing for Ballast Nedam personnel and argued that private capacity and market alternatives were therefore available.

Among other things, the letter sought clarification about the legal basis for the arrangement, permits and approvals, fire, health and structural inspections, the possible use of public funds or personnel and government’s previously announced intention to put operation of Orange Bay Hotel out to public tender.

The providers also asked how the Public Entity intended to safeguard a level playing field between itself and private accommodation businesses. Letter - Objection on behalf of hotel and accommodation providers on Sint Eustatius concerning unlawful commercial accommodation exploitation.pdfPDF

Government: this is not a hotel operation

The Executive Council responded on June 23 and rejected the suggestion that the arrangement constituted unlawful competition.

Government said the Public Entity was not operating a hotel business, was not offering accommodation to the public and was not competing in the tourism accommodation market.

Instead, it described the arrangement as a temporary lease between the Public Entity, as owner of the property, and BNIP. According to the Executive Council, the premises are being used exclusively to temporarily accommodate project personnel connected to infrastructure works on St. Eustatius.

Government therefore said it was acting as the owner and lessor of real estate rather than as a commercial hotel operator.

The Executive Council also argued that the temporary arrangement serves legitimate public interests. It said the property had been vacant for a considerable period and that leasing it allowed productive use of a public asset, helped prevent further deterioration, generated interim revenue and supported important infrastructure projects.

It stressed that the arrangement was temporary and did not prejudge future redevelopment or tender procedures for Orange Bay Hotel.

Compliance still had to be verified

Government’s June response did not, however, provide substantive answers to all of the questions about permits, inspections and safety requirements.

Instead, the Executive Council said it had asked the relevant departments to “verify and document” the applicable requirements and the compliance status of the property. It added that any additional information that could be shared would be provided separately.

That is a significant part of the correspondence. While the Executive Council firmly defended the nature and purpose of the lease arrangement, its response did not at that point establish which permits, inspections and safety requirements applied to the current use or document that those requirements had been met.

The government’s response also raised a separate issue concerning Lundh. The Executive Council noted that she had previously provided legal advisory services to the Public Entity, including work involving Orange Bay Hotel, and raised the possibility of a conflict of interest if confidential or non-public information obtained during that work were used in the present matter. Government reserved its rights in that regard.

Follow-up raises specific zoning questions

Lundh responded on July 9. Her follow-up stated that the additional information government had said would follow regarding regulatory requirements and compliance had still not been received.

The second letter also introduced a more specific legal argument concerning the zoning of Orange Bay Hotel.

According to Lundh, the property falls within the area designated “Gemengd – Lower Town” under the Ruimtelijke Ontwikkelingsplan Sint Eustatius 2023 (ROP). She argues that the accommodation uses permitted within that designation are recreational in nature.

Her position is that the Executive Council’s own description of the current arrangement — exclusive use of the property to accommodate personnel working on infrastructure projects — does not constitute recreational use as defined in the ROP.

On that interpretation, the question is not simply whether the Public Entity considers itself a hotel operator or a landlord, but whether the actual use of the property is permitted under the zoning plan.

This is the legal position advanced on behalf of the accommodation providers. The correspondence reviewed by BES-Reporter does not establish that a court or other competent authority has ruled that the current use violates the ROP.

Government asked to identify legal basis

The July letter went considerably further than the original objection.

It asked whether an exemption, or vrijstelling, had been requested or granted for the current use of Orange Bay Hotel. It also asked whether a procedure had been initiated to amend the ROP.

If neither had occurred, the accommodation providers wanted the Executive Council to explain the legal basis on which it considered the current use permissible.

They additionally requested copies of permits, fire safety inspections and structural and health and safety assessments applicable to the current use. They asked for the lease or use agreement with BNIP, including the rent being paid, and clarification of government’s position on tourist tax.

The Executive Council was given fourteen days to respond.

The letter warned that without clarification, the providers could submit a formal request for enforcement and reserved the right to seek injunctive relief requiring the current use to cease. The providers maintained that the arrangement distorted competition with licensed accommodation businesses required to comply with permitting, inspection and tax obligations.

July letter remains unanswered

According to one of the hotel owners involved in bringing the matter to the attention of the Executive Council, no response to the July 9 follow-up letter has been received to date.

That is significant because the Executive Council had stated in its June 23 response that the relevant departments had been asked to verify the applicable requirements and compliance status of the property and that additional information would be provided separately.

More than two months after accommodation providers first formally raised their concerns, the correspondence therefore leaves several substantive questions unresolved.

It remains unclear from the documents whether an exemption or other authorization exists for the current use under the ROP, which permits and inspections apply and have been completed, what fire and health safety requirements have been verified, and what government’s position is regarding tourist tax.

The documents also do not establish the rent being paid by BNIP under the temporary lease.

None of this, by itself, establishes that the Public Entity is acting unlawfully or that Orange Bay Hotel does not comply with applicable requirements. It does show that these questions were formally raised months ago and that the government’s June response did not provide the requested documentation or a final answer on several of them.

BES-Reporter awaiting government’s answers

The issues contained in the correspondence overlap with questions BES-Reporter independently submitted to the Government Information Service this week after concerns about the Orange Bay arrangement were brought to its attention.

Those questions concern, among other matters, the nature of the arrangement with Ballast Nedam, taxation, the decision to use Orange Bay Hotel while private accommodation is reportedly available, catering at the property, applicable permits and food and fire safety requirements.

The Government Information Service has informed BES-Reporter that government expects to be able to provide answers within approximately one week.

Those answers may provide clarity on issues first raised by accommodation providers in May and on compliance information that the Executive Council said in June was still being verified.

The BES-reporter questions to Government

BES-Reporter has received concerns from stakeholders in the hospitality sector regarding the current use of the Orange Bay Hotel and the accommodation of Ballast Nedam personnel at this location. We would appreciate clarification from the Public Entity St. Eustatius on the following points:

Can the government confirm that employees or contractors working for Ballast Nedam are currently being accommodated at the Orange Bay Hotel? if so, how many persons are currently staying there and since when has the facility been used for this purpose?

What is the exact role of the Public Entity St. Eustatius in this arrangement? Does government own, operate or manage the accommodation, and is Ballast Nedam paying the government for the rooms or accommodation provided? If so, what rate or fee is being charged?

⁠Is room tax being charged in relation to these stays? If not, on what legal basis is no room tax being levied?

BES-Reporter has received concerns from commercial accommodation providers that this arrangement may create unequal competition, as privately operated hotels and other accommodation providers are required to meet tax and regulatory obligations while reportedly facing relatively low occupancy rates. How does government respond to these concerns, and was the potential impact on the local hotel sector considered before entering into this arrangement?

Did the government first investigate whether sufficient accommodation was available within the existing commercial hotel and accommodation sector on St. Eustatius? If so, what was the outcome of that assessment and why was the Orange Bay Hotel arrangement ultimately chosen?

We understand that meals are also being prepared and provided at the Orange Bay Hotel for the persons staying there. Can government confirm this? If so, who is responsible for preparing and supplying these meals?

Does the Orange Bay Hotel currently have all permits, licenses and approvals required to operate accommodation and provide prepared meals on this scale? Please specify which permits and approvals are applicable and whether they are currently valid.

Do all persons handling or preparing food at the facility hold the required health certificates and/or other certifications required for food handlers on St. Eustatius? Which authority has verified compliance?

Has the kitchen and food preparation operation at the Orange Bay Hotel been inspected by the relevant public health or food safety authorities? If so, when was the most recent inspection and what was its outcome?

Questions have also been raised with BES-Reporter about fire safety at the facility. Has the Orange Bay Hotel been inspected and approved by the St. Eustatius Fire Department for its current use and occupancy? If so, when did this inspection take place?

Have the building, electrical installations, kitchen facilities, fire detection and firefighting equipment, emergency exits and other relevant safety provisions been inspected and approved for the facility’s current use? If not, why is the facility currently being used to accommodate workers?

Finally, does the government consider it appropriate for a government-operated or government-controlled facility to provide accommodation and catering services that are also commercially available from private businesses on the island? If so, how does government ensure that this does not result in an unfair competitive advantage over local businesses?