Legislature of the Virgin Islands P.O. Box 1690, Emancipation Garden Station St. Thomas, U.S. Virgin Islands 00804 ——○—— POST AUDIT DIVISION March 4, 2025 MEMORANDUM: TO: Honorable Novelle E. Francis, Jr. Chairperson, Committee on Budget, Appropriations and Finance 36th Legislature of the Virgin Islands FROM: Post Audit Division SUBJECT: Lease Agreement LESSOR: Department of Property & Procurement LESSEE: Tropical Marine, Inc. PREMISES: a. Parcel No. 37-1 Estate Nadir, No. 2 Red Hook Quarter, St. Thomas, United States, Virgin Islands consisting of 20,908.8 U.S. sq. ft. or 0.48 U.S. acres more-or-less, and b. A portion of unsurveyed Estate Nadir, No. 2 Red Hook Quarter, St. Thomas, U.S. Virgin Islands, consisting of 7,083 U.S. sq. ft. or 0.163 U.S. acre(s) of land more-or-less. TERM: Fifty (50) year period, with an option to renew for two (2) ten (10) year periods. The initial lease term commences on the first day of the month following approval by the Legislature and the Governor of the Virgin Islands. PURPOSE: The property will be used for the operation of a retail shop, commercial spaces, marine engine repair shop, the import of sale of goods, parking lot, and for other related purposes. LEASE SUMMARY BACKGROUND: Tropical Marine, Inc. is a long standing corporation doing business in the U.S. Virgin Islands whose purpose is to operation of a retail shop, commercial spaces, marine engine repair shop, the import of sale of goods, parking lot, and for other related purposes. TEL: (340) 774-2478 FAX: (340) 774-2492 Honorable Novelle E. Francis, Jr. Lease Agreement between Property & Procurement and Tropical Marine, Inc. Page 2 of 6 REQUIRED SUPPORTING DOCUMENTATION DOCUMENT EXPIRATION DATE Business License 8/31/2025 Trade Name Registration N/A Certificate of Liability Insurance 7/22/2025 Certificate of Good Standing 6/30/2025 PAYMENT TERMS The lease requires an annual rent of $30,000, payable in equal monthly installments of $2,500, due on the first day of each month during the term of the lease. During the 24- month construction period, the rent will be reduced to $2,000 per month for the first 24 months. If all the improvements specified in the lease are completed before the end of the construction period, the full annual rent of $30,000 will begin in the month immediately following the completion of the improvements. After the second year of the initial term, and every year thereafter, the rent will be adjusted based on the Consumer Price Index, but the increase will not exceed 3% over the previous year’s rent. Additionally, the rent will never be reduced below the original annual rent of $30,000. A late charge of 10% of the monthly payment will be assessed if the rent is not paid within ten (10) days of the due date. IMPROVEMENTS According to the lease terms, the Lessee shall provide the improvements listed below at its own cost and expense, which are estimated to cost approximately Eight Million Four Hundred Dollars ($8,400,000.00). Improvements to the property include the following: a. Remove debris; b. Construct driveway and parking area; c. Install security fencing and lighting; and d. Build an adjacent boat dock and boardwalk. The improvements shall be completed no later than twenty-four (24) months after the Commencement Date of this Lease (“Construction Period”). Lessee agrees to keep the said Premises and appurtenances as repaired, in a clean, sightly, and tenantable condition, and to return said Premises to Lessor upon the expiration or other termination of this Lease, in as goof condition as it was since the last repairs were made, less reasonable wear and tear from intervening use. LIABILITY INSURANCE Under the terms of the Lease, the Lessee agrees to: • Keep in force a policy of public liability and property damage insurance with limits of not less than: • One Million Dollars ($1,000,000.00) property damage, • One Million Dollars ($1,000,000.00) for one person injured or killed, and Honorable Novelle E. Francis, Jr. Lease Agreement between Property & Procurement and Tropical Marine, Inc. Page 3 of 6 • One Million Dollars ($1,000,000.00) for any number of persons injured or killed in any one accident. • All of the said insurance shall be in a form satisfactory to Lessor and shall provide that it shall not be subject to cancellation, termination, or change, except after thirty (30) days prior written notice to Lessor. ADDITIONAL INFORMATION Detail information on the following items can be found in the attached lease document: Items Page • Improvements 4-5 • Mechanic’s Lien 6 • Insurance and Indemnity 6-7 • Entry by Lessor 7 • Condemnation 7-8 • Cancellation, Termination, Assignment, and Transfers 8-10 • General Terms and Conditions 10-14 EXECUTIVE BRANCH APPROVALS Signee Title Department Date of Signature Lisa M. Alejandro Acting Commissioner Department of Property & Procurement 12/16/2024 Sean P. Baily Assistant Attorney General Department of Justice 12/30/2024 Honorable Albert Bryan Jr. Governor Office of the Governor 1/15/2025 CONCLUSION The Department of Property and Procurement has entered into a lease agreement with Tropical Marine, Inc. for the operation of a retail shop, commercial spaces, a marine engine repair shop, the import and sale of goods, as well as a parking lot and other related activities. The Department of Property and Procurement has confirmed that the terms and conditions of this lease are consistent with those applied in other similar leases issued by the Department. According to the Department, this agreement complies with all relevant policies and regulations. Based on this confirmation, the Post Audit Division recommends the approval of the lease between the Department of Property and Procurement and Tropical Marine, Inc. Nikia A. Fleming Acting Post Auditor Honorable Novelle E. Francis, Jr. Lease Agreement between Property & Procurement and Tropical Marine, Inc. Page 4 of 6 APPENDIX I Honorable Novelle E. Francis, Jr. Lease Agreement between Property & Procurement and Tropical Marine, Inc. Page 5 of 6 Honorable Novelle E. Francis, Jr. Lease Agreement between Property & Procurement and Tropical Marine, Inc. Page 6 of 6