Early Development of Water Island

The Walter & Floride Phillips Era
1950-1967
Walter & Floride Phillips

In 1950, the Army vacated Water Island and turned it over to the Department of the Interior by an indefinite revocable permit. Interior assigned the permit to the St. Thomas development Authority in 1951.

In early 1951, Walter and Floride heard about Water Island from Isidor Paiewonski. After making an inspection tour of Water Island, the Phillips’s and partners (Raymond and Edward Bills) formed a local corporation called Water Island Inc. with the intent to lease Water Island for development. On 1 August 1951, the St. Thomas Development Authority leased Water Island for 35 years (with option for additional 25 years) to Water Island Inc. The Lease rental was $3000 per year with Water Island Inc. committing to spend $200,000 to rehabilitate and convert existing Army barracks into a resort hotel with not less than 50 rooms.

The lease, however, could be revoked by the Army. On 11 July 1952, Public Law 511 directed the Army to transfer Fort Segarra on Water Island to the control and administration of the Department of the Interior. On 10 December 1952, Water Island Inc. signed a new 20 year lease with a 20 year renewal option with the Department of the Interior. As a condition of the lease Water Island Inc. was required to have a 50 room hotel operational by 1 January 1958.  You can see the original lease for Water Island here.

1951 Aerail Photo of Water Island
1951 Aerial Photo of Water Island

Once the lease issue was resolved, Water Island Inc. turned its attention to the establishment of the 50 room hotel. Shortly thereafter, the Phillips’s and the Bill’s had a major difference of opinion as to how the island should be developed. The Bill’s wanted to raise capital to build an elaborate, deluxe resort complex. Walter and Floride preferred a low key, informal, and simple operation with a view to improving existing Army facilities. This disagreement was resolved with Walter and Floride buying out the Bill’s for $25,000.

Walter then launched a public stock issue to raise $269,000 needed to complete the first phase of the development program of converting facilities left behind by the Army into a medium size hotel that would accommodate 100 guests. The 1953 stock offer described the facilities shown on the map below.

Initial Lease Offering on Water Island

On January 1st 1954, the Water Island Hotel officially opened for business.

Water Island Original Hotel
Original Water Island Hotel Photos
Water Island Original Hotel

The first major sub-sub lease (see a sample of the sub-leases here) was executed on 26 January 1954. Sub-sub leases were sold for about $2500 per unimproved acre and lots with old Army buildings sold for about $5000 per acre. In July 1956, Mr. Doheny executed a sub-sub lease for 165.5 acres on the northern end of the island (now Sprat Bay Estates).

Water Island received nationwide publicity on 1 December 1956 when the Saturday Evening Post published a five page article “An Island of Their Own”.

Saturday Evening Post

On 3 June 1957, Halsey Brister (Wally Henshaw's father in law) distributed a letter to residents setting out a draft document proposing the start of the Water Island Civic Association. Dues were set at $10.

On 10 October 1958, Mr. Doheny assigned his sublease of acres on the northern end of the island to Warren Corning for $100,000. Note: Corning also then purchased 338 acres on St. Thomas now called Botany Bay. And then in 1960, Corning sold his sub-sub lease to the Sprat Bay Club.

Sprat Bay Estates

Water Island was written up again in Life Magazine on 12 January 1962.

Life Magazine January 12, 1962

The Water Island Civic Association (WICA) was established to represent the interests of residential property owners.



On 12 June 1963 work was started to cut a 75’ wide channel from Flamingo Bay into the pond behind it.

Water Island Flamingo Bay



Over 300 truckloads of gravel from the dredging (6’ in channel and pond) was applied to the roads. $178,00 was spent on the dredging. Two buildings were constructed at the new marina area (one as a bar/dining room and the other as a maintenance shop for cars and boats.

Water Island Inc. sold the Master Lease to Water Island to the newly named Water Island Hotel and Beach Club (Ed McArdle) for $645,160 on 3 December 1965.

McArdle Letter

Mr. McArdle soon after started an ambitious new hotel expansion program (to be named The Colony Club). Mr. McArdle’s development plan called for an investment of $2,000,000 to create three multi-storied hotels capable of housing 800 guests, restaurants, 300 Mediterranean style villas, a shopping center, private yacht and tennis clubs, a boat harbor and a marina.

Hotel Brochure From the 1960's
Hotel Brochure from the 1960's

Do not think that Walter and Floride Phillips faded into the sunset! They became a force on the island representing the sub-sub lease-holders, often going head to head with the Master Lease Holder. They also helped to establishe the culture of style and grace on the Water Island!!!!

On 9 May 1966, Walter Phillips started the Water Island Botanical Gardens.

Walter Phillips Greenhouse

On 1 December 1966, the Master Lease Holder asked the owners of homes and lots to contribute $50 towards road maintenance.

The New York Times had a big spread on Water Island and the newly opened Colony Club on 3 December 1967.

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