Remarks by The Minister Of Finance The Hon. Curtis L. Dickinson JP MP
Good afternoon.
In recent days there have been media reports and some public speculation regarding the project at Morgan’s Point, known as the Caroline Bay Development. It is important to set out some facts for the Bermudian taxpayer whose hard-earned tax dollars are pledged in support of this development by way of a government guarantee.
The public will recall the swap of land over ten years ago which saw the owners of Southlands in Warwick receive the former base site known as Morgan’s Point. Since that time, the development team has been unable to complete the project as intended.
Bermuda is invested in this project also. The former government attempted to ease the path to financing and the completion of the development by pledging the Government of Bermuda as guarantors for the project financing in the amount of $165 million.
The experience with the developers and this project has spanned governments of both Parties and Administrations within those governments for over a decade.
In February 2018, there began a series of crunch talks with the developers of Caroline Bay based on the fact that there was a forecasted likelihood that work on the site would stop, workers would be laid off and contractors would not be paid. The constant theme of those meetings and the persistent demand of the Government was that this could not be allowed to happen as this country could not then, and cannot now, afford to see more Bermudians out of work.
As part of the process to shore-up the management of the project and other aspects of the operational control of the development, the Government mandated changes to the corporate governance of the development company and the marketing of the pre-construction units was made the responsibility of a strengthened, more experienced team of realtors.
Whilst work continued at the site, the pace and scope consistently reduced to the point where it has now stopped altogether. Genuine efforts by the developers have been made to secure financing and these efforts are ongoing. In the interim, the principals of the company have continued to fund their obligations mindful of the importance of keeping some work going on at the site.
This funding appears to now be at a standstill and as such this accounts for the sums owed to contractors and sub-contractors who have, in good faith, done the work required. Understandably, some have now lost their patience.
However, in addition to the issues surrounding non-payment to contractors and sub-contractors, I have a wider concern based on my responsibility to safeguard the public purse and to avert the risk to which the Bermudian taxpayer has been exposed, first by the former government and now by delays in the project.
The Ministry of Finance continues to consult with its advisors. These discussions are ongoing, and we are doing everything prudent to protect the Government’s position.
There is much more to be done, however, to firstly secure financing to complete the project and to ensure a successful conclusion of the construction phase of the project.
As recently as last Friday, the Premier and I met with the principals of Caroline Bay to discuss the advanced stage of negotiations for funding of the project. I made it clear in that meeting that the protection of the Bermudian taxpayer was this Government’s priority and that the terms of any financing deal, subject to the Government’s approval, must reflect that overarching commitment to Bermuda.
There has been progress on the financing front and that is for the principals of Caroline Bay to address in due course.
In the meantime, however, it is not correct that this Government or any of its various agencies is in any way preventing this deal from being finalized.
Hotel and property development is not easy. In the current economic climate, securing traditional, and even non-traditional financing for development projects of this size is even more difficult.
There is much riding on the latest efforts and the Government’s role, not just as guarantor, but as the representative of the people, is to do what we can to facilitate a successful development at Morgan’s Point and to realize the potential it can play in re-introducing Bermuda as a luxury tourism destination.
Thank you.