‘The great land giveaway’
An inside look at the Mayaguana land deal
Guardian Senior Reporter
The problems that plagued the Progressive Liberal Party (PLP) during its last five-year term in office are well known. The infamous Anna Nicole Smith saga, the notorious Cabinet “fight”, the Korean boat debacle and the general view that former Prime Minister Perry Christie had little control over his own ministers.
But perhaps what is perceived as one of the biggest – but lesser known – perceived blunders is what some have termed the “greatest land giveaway” of our time.
It was the PLP’s 2006 joint venture deal with Boston-based developers the I-Group to sell off nearly 10,000 acres – 9,999 to be exact – including prime beachfront and waterfront Crown land in Mayaguana for the fire sale price of about $650 an acre.
The deal in its original form would have boxed in the 350 natives of Mayaguana to the interior of the island, much like Native Americans relegated to a reservation, Hotel Corporation Chairman Michael Scott told The Guardian.
The investors also received a multitude of concessions, over and beyond those normally granted to these types of development projects, and the clause that allowed it to exit the agreement (force majeure clause) was excessive in its options, according to Scott.
It was heralded by those in the Christie administration as the new model for the Family Islands. The PLP argued that the agreement that handed over 9,999 acres of Crown land was a joint venture, and in no way represented a land “giveaway”.
The development was supposed to create 1,700 jobs during the first five years and contribute $116 million to the country’s GDP.
But by 2008, the I-Group, which had already received a portion of land under the original agreement (2,000-plus acres), had invoked the force majeure clause included in the deal, citing the global economic slowdown for failing to meet a number of milestones that would allow it to secure the remainder of the property.
Those milestones included the completion of the Mayaguana airport and associated facilities, the development of a subdivision and estate lots and utility projects, among others.
It also did not help that the relationship between the government – now the Free National Movement – and the I-Group had started to deteriorate. It is claimed that the I-Group openly supported the PLP in its failed re-election bid, and was less than welcoming to Prime Minister Hubert Ingraham when he paid a visit to the island to take a look at the project.
A new agreement
While Ingraham was prepared to honor the deal in its original form, Scott said, some in the administration – including Tourism Minister Vincent Vanderpool-Wallace – insisted that too much was at stake to simply let the development proceed under the original terms.
Last month, the government signed off on an amended Heads of Agreement with the I-Group, which was willing to rework the original deal and has said it is happy with the new agreement. It returned nearly 6,000 acres, including significant wetlands, to the Bahamian people and severed the joint venture between the two parties.
The new agreement also brings concessions and exit options more in line with other Heads of Agreements for similar projects.
Scott was an instrumental part of the team that reworked the Heads of Agreement with the I-Group, over more than two years. It involved determining how much the investors had already “put into the ground”, through a survey conducted by Baker Tilly Gomez. During a recent sit-down with The Guardian, he charted the genesis and later revamping of the controversial deal, a deal he described as an “insult” to the Bahamian people.
“First of all, $600 an acre is a disgrace. Secondly, you’d have essentially prevented the natural population expansion of Mayaguana because you would have had people herding together in the less desirable interiors of the island. Mayaguanans would have become the minority in their own island,” he said.
Under a clause in the original Heads of Agreement, the developers were also going to get the exclusive right to grant licenses to any licensees brought into the development – a situation similar to the operating conditions of the now troubled Grand Bahama Port Authority.
“This is not hyperbole, but with the amount of land originally conceived to the project, with the concessions given, with the licensing authority afforded, you were essentially creating another Freeport. You’ve seen the enormous problems over the last couple of years with the (Grand Bahama) Port Authority. That’s been a disaster. We were in the process of creating another one,” Scott said.
Scott believes the former government also erred when it agreed to the multitude of concessions awarded to the I-Group.
“They were allowed to bring in, for 20 years from the date of the agreement, the importation free from all Customs duties of all materials, supplies and things of every kind of description and without limiting all equipment, building material supplies, replacement parts, spare parts, plant, vehicles, vessels, petroleum products. Then they would have had all the other exemptions from business license fees, stamp duty and real property tax for 20 years,” he said.
Scott explained that the original deal was ostensibly a joint venture between the government and MID – the holding company.
“In that holding company, the Hotel Corporation provided a chairman and two directors, [I-Group] provided two directors, but the real decision making entity was the operations company called Mayaguana Management Company. So they called the shots. They were funding it and managing decisions relating to the time frame and milestones of the development were being made by them, not us,” Scott said.
“This was a land giveaway dressed up as a joint venture. The ultimate power and control were given to the developers. The Bahamian people were passive investors through making available (nearly) 10,000 acres of land.”
Scott said that the revised Heads of Agreement reflects the FNM’s model for Family Island development, a plan which focuses on small boutique hotels that are a stark contrast to the massive, sprawling ‘anchor’ projects that the last PLP administration pushed.
"It's a much smaller scaled development," Tourism Minister Vincent Vanderpool-Wallace said last month. "They are starting with 2,912 acres. The original proposal was a joint venture with the government for 9,999 acres. We are taking a lot of the land back and the land we are taking back is prime waterfront land, prime land in the interior and that allows some of the settlements to expand in the future and so it has become a great win-win for all."
“When they slowed the project down, we thought that was an opportunity to appeal to them to try and scale it back in terms of scope. They agreed and have signed a reinstated and amended Heads of Agreement which gets back 5,825 acres."
The first phase of the Mayaguana development will involve the construction of an airstrip, an airport terminal, a marina and construction of a 25-room boutique hotel for an investment of between $24-$32 million.
The second phase entails the construction of a $50-$75 million high end luxury resort in Mayaguana.
The original development was expected to be $1.8 billion. It is unclear what the exact value of the new agreement will be.
Mar 12, 2012