Grand Lucayan Resort
The Hutchison Group of Companies and primarily their land holding company CK Holdings, has initiated a bid process for the Grand Lucayan Resort on Grand Bahama Island and I shall speak to this more succinctly on these developments in my remarks on the Hawksbill Creek Agreement.
Memories
Memories enjoyed a near 90% occupancy in 2014 and 2015, prior to feeling the impact of a much weakened Canadian economy compounded by its dollar being sharply devalued against the US dollar and by extension Bahamian dollar. This development dealt Memories a 30% decline in this past winter, i.e., December 2015through April 2016. Sunwing Group's strong focus on the US markets, through its Vacation Express subsidiary beginning late May, is already resulting in business rebounding to last year’s level and projected to exceed summer/fall of 2015. The Group expects to regain and maintain its 500 direct employees along with further indirect employment stimulation estimated as a further 100 jobs.
Sunwing Vacations and Vacation Express is projected to generate some 350,000 visitor nights and some 150,000 room nights, with a significant share to other resorts on Grand Bahama Island.
The company remains keen on expanding its operations in Grand Bahama in the very near term, which if plans are realized,will result in the expansion of its already strong air service network into Grand Bahama to include new USA, Canadian and mostly likely European gateways in 2017, along with increased direct and indirect employment their expansion would bring about.
Sunwing Vacations and Vacation Express is projected to generate some 350,000 visitor nights and some 150,000 room nights, with a significant share to other resorts on Grand Bahama Island.
The company remains keen on expanding its operations in Grand Bahama in the very near term, which if plans are realized,will result in the expansion of its already strong air service network into Grand Bahama to include new USA, Canadian and mostly likely European gateways in 2017, along with increased direct and indirect employment their expansion would bring about.
n my recent Communication to this House on 9 th May, 2016, I indicated that the review of the expiring concessions under the Hawksbill Creek Agreement has afforded my Government the opportunity to conclude arrangements, after extensive negotiations with the Grand Bahama Port Authority and key investor/stakeholders, aimed at strengthening and expanding the economy of Grand Bahama. These arrangements follow upon an in depth and comprehensive study carried out by The Hawksbill Creek Review Committee, the first of its kind in 60 years, which involved wide consultation.
Mr. Speaker,
I feel it necessary to reiterate and re-emphasize for purposes of clarity the actions taken by my Government as it relates to the expiring concessions.
Mr. Speaker, as an outcome, the Government has
(1) entered into a Memorandum of Understanding (“MOU”) with the Grand Bahama Port Authority Limited, and key entities controlled by GBPA, Hutchison Ports, CK Property Holdings Ltd. and the Port Group, namely GBPA, Freeport Harbour Company Ltd., Grand Bahama Development Company Ltd., and Freeport Industrial & Commercial Ltd.
(2) executed a Waiver of Exclusivity Agreement with Freeport Harbour Company Ltd. with respect to the operation of cruise ports on Grand Bahama.
The MOU sets the stage for specific agreements which must be entered into with licensees with the aim of fundamentally shifting the investment climate and economic prospects in Grand Bahama in a dynamic and positive way for all concerned. Through our negotiations, we have sought to create a new economic development framework that can jumpstart and sustain growth in Grand Bahama. The result is an MOU that sets the parameters for the development of a framework which will enable the Government to engage with the private sector on delivery of a wide range of economic and social gains for the residents of Grand Bahama and The Bahamas as a whole.
Specific opportunities that will emerge from the MOU include:
§ immediate investments in strategically important industries;
§ the commitment of the GBPA to seek an injection of new equity capital into its Group of Companies through new globally respected shareholders or equity partners and project specific investors who will further the development of Freeport and Grand Bahama;
§ historic changes in the governance, transparency, and regulatory framework that governs Freeport;
§ Government ownership stakes in prime landholding companies which will allow for enhanced public/private commercial and residential real estate development;
§ a commitment to social and infrastructure improvements to enhance quality of life;
§ development of a new framework for performance-based development concessions that will replace the expiring tax concessions of the Hawksbill Creek Agreement;
§ a focused and collaborative strategy to reshape the approach to attracting, retaining, and expanding investment in Grand Bahama;
§ and a commitment to resolve longstanding issues related to Government deficits in Freeport in a way that protects the Government’s rights but creates a path forward in Freeport.
In the short term, these arrangements will drive new investment projects that will retain and expand key industries in Grand Bahama. There is indeed now a clear path to the expansion of the Freeport Container Port through Phase V and VI, with Phase V scheduled to commence in the second half of 2016. $260 million is being invested in the Container Port Phase V expansion. The Freeport Airport runway is being resurfaced at a cost of $13 million. Freeport Harbour Company is spending $14 million on the refurbishment of berths 3, 8 and 9.
Mr. Speaker,
PharmaChem has already broken ground on a $150 million extension. The MOU and Waiver of Exclusivity Agreement with the Freeport Harbour Company has cleared the way for completion of negotiations with Carnival Cruise Lines for the creation of a major cruise port with compelling attractions in East Grand Bahama. When coupled with ongoing discussions with MSC to consider home porting, a container repair facility, a logistics center, creating a maritime training center, and opening up employment for large numbers of Bahamians on their ships, Grand Bahama is poised for significant expansion as a hub for cruise operations.
Most significantly the MOU contains an overall Public Private sector Partnership commitment to recruitment and training of Bahamians to meet present and future diverse manpower skills.
Mr. Speaker,
Beyond specific short-term investments, we have secured historic commitments to change the governance paradigm in Grand Bahama, and a mechanism to enhance transparency into the GBPA’s financial affairs. The MOU provides a mechanism for the Government to play a meaningful role in steering and overseeing critical infrastructure and development via seats on the Boards of the GBPA and land development companies.
The MOU also provides the licensees with the opportunity to participate in governance by nominating a member to the GBPA Board. We have also come to an agreement in principle to align the regulatory functions of the GBPA with the national regulatory framework and policies of The Bahamas Government, and to establish a process for licensee appeals. These changes will allow increased public understanding of and dialogue about the inner workings of Freeport that have long been opaque and inaccessible to Freeport stakeholders.
Mr. Speaker
The changes will also help to mitigate conflicts associated with GBPA and its affiliates operating simultaneously as licensor, licensee, and regulator as well as participation in governance at the Board level. By having equity participation, and Board level transparency into the affairs of the prime landholding companies, the Government can play an active role in accelerating development in Freeport. Among other things, this new structure opens up significant new opportunities for public / private partnerships to facilitate larger development projects.
The MOU very significantly provides a commitment to social and infrastructure investments in Grand Bahama that will deliver tangible contributions to the quality of life for the residents of Freeport. We intend to seek to work with the GBPA to create an ongoing “Grand Bahama Development Fund,” which would make investments that can help to carry Grand Bahama forward. Measures to be undertaken could include, reopening important portions of West Sunrise Highway, upgrading airport facilities, making available residential lots to expand affordable housing, construction of modern medical facilities, refurbishing and expanding athletic facilities, and making contributions to support critical social services. I will more fully address this in my closing remarks to the budget debate. Suffice it to say, rather than a “one shot deal”, we will seek to create an ongoing mechanism for infrastructure investments that are aligned with our development strategy, and can evolve as the economy grows and the needs of the population of Freeport change.
Mr. Speaker,
A new regime with a new framework is contemplated for the Port area with respect to the tax concessions which expired on 5th May, 2016. The same tax concessions will be granted by the Government for a period of 20 years commencing on the 4th of May, 2016 to existing licensees of the GBPA on an individual basis, subject to certain conditions and under a framework that would provide for the maintaining of performance through periodic reviews every five years. The Government would collaborate with GBPA on the design of the framework. The same framework will apply to new licensees once they submit and obtain approval of their development plans. In return for the undertakings and assurance by GBPA, Freeport Harbour Company, Grand Bahama Development Company and Freeport Commercial & Industrial Company Ltd., the Government is to take the necessary measures to grant the expiring concessions to these companies, their existing affiliates, subsidiaries and joint venture companies in like terms for a period of twenty years, commencing 4th May, 2016.
We are also taking steps to address an important inhibitor to development in Grand Bahama. The lack of any taxes or carrying costs of undeveloped land mean that property holders can simply sit on undeveloped land without recourse. To address this situation, and enhance the revenue base in Freeport, we intend to create a new framework where real property tax would be payable on undeveloped land held by non-Bahamians owning more than five acres.
A Bill will be presented for consideration by Parliament to give effect to these new measures. My Government will during the next fiscal year work to implement these bold initiatives with the objective of ensuring that Freeport and Grand Bahama realizes the full economic benefits for many years to come.
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