The airport mail-processing centre and HM Customs centre will move into a rented building in Pembroke at a cost of $360,000 per year.

Lovitta Foggo, Minister of Government Reform, told the House of Assembly that the move was forced by the airport redevelopment contract, which stipulated that the Post Office and Customs would have to move by the end of this month or pay rent to developers Aecon.

Ms Foggo told MPs: “As a result of the agreement entered into by the former government, development costs must now be expended on leasehold improvements that are required at the new privately-owned Mill Creek facility to accommodate the segregation of the two agencies.

“Such segregation is in accordance with the requirements of the standard operating procedures for the Department of Customs to carry out their duties in a secure environment.”

She said that it was unlikely that a move would be completed by September 30 but that every effort would be made to work with the airport developers to avoid penalty payments.

Ms Foggo added that “no more than a 30-day extension will be requested.”

A supplementary estimate to the Budget tabled last week set aside $290,000 to fund the relocation of the Post Office mail office from the airport.

Ms Foggo said that several sites, including government buildings, were considered in a bid to cut costs but none were suitable.

She added: “This is a cost that should technically be represented as a line item when tallying the cost of the development of the new airport.”

Ms Foggo said the move “had the potential to jeopardise the reputation of Bermuda’s postal service’s international standing and impact revenue collection”.

She added: “The future requirement of having to move airmail to a non-airport facility before sorting and distribution will increase receipt time and decrease efficiency, thereby negatively impacting service standards.

“Further, the move significantly affects the Department of Customs and the border control work that they are required to manage.”

The deal with Aecon means that if the two agencies are not out of their airport home by the start of next month, Government will have to pay rent at market value.

If they are still on site after the end of the year, “the authority will pay Project Co $600,000 as a single liquidated sum as full compensation and the Bermuda Post Office will be permitted to remain in its current premises for the term without further payment of rent or occupancy cost, subject to the Bermuda Post Office entering into a sublease with Project Co.”

During a question-and-answer session in the House, Opposition leader Patricia Gordon-Pamplin asked whether it would be less expensive to stay at the airport to at least eliminate the costs associated with moving. Ms Foggo responded that it would not.

• To read Ms Foggo’s statement in full, click on the PDF under “Related Media”