Bob Richards statement
Government’s $25m guarantee for St Regis hotel
The deal for the East End’s first hotel in decades has been bolstered with a Bermuda government guarantee of up to $25 million for the St Regis resort.
Parliament heard that the guarantee will go towards a $60 million loan from Butterfield Bank for Hotelco Bermuda Holding Ltd, part of the Desarrollos Hotelco Group behind the luxury development.
Yesterday in the House, finance minister Bob Richards faced repeated questions from the Progressive Labour Party over concessions for the project.
Opposition leader David Burt and PLP MP Zane DeSilva queried whether the Government had agreed to cover the resort for $300,000 a year in water supplies.
Mr Richards could not provide details, but agreed with Speaker of the House Randy Horton that Parliament should know, and Mr Horton said he would make a ruling for specifics to be brought to MPs.
The Opposition also questioned whether condos would be built before the hotel, with Mr Richards insisting that both would proceed simultaneously.
Negotiations for the arrangement were described as “intense”.
But Mr Richards heralded the move as “tangible evidence of Government’s commitment to the redevelopment of the tourism sector”.
In total, the 122-room project will cost $150 million, which Mr Richards said will be broken down as $90 million funded by equity capital from the developer as well as the $60 million loan. Ground was broken on the project in a ceremony last week, after a long and increasingly sceptical wait for a new hotel at the East End. Mr Richards called it “historic” for the island.
Many factors contributed to the decline of Bermuda’s tourism, he said — particularly the island’s ability to assure hospitality investors of getting value for money.
“The financial closing for this project is real-world success in that objective,” Mr Richards said, maintaining that the One Bermuda Alliance was the first government to “seriously address” the issue.
Mr Burt noted that the Government had given a $165 million guarantee for Morgan’s Point, but Mr Richards pointed to the “extenuating circumstances to do with remediation of the property”, and said the St Regis guarantee posed “very little risk” in light of the equity put up by developers. The loan matures in 15 years.
Mr Burt suggested that the Government had “ignored” the fiscal responsibility panel’s advice not to extend guarantees to private projects, but Mr Richards responded that such guarantees had fallen by $155 million over the last year.
• To see Bob Richards’s statement in full, click on the PDF under “Related Media”
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