Caroline Bay site was 'poisoned chalice', OBA leader says
A decision to back the stalled Caroline Bay resort with a $165 million guarantee was defended today by the Leader of the Opposition.
Cole Simons, also the One Bermuda Alliance shadow finance minister, said the Morgan’s Point site in the West End, a former US base, was a “poisoned chalice” from the start.
Mr Simons said: “The ground was poisoned by the US Navy and the contract that was signed by the previous Progressive Labour Party government with Morgan’s Point Ltd was poisoned by the obligation to clean up the entire site to a ’residential 1’ standard, at Government’s cost and the Bermuda taxpayer.”
But he added that the Progressive Labour Party government had had “plenty of time” to draw up a plan for the future of the site.
Mr Simons said: “We were hoping that would be articulated in this Budget statement. I have to say that it is disappointing not to see the plan.”
He added that the developers threatened to sue the then-Government for $100 million if they failed to comply with the clean-up agreement.
Mr Simons said most of the site was brought up to standard at a cost of $33 million and, where that was not possible, land was retained in public ownership.
He added: “Notwithstanding all of this, it was still a brownfield site and, as such, investment funding would not be forthcoming without Government’s guarantee.
“To lay the infrastructure for the long-term, future of our tourism industry, create opportunities for local businesses and jobs for Bermudians, the decision was made to guarantee certain loans for the project.”
He said: “Unfortunately, the project failed. Nevertheless, despite the negative result of this case, government guarantees are generally required from overseas financiers to finance major projects in Bermuda.”
Mr Simons was speaking in the House of Assembly as he delivered the Opposition’s Reply to the Budget, unveiled by Curtis Dickinson, the finance minister, last Friday.
Work at the Southampton site ground to a halt in 2018 after the developers ran out of financing.
The Government was left on the hook for the guarantee, which forced Mr Dickinson to raise the debt ceiling by $200 million in September 2019 to buy the project’s debt.
Mr Dickinson said the purchase of the debt “gave us more rights than exercising the guarantees”, as well as leaving the Government with a claim on much of Caroline Bay’s assets.
He added this week that there were buyers in the pipeline for the development.
But Mr Simons said the Government had not yet revealed what it got in return for the adoption of the loans.
He added: “Again, the Minister of Finance has been very thrifty with these details.”