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A gambler’s bluff

Khalid Wasi believes the idea of a luxury village at Morgan's Point should not fall by the wayside

We have often heard in arguments the statement “Do the maths and you will see it doesn’t make sense”. Westend Properties’ latest PR salvo — if it does not get its special development order, it will take its money and run — is more scare tactic than real.

The maths do not add up when you consider a group buying an operation that was a going concern, then shuts it and leaves — for three years! By the owner’s admission, the building is in reasonable shape, needing only “refurbishment” and perhaps some plumbing upgrades, but the physical structure is solidly intact.

No investor in its right mind would allow the hotel to remain closed and deteriorate because it is a better sell as a going concern. Being in use protects against rapid deterioration and devaluation of the investment product. It’s a gamblers bluff to intimidate the Government, its Cabinet ministers and the people of Bermuda into caving into its demands by dangling the inevitable abyss.

Didn’t Gencom buy the hotel? Would a smart investor write that money off? Or would it mitigate loss and aim for break-even before offloading? It does not take long for rodents to colonise an empty space, including abandoned drains and pipes. The Saudis make that amount of money on a slow day, but not even they would leave hundreds of millions in assets abandoned for the rodents to move in.

It’s a bluff, and those with their hands out are running yelling “the sky is falling”, forecasting an apocalyptic moment if we don’t accept the SDO.

However, nothing is inevitable, not even the success that Gencom wants. A careful look at what is being provided indicates its chart of progress shows a small portion of the funds going into refurbishing the hotel — let’s say between $60 million and $80 million — and the larger portion of funds going into infrastructure and foundations for the new builds, which supposedly will be constructed over a 20-year period. The money to do the new builds will be leveraged against presales.

The hidden genius lay in the national strategy, which is to soften the housing market island-wide, giving preference to the Fairmont Southampton for the available middle-class housing stock. How so? The Government dumbed down the original Morgan’s Point luxury village to become a mixed village with subprime Bermuda Housing Corporation mortgaging units added to the mix. That addition has the effect of killing the notion of luxury villagers.

The Premier in his Throne Speech said he was repealing the Morgan’s Point Act. Morgan’s Point had the most dense housing allocation in Bermuda, with permissions to build to six storeys and more if height restrictions and fire regulations were met. A casual look would see that all Morgan’s Point was granted as permissions were transferred to the Fairmont Southampton project. Has anyone investigated who is the principal source of investment for the new Morgan’s Point scheme. Could it be the same principals behind Fairmont Southampton? The picture of this in the Throne Speech was like a dagger to our guts — now Westend Properties is attempting to twist it.

The practical reality is, not only is the Government trying to facilitate the opening of the hotel, but it is leveraging the housing market in Bermuda against other developers to do so. If no, then like Sir David Gibbons once declared in the early 1980s, we need to take off the caps, “come out of the cocoon”, open up the laws for six-storey development everywhere. Remove import duties on building material for houses for everyone, roll back the land tax on new builds for everyone. If the argument is, we need to increase employment by boosting construction, then let’s create a tsunami, not a little wave for one developer to surf on.

Why destroy the idea of a luxury village at Morgan’s Point to prop up Fairmont Southampton? “Let freedom ring”, let’s use the policy of openness and the attitude of “there is more”. When society adopts the attitude of scarcity, greed and selfishness cause people to hoard and manipulate to control what is perceived as the remaining resources.

There is a dearth in economic creativity and no ideas of how to grow the economy. This government is desperate to sell its assets or turn the country into a huge capital project. Bermudians are leaving in droves, and many of those who remain are contemplating when and if they can leave. Yet this does not disturb the leadership of Bermuda because they frankly don’t care. They will cling to that carcass and will not get up from the table until all that is left are bones. Stuck on that cursed “30-6”, all waiting for their lifetime pensions, taking the last drop of blood they can suck. It’s a pathetic scene, but in reality that’s what is of the “people’s movement”.

It may be that Chris Maybury, who did himself no justice by recently representing his own interest publicly in forums and on television, and who at one stage acted as an adviser to the Government, is leader incognito. Many of the Government’s initiatives, including the mortgage guarantee, have their genesis or as a result of collusion with Mr Maybury.

We have often heard the term “don’t put the cart before the horse”, but in this case we have to determine which one actually is the horse. We might have been following the cart, pulling on it in the belief that it’s the horse.

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Published May 22, 2023 at 8:00 am (Updated May 21, 2023 at 11:41 am)

A gambler’s bluff

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