The businessman now running Stonington Beach Hotel radically renegotiated his proposal after he was selected, saving himself millions of dollars in rent and securing an extra two acres of prime oceanfront land with two cottages.

The Royal Gazette has learned that the deal signed by John Jefferis to manage the Government-owned hotel at Bermuda College is significantly more advantageous to him than the proposal which he put to a civil service committee which awarded him the contract in December last year.

After his company, Island Resorts, was selected ahead of Bermuda Resort Hotels, Mr. Jefferis changed his plans and negotiated a five-year rent free period, and to increase the lease from the agreed 21 years to 50.

When Mr. Jefferis was picked by the selection committee to run the hotel last December, a 1.9 acre plot with two cottages was not on the plan of lands to be handed over to the new operator.

But in May this year, new plans were submitted in the name of the College, as landlord, to redraw the boundaries and include the prime site as part of Mr. Jefferis' hotel site.

The site was not on the table when Mr. Jefferis was selected because it had been earmarked in Bermuda College's master plan for halls of residence.

Bermuda College president Michael Orenduff said he was "very concerned" when he discovered the changes and believed the institution - and thus the taxpayer - had been saddled with a $1.25 million debt for this year alone as a result of the deal.

The College will also have no guaranteed base rent for the first five years, and the rental income for the duration of the lease is millions of dollars less than that proposed by Mr. Jefferis when he was selected.

Neither Dr. Orenduff nor the Bermuda College chief financial operations officer Ann Parsons saw the lease before it was signed, and the College has asked its lawyers to examine the deal.

Dr. Orenduff, who attended meetings of a committee overseeing the transition of the College-run hotel to the private sector, was unaware of some of the key changes Mr. Jefferis secured in the final lease, which was signed on June 12 this year.

Dr. Orenduff said: "After the lease was signed, a copy was given to the College's chief financial officer.

"When she told me some of the provisions of the lease I became very concerned.

"She reckons the lease creates a liability for the College in the region of a million and a quarter dollars.

"And since the lease does not require any rent for the first five years, there is no income from which the College can pay these liabilities.

"She has recommended that the lease be submitted to the College attorney so we can understand exactly what it all means.

"It is our hope that the Government has some plan to handle this financial liability without using College funds."

Transition Committee minutes seen by The Royal Gazette show Mr. Jefferis was told the extra plot of land he eventually got was not on offer because it was earmarked for halls of residence.

The selection committee which picked Mr. Jefferis in December last year was Tourism Director Judith Hall-Bean, Education Secretary Michelle Khaldun, Californian hotel consultant Jerry Morrison, and Philip Butterfield of the Bank of Bermuda.

After winning the lease, Mr. Jefferis negotiated the terms of the lease with the Stonington Beach Hotel Company - which will oversee the hotel - and civil service technical staff.

The Stonington Beach Hotel Company is chaired by Bermudian lawyer Paul King, and includes Mrs. Hall-Bean, Mrs. Khaldun and the chairman of Bermuda College Board of Governors Raymond Tannock.

After agreeing the new lease, the company forwarded it to Cabinet, which also approved the deal.

Bermudian Mr. Jefferis, a former general manager of Elbow Beach, who now owns the award-winning Coco Reef Resort in Tobago, has said he will spend $10 million upgrading Stonington to run it as the Coco Reef Resort Bermuda.

Tourism Minister Renee Webb said the tax-payer has got a good deal because Government will no longer need to bail out the loss-making hotel every year and it will be expanded and improved.

And she insisted the cottage and extra land were always on the original deal for Stonington, even though they were not included in the official plans submitted by the College to Planning dividing the land.

Ms Webb told The Royal Gazette: "I feel the Government and people of Bermuda have been very well served by choosing John Jefferis and Coco Reef Resorts to take over the management of Stonington Beach, which has been losing money consistently for about 20 years.

"Someone will be taking over the hotel who will inject capital to get the hotel to five star status at no expense to the public purse.

"We will benefit from that because the building will still be owned by the Government through the hotel company that will have a board of directors and a management team to ensure the hotel is functioning and does not operate at a loss.

"In terms of what was negotiated with him, we strongly feel the Government and people of Bermuda have achieved a milestone in the industry in getting this.

"It is a win-win situation. In terms of where it started and where it ended up, they ended up in a good place.

"There was to-ing and fro-ing. I don't know where it started, but it has ended up as a win-win situation."

Mr. Jefferis said the cottages were always part of the hotel and although he would be paying lower rent than he originally proposed, he was making a significant investment and taking on more responsibility.

"I don't think it was that much better (a deal)," Mr. Jefferis told The Royal Gazette.

"I assumed the liabilities such as insurance claims against asbestos pre-May 1 and there could be no claims for structural problems.

"There was a lot to do for maintenance. In terms of who was going to do what, it was restructured.

"There is less rent but it has to be balanced out by me taking on more responsibilities. Clearly they (the college) did not want to take on any extra risk and they didn't want to put any money into the property."