Work will start on a new low-cost housing development within the next four weeks, the Premier announced yesterday.

And the developer said ground will break on the hotel portion of the Grand Atlantic Resort development within the next six months.

Developer Larry Swenson said the $150 million project was "fully financed". The hotel is expected to cost $80 million with the remainder spent on the housing development.

Butterfield Bank confirmed it would be financing a portion of the housing development but did not state how much the loan was for.

At a press conference yesterday Premier Ewart Brown said: "I am pleased to announce that in just four weeks Atlantic Development Bermuda Limited will break ground on a brand new 125-unit affordable housing complex on the South Shore coastline in Warwick.

"Our Government promised to find solutions to address the serious and long standing issue of affordable housing. Promise made, promise delivered!"

The company was granted a Special Development Order to build the residential component, which includes 30 three-bedroom units and 95 two-bedroom condos, as well as the tourism portion, which includes a 100-room hotel and 20 fractional units. It will sit on 13-acres of prime oceanfront property in Warwick, on the former Golden Hind resort.

Yesterday, Mr. Swenson spoke with The Royal Gazette and said the residential units will be built in four stages.

The first stage will see 24 homes built, with construction starting in four weeks; it will take 10 months to complete. The second stage will begin in approximately six months and will see an additional 27 units built, also anticipated to take 10 months to construct.

Construction on a third lot of 27 units is expected to begin in 12 months' time. A timeline for the remaining 47 low cost housing units has not yet been worked out. He added that construction on the tourism units would begin before the end of the year and was expected to last two to three years.

It was first understood that Government would help fund the development by purchasing a portion of the land on which the low-cost housing will sit, however Mr. Swenson and Housing Minister David Burch said yesterday that was not the case. Real estate experts estimated that purchasing the land could cost $25 million.

In April 2009 Dr. Brown said: "The developer needs capital to build his hotel; we need land to build affordable homes. Today we have both."

He said Government was not "investing" in a hotel but "simply buying land" for housing.

"The Government has had on its books for a long time the money to buy property for affordable housing," he added. "In this case we found a developer who, rather than bear the pain of the economic downturn, got creative."

Yesterday, when asked about Government's capital injection into the project Sen. Burch said: "It's just like Loughlands. They develop [and] we give them occupancy certificates. It's quite simple. There has been no cash injection."

Loughlands was another private-partnership, also with Gilbert Lopes, which saw Government purchase the condos from him and then sell them at below market price, for approximately $450,000. Five hundred people signed up for one of the 96 units at the Paget property,

A request to both politicians to clarify the purchasing of land at Grand Atlantic was not answered by press time.

After the press conference Mr. Swenson elaborated on the partnership with Government.

"It is fully financed by Butterfield Bank," he said. "Government was never going to purchase the land. We are building homes for the Bermuda Housing Corporation, and their preapproved clients will buy them for $500,000 to $650,000.

"We are building the product and they are buying it, the Bermuda Housing Corporation (BHC) is acting as the go between.

"The BHC are not buying the houses, public funds are not [being used to] buy the property. There is no Government financing for it."

A spokesman for the bank stated: "Butterfield is pleased to have provided financing to Atlantic Development for the acquisition of the land on which the Grand Atlantic project will be constructed.

"We have further committed to provide a portion of the financing required for the development of the affordable housing units on the property.

"As Bermuda's own bank, we're pleased to be working with local developers to help provide affordable homes for Bermudian families."