Govt will cut ties with developer Bazarain
Government will stand by the decision made under the Progressive Labour Party to cut ties with developer Carl Bazarian, according to Tourism Minister Shawn Crockwell.
However, wresting control of the East End site earmarked for the Park Hyatt development would be a job for Parliament, Mr Crockwell told
The Royal Gazette.
Asked if the US developer had threatened legal action over the terminated deal, Mr Crockwell said: “Nothing has been filed, but the tenor of his comments suggest that he may wish to challenge our decisions.”
Government is currently mulling its legal position with the help of the Attorney General.
“We have already received preliminary advice, but we are just making sure there are no legal anomalies,” said Mr Crockwell.
Mr Bazarian, meanwhile, said he was unable to comment, when contacted yesterday by this newspaper.
Government’s agreement with Mr Bazarian was terminated in the final months of the PLP administration, on the basis of a breach in the terms of contract with the developer.
Yesterday, Mr Crockwell affirmed that the termination, which remains fraught with potential legal complications, would prevail under the One Bermuda Alliance government.
“The Government remains continuous,” he said. “It was a Government decision and we just want to make sure there are no legal risks as a result of what transpired.”
One snag, Mr Crockwell added, is the 2008 Park Hyatt (St George’s) Resort Act.
“The challenge is that, irrespective of the fact that the lease and agreement have been terminated, the land was transferred to Park Hyatt for their use for a period of time,” the Minister said.
“So although we may have had terminations, that does not allow us to use the land right away, because the land was made available to the Park Hyatt through the Park Hyatt Act.
“If indeed it is decided that we are not going to continue relations with Bazarian and this Park Hyatt proposal, then in order to go in different directions with the land, we would need to repeal the Park Hyatt Act.”
In terms of legal ramifications, Mr Crockwell continued: “There may be others — but that is what I would like to deal with immediately.”
In the wake of comments by Mr Bazarian that he had invested “millions” of his own in the project’s design, Mr Crockwell was asked if backing out of the deal presented a risk to the Island’s taxpayers.
“Those are matters that we are looking at,” the Minister replied.
“The reality is that there were certain conditions that were not met by Bazarian. All these types of commercial developments have risk.
“We are now looking at the documents and everything that transpired, to ascertain our position legally. I don’t know at this point what legal claim he may have.”
Mr Crockwell’s remarks followed an announcement by former Tourism Minister Wayne Furbert that the Park Hyatt deal had been dropped by Government scant weeks before the December 17 general election swept the PLP from power.
Asked why he hadn’t announced the break until after the election, Mr Furbert denied that the previous administration had been “trying to hide anything from Bermudians”.
“We were trying to give the developer the benefit of the doubt,” Mr Furbert said. “That’s why Government kept saying we wanted to get a hotel in St George’s, period. We were hoping that by some chance he would come through. There was a chance Mr Bazarian might go ahead with something in December. We also didn’t want to scare away any possible financing for the project.
Mr Furbert continued: “We really wanted to have a hotel in St George’s. But because we knew the termination was in place, we had a feasibility study prepared for a hotel site like St George’s. After the termination, Government was free to talk to anybody. Our plan was to hit the ground running in 2013, to talk to other developers.”
The new Minister said yesterday that he had not yet seen the study and could not comment.
However, Mr Furbert said the study had been drafted by Government following the expiry of the 30 days’ grace extended to Mr Bazarian.
Mr Furbert described the feasibility study as “a business plan for a five-star hotel location that attracts convention and leisure visitors”.
“We did it so that we could get out there and talk to new developers on Bermuda. We were working on starting up appointments to go after developers and talk to them about the site,” Mr Furbert said, adding: “The Minister Shawn Crockwell has a great opportunity, with the foundation we laid, to get things moving at that site. That study was done by a local architectural firm in conjunction with a Bermudian construction company with overseas support. We had it prepared in late November, early December. It was done at a good pace because we wanted to get out of the blocks running with it. It was done after the 30-day period was up. That study allowed Government to consider, once the termination went ahead, to find someone else interested in developing.”
The feasibility study, he said, didn’t specify a site location, but covered a roughly 360-bed hotel.
“It did not include residential units,” Mr Furbert added. “That model has not worked.”
Holding out hope that the possibility remains for new hotels in the Island, Mr Furbert said the former administration had been intent on “going ahead with a new Hotel Concessions Act, to encourage hotel development” and had also engaged in talks with the Bermuda Industrial Union toward possible means of lowering construction costs.
Asked how much Government might have already invested in the former Club Med site that had been slated for the Bazarian development, Mr Furbert replied: “I can’t answer that, as I’m not aware of any costs.”
For the second day running, OBA Chairman Thad Hollis accused Mr Furbert of withholding the truth in the run-up to the December general election, saying the former Minister should “hang his head in shame”.
Since the contract with Mr Bazarian was scrapped in October, Mr Hollis said: “What happened to November and December?
“By failing to tell the public before the election that Mr Bazarian had, in effect, been let go, Mr Furbert and his then-colleagues in the Cabinet misled the public in no small way. There was great public interest in this new hotel, especially in St George’s, whose residents had looked to it to rescue their failing economy for many years.
“It is documented that Mr Furbert was given an opportunity by
The Royal Gazette to comment on Mr Bazarian’s statement in early October that work would begin in January, but he declined, allowing all of us to believe it was the truth. The effect of that silence, presumably after consultation with his colleagues in Cabinet, was to avoid putting PLP candidates in that area at a disadvantage in the election, and I see that as being thoroughly dishonest.”
Mr Furbert responded: “I do not want to get into much discussion with Mr Hollis, but I would suggest that he speaks to his Ministers on this matter. As far as why we did not mention anything after the termination, we have answered this. There is no reason to hang my head in shame, we believe that we handled it right in the best interest of Bermuda.”
Newly named Mayor of St George Garth Rothwell said yesterday the property should not be allowed to sit idle.
Asked about the news that developer Carl Bazarian’s contract for the site had been terminated, Mr Rothwell said: “That’s 260-odd acres of St George’s Island that’s been sitting there for years and hasn’t been going anywhere.
“We lost the golf course, we lost the golf club and we lost the beach house. As a Corporation, we would be very interested in participating in whatever it is that goes forward and keen for something to be put in place up there — whatever makes sense.
“All that said, we realise that the business model for a hotel and residences in Bermuda is economically challenging.”
The mayor said he’d spoken to US developer Carl Bazarian regarding the project, but not recently.
“I have talked to him a couple of times in the past,” he said. “It was more to do with the mundane thing. If he was going to put in that hotel up there, he was going to have to put in a modern sewage plant and we need one in St George’s. We didn’t think it was sensible to build two of those.
“We talked to him about getting together on that, and he was sort of amenable to that, provided we didn’t hold up his schedule.”
In a bid to attract cruise ships to the East End, one proposal would have a dock placed on the north shore of the Island close to Murray’s Anchorage.
Asked how the scrapping of the Park Hyatt deal might affect that plan, Mr Rothwell said:
“I have heard that the hotel developers were not keen to have a cruise ship there if there was a hotel up there — so, in that way, I guess yes, it would make things easier.”