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Grand Atlantic cost to Government in dispute

The cost of the Grand Atlantic housing development to Government appears to be in dispute, even as legislators approved a $1.8 million overspend in the early hours of yesterday morning.

The South Shore property, originally conceived as low-cost housing, cost $42 million, according to former Public Works Minister Wayne Scott, but is today worth $17 million.

Opposition MPs reacted incredulously to news that the developer, Bermudiana Beach Resort, had acquired the property for $9 million, to be paid over four years.

The revelation prompted Progressive Labour Party MP Zane DeSilva to rise and offer to buy the beleaguered Warwick site himself, for $1 million extra.

The sale of Grand Atlantic has yet to be agreed, and new Public Works Minister Craig Cannonier was chastised by his Opposition counterpart, Dennis Lister, who told him to do his homework before bringing matters before the House. It came near the end of a five-hour debate on supplementary estimates for the 2014-15 fiscal year, in which several One Bermuda Alliance ministers were accused of coming to Parliament unprepared.

At about 2.15am, Mr Cannonier brought a $1.8 million supplemental on the Bermuda Housing Corporation (BHC), which he described as covering the reclassification of the housing grant for Grand Atlantic from the operational budget to capital budget. The Grand Atlantic loan stands at $36.7 million.

“It is anticipated that the agreement with the new developers for Grand Atlantic will be completed, and BHC will receive $9 million over four years for the sale of the property,” Mr Cannonier said.

“Again, this is money that was already allocated; we're just moving it from one area over into capital budget, because it is anticipated that the property will be sold, which is proper and better accounting practice.” This began a wrangle with Mr Lister over how much BHC would actually receive in the latest deal for the site.

Grand Atlantic, which was opened to acclaim under the PLP government in 2012, has been consistently reported as leaving BHC owing $36 million to Butterfield Bank.

Mr Lister said the latest deal for the property, in which only one housing unit was sold, amounted to “$9 million on a $36 million property”.

Mr Cannonier agreed, but said BHC would have to “ensue then with an agreement with the bank for the rest, which would be $27.7 million”.

BHC would have to work out a plan, perhaps over 15 or 20 years, that was still under negotiation, he said.

“So, in a sense, the new developer, Bermudiana Beach Resort, have acquired the Grand Atlantic property for $9 million,” Mr Lister replied.

“No, certainly not; that's not what I'm saying,” Mr Cannonier said, prompting Mr Lister to ask again.

The minister said: “As I understand it right now, $9 million over the next four years, which is what will be paid to BHC.”

Eventually Mr Cannonier apologised, adding: “I still haven't seen any contracts or anything of the sort, so I need to clarify this myself.”

Rising on a point of clarification, Mr Scott told the House that the deal was a work in progress, and its contracts “are not etched in stone”.

Notwithstanding the amount that the previous government had paid — which Mr Scott said amounted to roughly $42 million — its generally accepted market value now added up to about $17 million.

“Yes, the government will get approximately $9 million,” Mr Scott said. “It's estimated that there will be another $9 to $10 million over the next few years in taxes and fees, et cetera, and the BHC will also keep a couple of units, so that the Consolidated Fund will ultimately get back what the property is actually valued at today.

“Part of that being discussed is that the bank will have to participate in the reality of what that property is worth today. Let's not confuse what was paid for something versus what something is worth. Because those are two completely different things.”

The two sides once again clashed over the premise behind Grand Atlantic: Finance Minister Bob Richards declared it “a very expensive miscalculation” by the PLP, while Mr DeSilva said OBA and environmentalist fear-mongering over the cliff face had doomed sales from the outset.

BHC's capital grant was finally approved at 3am.

Earlier in the day, MPs heard that the single family living in the Grand Atlantic complex would move out soon, but had been delayed because “the deeds for where they were moving had been lost”, according to Mr Cannonier.

“We have found those deeds,” the minister added. “BHC is working with them to make sure they're comfortable, and probably within the next week or two, they will move out.”

The Grand Atlantic complex on South Shore, Warwick

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Published March 18, 2015 at 9:00 am (Updated March 18, 2015 at 9:19 am)

Grand Atlantic cost to Government in dispute

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