MPs to raise debt ceiling over Morgan’s Point
The Bermuda Government has been forced to pay lenders for the hotel and resort at Morgan's Point before the end of this month, finance minister Curtis Dickinson confirmed today.
A loan of $165 million will be negotiated with local banks and paid next week, which will end the administration's plans not to raise debt this fiscal year.
As reported in The Royal Gazette this morning, Mr Dickinson will now table legislation to raise the island's debt ceiling to cover the guarantee on the Caroline Bay development.
The unfinished development, where construction has ground to a halt, was put on notice over the summer by Mr Dickinson.
Mr Dickinson told a press conference today that Parliament had no choice but to raise Bermuda's debt ceiling by $250 million this morning, and that the island's debt would be pushed to $2.75 billion.
The minister laid the blame on the One Bermuda Alliance for agreeing to the $165 million guarantee on March 14, 2016.
Developers at Morgan's Point have failed on the terms with their lenders, who include the reinsurance firms Arch, Axis and Validus Re.
Meanwhile “a number of businesses” are pursuing claims against the project.
Mr Dickinson said there was potential for the island to suffer a downgrade at the hands of ratings agencies as a result.
He said: “We are responsible for resolving the negative and unfortunate outcomes of the deal negotiated by the former Government.”
Asked if the emergency payments meant that the development would be acquired for the Bermuda Government, Mr Dickinson said the Government had simply acquired the debt on the project as a result of its obligations.
The Royal Gazette understands that the Government Loans Amendment Act will be the only legislation tabled in what is likely to be a brief session this morning at the temporary venue of Veritas Place, on Court Street, while renovations continue at Sessions House.
The move comes with profound implications for the Government's hopes of balancing the 2019-20 Budget.
The guarantee for the development at the former United States military base in the West End dates back to 2015, under the One Bermuda Alliance administration.
It is the second-largest on the Government's books, behind $276.8 million for the Bermuda Hospitals Board.
Others include $71.8 million for the West End Development Corporation, $29.3 million for the Bermuda Housing Corporation, $10 million for the Bermuda Tourism Authority, and $1.2 million each for the Bermuda Casino Gaming Commission and the Bermuda Economic Development Corporation.
The guarantees are not charged against the island's statutory debt ceiling unless the obligation becomes due and payable by the Government, pursuant to the amended Government Loans Act 1978.
Immigration reform legislation covering mixed-status families, which was postponed in July, has been delayed further as a result.
• To read Curtis Dickinson's remarks in full, click on the PDF under “Related Media”