MPs pass tax concessions for Fairmont Southampton
The controversial bill giving a string of concessions to the developers of the island’s largest hotel was passed by legislators yesterday.
But in a lengthy debate, former Finance Minister Curtis Dickinson clashed with party colleagues when he declared he could not back the Fairmont Southampton Hotel Act 2022.
The Bill - which was eventually passed without any MP voting against it - will give tax concessions of between $121 million and $133 million over 15 years to Fairmont Southampton owners Gencom.
It was also revealed that Government will give a guarantee of $75 million, representing 21 per cent of the revised costs of the project of $376 million.
The tax concessions cover customs duty, hotel occupancy tax, land tax and the employer’s portion of payroll tax.
Presenting the Bill for its second reading, Tourism Minister Vance Campbell said naysayers of the concessions, who have included the One Bermuda Alliance, were "borderline criminal and undoubtedly tone deaf".
David Burt, the Premier, also attacked critics, telling MPs: "You can't give up something you do not have. If there is no hotel operating, there are no taxes. Simple.
"Without this Bill, the Government loses, business loses, families lose, union members lose, individuals lose and Bermuda loses.“
But Mr Dickinson, who resigned from the Finance Ministry portfolio in February, maintained his criticism of the bill.
He said the 15-year concessions, including Customs breaks, could run between $114 million and $133 million.
Mr Dickinson said the legislation had failed to provide sufficient detail when, with the $75 million guarantee thrown in, it could run up to $180 million to $200 million.
He added that the cost could run still higher, with a potential for further incremental costs on the project.
He said there was a risk that other developers such as the St Regis could approach the Government for retroactive relief because of the Fairmont deal, and said the Government was "flying blind" on the real costs.
He acknowledged that it was important to get the hotel up and running, but not at such a high price.
He said: "Given the Government's fiscal position, the proposed legislation is too generous.
"A simple question that remains unanswered is, what is Westend Properties' contribution to this transaction?
"I suspect that it is nowhere near as much as the people of Bermuda are being asked to put at risk."
Mr Dickinson also took a swipe at party colleague Lawrence Scott, who had earlier claimed that anyone who did not support the bill was “sowing the seeds of confusion and being disingenuous”.
The Transport Minister had said: “If you can’t support it, you are relegating this important Bill to nothing more than a political football.”
Mr Dickinson hit back, claiming: “It is indeed possible to not support this Bill but still be in support of the redevelopment of the Fairmont Southampton. We are entitled to different views."
Mr Dickinson came under fire from another former Cabinet colleague when he questioned the timing of the Bill, saying: "We are committed to giving someone more than $100 million without understanding what more is to come. What is the rush? Why are we doing this now?"
That question prompted Jason Hayward, the Labour Minister to respond: "Why are we doing this now? Because we have waited for far too long for the former Minister of Finance to close this deal, and he was unable to do so."
Mr Dickinson cut in on a point of order, saying "I hoped beyond hope that I would not have to do this", adding that Mr Hayward was "unintentionally misleading the House".
He added: "Unfortunately, I can't speak to what happens in the Cabinet chamber."
At that point, Acting Speaker of the House of Assembly Derrick Burgess did not allow Mr Dickinson to elaborate.
Earlier, Mr Campbell opened the debate with a stark portrait of a tourism industry that was increasingly reliant on cruise arrivals ahead of a pandemic that devastated leisure and hospitality services.
He said the success of the Fairmont Southampton restoration had a direct link to boosting air arrivals to Bermuda, and said the developers were keen to tackle the seasonal variations in the island’s tourism numbers.
Craig Cannonier, the One Bermuda Alliance spokesman on Tourism, said the Opposition backed the revival of the hotel.
"There’s no one in the OBA who is refuting that we need to get something done at the Southampton Princess and that this is of national importance," he said.
But he maintained prior to Mr Burt detailing Government estimates on the value of the tax concessions and the size of the guarantee that more details were needed - a view shared by Mr Dickinson.
And he said the OBA believed it was unnecessary to give more than ten years’ tax concessions with the developers getting the option to request an extension if needed.
Earlier Mr Burt told MPs the Government had hoped to close a deal in December 2021, but it never transpired.
"The more time that went on where there was no agreement, the more difficult finding an agreement became," he said, citing global difficulties caused by the pandemic.
Mr Burt said the Government could have demanded that the developers downsize the project, called for more equity, enhanced the Government's credit support, or left the hotel closed as "a monument to Bermuda's tourism past".
Instead, he said he - with the backing of his Cabinet - had opted to increase the guarantee attached to get the project done.
The $75 million loaned to developers is repayable through taxes collected through the operation of the hotel.
Mr Burt added: "There is no tax giveaway for wealthy foreigners."
Mr Burt said up to $10 million in investment from Bermudians themselves could cut the Government's guarantee on the Fairmont Southampton Hotel down to $65 million.