240-year lease at 9 Beaches sparks debate amongst MPs
Developers behind the 9 Beaches project will be able to lease land at Daniel's Head, Sandys, for up to 240 years, under an order approved by MPs yesterday.
Bermuda Land Development Company will get $1 million in rent for each of the first seven years and $8 million in the eighth year from IRC Sandys as a result of the lease which passed through the House of Assembly.
But Government MPs argued the real benefit for Bermuda will be the tourism and construction benefits from the $80 million dollar project.
The United Bermuda Party asked what might go wrong years from now and questioned if the order had been properly put together.
However, Tourism Minister
Patrice Minors argued the 9 Beaches resort is key to the Island's success as a tourist destination.
Hitting back at worries of “what if” something goes wrong in the future, she replied: “What if we do not enter into this lease, what is that saying for our hotel developers?
“What is that saying to our regulatory desire to increase hotel beds in this Island? What does that say to our global promotion of Bermuda as a jurisdiction?”
Mrs Minors said all parliamentarians admitted they wished Bermuda could return to the glory days and said it was important not to let quality and quantity fall down.
“This lease is a necessity. We need to continue to work hand in hand with the hotel developers and work with our desire to increase hotel beds. If that means having a lengthy lease then that is what we have to do,” she said.
“This is too significant of a matter for us to not consider it as seriously as we do right now the amount that is attached to this lease and the length of term that is attached to it.
“As the appointed Minister of Tourism that is a challenge I am trying to address. Are we going to bend over backwards, no? But we want to make clear (to developers) what we are willing to give.”
Mrs Minors said the tourism product was important to Government and added: “This is just one component of making us a success which is to have the beds. Another thing that I feel would make us a success is not only the quantity of beds, but the quality.
“I am quite supportive of this lease and eager to see some of the pending and imposed hotel development models so we can see the breaking of the ground, see the long-term, see our Bermudians employed in these establishments and see Bermudian hospitality institutes so we can have time to direct people back in these institutions.
“I am most encouraged by this development using a long lease. The development at the end of the day wishes to be profitable.”
She said the lengthy lease would give developers some certainty to invest at levels they can measure and make it a facility that proves to be profitable to them and the Country as well.
Public Works Minister
Derrick Burgess called the project “instrumental” and said it was important to get it moving, adding: “I apologise if people felt raced, but we are here to do the business of the Country.”
While he admitted there were some typos in the lease that had to be dealt with, he said Government knew what it was doing and praised its efforts in getting people into the Country to invest.
“You have to spend money in order to make money” said Mr Burgess, adding that the investment would stimulate the local economy.
“As far as Bermudians working there goes, you're still going to need dry wallers, plumbers, landscapers and carpenters. There is work there, and not only in construction.”
Paula Cox said she looked at the law in two ways; the dynamic approach or the static one and the later would result in nothing getting done.
Not only would the multi-million dollar project bring expenditure to the table, Mrs Cox said it would also boost the Island's tourism product.
She said she had no doubt of the necessity to dot 'I's within the lease, but expected this transaction was something Government could “be supportive of and continue to be for years to come.”
Shadow Attorney General
Trevor Moniz said the UBP was is in favour of stimulating the economy, but did not want to tie Bermuda to an agreement it could regret because it hadn't been thought through properly.
Mr Moniz complained the Opposition had not been given enough time to do its due diligence on the move, as it was only tabled in the House three days previously.
“Unfortunately the track record of Government continues of not giving proper notice and information about this very important initiative,” he said.
Mr Moniz said it was important to keep the public informed, particularly as environmentalists have long had concerns over the protection of Bermuda's land; he said some of the land in question had at one time been zoned as a national park.
He added that the map and other pieces of information regarding the lease had still not been tabled.
And he described the project as an accident waiting to happen because the lease was so long, explaining: “You are bound to have serious questions at one point or another.”
Grant Gibbons questioned whether the development included adequate protection to protect Bermuda Land Development Company and therefore taxpayers for many years in the future.
“Based on what we have seen so far, there are still some residual concerns about this,” said Dr Gibbons.
He pointed to typographical errors, and said the UBP was not impressed with the presentation of the lease; he said potential developers may feel the same.
“I'm embarrassed that we are here today dealing with something as incomplete and messy as it is,” he said.
Progressive Labour Party MP
Wayne Furbert said the development would bring hotel rooms to improve tourism and job opportunities for Bermudians.
“The Government recognises we have got great jobs for our people out there,” he said, adding that it needed to be pushed through as quickly as possible.
Southampton West Central MP
Charlie Swan of the UBP claimed the required rent - $15 million over eight years was not enough, saying: “It doesn't matter who the developer is, if they are really keen land is worth more to me than that.”
Zane DeSilva argued the benefit for Bermuda would last for more than two centuries.
Reflecting on Mr Swan's comment, he said: “That really touched my heart because I know this project is going to help our Bermudian people now and for 240 years.”
Mr DeSilva added: “It's better than a poke in the eye. Bermudians are out of work. We want to put our Bermudians back to work.”
Shadow Finance Minister
Bob Richards expressed concern at the developer's roots in Canada, claiming it might not have the long-term commitment to help Bermuda that a local firm would.
“It really behooves the Bermudian Government to make sure we take care of two words, and everyone today has talked about those two words. Those two words are 'what if',” said Mr Richards.
“What if something goes wrong? What if somebody doesn't pay? What if the developer goes broke?
“The 'what if' isn't so important if everybody has a confluence of interest. If it goes wrong, they can take a hike and go back to Canada. Where are we going to take a hike to? St David's?”
Bob Richards said usually what if scenarios were handled by lawyers, but there didn't seem to be much legal protection on the side of Government.
“One of the things that is making us some what uncomfortable here is there doesn't seem to be much evidence of a lawyer on our side.
“I know most of these contracts have various degree of clauses that provide protections for the landlord and it is the case of the lawyer to dream up all kinds of scenarios in the event of 'what if this happens' and 'what if this goes wrong'.
“Where have the lawyers for the Bermuda people been as it relates to this document?” the Shadow Finance Minister asked, adding that even optimists or realists were aware that things could go wrong.
He said there was no problem with the lease “conceptually”, but there was not enough detail or responsible oversight from the legal council for the people.
Walter Roban lauded the prospective development and praised Public Works Minister Derrick Burgess for bringing the lease to the forefront.
“We must as a Government protect and create capacity for developments like this. This is not just about whether people are coming in and bringing their money in like suitcases, this is more about the confidence people have in the Bermuda product.”
He said the development would ensure the renewal of the local product and reemployment of the people, adding that it was “crucial” for the country.
Mr Roban said Government should be praised for chasing some of the capital and bringing it home to benefit the people. “We are doing some different things than generations past, we are attaching development of our people to development of our products.”
Cole Simons said his party recognised the importance of developing this piece of property in the west end and didn't want to “put (the lease) on ice”.
But said he would have like to see the lease reviewed by the Attorney General's Chambers as it needed fine scrutiny. He criticised one clause in the lease that said the developers would only need to give 30 days notice for any planned hotel closing.
Mr Simons said: “Thirty days isn't long enough. I know the average employee at the bank they have to give 90 days notice. Thirty days is insufficient for us to plan if the hotel closes, what about the employees.”
Kim Swan said he knew the Island needed to create “buzz” within the tourism industry, but the lease was not something MPs wanted to get wrong and shouldn't be rushed through.
“There is a major concern as to what we are dealing with today. We need to know there is a balance and balance is important in all things we do.
“There needs to be balance to make sure Government is getting the best deal for the people and the future tenants of this property are going to get the best deal.”
He said the 240-year lease meant that this development would impact nearly seven generations of people and needed to be considered fully.
Attorney General and Justice Minister
Michael Scott said the lease offered Government protection as it “very carefully” dealt with eventualities within the context of the document.
He said he understood the UBP's problems were not with the principle of the investment “which would be good for the economy”, but with the terms and conditions of the lease.
“This is a standard lease. It is a lease that has top protections in it of the Bermuda Land Management Corporation and I think that in every respect we cannot project too deeply into what if or speculative scenarios when we are considering what is a really well developed lease.”
Mr Scott commended Mr Burgess for trying to get the lease approved before the Christmas holiday and said the development would not only stimulate economic activity and jobs in the construction sector.
It would also contribute to another wave of jobs in the hospitality, restaurant and entertainment sectors once it opened.
John Barritt said it was the UBP's role to scrutinise the lease for the benefit of the public.
He admitted it would be problematic to approve the lease as it stood yesterday and said: “If we approve something here today, what gives the (lawyers) the authority and right to check it after today?”
Mr Barritt said it was difficult to go over the terms and conditions of the lease in the House and said the proper way would have been to establish a committee to look at it clause by clause.
“It's a serious monumental step we have to take today and none of us will be around or will face challenges that arise from this lease (in the future).
“You can't see every issue that will arise but you try and get wording that will help you to deal with that,” he said.
Mr Barritt disagreed with comments from Mr Scott that the lease was “standard” and said: “This is not by any strength standard, but it looks like it is a coming wave.
“And once the word goes forth that we are open to this kind of business then we will attract more of it.”
Independent MP Darius Tucker praised the fact the development was driven by two local businessmen; hotelier David Dodwell and Rego Sotheby's International Realty president Buddy Rego.
“These (developments) do not come easily and I am sure there two gentlemen know the costs if this project fails because there are ramifications down the road.”
Mr Tucker said it was great the developers were able to embark on such a project in these trying times, adding: “I do not think we should impede their progress”.
“I have a lot of confidence in these two gentlemen because even in these tough times houses are still being filled in Bermuda. Mr Rego and Mr Dodwell should be able to realise thier dream and have this development come to fruition.”
Bermuda Democratic Alliance MP
Mark Pettingill said he heard the Opposition's concerns about the lease, but admitted he had faith that the suggestions would be taken on board.
Still he said it didn't serve MPs to have a “pedantic approach” to the lease. He said they could go on safe guarding every clause, but that would take eons and they would never get anything done.