Gencom praises approval of Fairmont Southampton tax breaks
Owners of the Fairmont Southampton have welcomed the passage by MPs of legislation designed to support the hotel’s redevelopment.
Karim Alibhai, on behalf of Westend Properties, added that the company believed its agreement with the Government could help to attract other investors to Bermuda.
He said: “We were very happy to hear that the Fairmont Southampton Hotel Act 2022 was unanimously passed in the House of Assembly on Friday afternoon, and that the Members of Parliament from both sides of the House recognise the significant impact the Fairmont Southampton hotel has on Bermuda’s economy.
“We believe this is a big step forward for Bermuda’s tourism sector as the reopening of the hotel, which is the largest non-government employer on the island, will not only create a significant number of jobs for Bermudians but will also increase much needed air arrivals to the island.
“We’re excited to break ground this summer once details are finalised and are looking forward to the reopening of this iconic property.”
Tax concessions of at least $121 million are expected to be given to the hotel owners over 15 years.
MPs also heard on Friday that the Government will give a guarantee of up to $75 million, which would represent 21 per cent of the revised costs of the project of $376 million.
David Burt, the Premier and Minister of Finance, said that the guarantee was set up so that the $75 million loaned to developers and the repayment of the loan will be financed by taxes collected through the hotel’s operation.
He added: "There is no tax giveaway for wealthy foreigners."
Mr Burt said up to $10 million in investment from Bermudians could cut the Government's guarantee on the Fairmont Southampton Hotel down to $65 million
Mr Alibhai is the founder and principal of Miami-based Gencom, which bought Westend in December 2019.
He said: “We are especially grateful to the Minister of Tourism, the Premier, and the labour minister for their ongoing support, and believe this partnership model with the Government will put Bermuda on the map in attracting investors who had not considered the island in the past.”
Curtis Dickinson, who resigned from the finance ministry portfolio in February, said the 15-year concessions, including customs breaks, could run between $114 million and $133 million.
He told MPs that the legislation failed to provide sufficient detail when, with the $75 million guarantee included, it could run up to $180 million to $200 million.
The One Bermuda Alliance said the tax breaks should be limited to ten years.