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New law reduces Government exposure to hotel scheme

The Government’s guarantee of the Fairmont Southampton Hotel will be “ring-fenced” through legislation for the resort that went before MPs on Friday.

Supported by the Opposition, the arrangement safeguarding Bermuda’s guarantee on the shuttered hotel was swiftly approved in the House of Assembly.

The new Bill has been brought forward for practical reasons rather than amending the 2022 legislation for the redevelopment of the hotel, tourism minister Vance Campbell told the House.

He said it was drawn up based on “detailed advice received in the course of the ongoing closing process for the redevelopment of the Fairmont Southampton Hotel”.

Mr Campbell said the 2022 Act was not currently in force and would not do so until “all conditions for closing have been met” – meaning the agreement between the Government and the developer for the revamp of the hotel had yet to be completed in full.

The Fairmont Southampton Hotel Act 2023 would come into force to govern “the full package of support provided for the project”, he added.

Tax and Customs duty concessions for the development will be structured as a rebate rather than direct relief, the House heard.

“It means the hotel must first pay the normal tax or customs duty in accordance with existing law, before being entitled to a rebate.

“In turn, the rebate will flow back to pay the loan the Government has guaranteed.”

Mr Campbell said the new arrangement would reduce the Government’s exposure and help the essential redevelopment of the island’s biggest resort to go ahead.

Craig Cannonier of the One Bermuda Alliance gave the Opposition’s support for the Act, noting that it applied strictly to the deal for the redevelopment and did not touch on the Special Development Order for the property.

Cole Simons, the Leader of the Opposition, reiterated the OBA’s support for the legislation.

But Mr Simons questioned whether a commitment to build the hotel first before constructing villas at the property could be “baked into the legislation”.

He also queried a clause in the Act that in years six to 15 at least 70 per cent of the hotel’s staff would be Bermudian – and asked what would happen if there were insufficient numbers of Bermudians available for jobs at the hotel.

Mr Campbell said 70 per cent merely represented a target – and that the Government would not declare that “all bets are off” should it fall short on a few percentage points.

He added that the Government was “100 per cent behind the employment of Bermudians” and highlighted training programmes to get locals working in hospitality.

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Published March 27, 2023 at 7:23 am (Updated March 27, 2023 at 7:23 am)

New law reduces Government exposure to hotel scheme

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