Parties involved in a deal to revamp the Fairmont Southampton are “getting very close to closing”, the Premier insisted yesterday.

David Burt confirmed that the proposed redevelopment project remained fully funded and stressed that the financial arrangement was large and complex.

His comments came after a report from the Department of Planning recommended that the Minister of Home Affairs “does not proceed” with a Special Development Order request to add up to 250 tourism and residential units at the resort.

Last night a spokeswoman for Westend Properties, the company behind the development, described the recommendation as “disappointing”. “But we are not surprised,” she added.

The proposal was to be considered by the Development Applications Board this week but The Royal Gazette was unable to confirm by the time of publication the outcome of the DAB’s meeting on Wednesday.

Mr Burt said yesterday: “There is no doubt that the most eagerly awaited news is that of the start of the construction and renovation of the Fairmont Southampton.

“The vast majority of Bermudians recognise the importance of this project to tourism and Bermuda's overall economy.

“The global conditions that have made large hotel development challenging have not changed but this project has survived and all parties are engaged in a push towards final closing.

“As I previously said, this redevelopment runs into the hundreds of millions of dollars and it’s incredibly complex and must be done right, even if it takes a little bit longer than we would all like.”

Westend Properties, the owner of the hotel and an affiliate of Miami-based investment firm Gencom, said earlier that construction work was expected to start this month.

Asked about the commencement of renovations, the Premier said yesterday: “I know that they are feverishly working towards closing.

“I do know that things are close but the timelines for construction are the responsibility of the developer.

“The Government continues to engage; the Government has done the necessary actions which it needs to do on its side, so far as the deal. But the deal is a very large deal and as time goes on, the deal of course, with time, continues to expand.

“What we may see when the final figures are done, we're looking at development where the total value is in excess of $450 million, so this is not something that is small.

“It’s a large, complex, multiparty deal.

“We are getting very close to closing, but I don't want to, you know, precipitate anything which may happen and as we said the developers are the ones to best answer those particular questions.

“From our perspective, we continue to be engaged and we are hopeful that this will be able to be kicked off very soon.

“Clearly, the timelines are critical for them as they need to make sure they are open for the 2025 season and so we expect that there will be news coming forward.”

The Government is to give a guarantee of up to $75 million in support of the project.

Mr Burt was asked about whether an intercreditor agreement — a contract between various lenders in a capital structure — was signed or if there was a date to do so.

He replied: “What I can tell you is that I'm not that close in the technical details; the Government has a very extensive legal team that is working on that, matters which have been updated in Parliament.

“I do know that some of the documents have been completed.”

The Premier added: “Now, we’re looking in a good space and I am hopeful.”

He said later: “The project itself is fully funded and we're progressing to closing.”

During a Progressive Labour Party leadership debate last October, Mr Burt claimed: “The deal has been done. The deal has been signed.

“What we are doing is getting to the closing process, which takes 45 to 60 days.”

Days later, he told a PLP conference: “Debates are difficult and sometimes you might say a word or two … but this Government sealed the deal to reopen the Fairmont Southampton.

“I said we signed the heads of terms, we are going through the closing documentation.”

The Premier said yesterday that challenges caused delays but highlighted it was for the developer to provide the most accurate information on progress.

Minutes from the DAB meeting this week were not uploaded before the Government’s IT systems were affected by a suspected cyberattack.

Members of the board were expected to discuss a request from Westend Properties for a special development order that would pave the way for up to 159 tourism and 91 residential units in buildings of between two and four storeys at the Fairmont Southampton.

A report from the planning department concluded that “the proposal is in direct conflict with the strategies, goals and objectives of the Bermuda Plan 2018 and is considered to represent an unsustainable form of development which would result in several adverse environmental effects”.

It added: “The applicant has failed to demonstrate a need for the proposed development, nor that the quantum or density of development can be satisfactorily accommodated on the application site.”

The report said: “It is therefore recommended that the minister responsible for planning does not proceed with making a special development order based on the proposal as it has been presented.”

Last night, the Westend Properties spokeswoman questioned some of those conclusions.

She said: “We listened to the public’s concerns about various aspects of the proposed development and had multiple meetings with planning and adapted our plan accordingly after each consultation.

“We went back to the drawing board to scale back our plans and reduce density on the site. We made several changes in an effort to address the concerns while still making the project financially viable.”

The spokeswoman said that the Department of Planning had to operate under “fairly specific parameters” and that the Development Applications Board would not legally be able to approve the application.

She said: “Where a development proposal doesn’t fall within the regular zoning guidelines but is in the national interest, power is granted to the Minister of Home Affairs to approve development through an SDO.

“We are grateful that the process allows for this additional opportunity for review.

“We believe that the Southampton property can easily accommodate the development of residential and tourism units as laid out in our proposal; in fact, the majority of the property will remain as green space, which includes the golf course.

“Given the significant benefits it will have for the tourism industry and, by extension, the island’s greater economy, we remain hopeful that our desire to create a year-round destination resort will be successful when our proposal goes before the minister.

Mr Burt highlighted yesterday that the SDO legal process was being followed.

He said: “This project is supported by a vast majority of the country, the business community, the tourism community, our unions, our people, our workers, visitors; it has broad support.

“Whatever happens in the DAB, the Government will go ahead and take a look at that and we will certainly determine our next steps.”

The Premier added: “What's important to note is that the Government has been committed to this, unions are supportive, the business community is supportive, they want this to happen and the Government has a responsibility to ensure that we advance things for the betterment of the entire country.

“There is no doubt that the starting of the construction of that hotel, the reopening of that hotel, the additional development and residential areas et cetera that it will provide long-term into the future, provides jobs, provides income and the key point to note is that the Government is in a better financial position with that hotel open than it is with it closed.”

Download PDF File

Dept of Planning report to DAB