22 August 2008

Park-Hyatt: Investment, or Give-Away?

The Government has called an extraordinary meeting of Parliament for one day on 12 September to debate (and try to pass, I would imagine) the Park Hyatt Act 2008. Normally, Parliament would not come back until November, so clearly the Government is looking for some quick action on this. You have to wonder what the rush is.

You can download the act here, and view the area to be developed using Google Earth or Google Maps.

The act is intended to allow the redevelopment of the old Club Med site with a new resort, but a careful reading of the act raises more questions than answers. Based on the information in the act, it looks more like a giveaway than a sensible investment in Bermuda's future.

  • For example, the act gives up to a 262-year lease on 125 acres of property to "Addax Holdings", for an unspecified amount of compensation. The baselands leases were only for 99 years, and that was during wartime!
  • The property includes the St. Georges golf course, which will no longer be public. The act does specify that the course remains accessible to the public.
  • The property includes the beach, to which the public is to have "reasonable access", free of charge.
  • Government can forcefully buy any property from other owners that is covered in the planned area.
  • The developers can build 140 condos, of which 40 are fractional ownership.
  • There will be no customs duty on the building materials, and no land tax or occupancy tax for the first 5 years after opening.

If you look at the map, you see that about half of the area other than the golf course is for condos and fractional ownership (red and orange vs. pink for hotel). So to me, this looks more like a condo development than a hotel. My questions are:
  • What is Bermuda getting out of this?
  • How much are the developers paying the Government?
  • What are the other terms and conditions?
  • Why is the lease so long?
  • What if the developers' financing falls through?
  • Can they then turn around and sell the lease to another developer, perhaps pocketing a profit subsidized by the people of Bermuda (ala Southlands land swap)? And if so, does the name of the act need to change?

If any of this concerns you, or if you want to find out more, call your MP!

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