McLaughlin defends Dragon Bay agreement

Opposition Leader Alden McLaughlin said there is nothing wrong with the extensive agreement his government signed with The Ritz-Carlton, Grand Cayman developer Michael Ryan in January 2009.

“There is nothing in that agreement that I’m ashamed of; absolutely nothing,” he said Monday evening after Premier McKeeva Bush made the agreement between Cabinet and Fujigmo Limited public for the first time.

Among other things, the agreement extended the lease 17 years back up to 99 years for the portion of the Dragon Bay Development that was once part of the SafeHaven property. It also granted the lease of two mangrove islands in the North Sound adjacent to the property and granted duty waivers and reductions on various construction materials.

In addition, the government agreed to support and assist the developer to get coastal works licences; a dedicated space at the airport to be used exclusively for clearing arriving Dragon Bay owners and tenants through Immigration and Customs; a exclusive boat dock facility near the airport and to get non-potable water supplied at a preferred rate or, failing that, a licence for the developer to make the water.

Mr. McLaughlin said the agreement came after a “back and forth with Mr. Ryan for years” that had actually started during the previous administration.

In a statement made in the Legislative Assembly, Mr. Bush said the People’s Progressive Movement government had done the deal in secrecy. Mr. McLaughlin said the matter had been discussed in a news conference in early 2009, but the Caymanian Compass could not find any articles that came out of such a press conference in any media.

However, in the Legislative Assembly on 12 February, 2009, a little more than a month after the deal was signed, former Leader of Government Business Kurt Tibbetts tabled a report concerning the extension of a lease of Crown land for the Villas of the Galleon, which was also once part of the properties the Cayman Islands Government leased to Benson Greenall in 1950.

Mr. Tibbetts mentioned the Ritz-Carlton and the SafeHaven properties as both being part of the Benson Greenall lease, but he made no mention of any other properties having the lease extended other than the Villas of the Galleon properties.

Mr. McLaughlin said there is a process that must be followed by law when formally extending a lease.

Mr. Tibbetts laid out those processes when he tabled the report with regard to Villas of the Galleon. They include publishing details in the Cayman Islands Gazette and getting three valuations on the subject property. Based on the value of the property, a value of the lease extension is determined.

In the case of the SafeHaven property, Mr. McLaughlin said he thinks even though there was a Main Agreement signed, there were various ancillary schedules attached – including one that dealt with the lease extension specifically – that were subject to certain conditions being met, including a valuation of the SafeHaven property. Although he could not be sure it was the case, he said he didn’t think all the conditions were met, at least in the time between the signing of the agreement and the elections in May 2009 that took the government away from the PPM. If the conditions were never met, including the payment of the determined value of extending the lease, then the agreement could be invalid.

“If [the developer] didn’t pay the money, then the property never got extended,” he said. Mr. McLaughlin said there was no specific reason why the PPM government didn’t make the agreement itself public.

“I don’t think it was a case where we made a decision not to make it public. It was just one of those things that never happened.”

With regard to why Mr. Bush decided to make the agreement public at this time, Mr. McLaughlin said it was because the government now wants to convert the lease holding on the land to a free holding for a price of $10 million. This is something he said the opposition opposes. He said the PPM government refused to sell the free holding on the land to Mr. Ryan when he asked.

“Our policy was to not divest of government properties in any way, and still is,” he said.

Mr. McLaughlin agreed with Mr. Bush’s contention it was unlikely the government would actually ever get the property back from the lessees. However, he said there was still a benefit to holding the lease because when the termination of the lease starts to get closer, owners get nervous and want to extend the term.

“As the lease winds down, the government can gain new revenues by topping off the lease,” he said, noting this can be done every 40 or 50 years.

“Once it’s sold, it’s gone,” he said. “We won’t agree to sell the freehold.”