Flexibility in government to accommodate commercial investment has always been an asset to encourage economic growth. Public-private partnerships have even greater importance in today’s challenging financial environment, especially for a small and isolated jurisdiction like the Cayman Islands.
Future of Cayman
Not only is the Chamber of Commerce’s Future of Cayman initiative founded on the idea of collaboration between government and business, but the initiative itself is a public-private partnership.
“This is not government-driven as such. It is something that we’re partnering with the Chamber on,” Premier McKeeva Bush said 28 September at the Chamber’s Legislative Luncheon.
“I’m glad, actually, real glad to see that the Chamber has this initiative, and going forward I think in the end it’s going to do a whole of good for the government and for the community as a whole.”
At the same event, Chamber President James O’Neill said, “More than 100 volunteers across political, business and government lines are working together on subcommittees to implement the actions outlined in the strategic report.
The initiative has helped to foster relationships and a better understanding between the public and private sectors; a partnership that is critical as we attempt to stimulate economic activity, to strengthen existing businesses, attract new investments and create jobs and opportunities for all.”
In late July, Bush and Chamber President-Elect David Kirkaldy co-signed a memorandum of understanding, stipulating that the government and Chamber would support the Future of Cayman initiative.
The relationship is more than just words. Public and private sector individuals have worked together since the initiative was launched in 2010 by a steering committee made up of government and business representatives. Each of the initiative’s five driver groups has two co-chairs, one from the private sector and one from the public sector.
“The Future of Cayman brings together both sectors in order to develop not just shared goals, but also shared actions that will improve our attractiveness and competitiveness,” Bush said.
The initiative is steeped in public-private collaboration, which is integral to every driver and most all of their objectives and individual action items.
Cayman’s ‘Big Three’
“The fundamental element of successful partnerships is that there must be a win-win for both parties, and that win-win must reside in the perception and hearts of the people of the community,” Bush said.
“This only happens when there is a positive relationship between the two sectors, and a shared goal of doing what’s best for the country.”
He said, “By now we all know of the much talked about three big developments. We are fortunate in Cayman to have strong examples of public-private partnerships: the ForCayman Investment Alliance, Cayman Enterprise City, and Narayana Cayman University Hospital.”
The ForCayman Alliance is a partnership between the government and Dart Realty (Cayman) Ltd. The partnership entails the redevelopment of the former Courtyard by Marriot into a new four- or five-store hotel; extension of the Esterley-Tibbetts Highway; closure of a portion of West Bay Road; remediation of the George Town landfill; and creation of a new landfill in Bodden Town.
As part of the partnership, the existing Public Beach will be enhanced and an additional public beach will be created to the north. In addition to the approximately $85 million Dart will spend on road construction and landfill projects, Dart will also provide some $18 million for community projects and education.
Additionally, Dart and government are engaging in other land swaps, including in the Barkers area and in West Bay, where Dart is handing over 20 acres, five acres of which the government has earmarked for Grace Christian
Academy to build a new private school.
An estimated 500-600 jobs will be directly created by the investment over five years, with Dart committed to spending US$415 million in that time, with US$200 million in the next two years. Over the next 20 years, Dart anticipates spending more than $1.2 billion.
In terms of incentives, Dart will be allowed to recover up to US$45 million in import duty concessions and waiver, and up to US$54 million if George Town landfill remediation costs exceed current estimates. Once the duty cap is reached, Dart will get a 50 per cent abatement of development fees and import duties for a further period of 15 years.
For a period of 30 years past the date the definitive agreement is signed, Dart will receive a 50 per cent rebate of hotel room taxes for all hotels it develops, acquires and renovates, or refurbishes for a period of 10 years after each hotel is opened.
Environmental tort reform legislation is also in the works to shield Dart from liability while closing, capping and remediating the George Town landfill.
On 6 September, representatives of the government and Dart held a groundbreaking ceremony on the highway extension after Cabinet approved the new road earlier that day. In late August, Dart contractors began work on the first phase of redevelopment of the Marriott, consisting of the interior demolition of the structure.
The primary contractor said more than 60 Caymanians worked on the demolition project at its peak. According to Dart, redevelopment of the Marriott is expected to create 230 construction jobs, plus 170 jobs when the hotel is operational.
Meanwhile, work on the George Town Landfill remediation, new Bodden Town landfill, and next phase of residential construction at Camana Bay was projected to start in the first quarter of 2012.
Shetty, Enterprise City
The proposed Narayana Cayman University Medical Centre is a $2 billion project slated to be built in stages during the next 15 years.
The medical tourism facility–including a tertiary care hospital, education facility, biotech park and assisted living community – is to be located on 600 acres at High Rock in East End. Representatives made the announcement of the medical centre’s location in early August.
In order to set the stage for the project by Indian cardiologist Dr. Devi Shetty, Cayman lawmakers have approved legislation regarding medical tort reform, the Health Practitioners Law and tax concessions. The tort reform legislation limits non-economic damages awarded in medical malpractice cases to $500,000.
The change in the Health Practitioners Law allows the registering of foreign doctors. Bush has said the government is offering Shetty concessions similar to those offered to Dart.
It is anticipated that lawmakers will take up the last piece of legislation critical to the Shetty project in the fourth quarter of 2011, specifically a bill creating regulations for organ donations.
In late September, lawmakers put their seal of approval on a bill to establish a special economic zone called Cayman Enterprise City. The zone will be located on a planned 500,000 square-foot, low-rise campus in the eastern part of Grand Cayman. A groundbreaking is expected in the first quarter of 2012.
Concessions for the developer and tenants include exemptions for the developer from fees other than stamp duty, work permits and universal utility surcharges. Duty on construction materials is capped at 15 per cent. Zone companies are exempt from taxes, duties and fees for 50 years, except for registration fees, stamp duty, work permits and trade certificates.
Companies do not have to pay duty or tariffs on any consumables imported within five years after phase one of Enterprise City is completed; after the fifth anniversary, they do have to pay duty and tariffs on consumables worth less than US$5,000.
The bill creates “zone trade certificates” allowing companies to operate within the zone in lieu of trade and business licences or local companies (control) licences.
Construction of Enterprise City is expected to begin in the second quarter of 2012. Until the campus is completed, and if space is an issue in the future, tenants can rent from Caymanian landlords in existing buildings.