Dart to government: Keep your word

Dart Realty [Cayman] Ltd. officials warned Wednesday that the Cayman Islands Government was risking its international reputation by not meeting legal obligations with regard to the National Roads Authority agreement, which – among other things – dictates the closure of a section of West Bay Road along Seven Mile Beach.  

“The failure of government to do what it is committed to and legally obligated to do, as well as the public acknowledgments by government that they are fully aware they have been in breach [of the NRA agreement] since May 2012, negatively impacts Cayman’s international reputation as a credible place to do business, especially for other investors who may be considering public-private partnerships,” said Dart Realty’s Chief Operating Officer Jackie Doak.  

Mrs. Doak’s comments came following a government press conference Tuesday in which Tourism Minister Cline Glidden Jr. seemed to question whether the National Roads Authority agreement, including some amendment clauses that had apparently been agreed since last year, were still binding.  

Mr. Glidden seemed to state on Tuesday that because government and Dart were still in talks over another proposed change to the agreement – referred to as the third amendment – that the document was still in question.  

One of the key areas of dispute with the NRA agreement has been whether a section of West Bay Road would be closed down to allow for the construction of a new four/five star hotel on the site of the old Courtyard Marriott property. The government has gazetted a portion of that closure area, but a second section remains to be gazetted.  

“We were willing to close a short, small section of the West Bay Road,” Mr. Glidden said. “We felt it was safe to close the portion by the hotel and the piece by the public beach while we were negotiating the third amendment. The fact that the third amendment has not passed means the road has not been gazetted, it has not been closed. 

“Obviously, that’s not going to happen between now and the 22nd and the new government after the election will have to negotiate. They would have to decide whether they think that there is justification, that they have a mandate to go forward or go back and renegotiate the agreement.”  

When asked during the press briefing about whether government was in compliance with the current version of the NRA agreement, Mr. Glidden responded: “We feel that compliance is a continuation of negotiating. If you are familiar with the agreement it also calls for the reconstruction of the hotel, so we can look at it and say they’re not in compliance either. It’s a work in progress.  

“We haven’t been compliant since sometime in May [2012]. We’re not willing to accept the conditions in the second amendment because we’re working toward the third amendment. You will see there are remedies for…either party breaching the agreement and we’ll have to deal with, at that point, breaching the agreement.”  

According to Mrs. Doak, the NRA agreement as it stands – including the first and second batch of amendments already agreed between the two parties – is a “binding and enforceable agreement”. The fact that government proposed a third round of amendments does not change the fact that a binding contract remains in place, according to Dart officials.  

Dart Realty managers also denied that work had not commenced on the new hotel, stating that some CI$1.75 million had been let on contracts for hotel work and that a total of US$3 million had been spent to date on total construction costs.  

“Government continues to acknowledge that since May 25, 2012, it has been in breach of its contractual obligation to close the full stretch of the road,” Mrs. Doak said. “Dart Realty has complied with all its obligations under the NRA Agreement thus far and continues to do so despite government’s breach.” 

Dart officials said the government proposed a “phased” closure in February of this year to allow time to fulfil commitments to close the remaining stretch of road after the release of an independent review on the NRA agreement by accounting firm PricewaterhouseCoopers. That evaluation was released to the public on Friday.  

Dart Realty also pointed out that the third amendment to the agreement, which included new proposals to widen the southern end of the Esterley Tibbetts Highway in George Town and the transfer of land to government in the Smith Cove and Barkers areas, was also agreed “in principle” between the two parties on 11-12 April.  

However, the company indicated that “last minute” changes attempted after that date led Dart Realty to end talks on the NRA agreement.  

According to Minister Glidden, the main point of contention was over $16 million in tax incentives given to Dart Realty for the construction of the Seven Mile Beach hotel on the old Marriott property.  

“The country has to ask itself, if we’re going to have to start giving $50 million or more in concessions for someone to build a hotel on our world famous Seven Mile Beach, then that sets a precedent,” Mr. Glidden said. “It’s not $16 million in terms of a $700 million deal. It’s ‘should the government give $50 million in concessions to incentivise a developer to build a $150 million hotel’?”  

Dart Realty officials noted they “cannot state precisely what Minister Glidden intended to convey in his public statements”. However, they stated that government in February proposed that development incentives – including the hotel tax rebate of 50 per cent offered – should be limited to US $16 million. After talks on the deal continued, the parties reached an agreement on 11 April, 2013, which is when things went south, according to Dart Realty.  

Dart Realty pointed out that both versions of the PricewaterhouseCoopers report found that the hotel redevelopment project was estimated to provide benefits to the country of $755 million over 20 years, as well as some 1,651 man years of construction activity.  

“Even with the 50 per cent hotel tax abatement provided to Dart Realty in the finalised NRA Agreement, government will still receive an estimated US$18 million in hotel tax revenue; revenue it would not receive if the hotel was not redeveloped,” a statement from the company provided to the Caymanian 
Compass read.  

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18 COMMENTS

  1. Here we go again, politics over progress. A developer simply trying to make Grand Cayman an even better place with regards to tourism has the CIG doing what is does worst, hinderism.

    Lead, follow or get out of the way. Dart has always brought quality to the island because they see the positive future economic impact and rewards.

    Not many others investing in CI these days, so don’t look a gift horse in the mouth and get on with it.

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  2. Our Government is so small minded, its embarrassing and frustrating.
    Can you imagine Cayman without Camana Bay?
    Dart has transformed our island and brought it to a higher standard compared to other islands.
    I know change scares people but if you don’t change or adapt you die.

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  3. Well stated by both Bethinking and island boy. Negotiating with the government must be sickening. A settled and agreed upon point is never truly settled.

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  4. Part of the problem is the silly season where politicians posture and pander to the voters to get their place at the trough.
    Dart is the hot button issue to enflame the voters, what is pathetic is to hear politicians speak about reopening WBR for votes when they said nothing against the closure for 3 years, Alden.

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  5. These guys are truly playing with fire, Dart has been highly accommodating to Cayman for quite a while, the last thing that needs to happen is to push them into playing Hard Ball. If the CIG really thinks they can push the Dart folks into a corner and win they are in for a surprise. Everyone knows that when you corner an animal they tend to bite. If Dart ends up taking legal action due to this, it will most certainly break the bank in Cayman as well as completely destroy their reputation, If they end up owing Dart for all the work they have already completed they will not only be unable to pay the hey will actually owe Dart Millions of Dollars, which they wouldn’t owe as part of the deal.

    Play Hard Ball if you want, just remember the Dart folks are masters of that Game.

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  6. One more reason to believe investment in Grand Cayman represents too much risk.

    Not the least of which is unsavoury duplicitous Government actions.

    Even with the ink dry and works in motion this Government thinks they can just re-visit the deal through yet another to be amendment with no regard for the deal already signed.

    Is this the image you wish to portray to the outside world, to the investors considering tens of Millions of dollars of investment earmarked for the Cayman Islands?

    Is this what the revitalization for the cruise industry has to look forward to, incessant waffle and vacillation!

    Fire the Lawyers lock the boardroom door and don’t leave until the deal is complete!

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  7. This is so pathetic to be hearing these outbursts now when nothing was said for 3 years? Another tactic to try and tell the voters how to vote at the 11th hour.

    Dart thank you for investing in the Cayman Islands, our Government doesn’t have the funds to do what you have done over the years!!

    Leave the road as it isI live in West Bay and since this new road has been opened I don’t have to leave home at 7.15 a.m. and sit in traffic for an hour plus; I get to work on time (the journey only takes me 15 – 20 minutes at most). The traffic flows smoothly, and it will only get better as the other sections are opened.

    CG Glidden this will not help you to get re-elected and get a ministerial seat! Alden and PPM (have you forgotten the rut that you and PPM left us in back in 2005-2009) not sure what to say to youyou are so sure that you are returning to the LA and will be the next Premier but all I can say is God have mercy on Cayman and its people if this happens.

    Cayman vote sensibly on 22 May 2013…I have not votes for cut-throats!! #Nuffsaid

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  8. It is obviously time for intelligence within Government.

    If someone is confident enough at the time of intent/a binding agreement, there would be no faltering when it comes to follow-through.

    Good decisions are good decisions. (period)

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  9. It is truly sad that most people are unable to see the future that Dart envisions.
    Everyone is so worried about the next few months or four years yet Darts visions exceed twenty plus years in the future.

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  10. The world is full of haters and people that can only appreciate something if it puts money directly in their hand without having to put anything out. The same people that complain that there’s no jobs and say what future will their children have are blinded by the political posturing going on now to the point that they can care less what’s good for Cayman’s long term sustainability as long as they get what they want right now. The same politicians that bash Darts vision will be that same one’s on their doorstep if they win the election and it won’t be trying to force them to reopen West Bay road. They will be in their comfortable high paying jobs taking credit for a whatever new business comes in and won’t have to worry about vote seeking for another four years at which point they will start the same game all over again..

    I finally understand completely what people mean when they say it’s the Silly Season..

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  11. My comments are; that what ever agreement the government had with Dart Realty in respect of the Public Beach, the New Road and the closing of roads. THOSE AGREEMENTS SHOULD BE HONORED and no if an butting in order to gain votes. It is too late for that. My suggestion to the West Bay candidates is to stick to what ever agreement was on the table. You cannot trust the people of West Bay to change their minds now that election is on your heels; it will only undermine how we are looked at internationally. If the people of west Bay is still voting for a fringe and stove and a hand full of change, leave them alone. I believe that after May they will see that it is finished.

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