Various infrastructure fees collected by the Cayman Islands government are expected to increase by 100 percent or more in the upcoming budget year due to several development projects coming on line.
The government expects to collect $2.7 million for its affordable housing fund over the next year.
Cash is generated for the fund when hotel properties are developed. Hotels pay a one-time charge of $3,000 per room constructed.
Apartments or condominiums developed in the Seven Mile Beach corridor that have more than 11 units must pay a fee of $20,000 per unit, according to the Development and Planning Law .
Those one-time charges, in addition to the typical planning-related fees, were implemented as part of the new fee structures in the Development and Planning Law legislators approved in mid-2010.
Former Premier McKeeva Bush – whose United Democratic Party government proposed the fee hikes – said at the time that the increased planning fees were going to hit some businesses. However, he said the government tried to balance the fees and avoid affecting the smaller, local developers and that he believed the “good” larger companies would still wish to build in Cayman.
The government’s 2014/15 budget also projects a $1.5 million increase in building permit fees paid, going from $1.4 million collected in the current year to $2.9 million in the new budget year. In addition, fees paid into government’s infrastructure fund will go from about $500,000 in the current year to $2.1 million next year.
“A number of large projects … are currently being finalized for submission or are under discussion with government for submission in the 2014/15 fiscal year,” Finance Minister Marco Archer said. “Examples of these projects are two hotels, a conference center and various apartment/condo developments.”
The various fees charged go toward different areas of the government’s budget. The building permit fees are placed in general revenues, while the affordable housing fund allotments go toward the provision of lower cost housing for families that qualify for the program.
The infrastructure fund fees are paid into a government reserve fund from which disbursements may only be made for the purpose of paying for road development and other infrastructure needs.
Among the new projects mentioned by Premier Alden McLaughlin during the government’s budget address were the start of construction at the Kimpton hotel property on West Bay Road and the construction of a new hotel in the East End district “being proposed to service Health City.” The latest plan for the Dart-owned Kimpton property on Seven Mile Beach is for the hotel to open sometime in 2016.
The government is also still in discussions concerning the construction of a five-star Conrad Hilton hotel in the Beach Bay area. A proposed $360 million “golfing community,” including a residential area, is planned off Frank Sound Road in North Side.
Overall, the government’s 2014/15 budget plan still depends on the private sector to drive economic growth. However, government will have some hand in most of the development projects, which will be completed as public-private partnerships.
The future of Dart’s partnership with government in the ForCayman Investment Alliance is still unclear, although Premier McLaughlin has noted that some encouraging discussions have taken place in recent weeks. However, the new administration will not review plans to seal the George Town landfill and open a new waste management facility in Midland Acres.