Funding for eastern roads still unclear

The construction of two new roads through Grand Cayman’s eastern districts, which would appear to be crucial for future economic development, is in doubt over questions of available funding.

The new traffic pathways involve the planned extension to the East-West Arterial Highway from its current end point in Newlands eastward to an area near the Mastic Reserve in the center of the island. 

At that point, National Roads Authority plans made public in 2005 show the road splitting off at a ‘Y’ junction, with one section continuing due east and another veering southeast. The eastern road is considered essential for the development of the new Ironwood golf course resort. The southeastern road would assist in alleviating traffic and speeding travel to the newly opened Health City Cayman Islands facility. 

Premier Alden McLaughlin said Thursday that government does not have the money to construct the southeastern section to Health City and has no plans to do so during the current term, to May 2017. 

“Government has no intentions during this term to build [the road to the health facility],” Mr. McLaughlin said. “I don’t know what any other administration would do. It’s a matter of resources and priorities, and it’s certainly not a priority of ours now.” 

The potential sources of funding for the eastern road that the Ironwood development desires are more complicated. 

Ironwood spokesperson Denise Gower told the Caymanian Compass last week that a funding arrangement for the construction of the eastern road was being worked out and had not been finalized. 

The proposal put forward appears to be that the Ironwood developer will pay up front for construction of the eastern road and be paid back via government revenues over a period of years. 

“The suggestion at the moment is that the stamp duties and other taxes that would be applicable to the building of the project, and anything else related to the project, would be earmarked to pay for the road,” Ms. Gower said. “The developer is offering to finance the road, and the proposal is that he’s requesting that all the money generated from this project by government be earmarked to repay [the money spent on the road] over time.”

The plan, described by government officials as a public-private partnership, would have to go to the United Kingdom government for approval under the terms of the Framework for Fiscal Responsibility, put into the Cayman government’s finance law in late 2012.  

According to the framework, there are five “key” stages to be undertaken by Cayman in public projects. Those include: the creation of appraisals and business cases, procurement, contract management, delivery of services and evaluation.  

“The Cayman Islands government will ensure that all projects, whether funded from recurrent surpluses, conventional borrowing or…alternative financing transactions, are suitably appraised before the procurement stage to ensure value for money and that a robust cost-benefit analysis has been carried out,” section 14 of the framework states.  

If the project is a public-private partnership, other rules are applied, including requirements that Cayman obtain independent account, legal, financial, economic, environmental and other technical advice. Public-private partnerships will only be considered where there is a “sound underpinning” for the project before financing means have been determined. 

The terms of the framework allow the Cayman Islands to borrow money in “exceptional circumstances” for a public project, but those terms would have to be agreed to in writing by the U.K. foreign secretary.  

Otherwise, the proposed project would have to yield sufficient revenues to fund additional debt service costs, or government would have to demonstrate that it has sufficient operating cash to fund the project.  

Mr. McLaughlin has also referenced talks with the Ironwood developer in public announcements and has confirmed the developer’s view that the eastern road of the East-West Arterial extension must be built for the Ironwood project to go forward. He said there was no way for government to pay for the extension entirely out of its own pocket. 

“From our perspective, when we took office we had no intention of building any of these roads simply because government’s fiscal position didn’t permit us to do it,” he said. “This has come about because of the [Ironwood] development.”

Mastic trail cayman

The bottom portion of this Mastic Reserve map shows the ‘Y’ junction of the East-West Arterial extension as proposed by the National Roads Authority in 2005.

5 COMMENTS

  1. This map of the area shows great details on what the reserve stands to lose if the road goes forward, it would also be nice to see what land the Civil Servants (Or their Families) own on the map, it would give a nice impression of what their interests are. Looking at the map the folks that own land on Frank Sound road adjacent to and near the Mastic Trail as well as those along the route of the road which is currently inaccessible stand to make a killing through increased property values. One thing I will say is that is doesn’t seem like it would be as disastrous as people make it seem to the reserve. If this actually happens they should get compensated with an equal amount of land. It may also give them an opportunity to create a really nice clearly visible entrance off the new highway with parking and a nice kiosk similar to what the Botanical Gardens has. This may actually attract more tourists to visit and walk the Mastic Trail.

    About this deal the Alden is trying to make with the IronWood developers to me it sounds worse than the Dart concessions which see Dart getting a 50 percent concession on only the accommodation taxes for his hotels. In this case the government would still get some revenue during the concessions and Dart would still have to pay all the stamp duty which is much higher than accommodation taxes, it would also take Dart decades to recoup the money they put out. On the other had the IronWooders get a pass on all stamp duty for the construction materials as well as any other taxes paid during the build out until they recoup the out of pocket money for the road. Alden blasted Bush for the deal he made with Dart yet he’s making a worse deal if you ask me. He has to be getting something out of it or he’s just not a good negotiator, why couldn’t he work it so the CIG wouldn’t have to give up all its revenues, they need to go back to the table on this, it doesn’t sound like a good deal to me.

  2. Couldn’t they put some sort of toll booth up before this junction? That would ensure the people who benefit from the roads pay the most for them. If an electronic pass system were created, then locals could purchase a monthly pass at a discount. Might be too complicated and expensive, but worth a thought.

  3. Christoph, your idea would never work. People would just keep using the current routes to the east and north side. And the tolls collected would never even cover the cost of putting up and maintaining the system. The goal of this road is apparently to open up the center of the island for development, make a quick and more direct route to the east and north as well as ease traffic on the other roads. A toll would defeat the purpose of all of this.

    I must also say that I find really strange that Ezzard and Arden as well the protect BT folks are so quite on this. Must be a good thing for all of them..

  4. Yeah i realize it’s not a likely or perfect solution, mostly given the cost of constructing the toll system itself compared to actual traffic potential is too great. But i wouldn’t say it’s because people wouldn’t pay a toll so they could continue to use a two lane, congested and beat up road that travels through small communities all the way to east end. I for one would gladly pay 50 cents or a dollar each way to drive the east-west arterial all the way rather than take the current route. Of course I’m probably in the minority of people who think saving 20 mins of travel and hassle is worth the great sum of one dollar.

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