Differing values for Clifton Hunter HS
The Cayman Islands government spent $110 million on the construction of a public high school that was initially valued at somewhere between $70 million and $85 million in a report completed during 2012.
According to a review released Thursday by the Cayman Islands Auditor General’s Office, the Ministry of Education “challenged the professional valuation” of its property and equipment – including the Clifton Hunter campus – in 2015, more than two years after the initial 2012 valuation was completed.
Government financial records released Thursday indicated the initial valuation of the school would have required the ministry to account for “a significant write down” of the value of Clifton Hunter High school. That “write down” or value reduction, would have been between $25 million and $40 million less than the original construction costs, the reports noted.
“As a result, the [ministry’s] financial statements for 2012/13 [budget year] will report a significant deficit when they are finalized,” the auditors’ review noted.
The completion of audits on the ministry’s financial statements for the next two budget years were delayed, according to auditors, because officials decided to challenge the initial valuation, which would have a “material impact” on the ministry’s financial statements.
At the end of the 2013/14 budget year, auditors reported that the ministry reported a $20 million decrease in the value of the school property, based on a second valuation. Although much kinder for the ministry’s bottom line, that valuation still put the school’s worth at around $90 million, far less than it cost to build.
Acting Auditor General Garnet Harrison said Thursday that in his view, the decision by the ministry to get a “second opinion” on the school valuation from a second firm was unusual given that the initial valuation was part of a government-wide review of Crown property values.
“We were a bit surprised they would go out and do something like that,” Mr. Harrison said. “Typically, you would rely on the [initial] valuation done, unless there were certain things not communicated … the first time around. And normally, you would go back to the same valuator to clarify those issues.”
The Cayman Compass has submitted open records requests for copies of the 2012 and 2015 valuation reports but has so far received no response from the Ministry of Education.
Mr. Harrison said, whatever the true figure regarding the school’s value, it was clear that tens of millions of dollars spent on the Clifton Hunter project did not represent value for taxpayer money.
“There was a significant amount of cost of construction that really didn’t provide any extra value,” he said.
Mr. Harrison noted in previous reports on the government high schools construction that the final cost of Clifton Hunter was more than $41 million above what was planned to be spent on the project as at May 2008.
The construction contract for Clifton Hunter and the new John Gray High School, which has still not been completed, was signed with Tom Jones International in June 2008. The Clifton Hunter project was initially to have cost $56.7 million.
The overruns largely related to additional costs including design changes, contractor disputes and legal advice provided between 2009 and 2012.
Some $6 million was spent to repair faulty work in the initial construction phase.
“The total of these items … is $30.3 million,” the separate audit report on the schools project indicated. Mr. Harrison said none of these expenses would have added significant value to the schools project.