Auditor was kind in earlier evaluations
The Cayman Islands government lost $41.6 million on the construction of Clifton Hunter High School between the date the school opened and the time a valuation of the North Side property was completed in May 2013.
Records released to the Cayman Compass under the Freedom of Information Law stated that the Clifton Hunter property was valued at $69.2 million by surveyors who were reviewing all government properties at the time.
The final construction costs for the school were estimated at $110.8 million by the Cayman Islands Auditor General’s Office in a report issued earlier this year.
Auditors noted in later reports that valuations for the school property had fluctuated between $20 million and $40 million below the initial construction costs.
The reason for the fluctuation was that Ministry of Education officials decided to undertake a second valuation, with another surveyor, in June 2015 – more than two years after the first valuation.
The Compass has learned via the open records request that the second report put the value of the school property at $83.2 million, still more than $27 million less than the original construction costs.
Government financial records released in October indicated the reason the initial valuation was not accepted by the ministry. The $69.2 million value for 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 required to include the $41.6 million less than the original construction costs.
“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.
As of Monday, those financial statements had not been completed.
Acting Auditor General Garnet Harrison said 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.”
Mr. Harrison said it was clear that tens of millions of dollars spent on the Clifton Hunter project did not represent value for taxpayer money.
The $69.2 million figure in the initial property valuation for the school is significant because that was approximately the amount that had been planned to be spent on the project in May 2008, auditors’ records revealed. The 2013 valuation did not show any value added to the project despite legal and technical disputes that took place over the five-year period between mid-2008 and May 2013.
The ensuing cost overruns largely related to 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.