No agreement yet on highway expansion
The $365 million Ironwood golf resort project will move forward without a final agreement on a highway extension previously viewed as a deal breaker for the development.
Ironwood will seek planning approval early next year for phase one of the resort, featuring retirement homes for affluent baby boomers situated around an Arnold Palmer-designed PGA Championship golf course.
A beach club and town center with shops and restaurants is also planned.
Completion of a 10-mile extension to the East-West Arterial Highway, slashing journey times from Grand Cayman’s main tourist area to the resort, was initially viewed as critical to its success.
But with the two parties so far unable to agree terms over a financing arrangement for the road, Ironwood and government have announced a deal that they believe will allow the project to get started.
Infrastructure Minister Kurt Tibbetts said Thursday that the involvement of golf legend Mr. Palmer, whose company was described as an equity investor in the development, gave confidence that it could be a success, with or without the road extension.
Premier Alden McLaughlin confirmed, “Notwithstanding the delays in finalizing an agreement for the construction of the road, we have agreed that Ironwood will bring forward its plans for commencement of the development project itself.”
He said the project would “reinforce the appeal of the Cayman Islands as a world-class tourist destination.”
The agreement signed Thursday involves a package of tax concessions worth around $22 million.
If Ironwood and government can agree terms on a funding model for the road and get approval from the British Foreign and Commonwealth Office within the next 12 months, those concessions will go into a ring-fenced fund to help pay for the highway extension.
If terms cannot be agreed, they will come back to Ironwood in the form of a tax rebate, similar to the concessions offered to other major developers, including Dart and Beach Bay.
The road is expected to cost around $50 million to complete.
Ironwood developer David Moffitt said the road would essentially pay for itself by unlocking development opportunities that would generate stamp duty and other revenue for government.
Mr. Moffitt remains confident that an agreement will be worked out for the road, which he said remained extremely important to the success of the project.
He said negotiations were at a stage where he had the “comfort level” to move ahead.
“We have reached an agreement where we can move forward while the details over the road are still being worked out.”
Roy Saunders, vice president of the Arnold Palmer Group, said the company is ready to start work on the golf course as soon as it gets the green light from the Central Planning Authority.
“We are 100 percent committed to this project,” Mr. Saunders said. “It is our first Caribbean golf course and we are looking forward to it coming to life and seeing that first ball fly off the first tee.”
He said the development would be similar to Arnold Palmer’s Bay Hill Club and Lodge in Orlando, Florida.
Mr. Moffitt said the resort would also include a beach club and would be marketed to wealthy people looking to retire in the sun.
Mr. McLaughlin said negotiations over the road had been long and intense. He said the concessions deal provided a way for the project to commence as that process continued.
The agreement gives Ironwood and government another 12 months to agree on a way forward.
“In the event that the negotiations for the road construction are not brought to a satisfactory conclusion within that one year period, then Ironwood will continue to have the benefit of the concessions provided under this agreement for a maximum period of eight years from the date of signing,” said Mr. McLaughlin.
A key sticking point is the level of liability for government.
Mr. McLaughlin said, “We are seeking to limit government’s exposure with respect to nonperformance or lack of completion of the road. We don’t want to go out on a limb which could require us to fund it through current revenue streams. The whole premises of this is that the cost will come from new revenue generated by the road.”