Editorial for 14 September: The future value of Dragon Bay

In this public-protest-happy land of ours, the next big thing that will undoubtedly cause a ruckus is the potential conversion from leasehold to freehold of the land comprising Dragon Bay, which consists of The Ritz-Carlton, Grand Cayman and former SafeHaven properties.

Premier McKeeva Bush acknowledged this week the government is considering an offer to covert the lease holding of the land to a free holding for a one-time payment of $10 million, plus an in perpetuity 2 per cent increase on stamp duty on all future sales in the development.

Although Mr. Bush gave no indication his government would approve such an offer, he made an argument about why it should. On the other hand, Opposition Leader Alden McLaughlin said the People’s Progressive Movement opposed the divestiture of Crown land and he made arguments supporting his party’s position.

One thing that should be kept firmly in mind is the Dragon Bay properties aren’t unencumbered assets of the government. They are subject to 99-year leases that have been extended before. It is doubtful that even if they were never extended again, the government of the day in 2107 would not have the courage, or possibly even the legal right, to simply take the stratified property back from a group made up primarily of American investors. On this issue, both Mr. Bush and Mr. McLaughlin agree.

It is true, as Mr. McLaughlin suggests, that nervous investors would likely pay to extend the lease again every 40 or 50 years, but that means no government is going to get the benefit of that again for a long time. A simple future-value-of-money calculation would show that receiving $10 million now is worth much more than receiving the inflation-adjusted equivalent of $10 million 40 or 50 years from now.

Most importantly, the conversion of leasehold to freehold could make the difference between a project that goes forward or one that stalls. The economic impact a progressing development associated with The Ritz-Carlton can have on our economy is desperately needed and far exceeds revenue benefits the government can receive every 40 or 50 years.