The agreement signed between the People’s Progressive Movement Cabinet and the developer of The Ritz-Carlton, Grand Cayman and Dragon Bay properties in January 2009 was tabled in the Legislative Assembly on Monday.
In a statement in the House, Premier McKeeva Bush said the PPM Administration had, without public discussion or the knowledge of the members of the Legislative Assembly, signed a huge development agreement that committed the country “to millions of dollars in the form of concessions”.
Mr. Bush had given some details of those concessions shortly after he took office in September 2009, but the agreement in its entirety had never been released.
The impetus for Monday’s release of the agreement came on Wednesday, 7 September when Sister Islands MLA Moses Kirkconnell read from an article that had appeared in The Cayman Islands Journal that same day concerning an interview with Ritz-Carlton developer Michael Ryan.
Mr. Bush said the article “implied that this Government was not assisting” Mr. Ryan.
“The developer has in fact made contact with our Government, and the matter that is outstanding pertains to the developer’s desire to have freehold title to over 300 acres of land, commonly known as the land occupied by the Safe Haven and Ritz-Carlton developments,” Mr. Bush said.
“Government has facilitated the developer … but the question is, whether to sell those two properties out rightly to the developer, and do we have support for such a move? That is the question that the Government is confronted with.”
Mr. Bush said the developer had made a proposal to purchase the freehold rights to the land, which was formerly known as part of the SafeHaven project and is currently on a 99-year lease.
“The proposal from the developer is that these leases will be converted to freehold for an up-front payment of $10 million dollars, with an increase in stamp duty of 2 per cent on all transactions in perpetuity. This would increase the rate of stamp duty from the current 7.5 per cent up to 9.5 per cent on each transaction. Total revenue is estimated to exceed $600 million dollars over the years.”
Mr. Bush said the opposition had implied the government was not assisting development projects in the Islands, but pointed out they were the ones who refused to agree to granting freehold ownership to the land to Mr. Ryan.
“I also want the public to understand the hypocrisy of the opposition as there was no announced MOU, there was no Social Impact Study completed, there was no Environmental Impact Study completed,” he said.
“This was done in secret without public discussion, public participation and again this Honourable House was not informed of this.”
Mr. Bush then detailed some the provisions in the 7 January 2009 agreement between Cabinet and Fujigmo Limited, Mr. Ryan’s development company. Those provisions included:
Extending by 17 years the lease for the SafeHaven land, which was set to expire in 2090, for a 99-year period ending 2107;
Agreeing to “do everything within its lawful authority to support and assist the developer” in obtaining the necessary licenses and approvals – including granting the necessary coastal works license – for the redevelopment of the North Sound coastline along the eastern end of the property, including the “reclamation and excavation of the coastline”;
Granting leases to two mangrove islands lying offshore from and adjacent to the property;
Granting waivers and reductions of import duty on construction materials used for various aspects of the Dragon Bay development;
Agreeing to support and assist the developer in obtaining a dedicated space at Owen Roberts International Airport for the exclusive use of the development for the landing and processing by Immigration and Customs of owners, tenants and residents of the development, and to obtaining exclusive use of a boat dock/landing facility near the airport;
Agreeing to support and assist the developer in obtaining “reasonable and competitive rates” for the supply of waste water treatment and the supply of non-potable water by the Water Authority to the development, and in the event of the Water Authority being unable or unwilling to provide such water within the necessary time frame, agreeing to assist the developer in obtaining the necessary license to produce the water itself for use in the development.
Mr. Bush said the Ritz-Carlton was a proven project that had delivered thousands of jobs and injected hundreds of millions of dollars into the economy through building and spending.
“It has raised the level of the Cayman tourism product and helped put us on the map as the No. 1 destination in the region,” he said.
Mr. Bush said the government was not likely to get the land back, even after 99 years.
“Under the Strata Title Law, which governs the properties, if government wanted to re-possess the land at the end of the lease, they might be obliged to purchase each strata title from the owner of each unit and land from each landowner under the lease,” he said.
Mr. Bush said the developer said the project was ready to start and “can begin employing Caymanians right away”.
“Alternately, the project can stall, we can lose the opportunity for jobs and investment,” he said. “We can even see the golf course close.”
Mr. Bush, however, never said whether his government supported the outright freehold sale of the property, but instead posed the question to the opposition, who he said were the ones who raised the matter.
“Do you support selling outright the lease to the developer for the amount he has offered?” he asked. “That is what they need to tell the public.”
Urgent needs
Developer Mike Ryan said he was pleased to see the government had decided to “address the urgent needs of this proven project”, which he said had brought more than $1 billion in economic impact and had been vital during times of economic downturn.
Mr. Ryan said the proposal for the outright sale of the leasehold property had already been endorsed in the Miller/Shaw report requested by the United Kingdom government in 2009 and in the National Investment Council’s 10-point proposals published last year and endorsed by more than 100 businesses and individuals.
“I’m pleased to hear that government put forward the terms that were negotiated and agreed with Cabinet and Caucus over an almost two-year period,” he said. “Ten million dollars is a big cost to the project, especially at this time, but one that should work for everyone now and for generations to come. The deal was crafted to provide not just cash now, but consistent revenue year after year.”
He said $10 million now would bring in more than the gasoline tax increase or the fee increase on the financial services industry.
The additional payments over the life of the project are expected to exceed $600 million dollars to Government,” he said. “This is a far better outcome than seeing a project fail when every Caymanian needs to see things moving forward and growing.”
Mr. Ryan said he knew that not everyone would support the deal if it is completed.
“There will be opposition, there always is,” he said. “The project has faced a lot of opposition in the past and many of those people who opposed most vehemently have, over the years, come up to tell me … they now thought it was a good thing for Cayman that the project got built.”
He said he thought the “vast majority of Caymanians recognise the benefits the project has and can continue to bring”.
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This is the type of project that should involve a profit sharing agreement. The developer is taking a risk, and we will be taking a risk along with them with the various concessions offered. No freehold!.. Our land should be associated with a 60/40 split we will accept the lesser..
Sometimes I really have to wonder if the Premier is really a fool or he’s just playing the fool.
If my calculations are correct Mr. Premier expects over CI 600mm over the years in revenue for giving this land up for CI10mm, let’s use the figures provided so far and adjust against Mr. Ryan 9.5% proposal on duty to find the true hidden figures.
This would mean Mr. Ryan is expecting at least CI6,315,789,500 (yes billions) in economic activities over the years this land is developed.
In order for Cayman to realize the CI600mm in revenue our financial guru from WB is floating around, over CI 6,315,789,500 in economic activity would have to be generated, this is even bigger than the Shetty Hospital,
Surely our Leader can’t be this gullible.
See calculations below:
CI 6,315,789,500 x 9.5% = CI 600,000,000
Mr. Ryan buys at CI 10mm /300 acres = CI 33,333.33 per acre
Mr. Ryan’s proposed plan using land CI 6,315,789,500 /300 = CI 21,052,631.67 per acre (develope at 63,000% markup)
Mr. Ryan Mr. Premier need to be nominated for the Pulitzer in economics next year if this works out.
Block 12C, Parcel 394 better known as the Ritz property – check out the zoning!!! The eastern half is zoned PUBLIC OPEN SPACE! Why is nobody questioning how it was allowed for a golf course private and condos again private to be put on this property? The LAW specifically states what can and can’t be done on Public Open Space zones. An interesting fact is that the Planning website had removed the Public Open Space and mangrove buffer designation from this parcel approximately a year ago and the when the infamous 350,000 letter became public it was changed back!
Development and Planning Regulations
17. (1) Public Open Space zones comprise predominantly undeveloped areas of land vested, or intended to be vested, in the Government or over which the public have rights and which is available to members of the public generally (whether subject to fulfilling any lawful condition or not) for purposes of sport, recreation, or the enjoyment or study of nature. Such areas include, but are not limited to, parks, reserves, beaches, playgrounds, sports grounds and playing fields, plazas, public access ways and land set aside for public purposes development and subdivisions under regulations 28 and 32.
(2) It is the duty of the Authority to preserve Public Open Space zones.
(3) The Authority shall permit development within a Public Open Space zone only if the development-
(a) is compatible with the character and function of the zone: and
(b) buildings forming a part of such development are directly associated with, and promote, the principal purposes and actual use of the zone.
(4) In considering any application for development in a Public Open Space zone, ythe Authority shall ensure that the intended development-
(a) will preserve, to the greatest possible extent, the natural features and character of the land:
(b) is not detrimental to the natural character or appearance of the land:
(c) accords preference to use of natural building materials:
(d) includes adequate landscaping and planting to improve the appearance of the zone: and
(e) displays a high standard of design and use of materials consistent with the character and heritage of the Islands.
Where’s the objective reasoning, the pro’s and con’s the indepth analysis of the numbers, the challenges to a self promoting ‘press release’. As has already been mentioned where does 600mio come from, made up?
Why no mention of the 6mio he already owes?
How does Crown Land designated public open space get sold?
Why does he need freehold, a lot of land is leasehold?
If leashold can never be re-taken by Government what’s the issue?
Too much BS in this.
@McCarron
Work this out on the back of your paper napkin, I use excel.
You are correct about the 6.3 billion, but it is over the same time frame of the lease ie 99 years.
That means 63.8 million in activity each year. If only 1/2 of the 300 acres is developed for housing inventory that would mean 150 acres. For arguements sake we will say that 200 condos at a average of 500K each are built on 50 acres and that 150 homes averaging 2.5 million each on the remaining 100 acres.
With annual turn over rate of 10% of the homes and 15% of the condos, you are at 60 million worth of sales per year, not taking into account appreciation or inflation.
I will say that I am no real estate expert but those involved ie Govt should know more than me about the plans for the development ie the prices and the amounts and types of the proposed buildings in the devlopment. I will also say that it is still a big risk for Govt as the developer may fall through on his commitments to develop the land as agreed. Hell Cayman maybe under water in 50 years so who knows.
@Beenie
Couple of issues, and I hope I’m not answering for @McCarron.
Last year real estate sales of housing totalled 300mio (excluding land), stats office reckon on 10% of those sales were above 500k, so in this price bracket we are looking at no more than 30mio in total sales across the Island. So to meet 63.8mio in sales Mr Ryan would need to corner the market in sales above 500k and double it.
Apart from the fact he allegedly hasn’t paid to extend the lease from 75 years to 99 even ‘tho it was granted.
I do get your point about time being a big factor in the numbers being bandied about, but to put it another way 6mio a year doesn’t sound as sexy as 600mio. It is of course easy to spend someone else’s money, this projected income will be paid for by the purchaser not the developer so saying here’s 10mio plus another 600 mio in fees is a little misleading at best.