Government is looking to revisit the granting of concessions to stimulate construction projects after a $350 million drop in development-generated revenue and a decline in the number of planning applications.
Tourism and Transport Minister Kenneth Bryan, speaking on the Cayman Compass Facebook talkshow The Resh Hour last Wednesday, made the point, as he said the slowdown in the third pillar of the economy – construction and development – is concerning.
“What scares me is the recent numbers by the Honorable Jay Ebanks, the minister for planning, that the planning application numbers are down. That’s scary, and I don’t know if it’s the … high cost of materials or is it because of the war or the fear of the recession and high interest rates that’s causing people to want to pull back? We have to be mindful,” he said.
According to statistics released to the Cayman Compass on Monday, between 1 January and 31 May this year, 311 projects, valued collectively at $241,404,905, were approved by the Planning Department.
Over the same period last year, 345 projects were approved by Planning, with a collective value of $628,947,685.
Up to 31 May this year, 21 apartment complex projects were approved this year. Over the same period last year, 52 had been approved.
Dip in applications fuels need for concessions policy
Bryan said the decline was troubling, as it shows a slowdown in momentum for construction projects. He added that, while it is a sensitive topic, concessions are something that will have to be looked at.
“When things are good, you should never have to use concessions,” he said. “Things are good, you want to develop, you want to build, do it. But when things start to recede, concessions [are] supposed to be a tool that you use to spark movement, to give incentives for the businesses and developers to develop and keep the economy going.”
Bryan acknowledged, particularly with this government and its stance on the environment, that they wanted to move away from concessions.
He said it is a matter he and Deputy Premier Chris Saunders, who is also the minister for finance and economic development, have discussed.
Caucus and the government, he said, have a lot to think about, but “we have to make sure some of these major projects are going and keep the confidence of the business community”.
“I know it’s going to level back out, but if we go into a recession, we could potentially be in some hot water for about a year, year-and-a-half. Now I don’t want scare the public, but we have to plan for that eventuality and we have to start thinking that way. I want you to know the government is already aware of it. And we’re making our strategies and discussions about it,” he said.
Bryan said work on a concession policy is happening as a matter of top priority and Saunders, who is taking the lead on that, has indicated that it will be done.
“We definitely need to get it resolved, so we can take the necessary action to help the business community… to keep that work going, like the construction and the development, the importation of goods and so forth, because we need that revenue,” he said.
Environment group concerned by concessions plan
Local environment group Amplify Cayman, in a statement to the Compass following the minister’s comments, challenged government’s approach as an “unsustainable method of economic revitalisation”.
It suggested that during this period of slowdown in planning applications, an alternative solution, which would be more sustainable for the long-term future of the islands, would be to focus on diversifying the economy through investing in green-blue industries, to transition Cayman to a carbon-neutral economy.
“Local community advocates and natural capital economists have voiced their support for the government relying on these sustainable methods to generate economic revenue, which we also support, as it’s evident we need to move away from a heavy dependence on revenue from duty,” it said.
Amplify Cayman said it welcomed news of a forthcoming concessions framework, since the lack of one resulted in millions essentially being given away at the expense of the community’s needs.
“We hope that the concessions framework development process is subject to public input and look forward to offering our advice to government on how to ensure it equitably helps build our nation. One suggestion to this point would be to appoint an independent committee tasked with recommending concessions through a performance-based points system – one which demonstrates that the development provides significant benefit to the community,” it added.
Amplify Cayman said, in the face of an affordable housing crisis, it is insensitive to continue approving concessions for luxury developments “when thousands in our community struggle to get onto the property ladder in their native country”.
“Government must act with reciprocity in its decision-making when approving concessions, which should be given to strategic objectives, such as affordable housing. This is a prime opportunity to use the slowdown in planning applications to work on a development plan, which we see as a relief to the housing and cost of living crises we’re currently facing,” it added.
Travel regulations need to be lifted
Bryan pointed out that the rising cost of living has been “haunting” him at nights.
He said it is critical for Caymanians to be able to provide for themselves and lifting the travel restrictions so the islands can allow more tourism business in is a key component.
“That’s why I’ve been pressuring so hard for these mask mandates and [pre-arrival] testing and so forth to be withdrawn,” he said, adding, “they are hindrances from us making the revenues that we necessarily need to provide for our people”.
This, he said, will not only provide for Caymanians by way of direct revenue, “but the opportunity for a person to provide for themselves so they don’t have to depend on the government”.
Government is said to be considering lifting the mask mandate and pre-arrival testing requirements, among other changes.
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The main problem with development in this country is that almost none of it is providing places for ordinary people to live. With a serious accommodation crisis and an out of control property market, there is benefit in throwing up ever more luxury multi-million dollar condos which then sit empty. No residential development should be permitted unless it provides a meaningful amount of affordable housing.
We are currently in Florida. To obtain covid tests we had to book appointments at two different Walgreens because they are cutting back on appointment numbers because so few countries now require it.
As a vulnerable person I am 100% behind keeping people safe. But it seems no point forcing air visitors to endure this aggravation when there are NO such requirements on cruise ships, the big spreaders of covid at the start of the pandemic.
As for Travel Cayman, they did a good job keeping our island safe for many months until most people were vaccinated. But it appears the only reason it still exists now is pressure not to release people from their jobs, even if the need for those jobs has passed. So hundreds of Caymanians don’t have their jobs back in the tourism industry and have to be supported by the taxpayers. Seems wrong-headed to me.
Your Govt. restrictions killed your tourism, and is still killing it. It is time to wake up and cancel all restrictions.
The government needs to hire more people to do inspections promptly and efficiently. Planning board approvals should not take months and months! However, instead of giving concessions to developers maybe give that money to them but they must use it to build affordable housing. The government has a lot of crown land, and maybe a Joint Venture between Government and construction companies can produce quality affordable housing.