The big question this week is why not take advantage of the one-time $600,000 pay-off offer in the contract deal for the new $250 million airport, as opposed to paying $30,000 a month in rent, plus costs to relocate the Bermuda Post Office Mail Processing Centre (BMPC), for three years?
The other big question swirling around in political circles has to do with just who owns the building earmarked to house the relocated airport mail facility.
This after newly appointed Minister of Government Reform, Lovitta Foggo advised MPs in the House on Friday, that the BMPC was in the process of “vacating its publically owned premises at the LF Wade International Airport, to relocate to a privately owned facility at Mills Creek”.
The move, she said, “is required” as a result of the agreement entered into by the former One Bermuda Alliance government, between the Bermuda Airport Authority and Project Co.
Based on the deal, the Minister said: “The BMPC now resides on leased premises.” But in her Ministerial Statement, she spoke of a clause in that agreement, should the Bermuda Post Office continue to occupy space on the Leased Premises at the airport after December 31, 2017.
Should that turn out to be the case, then: “The Authority will pay project Co $600,000 as a single liquidated sum as full compensation and the Bermuda Post Office will be permitted to remain in its current premises for the Term without further payment of rent or occupancy cost, subject to the Bermuda Post Office entering into a sublease with Project Co.”
As all premises leased by the Government fall under the Ministry of Public Works, Ms Foggo noted that the Minister, Colonel David Burch, was not in the House on Friday, when asked who owned the Mills Creek building to be leased.
Responding to PLP MP Neville Tyrell, who asked, she said she would get that information and revert to the House in due course.
Reports reaching Bermuda Real indicate that the building is reportedly the New Venture House, said to be owned, or part-owned by Don Mackenzie, the Chairman and owner of New Venture Holdings (NVH), “a privately owned holding company with a operating company and real estate investments in Bermuda, Canada and the UK”.
According to his bio online, his portfolio includes serviced office and self-storage facilities in Bermuda, a consumer food business in the UK and NVH companies in Canada.
He was also appointed to the SAGE Commission by the former Minister of Finance, which undertook an extensive performance of the Bermuda Government.
The criticism surfacing this weekend in political circles, generally questions why the Government would not consider it cheaper, in the long run, to pay the $600,000 one-time penalty, as opposed to paying rent for New Venture House at $30,000 a month.
With the Post Office and Customs expected to require use of the space for roughly three years, at $360,000 a year, amounts to approximately $1.1 million, plus the additional cost of re-fitting New Venture House to accommodate the two departments.
Efforts to secure a response from an official Government spokesperson was not available at post time.
As it stands as of Friday, MPs were told that the move is not likely to occur by September 30th, and that efforts are underway to avoid penalties.
Ms Foggo added that “no more than a 30-day extension will be requested”. She also noted that “the Supplementary Estimate to the Budget tabled last week set aside $290,000 to fund the relocation of the Post Office mail office from the airport”.
Several sites, including government buildings were considered, “in a bid to cut costs” but she said none of them were “suitable”.
Ms Foggo also said the move “had the potential to jeopardise the reputation of Bermuda’s postal service’s international standing and impact revenue collection”.
“The future requirement of having to move airmail to a non-airport facility before sorting and distribution will increase receipt time and decrease efficiency, thereby negatively impacting service standards,” she said.
“Further, the move significantly affects the Department of Customs and the border control work that they are required to manage,” she added.
Essentially, the deal with Aecon means that “if the two agencies are not out of their airport home by the start of next month, Government will have to pay rent at market value”.
But if they remain on site after the end of the year, “the authority will pay Project Co $600,000 as a single liquidated sum as full compensation and the Bermuda Post Office will be permitted to remain in its current premises for the term without further payment of rent or occupancy cost, subject to the Bermuda Post Office entering into a sublease with Project Co.”
When asked by Opposition leader Patricia Gordon-Pamplin whether it would be less expensive to stay at the airport to eliminate the costs associated with moving, Ms Foggo said it would not.
Overall, the Minister said: “This arrangement regarding the relocation of operations has unintended consequences.”
In any case, the debate on the Supplementary Estimate tabled by the Premier last week, is scheduled to take place on Friday, September 29th.