One Bermuda Alliance Leader and Shadow Minister of Finance, Cole Simons defended the former administration’s decision to approve the $165 million guarantee on the Caroline Bay project at Morgan’s Point in the House on Friday (March 5).
But he said the stalled project at the former US Naval Annex in Southampton was a “poisoned chalice” from the very beginning.
“The ground was poisoned by the US Navy and the contract that was signed by the previous Progressive Labour Party government with Morgan’s Point Ltd was poisoned by the obligation to clean up the entire site to a ’residential 1’ standard, at Government’s cost and the Bermuda taxpayer.”
In the Opposition’s Reply to the Budget, he also stated that the Progressive Labour Party government has had “plenty of time” to draft plans for the future of the site.
“We were hoping that would be articulated in this Budget statement. I have to say that it is disappointing not to see the plan,” he said.
He also noted that the developers had threatened to sue the former administration, to the tune of $100 million, if they failed to comply with the clean-up agreement.
The site was eventually cleaned up at a cost of $33 million – where that was not possible, Mr Simons said the land was retained in public ownership.
“Notwithstanding all of this, it was still a brownfield site and, as such, investment funding would not be forthcoming without Government’s guarantee,” he added.
“To lay the infrastructure for the long-term, future of our tourism industry, create opportunities for local businesses and jobs for Bermudians, the decision was made to guarantee certain loans for the project.
“Unfortunately, the project failed. Nevertheless, despite the negative result of this case, government guarantees are generally required from overseas financiers to finance major projects in Bermuda.”
When the developers ran out of money, work on the site stopped in 2018, leaving the current administration on the hook for the $165 million guarantee, which forced the Government to raise the debt ceiling by $200 million in September 2019.
According to Finance Minister Curtis Dickinson, buying the project’s debt “gave us more rights than exercising the guarantees”.
It also left the Government with a claim on the assests of Caroline Bay’s assets.
The Minister also noted that there were potential buyers interested in the project’s development.
Details have yet to be announced.