Anyone looking to hear specific details on the Gencom guarantee to renovate the dormant Southampton Princess Hotel would be sadly disappointed after hearing the Budget Statement delivered on Friday.
In fact, there was no mention of it in the 47-page fiscal plan for the next legislative year, in spite of the much touted speculation that it triggered Curtis Dickinson’s shock resignation as Finance Minister.
Ultimately, Premier David Burt did not specify what Government guarantees for Southampton Princess will be for the $200M redevelopment project.
What he did say was that any developments had to be fully funded to be considered for help.
What that means in terms of dollars and cents out of the taxpayers’ pocket remains to be seen.
But he did take the opportunity to bash the One Bermuda Alliance over the failed Morgan’s Point development project at Caroline Bay.
“Upon returning to government in 2017, the Progressive Labour Party was executing its agenda and laying the foundation for long-term economic growth before having to address two major events beyond our control, namely the Morgan’s Point guarantee and the COVID-19 pandemic,” said Mr Burt.
“In light of those challenges and the other potential risks looming, such as the new OECD global tax agreement, a challenging tourism market, US inﬂation, and the continued drainage of public funds to cover the Skyport minimum revenue guarantee, this Government is committed to making the difﬁcult, and sometimes unpopular, decisions required to steer us back to a path of economic recovery. We did it before, and we will do it again,” he added.
Moving forward, he said: “This Government will this year introduce amendments to the Tourism Investment Act to increase the duration of concessions available to hotel developers in Bermuda.
“Doing what is required to attract hotel investment does not mean that we will be reckless.
“We have seen what a desire to develop hotels at any cost can mean to the taxpayers of this country.
“The former Government’s failed bid to support the Caroline Bay project has had dire consequences for our public purse,” said Mr Burt.
“In that deal, the former Government guaranteed virtually all the debt for the project, and construction was started before sufﬁcient funding was in place to support its completion, with the project reliant on real estate sales to fund the balance of the development.
“That was an unacceptable risk for a massive undertaking involving persons that had no comparable experience in hotel development.
“What is most egregious is that in 2017, while the former Government was ﬁlming election advertisements at Morgan’s Point, the developers had already breached the commitments that were made for the guarantee, as they had agreed to sales targets that had not been met,” he said.
“It is clear that the former Government should never have entered into the agreement as it was structured.
“That has been made evident as the guarantee was called in and taxpayers have now paid over $210 million for the previous administration’s poor judgement.
“By contrast, this PLP Government has taken a different approach.
“We have ensured that guarantees extended to hotels, like the one provided to the new St Regis property in 2018 or the 2019 agreement between the former Minister of Finance and the developers of the Fairmont Southampton, do not overexpose the Government.
Photo By E Michael Jones
“We are making sure that all hotel development is fully funded so that taxpayers are not left bearing the cost.
“Properties like the Fairmont Southampton, which was the largest private employer in Bermuda, are a national priority,” he added.
“So much in this country depends on a successful tourism industry. Without it we do not have sufﬁcient visitor numbers, our attractiveness as an international business jurisdiction is reduced and all of the businesses that support it suffer, including food services, transportation and entertainment.
“Tourism is essential, and it is the responsibility of the Government to use all of the tools at its disposal, including appropriate guarantees where necessary, to facilitate successful hotel development.”
ONGOING COST OF THE OBA GOVERNMENT 2017/18 2018/19 2019/20 2020/21 2021/22 Total
Morgan’s Point/Caroline Bay $176.3 $30.5 $3.2 $210.0
Skyport Minimum Revenue Guarantee – – – $21.0 $20.0 $41.0
WEDCO – Cross Island $2.1 $6.3 $4.8 $5.0 $4.8 $23.0
Total $2.1 $6.3 $181.1 $56.5 $28.0 $274.0
When it comes down to money matters affecting the public purse, Premier David Burt announced a government hiring freeze and cuts to public services.
Payroll taxes will also be cut for low income earners.
Overall, he said: “The $945 million of current expenditure for the next fiscal year 2022-23 will still require a significant amount of reductions in services to meet that target.
“Services will have to be limited and hiring will be frozen.”
But the Premier stated that he would not say where the axe would fall exactly because it “steal the thunder” from his Ministers.
The Premier also eased what what is now referred by car owners as that infamous birthday gift, saying it “has long been a known irritation in Bermuda that the birthday gift from the Government of Bermuda for those persons owning a private car is a very large bill for your annual vehicle licensing fee”.
“This year, to provide further relief across the board to all residents, the Government is cutting the vehicle licensing fees for private cars by 10 percent. Let me repeat that Mr Speaker, the Government is cutting the vehicle licensing fees for all private cars by 10 percent.”
We’ll have more on the latest Budget in subsequent reports.