Dickinson’s $165m warning on Caroline Bay
Taxpayers could be left with a multimillion-dollar bill for the Caroline Bay residential development at Morgan’s Point, whose financing has reportedly ground to a standstill.
“Should the project go unfunded, we will be on the hook for $165 million,” said finance minister Curtis Dickinson, who reminded at a hastily called press conference yesterday that the Government had signed on as a guarantor under the One Bermuda Alliance administration.
“Genuine efforts by the developers have been made to secure financing and these efforts are ongoing. In the interim, the principals of the company have continued to fund their obligations mindful of the importance of keeping some work going on at the site.
“This funding appears to now be at a standstill. As such, this accounts for the sums owed to contractors and subcontractors who have, in good faith, done the work required. Understandably, some have now lost their patience.
“However, in addition to the issues surrounding non-payment to contractors and subcontractors, I have a wider concern based on my responsibility to safeguard the public purse, and to avert the risk to which the Bermudian taxpayer has been exposed, first, by the former government, and now, by delays in the project.”
Craig Cannonier, the Leader of the Opposition, warned against “pointing fingers”.
Mr Cannonier said: “Let’s get everyone working again on this project.”
He added that the guarantee had been provided “if all else failed”.
Mr Cannonier said: “That does not mean that at every hiccup the project has that Government needs to pay out.
“An agreement was made. However, Caroline Bay must do all it can to secure financing.
“Had a guarantee not been provided, it may not have received the support it has been given up until now.”
He added: “Both the OBA and [Progressive Labour Party] have shown tremendous support for the project and what is needed now is to ensure we all work together to get things moving again.”
One of the contractors for the West End development said that he was still owed “not insignificant” sums.
“We did grow impatient,” said the man, who spoke to The Royal Gazette on condition of anonymity. “We also recognise that the best hope for it ending well is that a new deal gets done so that the project can continue.”
The contractor added that potential new investors had given “some assurance” that funding for the development could be revived. He pointed to similar scenarios at Tucker’s Point and at Newstead Belmont Hills, where the developments were unable to meet financing targets, causing investors to step in and put the projects into liquidation.
He said: “A lot of debtors were left holding the bag. The difference with this project is that the Government has guaranteed this sum. That is why financing needs, really badly, to come off.”
He added: “The potential investor’s feedback on dealings with the Government were that they had been professional and extremely diligent.”
Construction was downscaled at Caroline Bay last year when costs overtook financing.
Mr Dickinson said the Ministry of Finance was taking advice, and had met with Caroline Bay Development principals last Friday to discuss the “advanced” stage of negotiations for project funding.
“We are doing everything prudent to protect the Government’s position,” he said.
“There is much more to be done, however, to first secure financing to complete the project and to ensure a successful conclusion of the construction phase of the project.”
Asked by The Royal Gazette whether a scaled-down version of the development was under consideration, Mr Dickinson said: “The developers are looking at a number of potential alternatives — looking at the project as originally contemplated and also the potential of revising it.”
Mr Dickinson also said he wished to deal with “speculation” that the Government was preventing the deal from being finalised.
A ZBM News report on Wednesday suggested that Cabinet was sitting on approval for licences in relation to financing and immigration.
The finance minister said: “I am not allowed to discuss Cabinet deliberations, so I won’t. I am not aware of any delays on any applications with respect to licences that have been delayed or even submitted.”
A series of crunch talks with developers took place in February 2018 based on a forecast that work on the site was likely to stop, workers could be laid off and contractors not get paid.
Mr Dickinson said: “The persistent demands of the Government was that this could not be allowed to happen, as this country could not then, and cannot now, afford to see more Bermudians out of work.
“As part of the process to shore up the management of the project and other aspects of the operation of control of the development, the Government mandated changes to the corporate governance of the development company, and the marketing of the preconstruction unit was made the responsibility of a strengthened, more experienced team of realtors.
“While work continued at the site, the pace and scope consistently reduced to the point where it is now stopped altogether.”