Baha Mar Development Company is paying ground rent of just $3,400 per annum for the first 43 years of its 99-year lease of the Crown Land upon which the Nassau Beach Hotel stands, secret documents seen by The Tribune show.
[Editor’s Note: It is an insult to Bahamians for anyone to even attempt to justify this outrageous giveaway of crown land, no matter what other factors are considered.]
However, although it seems that the developers behind the $2 billion Cable Beach redevelopment obtained a “sweet deal” in leasing just over seven-and-a-half acres from the Government, sources have told The Tribune this is not necessarily the case.
The details concerning the Nassau Beach Hotel lease are contained in a copy of the agreement between the Prime Minister, acting as the minister responsible for Crown Land, and Baha Mar, that was tabled in the House of Assembly by FNM opposition leader, Hubert Ingraham.
To acquire the Nassau Beach Hotel lease from the Government, Baha Mar paid $37,550.
The lease agreement shows that up until December 31, 2048, Baha Mar will pay to the Government “a total annual rent of $3,400”.
For the final period of the 99year lease, starting on January 1, 2049, and ending on December 31, 2104, Baha Mar will pay to the Government an annual ground rent for the Nassau Beach Hotel of $160,000.
In addition, every five years from January 1, 2054, onwards, Baha Mar will make lump sum payments of $35,000 on top of its
annual ground rent.
While the $3,400 per month ground rent for the first 43 months of the Nassau Beach Hotel lease may seem absurdly low, several sources have told The Tribune that is not the case.
It is understood that the same ground rent amount was being paid by the Nassau Beach’s previous owner, Philip Ruffin, and that the Government just rolled those terms over into the lease granted to Baha Mar.
It is likely that the $3,400 per year ground rent was included in the 99-year lease given to the Nassau Beach’s original developers, and that successive owners have merely inherited those terms.
Still, some are likely to argue that the Bahamian tourism industry has reached a stage in its development where the Nassau Beach Hotel ground rent should have been increased.
The lease granted to Baha Mar also included clauses committing the developers to perform certain obligations by specified dates.
Other sources told The Tribune that leasing Crown or Treasury land to developers for 99-year periods, usually for a nominal rent, was not unusual, as it enabled the Government to step back in if developers failed to perform or ran into difficulties.
And the reality is that in negotiations over most development projects, the Government’s main concerns are to create jobs for Bahamians, potential entrepreneurial spinoff opportunities for Bahamians, and a worldclass tourism product that will benefit the country’s economy and society for the long term.
The amount of rent the Government earns from leasing these lands is thus likely to be of secondary importance. And The Tribune was told that the various agreements the Government signed with Baha Mar were all concluded as arm’s length transactions, with proper scrutiny and on commercial terms.
Apart from the Crown Land agreement, the FNM has also been demanding to see copies of agreements signed between Baha Mar and the Hotel Corporation and the Treasurer of the Bahamas respectively, criticising the Government for its secrecy.
The Tribune, though, has obtained copies of both these sales agreements, which are described as “confidential”.
The Treasury sale involves three parcels of land – one known as the ‘Old West Bay Street parcel’, then the land upon which the Cecil Wallace-Whitfield Centre and the police station currently rests, and a parcel described as the ‘JFK Connector’ corridor.
Baha Mar, according to the terms of the agreement, purchased fee simple interests in all three parcels for a total of $5.963 million.
In addition, the agreement with the Treasurer said the Government and its agencies would transfer to Baha Mar, “for no additional consideration”, property used by the Bahamas Electricity Corporation (BEC), including its substations. Other parcels to be transferred include land owned by the Water & Sewerage Corporation.
The actual Heads of Agreement document between Baha Mar and the Government state that 103 acres owned by the latter and its agencies would be incorporated into the development’s golf course and for residential development.
Lands used for the golf course would be leased to Baha Mar for a “nominal rent”, and some of them would be owned by BEC, Water & Sewerage, the Government and the Crown.
The Hotel_Corporation agreement involved the sale to Baha Mar of freehold interests in the Cable Beach Golf Course, the land on which the Radisson resort stands, the land parcel that previously sited the Hobby Horse Race Track, the Gaming Board and Bahama Development Bank land, and land hosting the Radisson sports centre, tennis courts and laundry facilities. Baha Mar also purchased the “remainder interest” in the land upon which the Wyndham resort rests, and the Fidelity Bank (Bahamas) site.
The purchase price for the Radisson and all the Hotel Corporation land was not revealed, although Baha Mar paid a $2.34 million deposit into an account with its then escrow agent, SG Hambros Bank & Trust (Bahamas).
The agreement reveals that Baha Mar and the Hotel Corporation entered into a 99-year lease for the Wyndham.
For the period until December 31, 2039, Baha Mar is paying an annual ground rent of $120,000 per year, with lump sum payments every five years of $25,000.
After that, the ground rent increases to $240,000 per annum, with lump sum payments every five years of $50,000.
