RT. HON. HUBERT A. INGRAHAM,
SUPERSEDING HEADS OF AGREEMENT BETWEEN
THE GOVERNMENT OF THE BAHAMAS AND
EXUMA RESORT DEVELOPERS LIMITED
The development of legitimate business on Norman’s Cay in the Exumas for the benefit of the Bahamian people was a goal and objective of my Government when we were last in office.
Just as the illicit drug affiliation of Gorda Cay in the Abacos was cleansed by the development on that cay of a private port of call by Disney Cruise Line, today called Cast Away Cay; and just as the drug-infested Hawksnest Resort and Marina were sanitized and readied for expansion and upgrade following upon its acquisition by Jerry Clayton; we looked to the development of an exclusive, upscale tourism resort at Norman’s Cay to erase the blot of drug trafficking on the Cay caused by one of its more notorious residents – Carlos Enrique Lehder, locally called Joe Lehder.
Honourable Members will recall that Carlos Lehder, owned, in fee simple, certain properties on Norman’s Cay through two companies incorporated under the laws of the Commonwealth of The Bahamas, namely Fernandez Limited and International Dutch Resources Limited.
Honourable Members will also recall that Mr. Carlos Lehder, a citizen of Colombia, is a convicted drug felon incarcerated in the United States of America.
In 1989 Lehder’s Companies were struck off The Bahamas Register of Companies by the Registrar General.
By virtue of the laws of The Bahamas, title to the properties of the Lehder-owned companies now vests in the Treasurer in trust for Her Majesty in right of Her Government for the benefit of The Bahamas.
In 1990 our Supreme Court refused applications to restore the Companies to the Register.
An Appeal against the Supreme Court’s refusal was dismissed by the Court of Appeal in August 1995.
In February, 2002, my Government entered into a Heads of Agreement with Exuma Resort Developers Limited for the development of an Amanresort on Norman’s Cay in the Exumas.
The Heads of Agreement provided for the investment of some $25 million in the development of a five-star hotel resort of approximately 40 luxury villa-styled rooms together with beach clubs, restaurants, bars and appropriate amenities, including the upgrade of the Normans Cay airstrip, the construction of employee housing and other residential and commercial offerings.
So as to facilitate the development, the Government agreed to a Lease/Purchase of various tracts of land vested in the Treasurer, including a jetty at Norman’s Cay.
In accordance with the Heads of Agreement, in March 2002, Exuma Resort Developers Limited and the Treasurer of The Commonwealth of The Bahamas entered into a Crown Lease/Purchase with respect to approximately 550 acres of land on Norman’s Cay. The lease granted an option to Exuma Resort Developers to purchase the land at a price of $2,365.00 per acre.
The Government was to retain some 45 acres of the land vested in the Treasurer on Norman’s Cay for future public use.
The Heads of Agreement provided for the development to benefit from the usual concessions as are available under the Hotels Encouragement Act.
The Aman Project was to be developed and constructed over a 36 month period through Exuma Resort Developers Limited by: (i) Mr. Adrian Zecha of the Amanresorts (through his company Anbest Holdings Limited); (ii) Mr. Zecha’s long-time friend and business partner, Steven Manolis (through his company, 757 Overseas Limited; and (iii) Mr. Zecha’s development partners, Messrs. Jonathan J. Breene and John P. Conroy of the Setai Group (through their Company, Setai EDRL Investments Limited).
A Bahamian Group, Cleare, Holowesko, Cole and Solomon, who owned private acreage on Norman’s Cay, was also proposed as equity participants in the Project.
It was anticipated that the Amanresorts would brand and manage the Aman Project, while the Setai Group would serve as the Aman Project developers.
Honourable Members are advised that Amanresorts were founded in the 1980s by Mr. Zecha (after he had founded Regent Hotels and Rafael Hotels).
Amanresorts have developed an excellent reputation around the world for its visionary design, extraordinary attention to detail, and unsurpassed personal service. The Amanresorts portfolio of properties includes ultra-luxury hotels and resorts in some of the world’s most pristine and exotic destinations including Thailand, Bali, The Philippines, India and Morocco.
The Norman’s Cay development by Amanresorts were to be Mr. Zecha’s first property in the region and in The Bahamas. There were also plans for a second property in The Bahamas.
For a number of reasons the development did not proceed as expected and, indeed, Aman Resorts developed its first property in the region in the Turks and Caicos Islands.
The Setai Group is a New York based private development company specializing in luxury residential and five star boutique hotel properties in select markets around the world.
The Setai Group was founded in 1998 by Partners Jonathan Breene and John P. Conroy, Jr. The Setai Group’s mission is to recognize the needs of an individual market, to identify a location with the qualities that appeal to that market, and to create the ultimate living environment, that is, one that offers exceptional service in quality surroundings.
The first development completed by the Setai Group was an 18-storey, 120-unit luxury condominium project on Turtle Creek in Dallas, Texas, called Vendrome. The Setai Group recently completed construction of the Setai Resort and Residences in Miami’s South Beach, a mixed-use development comprising an 8-storey, 88-room luxury hotel and a 40-storey, 165 unit condominium tower, managed by Amanresorts’ sister company, General Hotel Management, Inc.
Subsequently, Exuma Resort Developers Limited advised that Amanresorts in partnership with the Setai Group were assuming 100% ownership and control of the Project by buying out the interest of the Bahamian Group.
The Developers through their attorneys approached the previous administration, requesting a Supplemental Heads of Agreement reflecting the new ownership structure and an expanded project concept.
A Supplemental Heads of Agreement was drafted but not finalized prior to the recent General Election.
Following upon the General Election my Government resumed negotiations with the Aman Group and agreed a Superseding Heads of Agreement.
The following has been agreed:
1. The Aman Resort on Normans Cay Project will now have an estimated project cost of US$80 million, with the following components:
(1) Hotel Lodge consisting of reception, hotel back-of-house, restaurants, bars and function areas and forty (40) Hotel Bungalows;
(2) Twenty-Eight (28) residential villa sites;
(3) Beach Club and Pool;
(4) Spa, Fitness and Tennis Centres;
(5) An Extension and Upgrade of the existing Airport;
(6) Customs, Immigration and Police facilities at the Airport;
(7) Living accommodation for Customs, Immigration and Police;
(8) Island infrastructure (electrical, water, sewage, communications, cabling and island roadways);
(9) Marina and marina village; and
(10) Staff accommodations.
It is now proposed that the Developer will commence construction of the hotel within six months and complete construction of the hotel within 48 months.
The Developer will pay to The Treasurer:
(1) US $ 1 million for Freehold Lands; and
5% of the gross sales proceeds on residential lots sold to third parties.
The Developer will also provide a bond of US $40 million from a bank, insurance or trust company licensed in The Bahamas, which shall be forfeited if the hotel component is not substantially completed within 48 months.
The Developer will surrender the 2002 lease and the sum of $50,000.00 paid thereunder shall be applied towards the purchase price for the Freehold Lands.
The Developer shall cause the purchaser of any residential unit located within the Freehold Lands to pay to the Treasurer an Occupancy Fee of $150,000.000 upon the substantial completion of the residence constructed, or the appropriate Stamp Tax on the cost of the construction of the home, whichever is the greater sum.
Subject to the hotel being constructed and operational, the Government undertakes not to approve any development on its remaining 250 plus acres of land at Norman’s Cay that is incompatible with the
Developer’s overall project concept. The Developer has agreed to prepare a development plan for the retained Government lands for the consideration of the Government.
After the opening of the hotel the Government will declare the Airport a “customs airport” and the Marina a “port of entry”. The cost of maintaining that status shall be for the account of the Developer.
There will be unfettered public access to the Airport and Marina, subject to standard landing and berthing fees set by the Developer and approved by the Government.
The Developer has undertaken to maximize the employment of Bahamians, inclusive of professionals in the “build environment”.
Between 600 and 700 persons will be employed during peak construction. During the operation phase, the ratio of non-Bahamians employed shall not exceed 20% in years 1 - 5, 15% in years 6-10 and 10% thereafter. Approximately 400 persons will be employed in the management, operation and maintenance of the resort, related facilities and residences.
The following tax concessions have been agreed to be granted for the Developers:
(a) Concessions as are available under the Hotels Encouragement Act, excluding stamp tax and property tax where the villas are not part of the hotel rental pool, for a minimum period of 9 months in the calendar year; and
(b) An Electrical Franchise, subject to the Out Islands Electricity Act.
My Government will be seeking the appropriate Parliamentary resolutions relating to the disposition of Government owned lands referenced in this Communication.
I am pleased to lay the agreed Superseding Heads of Agreement on the table.
18 February, 2008
1)COMMUNICATION BY RT. HON. HUBERT A. INGRAHAM, PRIME MINISTER ON THE SUPPLEMENTAL HEADS OF AGREEMENT BETWEEN THE GOVERNMENT OF THE BAHAMAS AND BAHA MAR DEVELOPMENT COMPANY LIMITED
2)HEA 2007 Agreements List