Dear Sir,

With all the uncertainty swirling around the Fairmont Southampton property development, let’s move the focus for a moment over to the Government’s economic initiative to redevelop Morgan’s Point. If you have not read about it, you should. I will attempt to summarise the Government’s intention, but you should do your own research as well.

On February 17, 2023 during the reading of the national budget, David Burt, revealed that the failed hotel project at Morgan’s Point will be converted into a mixed-use development including residential, along with a restaurant and retail complex. He said the 37-acre site in Southampton would provide opportunities in the hospitality, retail and service sectors with the first phase costing an estimated $130 million and would be backed by a government guarantee.

He suggested that financing this initiative would consist of two debt tranches: a combination of a senior debt tranche secured against Morgan’s Point land and applicable assets as built, and a subordinated debt tranche provided by a local Bermudian bank, backed by a government guarantee. Both tranches would be backed either by security of the property or sovereign guarantee, thus minimising interest costs. The Premier and Minister of Finance also said that the operation will generate cash returns to “more than cover the costs of construction”, so that Bermuda can recoup funds that were paid out for the guarantee agreed by the One Bermuda Alliance for that hotel plan.

First of all, let’s take the obvious glaring item, which is more taxpayer debt, wrapped up with another financial guarantee “bow”. Remember, in November 2022, in the Fiscal Responsibility Panel’s annual report, there was this stern warning: “Guarantees virtually never should be issued to back commercial projects — including those included in the Economic Recovery Plan.”

I would now remind readers of our existing financial guarantees, which are listed in the Bermuda Government 2023-24 Budget Statement. They total $1.137 billion.

Of course there are those who will say that financial guarantees are not “real” debt unless they are called, which is true. We did, however, experience a jolt of that reality with the OBA Morgan’s Point guarantee, to the tune of $165 million. Are you happy to risk another one?

I have serious concerns about the latest Morgan’s Point policy initiative and also would ask why is the Government going into the “development” business? We all know they have more physical infrastructure than they can keep up with right now, and it is all in terrible condition — roads, bridges, government buildings including Government House, public parks, Tynes Bay waste facility, etc. Will the Civil Service have to expand to meet these additional infrastructure responsibilities at Morgan’s Point? Who will maintain this “village”?

While it may be exciting to read about this grand plan “on paper”, in reality this “mini village” is going to add much more financial and management strain on the Government, and the ongoing government maintenance and oversight of this development will be costly to the taxpayer. Given the dismal track record of various governments on previous large infrastructure projects, we know the risk of failure is high and the ramifications always fall on us.

It appears that the latest idea for Morgan’s Point is to build 48 affordable apartments for Bermudians, above new retail space in an amenities district and then also build three separate blocks of high-end rental units. While affordable housing is a valid initiative and desperately needed, I cannot agree to this method of achieving it, by committing the taxpayer to also pay for and maintain an entire “destination village”.

Yes, revitalising the already brown site of Morgan’s Point is urgently needed and I am 100 per cent in favour of it. However, the Government should “facilitate” it only by giving favourable conditions for the development to happen, but to be done by the private sector. Government should set the stage to entice developers, possibly with the generous promise of a “land gift” and concessions to build out the already “brown” land with a plan that is financially viable and good for the economy (maybe something similar to this plan, maybe not). Whatever that looks like, the contract agreement must have low risk to the taxpayer and offered with no government guarantees.

I urge all Bermudians to read for themselves the relevant section in the 2023-24 Bermuda Government Budget Statement. Look for “Reimagining Morgan’s Point” on page 17 and become informed. It’s your money on the line and you should be aware of how it is being spent. I say “is being spent” because in June 2023, the Government issued a Request for Proposals for architectural design and support services in providing planning, design and other support services for the Morgan’s Point development project.

Cha-ching ... full speed ahead.

BEVERLEY CONNELL

Pembroke