The Grand Atlantic housing complex is to be transformed into a condominium hotel complex.

Announcing the move at a press conference, Public Works Minister Patricia Gordon-Pamplin said Government had signed a Memorandum of Understanding with a tourism and leisure firm to “upgrade and reposition” the residential development.

“The proposed redevelopment of the Grand Atlantic site will create a condo hotel which will make use of existing construction and bring a new all-suite tourism product to Bermuda that is very popular in other jurisdictions,” Ms Gordon-Pamplin said.

“This will be a welcome addition to Bermuda’s current hotel inventory and a completely unique product for our market.”

The complex, on South Shore, Warwick, was conceived by the former Government as an affordable housing project. But it was branded a white elephant after just two of 78 units were sold. One of those families has now moved to alternative accommodation, while the second owner is in negotiations with Government to find alternative accommodation.

According to Ms Gordon-Pamplin, a condo hotel is defined as a development which is legally a condominium but which is operated as a resort, offering short-term rentals of hotel suites with a front desk and resort leisure facilities.

“It is anticipated that the units at Grand Atlantic will be sold as a combination of investment and vacation homes, with condo owners being restricted to 90 days annual occupancy per year,” the Minister said.

“When owners are not in residence, they can leverage the marketing and management provided by the hotel operator to rent and manage the condo unit as it would any other hotel room.”

The 120-day MOU with Caribbean-based MacLellan & Associates has an exclusivity clause which will enable MacLellan & Associates, along with local industry partner Bermudiana Beach Resort, to finance the acquisition and associated development costs of the project.

“It is anticipated that the site could be prepared for sale of condo hotel units within the year,” Ms Gordon-Pamplin said.

“Currently MacLellan & Associates are working to finalise the financing arrangements for significant design changes, incorporating resort amenities and identifying a hotel operator that is willing to partner with investors in the opportunity presented by this development for a new tourism product in Bermuda.”

Details of how much Government will be paid for the deal were not revealed yesterday. Ms Gordon-Pamplin said that all financial arrangement will be determined during the 120-day exclusive MOU period.

However, the Minister said she was “confident that this project will prove to be financially beneficial to Bermuda”, adding that, with redevelopment expected to start soon, the deal would provide a welcome boost to the construction sector and also have a positive social impact.

Ms Gordon-Pamplin also confirmed that the consultant had been advised of environmental concerns over the complex, which is located close to a cliff face, said by some to be rapidly eroding.

Last week Opposition MP Michael Weeks questioned if the OBA was telling potential investors that the property was safe. But yesterday Ms Gordon-Pamplin insisted that the issue “was not going to go away”.

“Once an issue has been addressed and looked at it is there in the public domain,” she said

“The developer is aware of the public’s concerns surrounding the cliff and its structural integrity. They’ve reviewed the existing engineering documentation, they have physically inspected the site and they will take additional counsel from the structural engineer during this due diligence period.”