The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Golf Federation (BGF) yesterday said it was in the process of returning $130,000 to its members, after its plans for a two-year deal to lease the South Ocean resort’s golf course appeared to have been derailed by a $30 billion asset manager’s offer to purchase the property.

Conceding that “everything is up in the air” with regard to the Federation’s South Ocean plans, James Gomez, its president, hit out at the Government’s failure to deliver a promised letter that would have guaranteed to the resort’s owners that lease payments would be met.

Describing the Government’s approach as “not good business practice”, Mr Gomez said the Federation’s projections showed that the guarantee was unlikely to have been called upon, as the two-year deal would have generated more-than-enough revenue via user fees.

Disclosing that the proposal would have generated enough revenue even after the BGF cut its projections by 30-40 per cent, Mr Gomez said the proposed deal would have involved the Federation taking over South Ocean’s annual tax payments to the Government - a sum close to $200,000 per year.

And he added that the offer to acquire South Ocean, plus the Government’s failure to deliver the promised guarantee, also appeared to have ended the re-employment prospects for 20 staff let go by Baha Mar in closing its golf course for the Cable Beach redevelopment.

Pointing out that talks on the proposed South Ocean golf course lease began in January, and that discussions had been held with the former minister of youth, sports and culture, the late Charles Maynard, Mr Gomez said these continued with his successor, Dr Daniel Johnson, and ministry officials.

Alleging that it was the latter who had failed to deliver the promised guarantee, Mr Gomez said: “As far as I am concerned now, everything is up in the air....

“We had engaged in earnest discussions with respect to the lease, everything was going quite smoothly and the current minister promised to provide us with some information.

“Part and parcel of the lease agreement were some covenants, and the Government was going to guarantee the lease payments, in the event of default by the BGF.”

Explaining that it was a two-year lease under discussion, as this would have filled the gap created by the Cable Beach Golf Course’s closure, Mr Gomez said South Ocean’s owner, the Canadian Commercial Workers Industry Pension Plan (CCWIPP), had informed the BGF it was seeking to sell the resort.

However, it had promised that the lease agreement would survive even if a sell was achieved. Yet the Government’s failure to come through with the payments guarantee, and failure to respond to information requests, had caused CCWIPP “a high level of anxiety”.

“The disappointing thing here is that we have heard nothing, even though the Minister promised several times to deliver the letter of guarantee,” Mr Gomez told Tribune Business.

"I was told, as presented by the Minister, that Cabinet felt it was a good idea and would support this concept.... But they never gave me the letter, even though they communicated they would do so.”

The BGF president said both Baha Mar and the One & Only Ocean Club golf courses had offered “significant equipment” to get the South Ocean course ready, while its own members and local golfers had also donated funds.

“The thing is, everyone sat in waiting for this letter, and even though they promised it through communications on their part, they [the Government] never had the decency to give a response,” Mr Gomez said.

“This was despite e-mails received from me. That’s the disappointing thing for the Federation in this regard.”

Explaining how the lease terms would have worked, Mr Gomez said the BGF would have paid CCWIPP/South Ocean a “peppercorn” of $1 per year and taken over the property’s tax payments to the Government.

“If we had leased that property at arm’s length, the cost would have been significantly more than the amount of taxes due on the property,” he added.

“What we were doing, in exchange for leasing, we would simply be responsible for paying the taxes on behalf of the owner. That particular tax payment is significantly less than if we had to lease the course at arm’s length.”

Tribune Business had been informed that annual tax payments due on South Ocean were around $400,000, but Mr Gomez said they were “about 50 per cent” of that sum. This would have put the annual payment at $200,000, and the full payment at $400,000.

“Our projections were certainly sufficient to cover the expense,” the BGF president told Tribune Business, even when they were cut by 30-40 per cent.

Describing the Federation’s proposal as having “many benefits”, Mr Gomez said it would have filled the hole created by the Cable Beach Golf Course closure for both locals and tourists.

Junior Bahamian golfers would have gained a key practice facility, while taxi drivers and tour operators would have benefited financially from taking cruise passengers and stopovers to South Ocean.

In addition, Mr Gomez said the 20 persons released by the Cable Beach Golf Course closure had been “looking to get into new jobs right away” at South Ocean - hopes that now seem to have been dashed.

“Throughout this whole process, there was confidence reposed in the Federation by the members and community at large,” Mr Gomez told Tribune Business.

“We were able to collect significant monies, in excess of $130,000, to assist in the start-up, so I’m now in the process of returning those funds to persons.”