The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Christie administration signed-off on its $17.415m Post Office deal just one day before the May 2017 general election after the developer repeatedly warned it against "leaving me out in the cold".

Scott Godet, who agreed the public-private partnership (PPP) for the Independence Drive Shopping Plaza site, told Tribune Business he was not responsible for the timing as he defended the project against recent government attacks in the House of Assembly.

He pointed out that the initial Memorandum of Understanding (MoU) for the Post Office PPP, which was signed by both himself and the Government in early December 2016, and construction work at the project site both began well in advance of the general election date.

With the Government having already paid commitment fees around the 2016 year-end, and time of the essence given the Post Office's crumbling East Hill Street headquarters and associated health issues, Mr Godet said finalising the full PPP agreement was vital to protecting both his and the Government's interests.

"We started the work, and the Government paid the commitment to the project," he recalled. "They part-paid in December 2016, and part in January, and we started. We waited on the Government to produce those documents; they took forever to get it together.

"We insisted it had to be signed before the election. It was signed because I insisted: 'You can't leave me out in the cold like this'. I had to push and push for months. The pushing finally happened. It happened on May 9.

"That's not when they gave us our mandate, or when work started. That was just to protect the interests of the Government who had already paid their commitment, and to protect me who had already demolished my shopping centre," Mr Godet explained.

"The actual agreement was made well in advance [of the May 10 general election], the work started well in advance of the election. We did our part. The intent of the Government, the intent of everybody, the reason for the deposit and the reason for the MoU, all that stuff was done well in advance."

Mr Godet spoke out after Desmond Bannister, minister of works, used the recent House of Assembly debate on the "no confidence" motion against the Prime Minister to single out his Post Office PPP as an example of a multi-million dollar deal that was signed one day before the 2017 general election

Mr Bannister yesterday accused the Christie administration of trying "to buy an election" through doling out "tens and tens of millions of dollars" in contracts and jobs just 24 hours before it was voted out of office.

"There were tens of millions of dollars of contracts signed the day before the election," he charged. "There was this one (for the Post Office), one in Grand Bahama for the administrative building (in Eight Mile Rock), the roads in Andros. There were a number of them for millions and millions of dollars.

"We've honoured all those contracts. It required us to make commitments that we may not have necessarily thought were in the best interests of the Bahamian people." While the $25m Eight Mile Rock office complex PPP was ultimately given the go-ahead by the current administration, Mr Godet has been forced to seek damages from the Government for alleged "breach of contract" via the Supreme Court.

When this was pointed out to Mr Bannister, he replied: "The Post Office challenge is one where they were building without a building permit. They were actually moving ahead on that project without a building permit. The building control officer had to go in there after a number of warnings to stop them.

"That Post Office had drawn protests from the Garden Hills community, and created problems with traffic. There were a litany of problems it created. It's going to be litigated, I guess, and we'll see what happens."

Mr Godet previously told Tribune Business he believed some of the complaints stemmed from the inability of Garden Hills residents to use the former Independence Drive Shopping Plaza site as a short-cut after the shopping centre was demolished and it became a construction site. He added, though, that some modifications were made to the plans following a Town Hall meeting with residents.

Mr Bannister, meanwhile, slammed the Christie administration for tying the current government's plans by signing multiple million dollar deals on the election's eve. "It was a huge concern, particularly because they had promised not to engage in that type of activity, and then you have tens and tens of millions of dollars in contracts the day before the election," he blasted.

"You have to think the worst about people who do that in terms of intending to purchase an election." The works minister added that the incoming administration was forced to adjust its policy priorities, and election commitments made to the Bahamian people, to accommodate some of these projects.

The timing of the Post Office PPP's signing, and other agreements signed on May 9, 2017, raises fundamental questions as to whether an outgoing administration should seek to bind its successor's hands or leave such decisions for the latter to take.

Others word argue that government is continuous, and that contracts legally binding and enforceable should be honoured. This is the crux of the legal complaint filed by Mr Godet and his attorneys, McKinney, Turner & Company, in March 2018 seeking damages for breach of "a binding and enforceable contract" that was completed for the now-abandoned PPP.

Their writ of summons, obtained by Tribune Business, confirms that the final PPP was signed on May 9, 2017, following completion of an earlier MoU in December 2016. Mr Godet's fears about being "left out in the cold" appear to have been realised, and his situation - and those of others locked in similar contractual disputes with the Government - have several implications.

The biggest losers from such situations, apart from Mr Godet, who has been left with a multi-million dollar exposure and expense he cannot easily recover, given that the demolished Independence Drive Shopping Plaza site cannot be easily repurposed, are the Bahamian public and taxpayers who potentially face the payout of major damages and expenses to these investors if they prove their cases.

Projects deemed to be in the public interest are also subject to delays and cost overruns, and there is also a potential loss of confidence in doing business with the Government among the private sector - especially close to a general election - which now has to factor political risk into any contract it secured with the Government.

A copy of the Post Office PPP deal, which has been obtained by Tribune Business, reveals that a government breach would entitle Mr Godet and his LaGrange Investments project vehicle to "a sum equal" to the unpaid balance of their costs; 120 percent of the cost of all "change orders" to the project's construction that have been demanded by the Government; all the expenses required to restore the former shipping centre to its previous boundaries and condition; and any redundancy and termination payments due to employees and sub-contractors".

Other documents seen by this newspaper show that the Government was to enter into a seven year "lease-to-own" deal, whereby it would rent the new Post Office from Mr Godet and LaGrange with the lease payments sufficient to satisfy the developer's costs and earn a profit.

The accompanying figures called for a $17.415m investment, inclusive of $4.275m to acquire the Independence Drive Shopping Plaza site, with redevelopment costs pegged at $13.14m. More than half of this, some $7.185m, was dedicated to construction materials and labour, with the developer's profit at "redevelopment cost plus 18 percent" pegged at just over $2m.

Mobilisation costs were estimated at $3.483m, or 20 percent of the total $17.415m value, with a total build-out of eight months and interest costs on the CIBC FirstCaribbean financing at 8 percent. Capital Construction Company, according to the documents, was hired as the general contractor, with multiple Bahamian professionals engaged as architects, engineers, quantity surveyors and specialist sub-contractors.

Mr Godet and LaGrange, outlining the scope of works in a February 2017 document, suggested that the Post Office PPP would likely reduce the Government's typical cost overruns and delays on a project of this nature by 20 percent.

With the developer responsible for maintaining the Post Office's condition throughout the lease's duration, the document said: "In general, the Government has historically been challenged with maintaining its various buildings to a standard that is acceptable to the general public.

"As a result, some buildings have deteriorated to a state of disrepair to the point that a large number of buildings have been deemed uninhabitable. By implementing the General Post Office relocation PPP, the Post Office Department can better leverage its limited resources by having a company design, build and finance a new facility without major investment from government funding.'

"The successful implementation of this project is expected to reduce the Government's cost overruns and schedule delays by 20 percent."

The Opposition and its supporters will likely view revelations about the timing of the first Post Office PPP, and Mr Bannister's comments, as an attempt to distract from the Minnis administration's handling of the facility's relocation - which first involved the former Phil's Food Services building on Gladstone Road, before it ultimately moved to the Town Centre Mall and formed a centrepiece of the 'no confidence' motion.

Referring to the agreement with Mr Godet, Glenys Hanna Martin, former minister of transport, who had ministerial responsibility for the Post Office under the Christie administration, said in response to comments by her successor, Renward Wells: "What he did not tell you is that his administration stopped a far-advanced public/private project by a respected developer for a signature Post Office House, a technically custom-designed building with support facilities for postal workers including a day care centre and cafeteria.

"A building to be owned by the Bahamian people. He did not mention that, had they not stopped this project, postal workers would have been in reformed surroundings in 2017. He omitted to advise that their actions in stopping this project have now led to litigation in the Supreme Court."