The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Both the Grand Bahama Chamber of Commerce president and his immediate predecessor yesterday backed calls for Hutchison Whampoa to “take a more proactive approach to investing” through Devco, while agreeing that a hard look needed to be taken at Freeport’s real property tax exemption.

Largely backing an article written by Dupuch & Turnquest partner, Terence Gape, which issued a “call to action” over what he termed as Freeport’s economic crisis, John Swain, the current Chamber president, agreed that “we need to see how we can get Devco to move”.

And his predecessor, K. P. Turnquest, who is now the MP for East Grand Bahama, suggested that a “two-tier” real property structure might have to be implemented in the Port area to encourage corporate and foreign landowners to develop their real estate holdings.

The two men were responding to Mr Gape, who in articles in Tribune Business and Insight yesterday, suggested there was evidence that both Hutchison Whampoa and the Grand Bahama Port Authority (GBPA) had failed to live up to their statutory commitments to develop Freeport/Grand Bahama and market the island to international investors.

And the long-time Freeport resident and attorney also indicated that the city’s real property tax exemption may have acted against economic development, rather than incentivising it, through eliminating ‘carrying costs’ for property owners.

As a result, many were just ‘sitting and holding’ on to their landholdings, but Mr Gape said the impending negotiations with the Government over extending the real property tax exemption beyond 2015 gave the Government “a once in a lifetime opportunity” to force the GBPA and Hutchison Whampoa to “fix Freeport”.

No reaction to Mr Gape’s article was forthcoming from the Grand Bahama Port Authority before press time last night.

When contacted by Tribune Business yesterday, and e-mailed a copy of Mr Gape’s article, Ian Fair, its chairman, said in an e-mailed reply: “This will need a careful review. A considered response will be issued shortly.”

Graham Torode, Grand Bahama Development Company’s (Devco) chief executive, was said to be out of the country when Tribune Business called seeking comment.

Meanwhile, Mr Turnquest agreed that Mr Gape had made “a valid point” on the dilemma posed by Freeport’s real property tax exemption and its ‘unintended’ consequences.

“One the one hand you want to make the purchase of available land easier and affordable, but on the other hand you want to make it easier to develop,” he told Tribune Business.

“There is a perception that the major developers are holding this land, waiting for future events. They do need an incentive to move off and do something. If that is real property tax, that does need to be considered.”

Mr Gape had written that Devco owns some 70,000 acres of land, mostly planned and subdivided with infrastructure in place, but the company had not undertaken any investment projects of its own for 22 years.

Mr Turnquest, though, said any changes to Freeport’s real property tax exemption had to be balanced with ensuring land/home ownership was not pushed beyond the reach of ordinary Bahamians.

“We want to be cautious that ordinary Bahamians don’t get caught in a situation where they are penalised for the lack of activity by the developers, and their buying costs and housing costs go up from the fact they are now subject to real property tax as well as service charges from the Port Authority,” Mr Turnquest told Tribune Business.

“That is something we have to examine and work out, as we can’t afford to pay both. With all the foreclosures going on, we don’t want to add to that.

“We may have to look at a two-tier system where non-residents and corporate owners are subject to a different rule. It needs study, but there needs to be some incentive to develop.”

Mr Swain agreed that the real property tax exemption, and whether it should be extended beyond 2015, was “a Catch 22” situation. Careful analysis of its benefits for Freeport was needed before determining whether its should be allowed to expire.

But, agreeing with Mr Gape that the exemption did provide a development disincentive, Mr Swain added: “If you don’t have a true real property tax in place, you could hold on to large sums of land for long periods of time with no development. You can have large areas that are not released.”

And both he and Mr Turnquest were also in agreement over the need for Hutchison Whampoa, which owns a 50 per cent equity stake in Devco and holds the management rights, to be more proactive in hotel and real estate development.

“I would certainly like to see more activity from them in attracting investment or investing themselves,” Mr Turnquest told Tribune Business.

“I think he’s [Mr Gape] right on the mark with respect to them taking more responsibility and taking a more proactive approach to investing.”

Mr Swain added that Mr Gape’s suggestion that the GBPA, Hutchison Whampoa and Devco had failed to meet their statutory obligations was “of great concern”.

“With Hutchison being a 50 per cent owner in Devco, they would have to agree on everything for the Devco side to move forward,” the Chamber president added.

“They should be encouraged to act. We need to see how we can get Devco to move on certain items. Sometimes the Port’s hands may be tied because Devco does not agree, so that’s a challenge.”

Messrs Swain and Turnquest also backed Mr Gape’s call for focus to be placed on Grand Bahama’s cruise ship port and the $200 million World Mart project.

Referring to the latter, which has been pushed by Bahamas-based investors Ken Hutton and Joe Thompson, and potentially involves Beijing Construction, Mr Turnquest said: “If the project can come off it is a wonderful idea, and is what we’ve been talking about for a couple of years, turning Grand Bahama into a logistics and bonded warehouse centre.

“It could empower a number of entrepreneurs in freight handling and customs clearance.

“If that comes off, it would be a wonderful addition. I hope the Government sees the wisdom in that, and does what it can to facilitate the potential investors.”

Agreeing that the World Mart proposal could turn around Grand Bahama’s economy singlehandedly if it came to fruition, Mr Swain told Tribune Business: “Efforts need to be put in place to encourage the World Mart concept.

“We’d like to see that become a reality soon, as that would turn around Grand Bahama on its own.”