The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Property owners at the controversy-torn Oceania Heights development are furious that they will have to pay Stamp Duty based on their initial purchase price, despite values having fallen by up to 80 per cent.

Tribune Business can reveal that Deputy Prime Minister Philip Davis turned down their request to pay Stamp Duty based on current appraisal values, despite property owners feeling they had a strong case to do so.

This is because Oceania Heights’ developers originally marketed the property to them as ‘tax-free real estate’, neglecting to mention both real property tax and the Stamp Duty payable on the purchase. And they also failed to install the promised infrastructure and amenities, something that has negatively impacted lot and home values.

The latest frustrations come as homeowners fear efforts to resolve their dispute with the developers, which since January 2013 have been led by Mr Davis, have reached an impasse yet again.

Chris Fleming, one of the owners who has led the fight against the Exuma-based project’s developers, Canadian developer Howard Obront and Bahamian attorney Anthony Thompson, told Tribune Business he had reached a point where he “might simply walk away from it”.

Arguing that “the rule of law does not exist in the Bahamas”, Mr Fleming slammed the legal and architect professions as “a good old boys network” that merely served to protect their members from legitimate complaints.

And, in an e-mail copied to both Robert Ready, the Canadian High Commissioner for the Bahamas, and US Embassy official, Carina Canaan, Mr Fleming said this nation’s foreign direct investment (FDI) reputation was “at a crossroads” unless it took “strong, severe” action to bring the Oceania Heights situation to a satisfactory conclusion.

In an interview with Tribune Business, Mr Fleming said some 50-60 Oceania Heights property owners now faced having to pay Stamp Duty at inflated values to fully secure title to their assets.

“The reality is this,” Mr Fleming said. “”People paid way too much for those properties based on representations that Oceania Heights had all these amenities, which have never been installed. None of what was promised is installed.

“There is a letter from Anthony Thompson, and in that letter he states very clearly that there are no Bahamian real estate taxes. People bought on those representations. Now people are being told they have to come up with quite a bit of money.”

Tribune Business has numerous Oceania Heights’ marketing materials, containing promises to potential homeowners of ‘tax-free real estate’, in its possession. The promised amenities were supposed to include tennis courts, a restaurant and fitness centre.

The development appears to have been structured in such a way that all conveyancings and title documents were held in trust for purchasers by Mr Thompson, seemingly as a way to avoid real property tax and Stamp Duty on the purchase price.

Now, though, with Oceania Heights’ affairs being “regularised” (to quote a letter from Mr Thompson), property owners are being exposed to large real property tax bills and demands for Stamp Duty on the purchase price.

“I asked if it was possible to pay Stamp Duty based on the current appraisal values, and he [the Deputy Prime Minister] said no, we can’t do that,” Mr Fleming told Tribune Business.

“We would be required to pay on values that are way out of sight. The reality is that 50-60 people are going to be paying for something that they were told, by someone [Mr Thompson] supposedly looking after their own interests, that they don’t have real estate tax exposure on.”

Mr Fleming added that Mr Davis appeared to be satisfied that he managed to secure from Mr Thompson the title deeds for Oceania Heights homeowners, and to-date had not pressed for more in resolving the project’s other issues. This had left homeowners with the responsibility of recording their title deeds and paying outstanding taxes.

In his e-mail to Canadian and US officials, which has been seen by Tribune Business, Mr Fleming said: “The DPM is proud that he has required attorney Thompson to provide the ‘conveyance’ documents to the Oceania lot owners.

“With the filing of the ‘conveyance’, the lot owners will take ownership of the property. To accomplish the ownership, the lot owners will be responsible to pay the Government Stamp Tax. The 10 per cent Stamp Tax is calculated on the purchase price of the property, not the current appraised value, which, unfortunately, is approximately 20 per cent of the purchase price.

“I requested of the DPM to allow the remaining lot owners the opportunity to pay the required Stamp Tax based on current appraised value; he declined. I then requested that the advertised infrastructure be installed which, I believe, would have raised the value of the properties. The DPM agreed; unfortunately, nothing has happened.”

Mr Fleming continued: “I appreciate the DPM’s excitement that he has been able to achieve the release of the ‘conveyances’ from attorney Thompson.

“However, he neglects to give any weight to the fact that attorney Thompson provided a letter to potential owners that clearly states ‘the Bahamas has no real estate tax’.

“Thus, good news, people. You can now pay additional (and substantial) dollars to secure ownership of your property at an inflated price. Bad news is the Government, which approved the subdivision and is responsible for monitoring the installation, is doing nothing to the developer for not having installed the infrastructure.”

Mr Fleming told Tribune Business that progress towards an Oceania Heights resolution had been “absolutely zero” over the past month, and said he was “very dismayed” by the situation.

“We’ll probably get nothing out of it, and I might simply walk away from it,” he said. “The Bahamas, and the political people in the Bahamas, continually tell people they believe the rule of law exists in the Bahamas.

“From my perspective, that’s not the case. The rule of law does not exist in the Bahamas. The Bahamas Bar Association, the Bahamian Architects Board, none of it is to help people. It’s the good old boys network to help the good old boys.

“I find it fascinating that the Prime Minister was talking about a fundamental obligation of the US and Canada to help the Bahamas on national security, and they can’t help any of us. The US Embassy in Nassau has written to the Deputy Prime Minister and asked for an update, and not got anything yet.”

Making his frustration plain in the e-mail sent to the diplomatic officials, Mr Fleming wrote: “In my opinion, the Government of the Bahamas is at a crossroads.

“If there is any expectation of foreign investment for future economic growth, then they must take significant, severe, action.

“As a group, we have collectively spent time, money and blood to respectfully come to a reasonable solution with the Bahamas Government, the Oceania Heights attorney and developer, and the Exuma Chamber of Commerce. Unfortunately, to date, all of our efforts have gone wanting.”

Mr Fleming did concede that the two meetings attended by Mr Davis, on January 25 and May 13, had “been open and the dialogue productive”.

“The Government of the Bahamas appears to me to be focusing on what responsibilities the local ministries had to ensure the project was constructed as approved,” he added.

The main complaints of Oceania Heights homeowners are that they have been unable to obtain title/conveyancing documents to the properties they have bought; there are questions whether more than $880,000 in Stamp Tax they paid has been passed on to the Treasury; Mr Thompson failed to disclose he was also a beneficial owner of Oceania Heights when acting for the buyers in their purchases; the same lots have been sold to different buyers; and the hotel and other promised amenities have not been constructed.