The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government’s first Post Office partner yesterday warned that taxpayers may be exposed to a “$17m something claim” after a proposed settlement failed to proceed at the last minute.

Scott Godet, who agreed a public-private partnership (PPP) with the former Christie administration to construct a new main Post Office at the Independence Drive Shopping Plaza, told Tribune Business that the Minnis administration withdrew its offer to purchase the property just three days before the deal was supposed to be finalised.

Revealing that he was told during a meeting at the Attorney General’s Office that the government “didn’t have the money to go through with it”, Mr Godet said he had been left with no choice but to initiate legal action before the Supreme Court using the PPP agreement’s “breach of contract” clause.

He added that this required the government to pay him “the full value of the PPP” if it reneged on their agreement, which he yesterday estimated at “$17 something million”, reinforcing arguments that the Post Office saga will cost the government more than the annual $700,000 rent being paid to the Town Centre Mall owners (Brent Symonette and his brother) over the next five years.

“That didn’t happen,” Mr Godet said of the proposed settlement, which would have seen the government acquire the Independence Shopping Centre site from him. “They changed. They said they didn’t have the money.

“On June 28 they called a meeting at the Attorney General’s Office and said they weren’t able to go through with it. I’d been waiting until July 1 when they said they’d be able to settle the matter.”

Mr Godet said he was unable to recall the purchase price proposed by the government, adding that it was based on a formula involving his loss of revenue and the price that the property would have been sold at under the PPP contract.

The businessman, who is already a landlord to the government through his leasing of the Public Treasury building over which it has an option to buy, disclosed that he and his attorneys were still calculating the extent of potential losses and damages as they prepare to file the claim with the Supreme Court.

“We’ve lost quite a bit,” Mr Godet told Tribune Business, “not to mention the building has been demolished to the point that new construction has to be put in. For us, we’re going to have to reverse that, the new construction, if we rebuild.”

He revealed last October that the government’s decision not to proceed with the Independence Shopping Centre location had left him with a near-$4m financial exposure through some $3m already spent on construction activities plus the loss of $800,000 in rental income from previous tenants who had been given notice to move.

The site was once home to a City Markets food store plus other retail tenants, and Mr Godet will effectively have to redevelop or reconstruct the property twice to make it useable once again as a result of the Government’s decision not to go through with the PPP. Expenses related to mortgages and real property taxes continue to be incurred.

“We’re basically going to resort to the legal remedies and take it to court,” he said yesterday. “Our agreement had a breach of contract clause in it that’s very clear and that’s the direction we’re going in now. I can only trust that the courts will be fair.

“At this point I think that’s the only way it can go; to court. I can’t wait for them to mess me around any more. We’re just going to court and let the court settle it. It’s a setback, but I’m just rolling with the punches. It’s a business transaction that went bad, and we’ll find a remedy through the courts if they don’t come to us with a sensible solution.”

Mr Godet agreed that finding a new home for the Post Office was threatening to become “a very expensive” exercise for the Bahamian taxpayer, reiterating that the “breach of contract clause” in the PPP required the Government to pay him “the full value of $17m something”.

Tribune Business reported last year that Mr Godet and his team ran into several unexpected obstacles. The Post Office PPP was initially placed on hold during the final months of the former Christie administration after residents in the adjacent Garden Hills community complained that the increased traffic flow generated by the facility’s presence would disrupt the area’s quality of life.

Mr Godet, though, suggested the complaints may have had more to do with construction work cutting off a short-cut that residents were taking through the Independence Drive Shopping Plaza to reach Blue Hill Road.

Then came the FNM’s general election victory, and the new government’s decision to place all PPPs entered into by its predecessor on hold pending a review. Mr Godet’s was the only one which, at that stage, had already incurred significant expenditure and seen work performed.

Meanwhile, Tribune Business sources yesterday revealed that the Government had never specified the price it would purchase the former Phil’s Food Services building on Gladstone Road for when it examined it as a potential Post Office location.

The property, which was developed by contractor Edward Penn, was leased by the food retail business until its 2015 closure. It is now controlled by Bahamas Resolve, the special purpose vehicle (SPV) created to facilitate the Bank of The Bahamas bail-out, as it is security for delinquent loans transferred out of the BISX-listed institution.

However, the same contacts backed the Minnis administration’s decision to ultimately relocate the Post Office to the Town Centre Mall despite the “conflict of interest” allegations on the basis that it was a less costly solution than upgrading the Phil’s Food Services site.

“The condition inside that building was worse than the Government anticipated; it didn’t make sense,” one well-placed contact, speaking on condition of anonymity, said. “The cost would have been a real burden on the Government’s purse.

““When they got inside and made an assessment of what it would take to rehabilitate the building and put it in condition compared to the Town Centre Mall, the latter was a better deal in terms of cost outlay. The landlord at Town Centre Mall was also offering a turnkey solution.”

They added that the likely increase in the $3.5m-$4m improvements budget, together with the purchase price, represented “the Achilles heel” for the Government when it came to the Gladstone Road site as a potential Post Office location.

Tribune Business understands that near $2m worth of improvements were supposed to have been made to the Phil’s Food Services building between 2015 and 2016, with the bulk of the money spent on upgrading what was considered to be a “sub-standard floor” that was then “in pretty bad condition”.