The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Several hundred Freeport businesses ravaged by Hurricane Dorian were yesterday said to "desperately need" the Government to extend its $10m financing facility to the city.

Carey Leonard, the former Grand Bahama Port Authority in-house counsel, told Tribune Business that this was one incentive provided under the Government's three-year Economic Recovery Zones initiative that needed to cover areas outside east Grand Bahama and Abaco and its cays.

Backing the package of tax breaks and incentives being offered to revive the areas hardest hit by Dorian, Mr Leonard said he understood the Government's decision not to include Freeport in the zones because it already possesses many of these benefits via the Hawksbill Creek Agreement.

However, he argued that aspects of the Government's relief plan should be extended to Freeport's micro, small and medium-sized enterprises (MSMEs) that have been "wiped out" by the Category Five storm and have no capital of their own to finance recovery.

"The only thing he [Dr Hubert Minnis] perhaps may want to consider, and I haven't looked at it, but there are a number of small Bahamian businesses that could do with a guaranteed loan to get up and running," Mr Leonard, now a Callenders & Co attorney, told this newspaper.

"There are a number of Freeport businesses that desperately need the ability to access that. It may be intended that they can access that; I don't know, because there are a number of small Bahamian businesses where everything was flooded out completely.

"There are huge sums of money they have to find. They have to replace inventory, and there are a number who weren't insured. They should have been and have lost everything, but that's not because they're not good entrepreneurs."

Mr Leonard argued that no one could have predicted the extent of flooding in downtown Freeport and how badly the city's business community would be hit by Dorian's storm surge. He added that even companies which built their premises six feet above ground level suffered water intrusion up to three to four feet inside.

"This was something that was not foreseen and could not have been foreseen," he told Tribune Business. "These companies desperately need some help, and need it from the Government. I would think there's a couple hundred businesses that could benefit.

"A number of larger businesses are on their feet, but there are a lot of smaller 'Mom and Pop' shops and entrepreneurs that just started, and this has wiped them out completely. They have no capital, having invested it already, and are in areas that flooded out. It would be very wise, and I hope the Government will extend the guarantee to them as well."

The Prime Minister, in unveiling the combination of tax breaks and incentives on offer in the Economic Recovery Zones, revealed that one measure will involve a $10m loan guarantee and equity financing facility that is targeted at MSME enterprises to either help them re-open or create new businesses. An applicant will be able to secure a maximum of $500,000.

While wishing for this aspect to be extended to Freeport, Mr Leonard suggested the reason why the Government did not include the city in its three-year Economic Recovery Zone was due to the fact it already enjoys many of the post-Dorian tax breaks and incentives due to the Hawksbill Creek Agreement.

He added that the Recovery Zones will seemingly function in a similar manner to Freeport, with businesses able to bring in goods 'bonded' or duty-free before selling them to other companies or residents of the disaster-hit areas to facilitate recovery efforts.

"I think that's great," Mr Leonard said of the Prime Minister's proposed Recovery Zones. "I'm delighted he's doing it. There are certain aspects that wouldn't work in the long-term, but in the short-term he's absolutely right. I agree with what he's doing, and believe he didn't include the Port area because it has the Hawksbill Creek Agreement."

However, Tribune Business sources last night questioned why Bahamian and expatriate homeowner residents of Freeport were not being given any tax breaks or incentives to aid their rebuilding efforts as a result of being excluded from the Economic Recovery Zones.

The benefits of Freeport's 'bonded goods' regime are only targeted at businesses within the Port area, and are not available - or cannot be accessed - by residents for use outside a business. As a result, some suggested Freeport homeowners are being discriminated against in comparison to their counterparts in east Grand Bahama and Abaco.

One source, speaking on condition of anonymity, told Tribune Business: "Interesting that the Government has completely omitted the people of Freeport. Businesses have the Hawksbill Creek Agreement with pretty much all the concessions given, but families/homes of individuals do not. So the 60 percent-plus of flooded Freeport homes are irrelevant?"

He was backed by another well-known Freeport businessman, also speaking on condition of anonymity, who told Tribune Business that the city is facing a looming housing crisis because "4,000 middle class homes in the middle of the city are unlivable".

Given Freeport's status as The Bahamas' second city and a major commercial hub, they argued that it made more sense to focus on its revival by including it in the Economic Recovery Zones.

"Four weeks ago you had 1,000 persons living in east Grand Bahama. Now there's 500, and there are no businesses out there. What the hell are you giving them exemptions for?" the businessman asked. "It's totally ridiculous. It's going to take a Marshall Plan here."

While the tax breaks and incentives granted to east Grand Bahama and the Abacos were "wonderful", the businessman added: "If you're talking about places that support real numbers of people, you're talking about Freeport.

"Abaco, as a bedroom community (vacation rentals and second homes), will come back over time, but a commercial centre like Freeport will not come back over time. It needs a serious effort to rebuild. We've probably got 100 businesses that have been wiped out and destroyed. There are no businesses in east Grand Bahama."

They expressed particular concern over the fate of Grand Bahama International Airport, which was heavily damaged by Dorian. A critical component of Freeport's economy and tourism sector, the businessman expressed serious doubts as to whether its ownership would be committed to a quick rebuild.

The airport is owned 50/50 by Hutchison Whampoa and the Grand Bahama Port Authority's (GBPA) Port Group Ltd affiliate, with the former having management control. Hutchison Whampoa did little to revive the Grand Lucayan in the wake of Hurricane Matthew, and the businessman fears a repeat could be on the cards with the airport.

They suggested that some of the funds the GBPA's shareholding families, the Haywards and St George's, are due to receive from the sale of their real estate to facilitate Carnival's $100m cruise port should be held in escrow and used to finance the airport's rebuilding.