The Tribune

• Port ‘begged’ for $8m annual exemption

• Chamber: ‘No other way’ but to collaborate

• Questions if attempt to ‘totally derail GBPA’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister yesterday argued the Grand Bahama Port Authority (GBPA) gained a $64m “subsidy” from just one tax break amid private sector warnings that “there’s no other way” but for the two warring parties to collaborate.

Fred Mitchell, minister of foreign affairs and the public service, who has been the Prime Minister’s most vocal Cabinet supporter over his attacks on Freeport’s quasi-governmental authority, in a series of social media postings argued that the GBPA’s owners have enjoyed an $8m per year real property tax break on their landholdings after they “begged” the Christie administration to renew their exemption in 2016.

“The Grand Bahama Port Authority group begged the Christie government to renew the real property tax exemption under the Hawksbill Creek Agreement. The GBPA group got the exemption in 2016 from land taxes worth an estimated $8m per year,” Mr Mitchell asserted.

“That means they should have paid by now the Treasury $64m and change. But the Bahamian taxpayers gave them a break. That’s only one example of a subsidy to the GBPA.” Mr Mitchell’s latest broadside against Freeport’s regulatory body came in response to its reply to comments made by Philip Davis KC at the weekend, where it asserted that the Government “is not subsidising the GBPA”.

The Port Authority, seemingly trying to strike a conciliatory tone and cool the divisions with the Davis administration, added that the two sides are “not in competition” with each other and that they both have “clearly defined”, separate legal and regulatory responsibilities for Freeport and wider Grand Bahama’s continued growth and development.

Arguing that it would be “counter-productive to encourage a back and forth in the media”, as has occurred to-date, the GBPA added: “The Grand Bahama Port Authority (GBPA) remains open and committed to a healthy relationship with the Government of The Bahamas in the best interest of the island of Grand Bahama.....

“GBPA reiterates its desire to work with the Government of The Bahamas in the spirit of co-operation to resolve any issues and work together to create a bright future for Grand Bahama.” This, though, was seemingly interpreted by Mr Mitchell, also the Progressive Liberal Party’s (PLP) chairman, as an attack by the GBPA upon the Prime Minister.

“The statement by the Grand Bahama Port Authority attacking the Prime Minister is drawing a line in the sand. I wish them luck on this ill-advised course,” Mr Mitchell added. Again implying that the GBPA is failing to live up to its development responsibilities, and lacks the financing to properly maintain and upkeep Freeport, he said: “Residents ask why the GBPA can’t fix the bridge to east Grand Bahama. No money maybe?”

The latest rift between the Government and GBPA was triggered during the Prime Minister’s visit to Grand Bahama last weekend, when he argued that the Government is “subsidising the Port Authority” to fulfill the tasks and role it is obligated to perform under Freeport’s founding treaty, the Hawksbill Creek Agreement.

“We in fact have taken over the role of the Port Authority,” Mr Davis said. “It’s not fair to the Bahamian people for us to be, as it was, subsidising the Port Authority for what they should be doing.” Referring to the GBPA’s owners, the Hayward and St George families, he added: “It is clear to me that the interests of the owners do not truly align with the people of Grand Bahama and residents of Freeport in particular. Until those align, we will have no growth.”

The Prime Minister, who had to be prompted to identify ongoing Freeport-based investments by name, such as the Carnival cruise port, added that his main goal is to “right the ship at the Port Authority and decide how we ensure its full potential can be realised without hindrance”.

The GBPA, in response, argued that it is “funded exclusively by its approximately 3,000 licensees” and has always covered any “deficits” caused by hurricanes or the COVID-19 pandemic. “The Government of The Bahamas is not subsidising the GBPA when providing healthcare, education, aviation and assistance with tourism in Grand Bahama, as it is likewise obligated to do so for every other island in our country,” Freeport’s quasi-governmental authority said.

“While the GBPA has built schools, donated land for government projects, assisted with the hospital and constructed the island’s airport, these were never a responsibility of the Grand Bahama Port Authority under the Hawksbill Creek Agreement but an act of a strategic partner.”

James Carey, Grand Bahama’s Chamber of Commerce president, renewed his plea for peace and cooler heads to prevail in the aftermath of the latest outbursts given the impact the resulting “uncertainty” will cause for Freeport businesses and potential investors.

Agreeing with the GBPA that public rows are “counter-productive”, he even questioned to Tribune Business whether the Government is seeking to bring the Hawksbill Creek Agreement to an end despite it having just over 31 years to run, or if it is trying “to entice the Port Authority to make that decision” for it.”

The GB Chamber chief, urging both sides to resume negotiations on how they can collaborate, added: “Somebody has to have the ability to pick up the telephone” and speak to the other. “They need to sit down and have a chat together. There’s no other way. It has to happen,” Mr Carey told Tribune Business.

“From my information the Port Authority is more than willing. I don’t know whether they’ve communicated that to the Prime Minister, but it’s the way to go. They need to sit down at the table and see what it is.” Mr Carey said he was unsure if the Prime Minister’s weekend visit to Grand Bahama was a “missed opportunity” for this to happen, adding that Mr Davis has the power to summon the GBPA’s owners and managers to meet with him in Nassau.

“Is there an attempt to derail the Port Authority completely?” the GB Chamber chief asked. “I can’t speculate on that. The Port Authority, under the Hawksbill Creek Agreement, has 31 more years. The Government has the power to legislate, but I cannot see them unilaterally ending the agreement because of how it will look outside Freeport. Is their effort to entice the Port Authority to make that decision? I don’t know.

“I’d like to see this [spat] end. It has the potential to cause significant disruption to the country as a whole, and the business community in particular. Businesses are particularly concerned because they’re always looking for investment, foreign and local. Does this impact that search and those maybe looking this way?”

Mr Carey, noting that the GB Chamber this week hosted a luncheon with a Caribbean Export Development Agency (CEDA) executive talking about investment opportunities, asked “how does that work in Freeport when the Government is in a spat with a private company?

“Government is government. They have the power and they can do certain things,” he added. “But better steady as she goes. It’s really that point. Let’s go forward. It’s counter-productive the way it’s going. Somebody has to have the ability to pick up the telephone. It doesn’t need an emissary. It just needs a phone call to get it done.”

The GBPA was not the only foreign investor to enjoy the real property tax exemption referred to by Mr Mitchell. Another beneficiary was the GBPA’s partner, Hutchison Whampoa. And while legislation subsequently passed by the Christie administration renewed those tax breaks automatically for the GBPA and Hutchison, while forcing all others to apply to Nassau for the extension, this has never been enforced in practice.

Under the original 1993 Hawksbill Creek Grand Bahama (Deep Water Harbour and Industrial Area) (Extension of Tax Exemption Period) Act, the tax concessions available to GBPA licensees include no real property tax or real property levy; no personal property tax and no capital levies or taxes on capital gains or capital appreciation; and no taxes of any kind on the earnings of the Port Authority or the earnings of its licensees (income tax).