The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Royal Caribbean has already paid the full annual rent for seven Crown Land acres on Paradise Island for two consecutive years, it can be revealed, rather than just the four announced in its revised deal with the Government.

Campbell Cleare, the McKinney, Bancroft & Hughes partner, who is the cruise giant’s commercial attorney, submitted full payment for both 2021 and 2022 in accordance with the lease signed by the former Minnis administration granting seven acres on Paradise Island’s western end for its $110m Royal Beach Club project.

The letters attached to the rental payments, dated July 23, 2021, and September 6, 2022, are addressed to Richard Hardy, director at the Department of Lands and Surveys. In the first, Mr Cleare asks him to confirm receipt of cheques for $156,000 and $3,360 representing rental payments for the seven-acre lease and accompanying seabed lease respectively.

The second letter, sent last year, also asks Mr Hardy to again confirm receipt of cheques for $154,000 and $3,300, again representing the respective lease payments due to the Government. Mr Cleare’s letter makes clear that the larger sum is for the seven-acre Crown Land lease signed by the Minnis administration, as it refers to the matching lease number and date it was signed - May 25, 2021.

Of those seven acres, at least two were embroiled in Supreme Court litigation at the time the rental payments were made by Toby Smith, the Bahamian entrepreneur, who alleged he had a valid and binding lease with the Government for that same parcel. Chief Justice Ian Winder ruled against Mr Smiths claims almost three weeks ago, a decision that appears to have helped pave the way for the Government to announce approval of Royal Caribbean’s project.

The lease payments, though, raise questions as to whether Royal Caribbean still has designs on the full seven acres leased to it by the former administration despite the Government’s announcement that it will only receive four of those provided under the original deal. One possibility is that it could receive a partial refund of the prior lease payments to the Government.

Or the cruise giant and the Government might simply be waiting to see whether Mr Smith appeals the Supreme Court verdict, and how any further litigation plays out, before the former takes possession of the full seven acres granted to it by the Minnis administration. Either way, it remains to be seen whether the Government adjusts or honours in full the original lease.

Chester Cooper, deputy prime minister and minister of tourism, investments and aviation, in unveiling the go-ahead for Royal Caribbean’s project, said the four acres involved represent none of the land that was caught up in Mr Smith’s legal action.

“This first of a kind project for Royal Caribbean will cover 17 acres, of which 13 acres represent privately-held land and some four acres of Crown land that was included in the lease to Royal Caribbean by the former administration,” Mr Cooper said. 

“It is important to note that the land currently proposed under the project has not been subject to any dispute or litigation. Final approval of the project is subject to submission and approval of a standard Environmental Impact Assessment (EIA) and an Environmental Management Plan (EMP).”

The Minnis administration was heavily criticised when Tribune Business revealed it had effectively gave the cruise giant a minimum 150-year lease over seven Crown Land acres on Paradise Island. 

The lease gives the cruise giant an initial 25-year extension plus “no less than four additional options”. All these “options” are 25 years in length, meaning that when they are added to the original 25-year lease, Royal Caribbean can exercise its rights to potentially occupy that land for one-and-half centuries.

The agreement, which was executed on May 25, 2021, also commits Royal Caribbean to paying an annual $140,000 rent to the Government for use of land that it holds in trust for the benefit of the Bahamian people. Over a 25-year lease, this amounts to $3.5m in total rental income with VAT at 10 percent contributing a further $350,000 to the Public Treasury.

Thus the extra $16,800 and $14,000 on top of the $140,000 rent payments for 2021 and 2022 represent VAT at 12 percent and 10 percent, respectively. These sums, though, pale when set aside the extra $26m in annual visitor spending that the Royal Beach Club is projected to generate, a figure that rises to $650m when extended over the initial 25-year lease term. 

The decision to seemingly honour at least part of Royal Caribbean’s Paradise Island lease contradicts the pledge Philip Davis KC made when Opposition leader on March 9, 2020, when he promised that a future PLP government “will terminate” any such agreement with the cruise giant.

In a statement, he argued it would be “grossly unfair” for the cruise line to obtain such a deal in the Colonial Beach area due to the impact on both local businesses and Bahamian access to the area. Confirming that the PLP “fundamentally opposes” any lease of such Crown Land assets, which are supposed to be held in trust and used for the Bahamian people’s benefit, to Royal Caribbean, Mr Davis argued that any such a deal was not in the national interest.

“The deal would set back Bahamian industries, and block Bahamians from the enjoyment of asset use and value in what little is available for ordinary Bahamians,” Mr Davis said, “while nearly monopolising and increasing the riches for Royal Caribbean in The Bahamas.

“The deal would leave Bahamians and the country’s future with the lion’s share of any losses and damage from any unexpected or unforeseen decline in Royal Caribbean’s Bahamas strategy. This is grossly unfair to Bahamians, and the next PLP Government will terminate this agreement.”

The then-Opposition leader had continued: “Any project of this type should be owned and operated by Bahamians, fully utilising Bahamian entrepreneurs, vendors, artists, entertainers, retailers, tour guides, water taxis etc.

“Secondly, no non-Bahamian entity should receive preferential consideration over the many Bahamian applicants who have attempted to procure this property. Third, all attempts to purchase this property in the past have been denied for reasons overwhelmingly in the public interest: Colonial Beach is one of the only remaining public beaches on Paradise Island where Bahamians have reserved access.”

Mr Davis said the Crown Land lease to Royal Caribbean threatened the livelihoods of Bahamian entrepreneurs competing for the same cruise passenger dollar, undermined access to Colonial Beach for locals and other tourists alike, while also increasing water taxi-type traffic in an already-congested harbour to take persons across to the Royal Beach Club.

“As with any policy or transaction conducted on behalf of the Bahamian people, the Government has an overriding duty to clearly demonstrate how that policy or transaction is in the interests of the Bahamian people,” he added at the time.

“There is none with this Royal Caribbean deal. Why is the government accommodating the request of Royal Caribbean Cruise International despite them already having ownership of Coco Cay? “If Royal Caribbean is allowed to acquire government property on Paradise Island and proceed with the project as a sole proprietor, they would be in conflict with both Bahamians and other cruise lines calling at Nassau, which is the leading cruise port in the region.

“In order to preserve public access and government ownership of this only remaining public beach property on that part of Paradise Island, a better arrangement would be to create a public-private partnership (PPP) in which the Government leases the land as its contribution to a project in partnership with Bahamians.

“The partnership would then enter into contracts with all of the cruise lines, not just Royal Caribbean, for the use of the facilities, which would also remain open to the Bahamian public. The contracts could then be used to raise finance for the project and the cruise lines could, if necessary, put up the financing to be repaid from user fees.”

The Government is now likely to argue that it is not leasing, but instead converting the four Crown Land acres into an equity stake in the project that will be held in the newly-created National Investment Fund that replaces the sovereign wealth fund.