The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A high-end Exuma project was warned both developer and homeowner properties would be sold-off unless “very serious concerns” over multi-million real property tax liabilities were resolved.

Homeowners in February Point, which has been described as “the crown jewel of Great Exuma”, were alerted late last month to Ministry of Finance and Department of Inland Revenue (DIR) demands for all homeowners to provide proof of their real property tax status and whether they were current with their payments by end-September 2024.

Patrick Dwyer, company accountant for February Point Resort Estates, in a September 27, 2024, e-mail to homeowner residents revealed that the demands came after he was summoned to a meeting in Nassau headed by Simon Wilson, the Ministry of Finance’s financial secretary.

“On Monday and Tuesday, September 23-24, 2024, a meeting was held at the Ministry of Finance with the financial secretary of the Government of the Bahamas, Simon Wilson, and me representing February Point,” Mr Dwyer wrote in the e-mail obtained by Tribune Business. “The meeting was to address some very serious concerns relating to real property tax.

“The Government is requesting immediately that we (February Point Associates) provide to them the names, addresses and telephone contact of every single homeowner within the February Point community. In addition to the requested information, we are also required to provide them with a copy of each homeowner’s real property tax payment as of June 30, 2024.

“In an effort to expedite and amicably resolve these matters, I am urgently requesting your assistance with obtaining copies of your most recent real property tax payments. If you have made suitable payment agreements with the real property tax department (DIR), I am also requesting confirmation of such agreements,” Mr Dwyer added

“This is an extremely urgent matter and requires your immediate attention and assistance in providing the requested documentation. We are required to provide this information no later than Monday, September 30, 2024.”

Mr Dwyer could not be reached for comment over the weekend, and did not reply to messages left on his cell phone by Tribune Business. This newspaper, though, understands that the nature of the discussions with Mr Wilson and the meeting’s outcome triggered a hasty scramble by February Point Associates, the project’s holding company, to comply with the demands.

It is understood that the information and documents sought by the Government were largely supplied by the deadlines imposed by the Ministry of Finance because the urgency was greater than the homeowners were led to believe.

Well-placed sources, speaking on condition of anonymity, told this newspaper that the the developers were informed the Ministry of Finance/DIR would seek to use their power of sale, and begin the process of auctioning off properties deemed to be tax delinquent, unless the proof of real property tax payment and other details were supplied within 14 days.

The Ministry of Finance and DIR are seeking to better determine the actual tax liabilities that may be owed by February Point, as the developer, and its homeowners to the Government. In particular, the tax authorities believe close to $3m in real property tax may be owing, with this sum split just about evenly between the developer and homeowner.

The allegedly outstanding sum dates back a decade to 2014, which is the same year when Florida-based investor, John McGarvey, teamed with a group of existing homeowners to acquire February Point from the Hart family for $8.2m. Mr McGarvey and his brother, Jeff, did not reply to detailed e-mails seeking comment that were sent to their respective addresses.

However, it is understood that the developer will likely dispute at least a portion of the sum that the Department of Inland Revenue alleges it owes. February Point Associates’ annual property tax billing for its vacant, unsold land, valued at around $6m is understood to have more than tripled to close to $150,000 for some of the ten years since 2014.

And there are also questions over whether the developer and at least some homeowners were exempt from real property tax during that decade as a result of the project’s Heads of Agreement with the Government. Tribune Business understands the aim was to exempt all homeowner units placed in a rental pool, as well as numerous developer properties, from the tax.

Yet February Point’s Hotels Encouragement Act agreement, which covered most of the tax breaks, investment incentives and concessions provided to the project, expired on March 31, 2024, and has yet to be renewed. And, as this newspaper reported in May 2024, there are questions over whether the developer has sufficiently lived up to its commitments to justify granting this relief.

“The Hotels Encouragement Act agreement has expired. The expiration date was March 31, 2024,” one well-placed source, speaking on condition of anonymity, said. “They have not renewed it. The developer has to live up to its commitments. Every single last piece of property in there was supposed to have real property tax exemptions once there was development.”

This newspaper reported in May how there were fears that the Government may demand the retroactive payment of Customs/import tariffs and real property taxes by February Point homeowners on the basis that the developer had failed to live up to its Heads of Agreement commitments.

Mr McGarvey and his partners, in their application for Bahamas Investment Authority (BIA) approval back in 2012-2013, had pledged to make a $40m capital investment and “immediately create approximately 130 permanent construction jobs for Bahamians”.

Condominiums, town homes and fractional development was also promised, along with a “hilltop boutique five-star branded hotel and beach club”, but this newspaper was told that none of this has materialised with the developer/ownership not selling a single new home or lot during their decade in charge.

February Point’s woes were detailed in a missive, which appears to have been a circular to the project’s homeowners dated January 6, 2023, that was leaked to the media.

“It is unclear that February Point actually is in good standing with the Government and can allow others to benefit from the tax relief afforded by the Hotels Encouragement Act,” it said. “Homeowners are at risk if compliance was not in effect, and they filed and took relief for the years that coverage had possibly lapsed.

“We have been told by home owners that recently sold their home that they had to pay back taxes to clear their title for sale...... We have uncovered that the issue that persists is that February Point has not done enough development through the years since the original approval, and now has fallen into oversight by the Government.

“The [Department of] Inland Revenue has taken exception and will not recognise that February Point complies under the Hotels Encouragement Act. This causes all kinds of issues for new buyers and existing homeowners trying to sell and have been taking relief of taxes under the Hotels Encouragement Act.”

Mr Wilson did not respond to Tribune Business calls and messages seeking comment before press time. However, this newspaper was told that similar demands to those imposed on February Point may also have been sent to other high-end, resort-style real estate developments dotted around The Bahamas.

“The Tax Department has taken a very, very aggressive approach to recovering taxes,” one source, speaking on condition of anonymity, revealed. “What they have done is that they have gone to a number of resort residential developments, spoken to a number of people in the business of collecting homeowner association fees, and said to them: ‘We want you to tell all the residents to provide evidence of their tax statements and liabilities owing.

“It’s delegating to those people the obligation to recover taxes. It’s an horrendous thing. From what I understand that they’ve done that in a number of places. At the moment I believe this is fishing and a fact-finding mission; who owes, who owns, who doesn’t own and how many Bahamian property owners are there.”

As for February Point in particular, the source said: “As I understand it, McGarvey said to the owners they are exempt from the payment of taxes if their homes are in the rental pool. That’s where the confusion lies. One the one hand you have people paying taxes, and on the other side you have people paying nothing because McGarvey said they fall under the Hotels Encouragement Act exemption.

“The developer has not lived up to his obligations. I don’t know if the Government is going to claw back or terminate the Hotels Encouragement Act agreement. Even if that hasn’t expired, there was an obligation on the part of the developer to do certain things. That hasn’t happened, and I was wondering if the Government was going to claw back and recover taxes.” 

The Government is understood to have taken the position that February Point, and other resort-style communities similar to it with homeowners associations, should have records of real property tax payments by homeowners liable to pay the tax.