UK to decide $40m road loan

| 01/05/2014

(CNS): Investors proposing a $360 million golf development in North Side said the future of the project isin the hands of the Foreign and Commonwealth Office as the UK must approve what will be a $40 million loan to the Cayman government to finance the east-west arterial extension. David Moffitt made it clear to local business people Wednesday that the Ironwood development will only happen if the road is approved and the FCO has the final say on that. Although government has distanced itself from the financing of the road, the public purse will be picking up the tab, albeit over a 20 year period. The loan will be paid back to the developer via duties and fees that government will collect, not just from the Ironwood project but any other new development that generates revenue as a result of the road.

Speaking at the Chamber of Commerce 'Be Informed' event, Denise Gower of Fountainhead, the project’s PR firm, explained that the developer will not receive any concessions or duty waivers at all on the project. Instead, all of the taxes, fees and duties associated with the development will be paid in full to government but that money will then be ring-fenced and given back to the developers to pay-off the road loan.

“The idea of a developer not asking for any concessions from government is unique,” she said. “But Ironwood is a unique project that is being built on a philosophy of long-term sustainability.  It makes more sense for the developer to pay the requisite duties and fees to government and in turn have the infrastructure required for the success of the project than it does to ask for special favours.  Ironwood has proposed the clearest and most transparent approach possible, which is good for Cayman,” she explained.

This means that the revenue government collects from customs duty, stamp duty and all other related fees over the twenty years it will take to complete the entire development will not go into general revenue but will be used to pay for the road. The developer anticipates that the project will generate up to $25 million in duties but the new road is expected to spark more development, creating new revenue for government which will also be ring-fenced and directed towards the loan until the full $40million is paid off.

Following negotiations with the National Trust and the compromise over the actual direction of the ten miles of by-pass, the next step is to have the loan approved by the FCO. Although the developer will be taking the risk on the initial financing, government will still be paying the full amount in the long run, which is why the final say is down to the UK. Regardless of the arrangements, the money is a loan and the CIG is currently barred from increasing public debt, leaving a significant question mark over the project. However, Moffitt said he was cautiously optimistic that an arrangement over the financing could be made that the FCO could support.

He also told members of the Chamber that he and the investors are ready to go and if the FCO does say yes to the financing arrangements under discussion, within three months or so of that OK, he would hope to start work not just on the road but the first phase of the development as well. It is not clear, however, when government would be required to start making its payments to the developer on the loan but if work begins on the development at the same time as the road then the developer will be paying duty immediately.

The first phase of the development includes the golf course and related facilities, the town centre, which includes retail units and over 80 town houses, and a subdivision for residential homes.

Moffitt confirmed that although the developers have submitted plans regarding the retail element of the town centre, no other applications, including for the golf course, have been made to planning as he said the road was the deal breaker.

The developer has committed to utilizing local firms and workers across the life of the project. However, Moffitt told the Chamber audience that Ironwoodwill be partnering with GLF, the company which had at one time been in negotiations with the previous UDP government to build the George Town port. GLF had been ready to mobilize when McKeeva Bush closed down the talks in order to work with the Chinese conglomerate CHEC.

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  1. Anonymous says:

    This country has made it for 45 years through development. Obviously those of you writing on this blog don't know that or are pretending to be blind of the fact. We have been waiting for this road for over 40 years. THERE are no TOURISTS who want to see our bush, sorry . This project whether it finishes in 10 or 30 years will still be the catalyst for development which has been denied because of not affording a road ,elect., and water. It will give this country the very much needed gov't revenue to pay outstanding bills .This was created by some  greedy owners who will not pay proper cost of living wages. This is costing the gov't 60 million dollars. So indirectly you are still paying. You are just not getting value for money cause no labor is involved.

    The central mangrove will be a wonderful new opportunity to cause some banks, offices , stores etc. a chance to get lower rents that are being charged in town. By decentralizing town there will be less traffic going to town which will be a win win situation .

  2. Anonymous says:

    God Almighty, what is wrong with people here? Go look at Mr Moffits successful Cayman developments, like Turtle Cove. Also remember nobody wanting the ETH west bay extension? You can't get people off it now. Is there a cave where these people live and they only drag their Neanderthal knuckle dragging asses out when someone does something new and positive? Show me where it is and I will show them how to make magic fire.

    • Anonymous says:

      Time will tell if his "developments" in Cayman are successful or not. What we do know is that while he ws doing these developments, he was either unable or unwilling to pay off the debts for his developments in Florida. Although I must say that his cojones must be quite sizeable to propose a $360 million development at a time when he can't even keep up the payments on a $235K loan.

  3. Anonymous says:

    Seem like a winning situation to me, offered by the developer. If they say no to the loan, the developments don't get built and Gov't doesn't get the revenue flowing from those developments. If they say yes to the loan, then the developments get built, revenue goes towards the road loan (for a couple decades), and Cayman has a new road and new developments. Sure, Gov't won't get the revenue from the developments, but they wouldn't get it if they said no to the loan either, since there would be no developments. So the only question is whether they want a road built or not. It is essentially getting a road for free. Yes, it is also good for the developers, but is a classic win win deal. Plus, I'm all for another golf course.

  4. Anonymous says:

    Ok so we all will be able to reach North Side in 5 minutes, however, we will continue to sit daily in bumper to bumper traffic from Lantern Point onwards when we are driving our children to school and trying to get to work?

    • And Another Ting says:

      Said it before and Im saying it again, this back way process of coming to agreements without the FCO approval makes no sense. If it's not approved who ya gin blame; probably the best thing anyway. If it's approved as murky as it is not sounds but murky as it is does it mean that the UK are showing that laws can be bent for their puppets. There I said it now print or not print thumbs up or down, it's myyyyy opinion.

  5. Anonymous says:

    even worse than the enterprise 'city' scam……

  6. A man says:

    Pump and dump.

    a) Find small country with big ego desperate to "develop".

    b) Ensure country is easy to push around/manipulate and preferably is open to corruption.

    c) Buy huge tract of land in least developed part of little country cheaply due to its remoteness

    d) Promise sparkly development, jobs for locals and Porsches for some.

    e) Force little country's government to build road/airport/railway/port

    f) Make government take on all downside risk (loan)

    g) Watch value of your land/asset jump

    h) Sell far more valuale land at huge profit (dump)

    i) Walk away without ever having to complete risky development

    j) Fnd new country to con.

    PS in addition to the cost of building the road, what is the cost of compulsorily purchasing all the land needed for the road corridor, plus experts, Lands and Suvey staff to negotiate, courts to hear compensation cases, lawyers, etc? True cost CI$100,000,000!

     
    • Anonymous says:

      You can scratch c) as they have not purchased any of the land they are proposing to develop.

  7. 4Cayman says:

    This is like a Jerry Springer show at best! Like putting a rotten egg to boil with hopes that when it's cook, it won't be rotten!!!

    Wake up Cayman, we cannot afford another wasted scheme.

  8. SKEPTICAL says:

    How long will the funds from duties etc. remain "ring-fenced" if we have a change of government?

  9. Anonymous says:

    I know that there is a world wide crunch, however Cayman is still doing ok.  People, the world is slowing down, this should be an excellent time for government and the populace to reevaluate our position and options and know that there are some critical decision for us to make.

    1. We need to slow down development; there is another generation left that will want/need to develop the country we need to remember Rome or the world was not built in one day nor one generation.
    2. Access our skill sets and needs; no use in building and creating jobs if there are not enough people that are qualified  to support the development.
    3. Access whether the development is an overall benefit to the country and not a short term injection of cash into the country that will create more problems for our already challenged environment.  What further impact will such a development have on the dump, roads, lost of natural habitat for our indigenous flora, fauna and even population.  Government who the people elected to make the right decisions for them should really determine if the the short term gain is worth the long term pain. 
    4. We now complain about atleast two projects that have been very contraversial and have caused this country more than it has actually helped. 
    5. Why do our leaders continiously go against what is in the interest of the majority of the populace which is the middle class?
    6. Our leaders need to return to common sense and reasoning and do what is in the interest of the people and not developers.
    7. Most if not all Caymanians would rather have work and food for the rest of their lives than to have to live off the dole of social services and sit home under a tree all day waiting for some politician to give them assistance.  This is not what Cayman and Caymanians are about, should I say was about we were a people full of pride and ambition.
    8. In the 1970s when I came of age it was a shame to tell anyone that you were not working and healthy, there were few people who did this you could count them on one hand.  Every able bodied young person out went to work they had a future to look forward to, now all this is changing so fast I now see young people a few working or attending school/college a fair amount loitering because they cannot find employment and I know this is a fact because my friend is taking her grandchild most days all around the island to drop off resumes and make job application to no avail, something need to happen in this country.  I appreciate expats and the value that many bring to these islands and they are not to be blamed for coming here to take up employment that many greed Caymanians do not want to give to their own people because they can exploit the expat or in some cases foreign firms and HR managers just prefer to employ their own kind.  This government need to stop its reliance on work permit fees.  Get rid of that drug dependency completely and see what will happen.  Start to make developers pay their way they don't have to pay taxes here that should be incentive enough.  
    9. Cayman was following in the foot steps of most 1st world countries now we are on the cusp of becoming just another 3rd world hell hole if we don't get control of what is destroying our society.  This island have come too far to descend into chaos.  
    10. We need to write a list of alll the thing that made us great from 1962 to 1992 and try to return to as much of it as possible.
  10. Anonymous says:

    What happens if the project doesn't get finished for whatever reason, how does Government get the road paid for then?

    • Anonymous says:

      The developer is paying for the road up front. Why can you not understand this?

  11. Anonymous says:

    The public should know this road is going to cost more than $40mln.  $40mln is merely the figure that Ironwood have agreed to loan the CIG – if approved by FCO – to be amortized via duty and other undisclosed concessions over subsequent 20 years.  The actual cost could be $60-80mln, nobody knows.  The NRA will have to absorb the extra cost and it could be substantial.  Meanwhile, it seems that the Strand road will never be repaved in our lifetimes.

  12. Anonymous says:

    The proposed $40mln loan (on the $60-80mln road) is to be amortized in duty waivers over 20 years.  DUTY WAIVERS ARE NOT NORMAL, SO THIS IS CLEARLY A SPECIAL CONCESSION.

  13. Anonymous says:

    Florida Records.

    Go to this link and enter the name David Moffitt.

    https://www2.myfloridacounty.com/ori/index.do

     

    • Anonymous says:

      Looks like Bank of America, Bank of Florida, and Milestone Investments will not be lending him money for Ironwood.

  14. Anonymous says:

    There goes the PPM borrowing  more money again, The UK will most likely so no to this as they will to the money they will eventually try to borrow to fix the GT Dump. This is a load not a Public Private Partnership. They hype on the developer not receiving any concessions but in this case concession would be better than the CIG giving up all revenue from duties that would be paid not only by the Ironwood development but any other development that generates revenue as a result of the road.

  15. Anonymous says:

    We need to make sure that they do spend that $40 million on the road and there is no scam with the subcontractor(s) who do the actual work.

    Also we need to make sure that the NRA are doing proper inspections along the way to ensure the work is up to scratch.

    Lets face it, the road is mainly for the developer, but we the public will be paying for it thru duty concessions in the future. 

    The golf course will never be built.  This is about getting fill and selling lots.

     

  16. Young Man says:

    One man can't conduct any major business unless the other man says so. Look at the mess that irresponsibility has gotten us into. I would never consider running for office until the last say on our financial matters is back with us, the Caymanian people, instead of the UK FCO.

    A BIG SARCASTIC THANK YOU, to ALL the of previous governments that got us into crap. A lot of you are sitting in office right now talking about 'oh, we can't do this and we can't do that because or until so and so says so.' You're the sole reason why we can hardly do anything right now! Building multiple skyscraper schools at the same time (kids' behaviour still hasn't changed), canceled port deals, generous religious handouts, and the list goes on.

    When it comes to major capitals projects we're just a bunch of lame ducks thanks to some people still in the Legislative Assembly and it's very embarassing and frustrating.

     

    • Young Woman says:

      This is the problem. We turn our noses up at the construction of schools which, whilst costly, directly invest in the education of our youth. Also, your accusation that the attitudes haven't changed are false. Go to Clifton Hunter, they are far more behaved and attentive with more options available to them than those in the George Town government high schools. Also, if you think that a school is the only thing that has affects the behaviour and development of a child, you're sorely mistaken. 

      How we mourn these ridiculous pie in the sky deals we CAN NOT AFFORD. We have no PROOF that even if we were to accept the loan that we would be able to a) pay it back or b) that the development will bring in the desired business. Says something about us as a people when we're jumping down each other's throats screaming 'gimme gimme'. Greedy little suckers- no wonder these companies take advantage of us! And so quick to blame! Who put these people in government to make such decisions? Who allows them to stay? US, because we're too goddamn apathetic and ignorant to help ourselves. Far easier to sit back and point fingers rather than trying to contribute anything positive. Pathetic. These 'investors' will be laughing all the way to the bank and we'll still be here cussin' and fighting each other about the same thing.

      THAT is what is embarrassing and frustrating to me.

  17. Double Bogeyman says:

    I am completely skeptical about the ability of these people to pull off this development. But I am willing to commit to the purchase of a lot if (1) they deliver a completed project of “Dart level quality”, (2) the course has a proper driving range and (3) it is a walking course. Carts are for Americans and sissies and should be optional at the discretion of owners. And I want at least 15 minutes between starts.

    I know. The stuff of pipe dreams.

    • Anonymous says:

      There will probably be an option to walk, but most golfers on island and those visiting do not want to walk.  It's hot, humid and dehydrating.  I think it should be an option but not mandatory walking. That is just silly as a fellow golfer myself and someone that has played around the Caribbean. It's just too HOT!

      • Double Bogeyman says:

        Fine. You ride and I'll walk. How I miss the Ivan aftermath when the Links had finally re-opened but the carts were still out of action. Good days.

      • Antoine says:

        If you can’t stand a little heat you should limit yourself to a quick nine after 5pm. This is no country for old men……..

    • Anonymous says:

      Everyone should have to use carts, and the carts MUST be driven by someone with a Cayman Taxi license. That way you will not need to have 15 minutes between starts, as you cart driver can drive you down the middle of the fairway and get you to the hole before those who started before you. Wouldn't that make golf fun?

  18. Anonymous says:

    Okay they need a new road to make the project work, then pay for the new road, simple. If I build a house and need a road to it from the public road should I get the government to pay for that road? No, if I want the house where it is I have to pay for the road. We the people will have enough expense in maintaining the new roadwithout giving a list of concessions as well. Sure give something to make it happen but don't give and arm and a leg when they will only fill the jobs with non Caymanians anyway. In fact give all the concessions with just one stipulation, that is, 50% of the work force while building and then running must be Caymanian, just wait until you see the developers cry then!!

    • Mitt says:

      To answer your question: (1) Developers are the “makers” and they must be subsidized by the taxpayer in order to create the pennies that may one day trickle down to the takers and (2) you are a “taker” and instead of expecting the government to look after you as though you were a maker you should be grateful for the makers who are doing everything they can to get some government subsidized pennies to trickle down to you.

  19. Anonymous says:

    In good faith, Dart didn't obligate CIG to pay back for their roadways, CIG just cancelled their side of the deal, and for some reason voters hate Dart, but welcome Ironwood.  CIG will change their duty concessions after they finish the road all the same.  How is this any different?

  20. Anonymous says:

    Remember when Springfield bought a monorail . . . that was a better proposal.

    • Anonymous says:

      don't forget about north haverbrook, ogdenville and brocway………

    • Lyle Lanley says:

      That would be silly. What we really need is a water taxi circuit that runs the North Sound perimeter from Batabano all the way round to Rum Point.

  21. Anonymous says:

    …not a chance with this going through.

  22. Anonymous says:

    PPM are taking us for fools with the political posturing claiming it will cost us nothing from the public purse.

    • Anonymous says:

      Is the PPM as deceptive as the UDP?  Are they going to sell us out like they  did the West Bay road?  I just hope they have balls and bats in hand.

  23. Anonymous says:

    Another day and another outright lie from the Regressives.

    The new road is effectivly a 40m loan to this government that don't have funds to do it themselves so why lie about? If the 100m surplus was real they would know exactly where the funds to cover the short fall would be coming from instead of hoping that things work out in the future to fund the repayments to the developer.

  24. Anonymous says:

    Dear Lord, this sounds just like one of those lottery million scams in which winners of the lottery have to pay out money to the company before they get their winnings which never come. This sounds like a scam to me.  Listen people this sounds just like this scam 

    http://www.youtube.com/watch?v=gd4PBQrMYJQ

    • Anonymous says:

      Chances are if Arnold Palmer and his team are behind this project, it is no scam.  They are putting their name on the course and probably assiting with funding.  Your comments are absolutely ridiculous. This man is one of the most reputable, humble and charity giving men in the whole word. So I would rethink your view of your comparison to a Jamaican scam. They have NO correlation whatsoever.

      • Fore! says:

        Arnie operates on a fixed fee basis for golf course design work. Presumably the developers have managed to come up with the first downpayment for the golf course work. That is all.

  25. Anonymous says:

    FCO – Please do your due dilligence on this one. 

    Given that the British Government has identified threats to the natural environment in Cayman as the second biggest concern for Cayman (after Government finances) do you really think that it is a good idea to allow a road that will open up much of the areas of critical primary habitat that should be protected?

    Furthermore a road that it is not actually needed! Only 'needed' by one developer of a golf course and a few other landowners who wish for the public to pay the bill (eventually) for a road that will open up their land. 

    Furthermore – refusal to go for a PAD application !!!???? If nothing else is red flag, this should be. 

    And – please please – help us avoid the eventual fallout of another questionable developer / business person, who comes with a very weak track record at best. 

     

     

    • Anonymous says:

      There was no refusal for a PAD… it is just not required.  A PAD is used if a developer is planning to build a development and potential make changes in the future.  There are no changes that will be made to plans for this development since a large portion of it is the golf course.  Please read about PAD's and what is required before you come out with nonsense…..

  26. Anonymous says:

    I find it curious the way they kept skirting they were not asking for concessions.  All this is, is a deferred concession.  They put the money up front but they get it back and they admit the project is not viable because it is landlocked without that road.  They went on to discuss a large hotel with huge conference capability but when asked about size they said five stories but they would be applying for higher?? Which is it 5 stories or higher, no exact details forthcoming.  You present to the public a hotel about 150 rooms then say it will attract major conferences for things like charities, if I do my math correctly that means the hotel as presented could sleep between 300 to let's be generous and say 600 uhm that doesn't add up when you hear how they describe all the conference capabilities so we know that isn't the whole story then the presentation goes on to tell us about vague amenities etc…when hard questions were asked about population density, how would the golf courses (I eighteen holes and 2 nine holes) would be irrigated that was vague, but on the happy selling note we were all told as business owners there was plenty of opportunity for us to get involved oh goody!

     

    Oh and they have 140 or so lots on the course that right now we all can buy for 30% off and a small down payment that we can get back if the road deal doesn't go through.  Bad form that trying to sell lots while "informing" the public about bigger issues!

    i actually am in favor of the development but let's call this road what it is a deferred concession as a result of very creative financing.

  27. Anonymous says:

    Just make approval conditional on a public share owners register . . .  .

  28. I am CAT says:

    My name is CAT and I think I smell a BIG RAT.  Or is it  a VULTURE?  

    Just wait until there is a commitment then, let's see how fast things will change!

  29. Anonymous says:

    There is no such thing as a free lunch

  30. Charlie Ponzi. says:

    Sketchy at best. Stick a pin in it FCO. 

    • Anonymous says:

      Why would you want the FCO to stick a pin in this development?

      Why not accept the facts that this these Islands have progressed  from a fishing village to a modern developed  country. If you dont want development then move to the Brac..

      • Anonymous says:

        Any piece of construction is development, whether good or bad.  Stop abusing a term.

      • Winning..... says:

        On a per capita basis, the Brac far outstrips Grand in the number of existing subdivisions and government funded roads to those subdivisions. Also quarries. All we need is three marinas and we’ll win that race too. So take that you less tiny islander!!

      • Anonymous says:

        Dubai was desert sand and is now the world largest and richest theme park for the rich and famous, but the difference is their development has benefited its citizen.  They enjoy a standard of living and protection that sadly we will never have.  That my friend is why the FCO should stick a pin in this and future developments that are not beneficial to Cayman overall.  If they want a road to their property let them build it no concessions or paybacks by government. 

        It is high time Caymanians benefit from all this development like they did in the 1970s and 80s Caymanians are regressing while developers and non Caymanians are progressing.  Something is wrong with this picture.  I say to the FCO stick a pin in it yes!

        • Anonymous says:

          Dubai paid for their own developments, they didn't someone else to foot the bill…

        • Anonymous says:

          That's because back then they sold all thier land to foriegnors and now Caymanians no longer own Cayman for the most part..

  31. Anonymous says:

    Is "ring-fenced" anything like a "rim job?  Remember, if it sounds to good to be true it most likely is not true.  If they had confidence in this, why not put it all on the table with a PAD?????

    I see a very big credibility gap.  My guess is government is on the hook and it never completes.

    • Anonymous says:

      Did Bryan Butler put  all his condos on PAD?? one of the greatest developers before Dart's time. He developed 4 miles of the 7 mile beach.

      All Caymanian Builders worked for this man. I would like to see your concern focus more in this direction.

      Developments will continue to come., no matter what!

      let's make sure the Caymanians profit from it, it's their country.

  32. Anonymous says:

    I couldn't make the meeting, but did Moffitt address the string of foreclosures against him and his companies in his home County in Florida over the last three years?

    • Anonymous says:

      You should substantiate such comments.
      CNS: where is the evidence of the alleged foreclosures?

    • Anonymous says:

      Not that i'm a fan of Michael Ryan, but the people cried out against him also.

      They said that he was bankrupt, broke and were "Ritz Carlton".

      We as Caymanians have to cease that small minded mentality or it will segregate us from within.

      The Cayman Islands  have development laws and regulations. Should you as a citezen see Muffitt doing anything out of the ordinary then come forward and place your complaint.

      Please stop the speculations before this project even get started. There are many builders and businesses that welcome this project. Should you find youself idle, then please try and assist these entities to get involved.  

      • Anonymous says:

        And the people were right about, Ryan. Look at the trouble he has caused us.

      • Travolta says:

        Was it Moffitt, Muffitt or maybe you meant Muppet?

      • Anonymous says:

        But wasn't he also heading up another company after this for another large project. And wasn't he trying to get the payment chargedto that account?

      • Anonymous says:

        Umm so you think that the financial story around the Ritz was a good one.

        MR seems to have come out of it OK but you do know he wasn't the backer don't you. They got well and truly burnt as did some banks and the CIG.

        Yes we have the R-C which is wonderful and no MR isn't broke or bankrupt but there are plenty of fiancial disasters at the foot of that project.

      • Anonymous says:

        Is thisthe same developer Michael Ryan who was the developer of the Ritz Carlton that was sold at auction to Five Mile Capital Partners LLC, the same person who had issues with the Dragon Bay development and left owing government coffers millions.  This does not fit the profile of a person that anyone should hold in such high esteem as you are proposing that we do.  There are many developers of Cayman of 50 – 25 years ago that I hold in high esteem the kind that did not demand or even ask government for one penny in concessions.  Many people warned us about many of these new developers and they were proven right.  When will the Caymanian people learn that if it seems too good to be true it usually is, and all that glitters is not gold?