Prime Minister and Minister of Finance the Rt. Hon. Hubert Ingraham tables resort agreements for New Providence and Exuma in parliament on Monday, February 18, 2008. (BIS Photo/Peter Ramsay)

Communication by

Rt. Hon. Hubert A. Ingraham

Prime Minister

on the Tabling of

Agreements Concluded Under

The Hotels Encouragement Act

Between the Government of The Bahamas

& Resort Developers since May 2, 2007

Mr. Speaker,

I am pleased to table nineteen Agreements concluded between my Government and Resort Developers since 2^nd May 2007 under the terms of the Hotels Encouragement Act since 2^nd May 2007.

Pursuant to the provisions of the Act, exemption from the payment of Customs Duties and or real property taxes permissible in respect of the construction, development and outfit of new hotels and related amenities, and or for the refurbishment, renovation, upgrade and or expansion of existing hotel resort properties.

Eleven of these Agreements have been concluded with international owners and operators of resorts in The Bahamas. Seven have been concluded with Bahamian owners and developers, while one involves a joint venture between a Bahamian and a foreign investor in a Family Island Resort.

I am pleased to table the Agreements together with a listing of the same indicating those that are Bahamian-owned, the value of concessions granted, and the duration of the Agreements.

Honourable Members will note that, with regard to a number of Agreements, the expiry date for the Agreement pre-dates the date of formal execution of the Agreement.

I advise that over the years the practice evolved whereby applications for the grant of concessions for the construction and outfit or the refurbishment and upgrade of hotels and resorts in The Bahamas under the Hotels Encouragement Act were approved in principle by the National Economic Council. Subsequently the Minister charged with responsibility for the implementation of the Act approved concessions to be granted on a specific detailed listing of items to be imported to facilitate an approved project, and set the terms and duration of exemptions from the payment of Real Property Tax.

Once the Minister had made his/her determination on the concessions and waivers this decision was conveyed via letter to appropriate offices, e.g. the Customs Department and the Valuation Unit of the Ministry of Finance.

On the strength and basis of such letters conveying approval, owners developers and operators of resorts in The Bahamas have been able to access concessions under the Hotels Encouragement Act even prior to the formal execution of an Agreement under the Act.

While this practice has assisted in expediting the start up date of projects, it has also permitted a slippage in control, sometimes to the detriment of the collection of Government revenue.

Hence, we have now put in place new policies governing the implementation of the Hotels Encouragement Act and all affected Government Departments and Agencies have been advised that concessions under the Act are not accessible until such time as an Agreement has been concluded between the Government and the Resort owner or operator as appropriate.

Mr. Speaker,

I highlight briefly for general information the more significant Agreements under the Hotels Encouragement Act which are tabled this afternoon:

BRITISH COLONIAL HILTON

This project is completed. The British Colonial Development Company Limited and Ocean Bay properties I Limited received approval for the refurbishment construction, furnishing and equipping of the “Best Western British Colonial Hotel”. The refurbishment project which was to render the hotel a new British Colonial Hilton Hotel.

ATLANTIS PHASE III

This project is now completed. Kerzner International was granted approvals for the third phase of their Paradise Island development to include the construction of the Marina Village, Ocean Club Villas, Fire and Ambulance Station, Harbourside Phase II, 600-suites hotel, 500-room condo-hotel, expanded attractions and utility and infrastructure expansion. The minimum investment for the expansion was set at $1.0 Billion.

SHERATON CABLE BEACH RESORT

This project is now completed. Baha Mar Resorts Limited carried out extensive renovation of the 700-room Radisson Cable Beach Resort to comply with the standards of a Sheraton brand. All front of house and back of house areas were renovated. The project included the repair and upgrading of central services equipment, the R/O and sewerage treatment plants, chillers and laundry facility. The total cost of the project was estimated at $80 million.

Honourable Members are advised that Baha Mar undertook to showcase reproductions of Bahamian artwork from the winning entries of the Baha Mar sponsored art competition in all 700 of the property’s guest rooms.

COCKROACH CAY CLUB RESORT & MARINA

The TH-PY Development Limited is located on an eighty acre island, Cockroach Cay, Berry Islands purchased by the Developers. The Project is to include a resort and marina with Phase 1 consisting of a 20-room Bed and Breakfast Inn, a 65 slip marina, a 20-unit employee housing, and a restaurant and in Phase 2, 26, 2-bedroom cabanas to be placed in the hotel rental pool. The total construction cost is estimated at $35 million. The projected number of persons to be employed in the management and operation of the resort is between 30 and 50.

ISLAND VILLAS

Mr. Glenn Davis, the Bahamian owner of Coastline Company Ltd. proposes to complete a 6-unit boutique hotel at Hooper’s Bay, Exuma using a local contractor, Bacchus Construction Ltd. He also proposes to add amenities and additional units in a future phase of the development.

BAIR’S LODGE

Caribbean Lodges Ltd. was granted permission to operate a fishing lodge in Little Creek, South Andros. The renovation and expansion of the existing structure increased guest accommodation from 8 persons to 12 by the addition of 2 rooms added, a storage facility and generally upgraded the public areas. Local contractors, Timothy Smith and Richard Kemp, carried out the renovations.

TINGUM VILLAGE HOTEL

Mrs. Ruby Percentie, owner of Tingum Village Hotel, Harbour Island received approval for the completion of 3 new villas, a beach cottage and pool in addition to refurbishment of the existing 12 rooms of the resort. The total cost of the project is estimated at $500,000. Cody’s Construction Co. is the contractor for the project.

SEASIDE SERENITY SUITES

Albert and Alexandria Archer propose to construct an Eight (8) unit guest hotel at South Palmetto Point, Eleuthera with a restaurant and bar. Two-storeyed guest houses will be constructed in Phase 1 and the restaurant and bar in Phase 2. The project is estimated to cost $800,000.

BIMINI SANDS BEACH CLUB & MARINA

Bimini Sands Beach Club & Marina, a joint venture between Bahamian and international owners, is a condo-hotel and marina project in South Bimini with 124 units already in operation. South Bimini International Ltd. was approved for the construction of 90 additional units. The total cost of this phase is $5,363,500. Some 90 persons will be engaged at the completed resort facility.

ETON MANOR

Eton Manor is a Ten (10) bedroom Bed and Breakfast hotel under construction in Westward Villas, Cable Beach owned by Cabin Traders Management Ltd. (Clinton Clarke). Approval was granted for building materials to complete construction. The contractor is Dolphin Construction Co.

FEBRUARY POINT RESORT & VILLAS

February Point Resort Estates Ltd. was granted approval for the addition of three (3) villas to their existing condo-hotel programme in Great Exuma. Concessions for building materials, furniture and equipment for the new units amount to an estimated $426,895.30. The new Project is estimated to cost some $600,000.00. The Resort presently employs 120 persons.

Mr. Speaker,

I note that the Hotels Encouragement Act Agreement concluded with Park Ridge Securities Corporation to facilitate the development of the Albany Project is being tabled today together with other documents connected to that development.

18 February, 2008

Communication by

Rt. Hon. Hubert A. Ingraham

Prime Minister

on the

Road Swap Agreement between

The Government of The Bahamas

And Park Ridge Securities Corporation

Mr. Speaker,

The Government of The Bahamas entered into Heads of Agreement dated the 9^th November, 2006 with Park Ridge Securities Corporation with respect to the development of a mixed use luxury community to be known as “Albany” in southwestern New Providence.

My Government previously tabled these Heads of Agreement concluded by our predecessors in office but not tabled in the House of Assembly prior to the May 2 General Elections.

I am also pleased to table the Hotels Encouragement Act Agreement concluded by my Government with Park Ridge Securities Corporation pursuant to the provisions of the Hotels Encouragement Act, the legal authority under which concessions may be granted to resort development in The Bahamas.

The proposed development in southwest New Providence in respect of which concessions have been approved is estimated to result in a minimum expenditure of $191 million. The development will include the following:

a) A luxury hotel to include between a minimum of 10 luxury cottages with not less than 30 bedrooms and a maximum of 65 luxury cottages having not less than 130 bedrooms, and 25 condo-hotel units around the marina; the common areas and related infrastructure required to support the luxury cottages and the condominiums.

b) A Fitness Club

c) Restaurants

d) A Signature Golf Course

e) Sports Facilities including swimming facilities

f) An Equestrian Facility

g) Marina with a minimum of 50 slips

All facilities in the Project in respect of which concessions are received will be made available to members of the general public.

The Developers have undertaken to commence the construction of the Project within 7 days after the execution of an Agreement for the swap of the public roads which traverse the development.

Albany will construct an alternate public road and realign South Ocean Boulevard.

The new public road is to be exchanged for the closed portion of South West Bay Road, and in this regard, I will table the Resolution to authorise the swap.

The proposed new Public Road runs parallel to the BEC power lines and encumbers a number of privately-owned parcels. To facilitate the construction of the new road the Government acquired certain parcels under the provisions of the Acquisition of Land Act.

Mr. Speaker:

At all material times the understanding was that the cost of the acquisition and the construction of the new public road would be for the account of Albany. My Government undertook, in the interest of transparency, to cause two independent valuations of the private lands acquired to be undertaken.

Having obtained these valuations, an offer of the higher of the two valuations was made to each of the landowners. These offers were generally rejected as being inadequate.

Mr. Speaker:

I am convinced that the Albany Development is in the best interest of The Bahamas.

18 February, 2008

COMMUNICATION

RT. HON. HUBERT A. INGRAHAM,

PRIME MINISTER

ON THE

SUPERSEDING HEADS OF AGREEMENT BETWEEN

THE GOVERNMENT OF THE BAHAMAS AND

EXUMA RESORT DEVELOPERS LIMITED

Mr. Speaker,

The development of legitimate business on Norman’s Cay in the Exumas for the benefit of the Bahamian people was a goal and objective of my Government when we were last in office.

Just as the illicit drug affiliation of Gorda Cay in the Abacos was cleansed by the development on that cay of a private port of call by Disney Cruise Line, today called Cast Away Cay; and just as the drug-infested Hawksnest Resort and Marina were sanitized and readied for expansion and upgrade following upon its acquisition by Jerry Clayton; we looked to the development of an exclusive, upscale tourism resort at Norman’s Cay to erase the blot of drug trafficking on the Cay caused by one of its more notorious residents – Carlos Enrique Lehder, locally called Joe Lehder.

Honourable Members will recall that Carlos Lehder, owned, in fee simple, certain properties on Norman’s Cay through two companies incorporated under the laws of the Commonwealth of The Bahamas, namely Fernandez Limited and International Dutch Resources Limited.

Honourable Members will also recall that Mr. Carlos Lehder, a citizen of Colombia, is a convicted drug felon incarcerated in the United States of America.

In 1989 Lehder’s Companies were struck off The Bahamas Register of Companies by the Registrar General.

By virtue of the laws of The Bahamas, title to the properties of the Lehder-owned companies now vests in the Treasurer in trust for Her Majesty in right of Her Government for the benefit of The Bahamas.

In 1990 our Supreme Court refused applications to restore the Companies to the Register.

An Appeal against the Supreme Court’s refusal was dismissed by the Court of Appeal in August 1995.

In February, 2002, my Government entered into a Heads of Agreement with Exuma Resort Developers Limited for the development of an Amanresort on Norman’s Cay in the Exumas.

The Heads of Agreement provided for the investment of some $25 million in the development of a five-star hotel resort of approximately 40 luxury villa-styled rooms together with beach clubs, restaurants, bars and appropriate amenities, including the upgrade of the Normans Cay airstrip, the construction of employee housing and other residential and commercial offerings.

So as to facilitate the development, the Government agreed to a Lease/Purchase of various tracts of land vested in the Treasurer, including a jetty at Norman’s Cay.

In accordance with the Heads of Agreement, in March 2002, Exuma Resort Developers Limited and the Treasurer of The Commonwealth of The Bahamas entered into a Crown Lease/Purchase with respect to approximately 550 acres of land on Norman’s Cay. The lease granted an option to Exuma Resort Developers to purchase the land at a price of $2,365.00 per acre.

The Government was to retain some 45 acres of the land vested in the Treasurer on Norman’s Cay for future public use.

The Heads of Agreement provided for the development to benefit from the usual concessions as are available under the Hotels Encouragement Act.

The Aman Project was to be developed and constructed over a 36 month period through Exuma Resort Developers Limited by: (i) Mr. Adrian Zecha of the Amanresorts (through his company Anbest Holdings Limited); (ii) Mr. Zecha’s long-time friend and business partner, Steven Manolis (through his company, 757 Overseas Limited; and (iii) Mr. Zecha’s development partners, Messrs. Jonathan J. Breene and John P. Conroy of the Setai Group (through their Company, Setai EDRL Investments Limited).

A Bahamian Group, Cleare, Holowesko, Cole and Solomon, who owned private acreage on Norman’s Cay, was also proposed as equity participants in the Project.

It was anticipated that the Amanresorts would brand and manage the Aman Project, while the Setai Group would serve as the Aman Project developers.

Honourable Members are advised that Amanresorts were founded in the 1980s by Mr. Zecha (after he had founded Regent Hotels and Rafael Hotels).

Amanresorts have developed an excellent reputation around the world for its visionary design, extraordinary attention to detail, and unsurpassed personal service. The Amanresorts portfolio of properties includes ultra-luxury hotels and resorts in some of the world’s most pristine and exotic destinations including Thailand, Bali, The Philippines, India and Morocco.

The Norman’s Cay development by Amanresorts were to be Mr. Zecha’s first property in the region and in The Bahamas. There were also plans for a second property in The Bahamas.

For a number of reasons the development did not proceed as expected and, indeed, Aman Resorts developed its first property in the region in the Turks and Caicos Islands.

The Setai Group is a New York based private development company specializing in luxury residential and five star boutique hotel properties in select markets around the world.

The Setai Group was founded in 1998 by Partners Jonathan Breene and John P. Conroy, Jr. The Setai Group’s mission is to recognize the needs of an individual market, to identify a location with the qualities that appeal to that market, and to create the ultimate living environment, that is, one that offers exceptional service in quality surroundings.

The first development completed by the Setai Group was an 18-storey, 120-unit luxury condominium project on Turtle Creek in Dallas, Texas, called Vendrome. The Setai Group recently completed construction of the Setai Resort and Residences in Miami’s South Beach, a mixed-use development comprising an 8-storey, 88-room luxury hotel and a 40-storey, 165 unit condominium tower, managed by Amanresorts’ sister company, General Hotel Management, Inc.

Mr. Speaker,

Subsequently, Exuma Resort Developers Limited advised that Amanresorts in partnership with the Setai Group were assuming 100% ownership and control of the Project by buying out the interest of the Bahamian Group.

The Developers through their attorneys approached the previous administration, requesting a Supplemental Heads of Agreement reflecting the new ownership structure and an expanded project concept.

A Supplemental Heads of Agreement was drafted but not finalized prior to the recent General Election.

Following upon the General Election my Government resumed negotiations with the Aman Group and agreed a Superseding Heads of Agreement.

The following has been agreed:

1. The Aman Resort on Normans Cay Project will now have an estimated project cost of US$80 million, with the following components:

(1) Hotel Lodge consisting of reception, hotel back-of-house, restaurants, bars and function areas and forty (40) Hotel Bungalows;

(2) Twenty-Eight (28) residential villa sites;

(3) Beach Club and Pool;

(4) Spa, Fitness and Tennis Centres;

(5) An Extension and Upgrade of the existing Airport;

(6) Customs, Immigration and Police facilities at the Airport;

(7) Living accommodation for Customs, Immigration and Police;

(8) Island infrastructure (electrical, water, sewage, communications, cabling and island roadways);

(9) Marina and marina village; and

(10) Staff accommodations.

(2) It is now proposed that the Developer will commence construction of the hotel within six months and complete construction of the hotel within 48 months.

(3) The Developer will pay to The Treasurer:

(1) US $ 1 million for Freehold Lands; and

(2) 5% of the gross sales proceeds on residential lots sold to third parties.

(4) The Developer will also provide a bond of US $40 million from a bank, insurance or trust company licensed in The Bahamas, which shall be forfeited if the hotel component is not substantially completed within 48 months.

(5) The Developer will surrender the 2002 lease and the sum of $50,000.00 paid thereunder shall be applied towards the purchase price for the Freehold Lands.

(6) The Developer shall cause the purchaser of any residential unit located within the Freehold Lands to pay to the Treasurer an Occupancy Fee of $150,000.000 upon the substantial completion of the residence constructed, or the appropriate Stamp Tax on the cost of the construction of the home, whichever is the greater sum.

(7) Subject to the hotel being constructed and operational, the Government undertakes not to approve any development on its remaining 250 plus acres of land at Norman’s Cay that is incompatible with the

Developer’s overall project concept. The Developer has agreed to prepare a development plan for the retained Government lands for the consideration of the Government.

(8) After the opening of the hotel the Government will declare the Airport a “customs airport” and the Marina a “port of entry”. The cost of maintaining that status shall be for the account of the Developer.

(9) There will be unfettered public access to the Airport and Marina, subject to standard landing and berthing fees set by the Developer and approved by the Government.

Mr. Speaker,

The Developer has undertaken to maximize the employment of Bahamians, inclusive of professionals in the “build environment”.

Between 600 and 700 persons will be employed during peak construction. During the operation phase, the ratio of non-Bahamians employed shall not exceed 20% in years 1 - 5, 15% in years 6-10 and 10% thereafter. Approximately 400 persons will be employed in the management, operation and maintenance of the resort, related facilities and residences.

The following tax concessions have been agreed to be granted for the Developers:

(a) Concessions as are available under the Hotels Encouragement Act, excluding stamp tax and property tax where the villas are not part of the hotel rental pool, for a minimum period of 9 months in the calendar year; and

(b) An Electrical Franchise, subject to the Out Islands Electricity Act.

My Government will be seeking the appropriate Parliamentary resolutions relating to the disposition of Government owned lands referenced in this Communication.

Mr. Speaker:

I am pleased to lay the agreed Superseding Heads of Agreement on the table.

18 February, 2008

ATTACHED BELOW: