04 June, 2009

Golf Course

Victor was on the radio today. I suspect he meant to make this speech in the cancelled House of Assembly meeting that should have taken place this afternoon. It is sufficiently important that we should not have to wait until next week's The Anguillian Newspaper to read what he has to say about the abandoned Flag golf course. [I suppose we all know that the watering of the grass started up about one week ago, but has now been discontinued again.]

Anyway, this is what he had to say. What do you make of it?


By the Hon Victor Banks

Address on Golf Course Project

June 8th, 2009

Fellow Anguillians,

Over the past twelve months the Government of Anguilla has been faced with a number of consequential impacts from the global financial situation. Foremost among these have been a shortfall in tourism arrivals; challenges to obtain and maintain financing for a number of tourism projects in the early stages of implementation; slowdown of the construction schedule for one major project at an advanced stage of completion; and the stoppage of all construction activity on one of our main tourism development projects, namely, the Flag Luxury Properties project known as the Tenemos Resort & Golf Course.

The latter has become the topic of discussion and debate in daily conversation; the print media; the radio talk shows; political platforms, and; other fora. I will hereafter refer to it as the Golf Course Project.

The Government of Anguilla has been extremely cautious in its approach to public discussion on certain aspects of the Golf Course Project negotiations in the context of the legal and fiduciary issues which are involved in the process. We have however on a number of occasions sought to involve members of the opposition both in the House of Assembly and meetings at the Secretariat with the intention of bringing some bipartisanship to the process. And to demonstrate our readiness to adopt that approach --- we actually supported at least two motions by the Opposition in the House of Assembly on the topic.

While this period may be characterized as a political year we feel that the issue is important enough to merit the participation of all sides of the political spectrum. We are also aware that the wider public has great concern for this issue and are anxious to find a solution. Our experience, however, has been that the issue is being used as a political football without due regard to the critical realities surrounding the ongoing delay in the resumption of the project.

It is in this context and at this strategic juncture in the negotiations that the Chief Minister has asked me in my capacity as Minister for Economic Development and Tourism to clarify a number of the statements that have been tossed about; explain the reasons for Government’s strong resolve to finding a way forward and outline the progress that we have made to date.

Since the third quarter of 2008, the Government of Anguilla has been in negotiations with the principals of the Golf Course Project to assist them in finding a way to overcome the challenges facing them since they were forced to shut down construction in early June last year. We thought that it was important enough to take a motion to the House of Assembly seeking support for developing an appropriate strategy for assisting the project in its efforts to obtain critical funding. We understood that this might require some unusual measures by the Government of Anguilla but we felt that the impact that the closure of this project would have on the island would be devastating. Where we stand today is testimony to that foresight.

There were many persons who perhaps, understandably, were not supportive because the impression was maliciously circulated that Government assistance meant a direct cash injection into the project. Preoccupation with quieting those negative concerns could have been in fact a lost opportunity to bring an earlier response to the challenges of the project. And unfortunately it ended up with the closing of the Golf Course itself including maintenance and watering. But of course that is water under the bridge.

Still pressing forward in February of this year the principals of the Golf Course Project as a result of the persuasion of the Hon. Chief Minister and other Ministers decided that they would devise a way to restart the project and solicited the support of a team of four local Anguillian consultants to work with them to develop a viable proposal. The outcome of this joint effort was a proposal presented to GOA on March 23, 2009. The proposal indicated that a suitable buyer/operator was identified but certain preconditions were required to get the process going --- the main one being the acquisition of the Golf Course improvements by the Government of Anguilla.

Let me clarify that when I say the golf course improvements I mean all the costs involved in converting the over 100 acres of lands into an operating facility.

To put the issue even more clearly, let me state that the buyer could not in the present financial market conditions get funding for completing the project because the inclusion of the golf course component would make the overall business plan unattractive to lenders. It is an accepted fact that, a golf course, in and of itself does not make a profit --- it usually requires a strong real estate component to ensure viability. In fact in the last twelve months of operations the facility lost approximately 3.9 million US dollars.

It is in this context that the team’s proposal included three possible options for the GOA to acquire the Golf Course. The justification for the acquisition of the Golf Course is based on the premise that only two entities can feasibly purchase the facility, namely, the buyer of the other components of the property because of the value-added or the Government of Anguilla because it would enhance the quality of our tourism product and increase its the overall revenue potential. Since the potential buyer/operator was unable to put together a feasible business plan to its lenders to include the purchase of the Golf Course facility --- the team presented the GOA with a structure whereby it could acquire the golf course improvements.

The three options presented to GOA were as follows:

· Purchase the Golf Course facility via a fifteen year loan with total payments of 83 million US dollars.

· GOA put together a public/private partnership to acquire the Golf Course facility via a fifteen year loan with total payments of 93 million US dollars

· The owner immediately transfers the Golf Course facility to the GOA for a nominal payment of $1.00. GOA then grants an incentive to the project by the allocation of tax revenues (the suggestion being accommodation tax) for a period of thirty years.

The presentation of these three options required GOA to indicate in a letter of intent its readiness to accept any one of them as a way forward. However, the presenters indicated a willingness to discuss any alternatives and modifications which GOA may wish to propose. You may ask the question: why would the GOA even consider any of these options? Let me explain!

I find it at this juncture useful to quote a part of an open letter to the Chief Minister from Mr. Sheridan Smith, CEO/Owner, Sheritons Development Inc. Mr. Smith writes and I quote: “If this is the only logical way to get this property restarted, and to alleviate the financial burden off the shoulders of the Anguilla people, some careful thought and action should be applied. We do not have the luxury of time on our side. The state of the economy is speeding down a slippery slope and the Government should --- in my humble opinion --- find the moral and political will power to implement a prompt settlement of this ongoing disaster.” Those are of course the views of an assertive and enterprising Anguillian who has built one of the most elegant and top class tourism resorts on the island. He concludes by writing and again I quote: “This is a matter of economics and should not be politicized.” I can assure you that Mr. Smith is not an individual who would allow anyone to put words in his mouth.

I have used that abstract from Mr. Smith to provide a backdrop for the concerns which led GOA to consider the options presented to us. Let me list some of these concerns briefly:

· The Golf Course was a major initiative by GOA to enhance our tourism product and remains a critical element of our business plan and promotion strategy

· We need to protect future jobs and business opportunities

· We must defend the interests of local creditors, vendors and contractors who are now owed several million dollars collectively and in some cases separately. Including the GOA.

· Anguilla cannot afford a “white elephant” after committing so many resources to its implementation.

· If we lose this golf course the next one is probably about two years from completion --- even so more than one golf course facility has a multiplier value for golfers in terms of choice of destination.

· If we do not find a solution in a timely manner we can conceivably end up in a long period of litigation which in terms of its complexity would exceed/dwarf the Cap Juluca matter.

· The local rental sector which was encouraged to respond to the needs for all kinds of accommodation is beginning to feel the pinch and if we do not protect their source of business they face a real threat of mortgage failures and foreclosures.

· Anguilla does not have a formal social safety net system that is institutionalized and funded to support persons who have lost jobs and business opportunities --- as a consequence there is a real chance of social and political instability as a result of the failure of large ventures such as this.

· The central government budgetary situation requires some form of immediate to short term stimulation --- because our key revenue streams are dependent on consumption which requires purchasing power.

· The project involves a number of stakeholders not the least among which are a number of international buyers who have chosen to invest in this project and Anguilla --- these homeowners/buyers need our support and assistance --- and they too are making sacrifices. They have not chosen the route of going to the World Press --- so to maintain Anguilla’s good name and reputation as an excellent place to invest we should not let them down.

While the foregoing list of concerns is not exhaustive there are a number of reasons why the GOA decided that of the three options it would prefer to negotiate on modifications to option three, that is, the immediate transfer of the facility to the GOA for $ 1.00 and the granting of an incentive to the project via the allocation of future revenue streams in particular accommodation tax for up to 30 years. Let me explain:

· In this option the GOA owns the land and improvements immediately without any direct liability. That means that we have no commitment to pay any loan.

· In this option the GOA pays only if and when future revenues are payable. In other words if the project is not completed the GOA owes no one anything. In the other two options GOA has a liability to pay whether or not the project is completed.

· This option represents an economic risk free transaction for the GOA because the owner on the basis of a negotiated long term management agreement with GOA will assume all costs associated with the maintenance and operations of the facility.

· GOA can also create a further revenue stream by charging a per-round “recreation tax”.

· The allocation of revenue from accommodation tax of the hotel operations is not the only revenue associated with the project.

· We are cognizant of the fact that everything carries a price and any quoted price can be negotiated. It depends on the commitment of all parties concerned to come to a successful and mutually beneficial arrangement.

On March 27th a letter of intent was sent to Flag by the Chief Minister indicating our willingness to negotiate the third option and a process of due diligence slated to take over a period of thirty days began. When this option of purchasing the Golf Course was floated one of the Members of the Opposition who was encouraged to use his self-proclaimed influence with Mr. Lee Rizzuto, the owner of Cuisinart Resort & Spa came back with the report that Mr. Rizzuto was prepared to buy the Golf Course. Discussions with Mr Rizzuto and his agents by the Chief Minister and myself clearly confirmed that this is not the case. In fact despite strict instructions from Mr. Rizzuto and his agents that this was not so that member of the opposition continues to say on various media that Mr. Rizzuto intends to purchase the Golf Course.

I believe that to dispel this misinformation once and for all I should read a copy of a letter from the Senior Vice President & General Counsel of the Company to the Chief Minister on the matter. The letter was dated May 29th and reads as follows:

“It was a pleasure meeting with you this morning regarding the golf course issues. You asked me to confirm with Mr. Rizzuto if he has any intention of actually paying monies to purchase the golf course. This will confirm that the offer Mr. Rizzuto made to Mr. Sillerman never involved the payment of any monies by Mr. Rizzuto to purchase the golf course. The considerations which Mr. Rizzuto will undertake are limited to the assumption of the operating costs and maintenance of the golf course. In the event agreements can be worked out by all parties, I hope this sufficiently clarifies this point. Please let me know if you require anything further. Sincerely etc.”

Obviously, that member of the opposition either mistakenly or deliberately is spreading the wrong information. But even from a basic business standpoint for Mr. Rizzuto to decide to purchase such a high price facility and then operate it at a loss for several years would defy the very principles which made him the successful entrepreneur that he is. Mr. Rizzuto himself has said this.

I therefore want to disabuse all listeners of the idea that that there is any one out there who has a feasible plan to purchase the Golf Course as a separate entity. I repeat that only the GOA or the buyers of the other components of the project can realize any practical benefit in doing so.

But even in the face of overwhelming evidence that GOA could benefit from this transaction. Technical officers in the relevant ministries were charged with doing the necessary due diligence in researching the matter. GOA employed two qualified international firms at great expense to review the purchase and management agreements and do an evaluation of the asset. This exercise took some time and the period for due diligence having come to a close the principals of Flag opined that GOA was reneging on its agreement and decided to suspend the maintenance of the Golf Course which they decided that at a cost of US$200,000.00 a month without any resolution in sight would represent a waste of valuable resources.

Nevertheless, Government continued its due diligence and negotiations and on Thursday May 28, 2009Executive Council instructed me to make a final offer based on a modification of option three. Rather than an incentive based on allocation of accommodation tax revenues for thirty years --- GOA offered ninety percent of the allocation for fifteen years and seventy-five percent for ten years. Added up this offer would amount to 21 years of one hundred percent allocation. We feel that this is a reasonable compromise for a valuable asset which GOA would acquire. In other words it is not a free concession but a transaction which includes the transfer of an asset in exchange for future revenues. As I said earlier nothing comes without a price and we believe that this is a reasonable cost to pay for a fully operational resort with a top class golf course facility.

The point must be made that this is not an unusual government transaction. Governments use revenue in the form direct payments and loans to buy goods and services for its people including the purchase of roads; airports; seaports; schools; hospitals; playgrounds golf courses and so on, to develop its economy. This is the same thing. But in addition GOA is acquiring a facility without any contingent liability if it is not successful. In other words if it does not work out we owe no one anything. But let me explain what this agreement triggers in terms of the project. Bear in mind that immediately upon signing, this document goes into escrow until the other cogs of the arrangements fall in place.

As soon as GOA successfully negotiates the terms of the purchase and management agreements, the other components of the larger strategy to restart, complete and operate the project are triggered as follows:

· Flag Properties settles its liens with its lenders

· A new developer/owner is brought in

· The homebuyers arrangements are affirmed or mutually modified if required

· A new construction loan is arranged

· Agreement is reached with the Contractor for past due amounts and scope of new work

· Flag Properties must come to a mutually agreed settlement of outstanding monies owed to local creditors, vendors and contractors, including GOA.

This last component as it relates to local creditors, vendors and contractors will be of major importance in the approval of the new owner/operators of the project. GOA remains committed to ensuring that Anguillians who are owed monies have been dealt with satisfactorily.

On the basis of the foregoing agreements which will shortly be approved in the Anguilla House of Assembly the principals of Flag have in good faith restarted the maintenance program for the Golf Course facility and have begun negotiating the other components of the deal. We feel that this represents significant progress and hope for a final resolution of the challenges of restarting this very vital project.

While I am on my feet I would also like to take this opportunity to report that the Viceroy Project is well on the way to a soft opening in July which will result in the employment of a number of Anguillian workers --- and the long awaited Medical School is scheduled to open in August/September and will create opportunities for the apartment rental sector and other businesses. The fiscal situation is challenging but we are encouraged that with continued progress on all these fronts we will experience some relief from the pressures that now attend us.

Let me take this opportunity to thank you all for your kind attention and wish you all the best as you strive to manage the many challenges which are affecting all of us in this unique period of global financial and economic crisis.



  1. As outlined in the letter above, it sounds very reassuring and hopeful to me.
    I pray that it really works.

  2. Don, I just read your newest blog and the previous one related to the Flag Golf Course. I wish to post this to both since the previous blog has now probably been forgotten by readers. One of the early poters to the previous blog jumps into the fray with the following:

    "The story is often heard how Sillerman killed the Junks Hole proposal by threatening government that he would close down. It didn't happen that way.

    It was actually Credit Suisse who said Junks Hole would glut the market with golf club residences and condos and they would discontinue financing Sillerman if Government allowed Junks Hole to proceed before Sillerman was trying to market their units. Certain interested persons twisted this story around to blame Sillerman. Hubert jumped right on it, finding it necessary to educate us on Sillerman's alleged religion. Bunton outsourced the story to whoever wanted to tell it and it has become the accepted "truth."

    I wonder why, because no-one mentioned the Junks Hole project. Someone trying to clear their conscience maybe? Or trying to re-write history as has become the norm of late? Either the poster is seriously mis-informed or is trying to seriously mis-inform. The truth is that the United Front government seriously tried its best to kill the proposed Junks Hole Golf Course project from the beginning because of the potential threat to the Flag Project which is now a millstone around their and Anguilla's neck. A Jack Nicklaus Signature Golfcourse on what he Jack Nicklaus himself describes as one of the top three golf course sites in the world with luxury villas and hotels with ample space surrounding them, real beaches and priced significantly lower than Flag's Long Island condo style villas within touching distance of each other and a golf course with essentially the same view from each hole would be a great threat. So Flag tried to kill it from day one, using the government and its agents. They triedevery conceivable ploy until finally the government was ready to sign the agreement and we all know that Sillerman wrote to the CM Osbourne Fleming saying he would close the Flag project if the Junks Hole project was signed. And he and the government gave in to open ********* (fill in the blanks coz I dont want to be accused of slander or whatever the legal term is). And then, the same government announced a moratorium on future developments. Then lo and behold a few months later the same chief minister announced the Forest Project with the Lakes. He actually sais it was a project for the East, although nobody has ever been heard before calling the Forest "The East". God doesnt like ugly. Any wonder why both projects seem to be going nowhere? Unless Bunton again comes to Flag's rescue?

  3. So have I got this right?:

    Victor is sucking up to Sheridan Smith. Oh well, election year…

    Net loss of the golf course for the last year of operation was US$3.9million. Presumably that figure will be ongoing and be funded by GoA/the taxpayer … or accommodation tax/other tourist charges … but then, in dissing Hubert, he says that Rizzutto is prepared to underwrite the cost of the Golf Course … but then does not say whether the GoA has taken him up on the offer.

    It looks like the reason why maintenance was not carried out (@ US$200K/month) was because the developers were unhappy about the time being taken by GoA to do due diligence. This could well be the case - GoA is not known for speed in such matters. However it could also be coercion or blackmail to make GoA sign up a deal it would otherwise not have made – or have made so quickly.

    GoA has conceded accommodation tax for 15 years to the tune of 90% and 10 years @ 75%, equal to full waiver for 21 years. Chances are that we, and all the signatories to the agreement, will be long dead before full accommodation tax flows to GoA from that project.

    Medical School! This was talked about YEARS ago! This is way overdue and I can’t understand what held it up before.

    Viceway soft opening in July. This year or next?

  4. I know it's unfair to criticise without proposing alternatives but my wager on the winner of this mess is on the New York lawyers, not the GOA.

  5. I think all Anguillians should be somewhat reassured by Mr. Banks comments. First of all, it is wonderful seeing the Government being this open about their efforts and the options considered – whether one favors any or none of them, this kind of communications is something that has greatly been needed in the past and should be strongly encouraged in the future.

    I think most would agree that the GOA is in no position (especially at this time) to purchase the golf course for 83 to 93 million dollars US, especially with the prospect that the course could lose money going forward. Given this assumption, the third option is the only one remaining (unless someone can come up with another creative possibility).

    According to Mr. Banks, this option represents an economic risk-free transaction for the GOA because the (new) owner (of the remaining project) will negotiate a long term management agreement with GOA to assume all costs associated with the maintenance and operations of the facility. Apparently Mr. Rizzuto has expressed a similar willingness to assume the operating costs and maintenance of the golf course (but not its purchase).

    Of course, being given the golf course (whatever its true value) does not come free, nor should Anguilla expect this. In return for getting an asset priced at $83 million to $93 million US (even it’s real value is less), as proposed Anguilla will give up the equivalent of 21 years accommodation taxes on the completed project, assuming it is completed. However, if we turn our backs on this offer and the project is never completed and is allowed to fall into total ruin, then no accommodation taxes related to the project will ever be received either. Additionally, Anguilla’s reputation among both investors and tourists will certainly be hurt, so what is the downside?

    Under the third option, Anguilla should still benefit financially to some degree. A direct benefit will come from accommodation taxes paid by other resorts, hotels, villas, etc. for additional visitors that choose to come to Anguilla because of the added value a golf course brings to the overall Anguilla experience, plus the not insignificant payment of amounts currently owed to Anguillians for work already done for Flag/Temenos. Assuming that this also leads to the completion of the overall project, Anguilla will benefit indirectly from the jobs created at the project itself and the many businesses that will support the project and its eventual guests.

    Certainly this is not what anyone had in mind when the overall project was initiated, but the fact is the world has changed dramatically and real money has been lost (by a lot of people, Sillerman and Credit Suisse included). An unwillingness to recognize and accept this fact, and to insist that nothing further be done by GOA to support this project, would simply be foolish and ignore realities.

    This does not meant that the proposal as presented should not be debated and possibly refined – now that then proposal is public, it sounds like there is still time for good suggestions to be incorporated into any final contract as there are still a number of hurdles to be overcome. As further details come out and are analyzed, this third option may be less attractive than initially presented.

    Is this the best deal that could have been made? Could a better deal have been negotiated? Who knows? However, at this point it appears that the Government has approached this thoughtfully and with caution and with Anguillian taxpayers in mind, and has come up with a proposal that offers some real benefits with limited upfront financial burdens being assumed by the Government.

  6. A golf course on Anguilla will never last. Too expensive to maintain. Not enough golfers to sustain.

  7. I compliment Government on making some decent lemonade out of these lemons. Saving this project, putting lots of Anguillians back to work and getting a lot of money into circulation will benefit Anguilla as a whole -- even those whose politics forces them to criticize everything Government does.

  8. More debt for Anguilla, just what we do not need. More taxes, just what we and our tourists do not need. I sometimes wonder if the GOA enjoys making our lives harder. For goodness sakes think of how to save Anguillas revenue not get us into more debt.

  9. Will Anguillians be employed, or will the jobs go to cheap labour from Phillipines, India, China, or wherever?

  10. And now we are to have "the long awaited medical school." How wonderful, I had no idea that a medical school was being built with its library, laboratories, lecture halls and of course, acredited staff and opening in August/September, (I hope not a "soft opening")
    Am I the only one not aware of this new facility?

  11. Does the APP have a position on this matter, other than to study the facts and then tell Credit Suisse and other world players what to do?

  12. It seems to me that what is really offensive about the entire government approach is that it amounts to the bail out that was rejected by the House of Assembly some months ago. It is a bail out that is as underserved as it is unsustainable. Such a large and luxurious golf course in little Anguilla is impractical. It was never meant to be anything else than a playground for a few very wealthy villa owners.

    The economics of the failure of this proposed bail out is easy. If, as we are repeatedly reminded, it costs $200,000 per month to maintain, and if a reasonable charge for a round of golf is $200 per person, then it will take 1,000 golfers per month, every month, every year for the forseeable future, for the golf course to pay for the upkeep. Never in a million years will enough people come to play golf in Anguilla to allow it to break even.

    The golf course can never be a feasible proposition on its own. It could only work as a side attraction to some other project, eg, the sale of very expensive holiday homes. Paying to play at this Flag golf course makes sense only to the type of person who is willing to pay $12 million for a villa, and $100K per year for golf course membership. Perhaps, the deals they had planned to make with colleagues whom they will invite to play a round on "their" golf course would have more than justified the expense. But, for you and me and the average Anguillian, this golf course is as welcome as cancer of the liver. Why would the typical commuter want to be so foolish as to drive a gas guzzling Hummer to the office?

    On its own, the Flag golf course will be a bottomless pit of costs and expenses for whoever owns and runs it.

    I would like to put forward a proposal. The golf course should be split in two. One half of it could be turned over to planting Julie Mango trees. There is a market for mangos. With the bits of the irrigation system that will survive the ravages of time, we could even grow Breadfruit trees. The Vincentians among us could teach us how. I would love to see a National Botanical Garden put on part of it. Keep no more than half of it for a nine-hole, cheap, run of the mill, golf course.

    That would be more practicable a solution that the one presently planned.


  13. Don, you have missed the whole point of the success of this con job.

    Of course, the golf course is impractical, as a golf course. It only works as a sales gimmick. Sillerman is not going to give it up. He is promising to give it to government and to pay to keep it running. On one further condition. What he really wants in return is for government to give up the right to any real estate and aliens landholding taxes for as long as possible: 25 years, 50 years?

    That is just what Victor and Osborne are giving him. They have agreed to forgo collecting taxes. Government gets a meaningless “ownership” of the white elephant golf course. Sillerman gets to keep it for his use and the use of his villa owners willing to pay $400 per round. Best of all, in exchange, he gets to sell his condos and villas free of all taxes.

    He is laughing all the way to the bank. He won.

    The man is brilliant. Who said he did not know real estate?

  14. Don, didn’t you or some of the other posters here actually READ the statement by Victor Banks? He made three critically important points:

    • “In this option the GOA pays only if and when future revenues are payable. In other words if the project is not completed the GOA owes no one anything.”

    • “The owner on the basis of a negotiated long term management agreement with GOA will assume ALL (emphasis added) costs associated with the maintenance and operations of the facility.”

    • “The considerations which Mr. Rizzuto will undertake are limited to the assumption of the operating costs and maintenance of the golf course.”

    What the government appears to be doing is buying the golf course for nothing other than the cost of forgoing future revenue (e.g. most accommodation taxes for 25 years) from the completed Temenos (or Golf Course) Project, if and when it is completed. This willingness to forgo future revenue is being used as an incentive to the new owner (whoever that may be) to actually complete the rest of the project - something that, if finished, will create jobs and eliminate the probability of your "pyramid ruins" existing on Anguilla.

    If this deal (or something like it) isn’t done and the rest of the Golf Course (Temeonos) Project isn’t completed, then no accommodation taxes from this project will ever be realized anyway and Anguilla will be left with just the concrete ruins and no golf course.

    On the basis of the proposed contract with the new owner of the project (or with Mr. Rizzuto), according to the Banks' statement there should be no annual financial operating costs associated with the golf course to the Government of Anguilla. Both the owner and Rizzuto appear willing to maintain and operate the course for nothing (accept probably a hoped for profit), but the new owner just wants to receive value for selling it and Rizzuto appears unwilling to actually buy it. If in the future, the course loses so much money that Rizzuto or the new owner will not renew the management contract that costs the Government nothing annually, then maybe Anguilla can look to turn the property over to farming, a botanical garden or something else.

    With all the suggestions being offered for farming, botanical gardens and other uses, please remember that the Government of Anguilla does not own or control the golf course presently to do with it as it wants. Don, as a lawyer, I would think you know that the Government of Anguilla does not currently have the right to do what it wants with the property - first it has to get legal control of the property and the improvements on it. Don, you're going to have the GOA "buy" the golf course to plant mango and breadfruit trees?

    What am I missing?

  15. So what the above poster is saying is that Victor's use of the term "accommodation tax" -- and he uses it five times -- is a lie, and what he really means is alien land holding and property taxes, is that right?

    And everyone's going to keep this a secret until after the election?

    This discussion is getting silly.

  16. The person or persons defending the bail out on this post is being disengenous.

    The 21 year concession on the various revenue streams, including accommodation tax, offered by the government of Anguilla amounts to 100% tax concession on the sale and transfer of each villa. The aliens landholding licence tax that future purchasers should have been paying have all previously in the Flag MOA been commuted into increased accommodation and other annual taxes.

    Victor made certain to emphasise several times that he was talking about GOA conceding various revenue streams, not just accommodation tax.

    I would estimate that amounts to a concession of over US$1.5 million in stamp duty and ALHL taxes every time one of the units changes hands, not to mention other taxes. That can be hundreds of millions of dollars in foregone taxes over the next 25 years that the concessions will endure if this deal goes through.

    This is not a gift to the people of Anguilla. It is a major fiscal burden.

    I trust this proposal will require debate in the House of Assembly, as it will mean concessions on taxes fixed by the House of Assembly and only the House of Assembly can remit such taxes. It will be interesting to see exactly which statutes are being amended.

  17. At least we now have something specific to discuss and debate. As I read the statement by Victor Banks, under Option 3, the new buyer/owner (not Sillerman/Flag) would transfer the golf course facility to the GOA for $1.00 and, in return, be granted an incentive (to assist the owner in completing the overall project) via the allocation of future revenue streams equal to ninety percent of the accommodation taxes of the hotel operations for fifteen years and seventy-five percent for the next ten years. The owner also would agree to a long term contract to operate and manage the golf course at no cost to the GOA.

    Maybe "accommodation taxes" as used by Victor Banks had some broader meaning, but nowhere did I read in his statement that other future revenue streams (e.g. ALHL, stamp duties, etc.) have been offered as Don and some posters have suggested. Maybe someone has specific information about concessions not detailed in Vicotr's statement; if so, please share this information and the source(s) with the rest of us.

    We do need answers to the question as to what specific future revenues would actually be given up, especially if broader than the accommodation tax revenues from hotel operations, and an estimate of what those future numbers might be. Then present value analyses of projected revenue stream scenarios can be done to better answer the question of how much the golf course will cost (in theoretical terms).

    I say “theoretical cost”, because if this deal (or something similar) is NOT done and the golf course remains closed and the project doesn't restart, then Anguilla will have NO future revenue streams from this project anyway There will also be no additional jobs during construction or afterwards (assuming the project is completed) and no golf course to attract new visitors, and Anguillians and the GOA will still be owed a lot of money by Flag. Instead, we’ll be left with years of litigation and a decaying concrete jungle, and the “Anguilla Experience” will be tarnished.

    However, maybe Anguilla could generate some additional revenue by attracting new visitors desiring to tour our "ancient Temenos ruins". :)

  18. I have also heard about the secret MOU between the government of Anguilla and Flag. I believe I heard on the radio Hubert quoting from it one day in the House of Assembly. I do recall something about the purchasers at Flag not being required to pay in one lump sum the 17.5% stamp duty and ALHL fee. The purchase tax was being converted into an increased accommodation tax that the Minister of Finance assured us would result in a steady stream of many times more revenue accruing to government than if they had collected the one-time tax.

    I do not recall the details, but the poster appears to be quite correct that the tax that the Minister is proposing to reduce to almost nothing for 25 years is, basically, all the revenue, every cent, that government could ever hope to earn from this project.

    Government should have the testicular fortitude to tell Flag and Credit Suisse to get their backsides down here and honour the MOU.

    It is inconceivable that they will walk away from their $750 million investment.

    If the project is not feasible in the present economic climate, our giving up our only hope of revenue is not, I guarantee not, going to make any difference to its lack of success.

    If the project remains feasible, then our revenue stream will not, repeat not, prevent it from being a success.

    Perhaps someone who has a copy of the Flag MOU would like to remind us how we were supposed to earn any revenue from this project. That should clear up the point.

    This deal is not only completely unnecessary, it is also completely futile.

  19. It is simple. The land was sold/leased under specofoc agreements. If the agreements are breached, the GOA can and should enforce them to their advantage. Either the owner does what is written in the agreement or the GOA gets back the property as is. Then it can sell it a new to a developer with money. Right? Maybe the GOA should publish the agreement they have with Flag and a good lawyer can tell us if there is recourse, or if it is going to be just like Mullet bay. If it is so, why did the GOA sign off on land without the proper legal protections? Maybe that is where the real influence peddling was.

  20. If the GOA really has the legal right to take the property "as" is under the existing agreements, the Government should do so. However, it should be pretty obvious to all that they do not, or we wouldn't have this proposal as presented. Maybe you wish it were simple, and maybe it should have been, but it clearly is not!

  21. Hubert has announced repeatedly that our leaders have exempted their "wealthy foreign investor friends" at Flag and Viceroy from the 17.5% transfer tax and stamp duty for properties purchased under an alien license. This is true.

    He has, of course, failed to inform us that a new tax has taken its place. These units are subject to a Resort Resident Asset Levy, payable annually at the rate of US$6.50 and $4.50 per square foot for units not included and included in the rental pool, respectively. The fees will be paid by the owners of estate residencies, villas and condominium units. Over the years, these fees are expected to be many times the normal 17.5%.

    Our leaders are equally at fault. Having explained this in the House of Assembly in 2005, they can't be bothered to explain it again. What the CM's press secretary does all day is unclear to me.

  22. It's silly to say that 1,000 golfers per month would have to play golf to cover the $200K of operating expenses. That would be true if that's all they did - fly in, play golf, fly out.

    Beside the obvious advantages of keeping the residential/hotel development and the course open and avoiding a 20-year black eye, here's the real financial picture:

    1) Golfers tend to come with their families, sometimes with buddies (that's 4 golfers with one trip, wow!).

    They tend to be higher-end.

    They tend to eat at restaurants, stay at good hotels and even, gasp, shop.

    So let's say that they spin off a heck of a lot more than play-golf/leave island.

    Between profits to hotels (which employ people), restaurants and shops and rental cars (ditto), let's divide the number of golfers that the ISLAND needs to break even by 4, very conservatively. 10 would be a better number (leaving $2K of profits behind after spending $15K or so for the whole group).

    But let's use 4 as our conservative factor. (The government should ultimately levy a tax on the establishments who benefit from all this, but that's another story.)

    We're down to 250 golfers per month.

    2) They tend to play more than once. If the average golfer plays 2.5 times (and the course truly is sensational, world-class, if it can be restored - a big "if" now), hey! We're down to 100 golfers per month.

    3) If the Nicklaus/Fairmont thing ever gets done, 2 courses are NOT twice as good as one. They're 4 times as good. And if the Nicklaus folks have any brains, and I'm sure they do, they'd do a tropical links course, minimal green area (tee box, landing zones for fairways, and greens). Give them a radically different experience -- the wind makes an astounding challenge.

    You'd triple the golfers, easy. And they'd play more rounds. Hey, if we get that far (but we won't have course #2 without course #1), we're now way past an easy slam dunk.

    4) Golf is a big and growing sport. Very promotable. The PR about Anguilla for golf will invariably feature the rest of Anguilla. More visitors all around.

    And the whole island smells awfully good instead of awfully bad. What really needs to happen is...

    Get good management in place all around over there. Um, someone like Rizzuto and his team.


  23. To focus on whether something is is "profit making" is a Hubertism. The real question is whether it contributes to the long term social and economic progress of Anguillians. If you want to take the golf course out of its context and just analyze it's stand-alone economics, then I have the right to do that with schools, roads or the road to your house. That road will never make enough money to justify all that you've spent on it. It's a guaranteed loser. You should lock it off and plant mango trees along there and build your wife a fruit stand on the North Hill Road. Your present use of that land is a waste of valuable resources.

  24. Don Watcher’s arithmetic is strange.

    Four golfers in one party are still four golfers, not one golfer as he calculates.

    Their eating at restaurants and shopping and other contribution to the economy is not a contribution to the estimated US$200,000 per month it takes to maintain the golf course, contrary to his calculation.

    No matter how the figures are worked, the mathematics is still 1,000 rounds of golf [golfers] per month at US$200.00 per round to make $200,000.

    If we could imagine that each of 250 golfers would play four rounds of golf each and every month that would be the same as 1,000 golfers playing one round per month. At $200 per round, they could raise the $200,000. But, it is not feasible. The golf course has been open for two years, and I do not believe that it ever managed anywhere near this number of golfers or of revenue.

    The whole calculation is preposterous.

  25. By the way, 1000 rounds of golf a month sounds like a lot, but is less than 9 foursomes a day (yup, ONLY 9 FOURSOMES A DAY). While that may be hard to achieve in August and September, 9 foursomes during the winter months is very conservative if a round were priced reasonably at $200.

    But why do we keep seeing reference to the $200,000 monthly costs and how many rounds of golf will be played? Why do we even care? Both the new owner and Rizzuto have apparently indicated a willingness to run the golf course WITHOUT ANY COST TO THE GOA (or anyone else).

    DonWatcher's math may not be accurate to the nearest penny, but his thinking is certainly logical. If a golfer comes to Anguilla and brings 3 non-golfers (family or friends), 4 people end up spending money at Anguilla's hotels, restaurants and shops, etc. That means money to the Anguillian economy.

  26. If I understand correctly, the golf course cost $200,00 per month the last few months, while it was CLOSED.Those are just the costs to maintain the course at a minimum. Now add the cost of a professional golf pro and an assistant.Add the golf cart maintenance crew and golf cart repair costs,add the cost of extra personnell to maintain the course to optimum level and the extra costs of electricity(it is expensive in Anguilla) and caddy personnel and the cost to run a golf course as fully functioning rental course goes up. If government is also going to run the restaurant...... I believe the figures for 2008 were a loss of US$3.9 million. That works out to $350,000 per month.Wether the golfers spend money on shops and hotels is irrelevant to the golf courses bottom line. Wether an operating golf course would be an asset to our tourism product isn't in question. The question is where is the $3.9 million a year coming from? Is it from the same fund that pays an airline not to fly?

  27. DonWatcher is a spin-artist at best, and not an adept economist, nor marketing genius. Carry on DW, a course manager position is waiting for you. - scotty

  28. I must remind the above poster that payments to Air Tsarina using government money has been decreed to be "none of your business."

  29. If the prospective "employees" are brought in are Filipinos, Chinese, Mexican, Indian, etc., that are housed "on-site" and paid lump sum to their home country, are the benefits to Anguilla still there? Like, hasn't this happened before? Or, are we still naive enough to believe that "this time it will be different."


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