Madness

What did Osborne and Victor think they were doing?  I was living in Anguilla in 1976.  I was the Magistrate.  I know, that makes me old.  More than that, it means I was present in 1978 when Emile Gumbs’ government adopted Anguilla’s first tourism policy.  With expert guidance, Anguilla studied the various models of tourism development in the region.  We came to the conclusion that the secret to success was to hold to a low-density, up-market product.  This policy was enthusiastically adopted by Emile’s government, Ronald’s subsequent 1980 government, and Hubert’s.  So, what happened to make us lose sight of the aim?

On 5 June 2007, Dr Aidan Harrigan issued a cautionary address when delivering the 7th Walter G Hodge Memorial Anguilla Day Lecture.  Everything was going well then, but he saw the danger.  That was six months before the present recession hit us.  He warned us at the time that the ten hotel projects recently approved by the Government were a disaster waiting to happen.  Do we remember the nature of the catastrophe that he warned awaited us?

Anguilla in the year 2007 was a tiny island with a population of some 10,000 souls.  We enjoyed full employment.  Our tourism plant then consisted of some 700 hotel rooms.  The rule of thumb is that approximately three employees are required to service one up-market hotel room.  All available Anguillian hotel staff were fully employed.  Hundreds of men were employed in the construction industry.  Thousands of men and women were employed in ancillary services, such as construction, drug distribution, massage parlours, music production, car rentals, agriculture, and fishing.  We thought we were doing well.

Executive Council next proceeded to consider approval of the construction of over 4,000 additional rooms.  They dealt with over a dozen major new hotel/condominium projects.  No independent Environmental Impact Studies were required.  These new projects were intended all to have been on stream by the year 2020. 

I actually get more than his ten projects, I get fourteen.  In alphabetical order, the ones I know about are:

1. Altamer Marina and Hotel expansion 164 units

2. Cap Juluca Cove Bay expansion        360 rooms

3. Crocus Bay Development                 50 rooms

4. CuisinArt Resort expansion              93 guest rooms and suites

5. Fairmont Hotel and Golf Course        730 rooms and suites

6. Flag Luxury Hotel & Golf Course       450 rooms

7. Frangipani Hotel expansion              50 rooms and 6 villas

8. Long Bay Development                   41 villas and 14 apartments

9. Rendezvous Bay Hotel expansion      450 rooms

10. Shoal Bay Development                 100 rooms

11. Seychelles Hotel                           Unknown

12. Viceroy Hotel on Barnes Bay          350 rooms

13. Viceroy Hotel on Meads Bay           Unknown

14. Viceroy Hotel on Savannah Bay      Unknown

How many Anguillian hotel development projects in the period 2006-2010 do you know about?

It is difficult to estimate the number of hotel rooms involved in these 14 projects that I know about.  Villas, units, and suites are multi-room accommodation units.  They involve any number of rooms.  Dr Harrigan’s best estimate was that, by the year 2020, Anguilla would be attempting to fill a total of 5,000 rooms.  Do remember that US visitors on average only come for a week at a time.  We would have to fill each of these rooms each week or two at the most.  These are double rooms, which means that 5,000 rooms could on average hold 10,000 visitors.  It does not take a lot to work out that we would have needed to find 15,000 hotel staff to accommodate them comfortably.  The pressure this number would mean on our schools, hospitals, roads, electricity, water, waste disposal, mortuaries, is unimaginable. 

The unsustainability of this approach is overwhelming.  Let us be honest.  We could not have managed it.  There would have been island-wide melt-down.  We simply could not have got 10,000 visitors into Anguilla, and out, every weekend.  American Eagle, LIAT and the Access Tsarina’s Anguilla Express would have to be working around the clock.  The present one-lady post at Customs at Blowing Point Port would have had to be multiplied ten times to deal with the traffic.

The impossibility eventually impacted even our leaders.  They put in place a moratorium on future hotel licences.  It did not last for long.  They then promptly proceeded to make exceptions.  For their friends only, of course!  All done with God’s blessing!

It is not correct to say that the recession rescued us.  The recession compounded the problem.  There was no accommodation for the needed extra 15,000 hotel staff.  Osborne and Victor hit on a solution.  They encouraged poor Anguillians to borrow heavily from the banks.  We were supposed to invest in building apartment complexes.  We would make our money from accommodating the foreign, imported staff needed to work at these hotels.  Then the recession hit.  There are no renters for the existing or planned apartments.  The apartment complexes lie empty.  Meanwhile, the bank loans had to be repaid.  With no income to make it possible.  The s*** had hit the fan.

That is where we are now.

Where do we go from here?

Related posts:

Fairmont

Apartments

Credit rating

The announcement on Caribbean 360 appears devastating for Anguilla.  Word was out yesterday that the regional credit rating agency had downgraded Anguilla’s sovereign debt.

Caribbean Information and Credit Ratings Services Limited is allegedly the regional credit rating agency. 

Basically, they tell investors whether or not to buy bonds and other sovereign debt issued by a government.  

So, I rushed to the company’s website to find out what the alleged crisis in Anguilla was all about. 

See it for yourself.  It turns out that there has been absolutely no change in Anguilla’s credit rating since the last published rating.  We have long had an AA rating. That is where we remain today, at any rate according to their own website.

Unless the company is so incredibly inefficient that its website does not reflect in real time the ratings allocated by the company!  In which case, what credibility do they have a right to?

IMHO the story on Caribbean 360 is complete fiction.

Flag Revival

Robert FX Sillerman’s back!  He may have told everybody that he has no talent in real estate.  But, he sure has talent for dealing with the government of Anguilla.  His team has recently put together a 30-page marketing presentation to persuade investors to take over the Flag Luxury Resort project in Anguilla.  The presentation reveals that in July of this year he concluded a terrific deal with government.  It brings him back in charge of Flag, and has breathed life into this failed project.  He is using this presentation to invite new investors in the Flag project.  The presentation tells us a number of things.  For one thing, from the cover we learn that the new project will be called Temenos Resort, Anguilla. 

1. Note the particularly disturbing news that we are now being described as “Anguilla, a British Protectorate”.  The last British Protectorate I know about was Palestine, and look what happened to that unhappy territory.

 

2. Page 3 reveals that it is really the same old project completely unchanged.

3. Page 4 indicates that the new investors will acquire $180 million of ‘first and second lien’ debt for $100 million.  No doubt that is clear to our US cousins.  Since “first and second lien debt” has no meaning in Anguillian law, I have no idea what they wanted to say.  I suspect they meant to say that Credit Suisse, and perhaps Sillerman himself, are selling out their charges cheap. 

 

Most extraordinarily from the same page 4 we learn that the “owners” have recently concluded negotiations with government for “a 25 year bed tax concession” which we learn is worth $98 million over the same 25 years!!  We knew about the tax concession, but now we learn the amount of the give away.

4. From page 8 it appears to be the same project.  It is just being refinanced.  With us giving them $98 million of public revenue to sweeten the deal!  No question of one acre of land being refunded.  I am glad we do not take responsibility for the golf course, as government was proposing at one time.  But still . . . accommodation tax is supposed to be a major part of our revenue.  Government has given up collecting it for 25 years.  How are they going to pay their public servants and other obligations?

 

5. Page 15 reveals that delivery of the first Temenos villa will occur in the last quarter of 2009.  Delivery of the last will be in the second quarter of 2010.  The hotel will be completed and opened in the last quarter of 2010.  So, it looks like full steam ahead.  Just in time for the upcoming general elections.  

There is one worry.  Since the US economy is not expected to turn around until the last quarter of 2011, I am not sure who is going to come forward to make this happen.

 

6. Page 16 is quite revealing.  It states that Mr Sillerman enjoys “a great deal of local support for the project”.  I have no idea what local support he could be referring to.  I rather thought that both Government and Opposition had publicly and repeatedly washed their hands of him.  

Anybody remember the Chief Minister’s actual words the last time on the subject of Mr Sillerman? 

 

Did you catch the bit at page 16 that Mr Sillerman has been granted permanent residence status in Anguilla?  The brochure claims this “is quite unusual for a non-native of the island”.  That is surprising.  I always thought that it was a precondition for being granted permanent residence status that you had to be a non-native.  I was also under the mistaken impression that every foreigner who bought a flat or apartment was more or less automatically granted permanent residence status.  Permanent residence status was invented by Ronald Webster back in 1980 as a convenience for every foreign home-owner not to be asked harassing questions by the youngsters of the Immigration Department when arriving in Anguilla to spend the winter.  Each person who buys one of the villas will be entitled to apply for permanent residence status.  Although, since government abused the status to additionally give citizenship rights, I hear they may be stopping it.  Is Sillerman mamaguying me, or what?

7. Page 22 contains some vital figures.  It calls itself “Key Financial Data”.  From it, we learn that some $200 million has to be raised to bring this project to completion.  We also learn that it will take the trivial figure of $40 million to buy out the existing lenders.  Credit Suisse has obviously agreed to lie down and play dead in exchange for $40 million.  Any takers?

 

It looks like the government of Anguilla was not joking when they announced a few months ago in the House of Assembly that they were thinking of ways to bail out this project.  Have you any idea what US$98 million represents?  That is more than a quarter of a billion EC dollars.  Some bail out!

No doubt, this development will be presented as a major triumph for the party in power when the upcoming elections are announced.  But, why have they been silent about the figures up to now?

Who said Mr Sillerman knew nothing about the real estate business?

Amazing!

It is amazing what you can meet when you go walking in Anguilla. I have been away in St Kitts for a few days. Today I resumed my walking regime and went to explore the Brimegin area. I came upon what appeared to be an abandoned hotel project. I never knew there was such a project on that coast. There was no “No Trespassing” sign. The entrance was open. Each room was open to the elements. No doors or windows were installed. There was not a speck of building materials left on the site. It was so clean, you could eat off it (if you ignored the goat droppings in the pool area). There was no sign indicating who the owners were. There was no sign indicating who the architects or contractors were.

The project as seen from Albert Lake's quarry

I wondered who started building it.

The back entrance?

I wondered why it stopped. Did the money run out? Or, had there been a health issue?

Approaching up the rear entrance

What dashed hopes and plans does this abandoned property represent?

The rear of the back row of buildings

Is it going to be restarted, or is it closed down for good, eventually to go back to bush?

The front row of buildings from the rear

Did the contractors and local suppliers get paid?

The pool, bar and restaurant from the front

Was there a Memorandum of Agreement with government relating to this project too? And, was it honoured, by both parties?

The pool deck and the buildings beyond

Or, is it locally owned, and there was nothing for government to give away?

From the windows to the pool deck looking back to the rear row of buildings

Was there an Aliens Landholding Licence that government ministers could give away so that no fees or taxes need be paid to the people of Anguilla for the next 125 years?

The rear view of the front row of buildings

Or, did it stop because the owners want to have a Cap Juluca type MoA too, and government was not sufficiently accommodating?

The front view of the back row of buildings

The buildings just sit there, enigmatic, clueless, but not giving away any information either.

Rock fill at the entrance

What an amazing amount of rock used in this construction! The most expensive finishing touches are yet to be done: The wiring, the plumbing, the furnishing and equipping.

Datura bush

Leaving the site, I noticed the largest datura bush I have seen in a while. I wonder how many Anguillians know about the ritual use of the crushed seed. Thugeeism, after all, is not a common topic of conversation in the West Indies. How many of us would be aware of the use of its psychotropic qualities in drugging the sacrificial victims murdered in honour of the goddess Kali, the goddess of death and destruction?

Austerity

Government announces civil service salary cuts as part of austerity measures. This circular letter from the Department of Public Administration to all public servants has just been sent to me for comment. I have not checked with anyone to make sure it is authentic. I take it on trust as the source is dependable. I have read it.

Department of Public Administration

The James Ronald Webster Building

The Valley

REF: EST/5/10

GOVERNMENT CIRCULAR NO. 4 OF 8 JUNE 2009

TO: Permanent Secretaries

Hon. Attorney General

Department Heads

All Public Officers

H E, The Governor (for information)

Ministers of Government (for information)

AUSTERITY MEASURES

Anguilla and by extension the Budget of the Government of Anguilla continue to be impacted by the sharp slow down in global economic activity. The Government of Anguilla has been adopting certain austerity measures in response to the global financial crisis. The current difficulty being experienced in meeting monthly expenditure has necessitated further austerity measures by Government.

On Wednesday June 3, 2009 Executive Council agreed to the following for a period of six months in the first instance, effective July 1, 2009, to sharply reduce expenditure:-

(i) the figures for travel allowance categories A to E will be as follows:-

($225.00, $175.00, $125.00, $75.00, $62.50 respectively);

Council further agreed that travel allowance categories should be continuously reviewed to ensure that officers are placed in the correct categories.

(ii) telephone allowance will remain at the current reduced level;

(iii) salary payments be reduced by the amounts set out below:-

a) Hon Deputy Governor, Hon Attorney

General and Public Officers in grades A-F - 10%

Public Officers in grades G-M - 5%

Public Officers in grades A-F who did not receive the 25% salary increase in September 2008 should have the increase actually received reduced using the following formula to determine the percentage reduction (10 ÷ 25 x % increase in salary actually received in September 2008 = % amount current salary to be reduced by). This is proposed exceptionally on moral grounds particularly as persons would have made financial commitments based on their prior salary. This exception must not be construed as giving affected persons any rights or benefits that they would not have otherwise accrued.

b) All elected Members of HoA - 15% (of ministerial and HoA allowances)

Speaker and Nominated Members - 5%

Special Assistants/Advisers/

Specialist Worker - 10%

Wage Workers - 5%

(iv) pensioners will not be affected by any reductions;

(v) officers retiring during the temporary salary suspension period will be afforded their retirement benefits (gratuity and pension) based on their current salary and not at the reduced salary;

(vi) all officers including “contract” officers will be subject to the temporary suspension of benefits;

(vii) the GoA will communicate with financial institutions to request that civil servants who require their loans to be refinanced be granted that service at no cost;

Council noted that the GoA cannot commit to giving back the suspended funds at this time but undertakes that if the situation changes positively and significantly, consideration will be given to either partial or full reimbursement of the suspended funds.

Public Administration acknowledges the historic nature of these measures and the personal sacrifice officers will be required to make. However, it is hoped that public officers will recognize the seriousness of the situation and understand that the measures being instituted come after considerable deliberation.

Public Administration continues to urge officers, especially at this time, to remain vigilant in the collection of government revenues, be professional in the performance of designated duties and practice sound work ethics.

------------------------------------------------

Lana Horsford-Harrigan

Director Human Resource Management

Public Administration

Copy – Honourable Deputy Governor

Here are my comments.

First, let me say that everyone in Anguilla would expect that in time of financial crisis and falling revenue deep cuts must be made, including cuts in salaries and allowances. But, it is elementary that such cuts can only to be made by consent, not by force.

The memorandum makes it clear, if only by inference, that the proposed reduction was determined on by the Executive Council without discussion with either the public service or their representatives. There is no question of seeking to obtain the consent of the civil servants whose salaries will be affected. They are being told of a decision that has been made. The decision is “effective July 1”, by which I understand that salaries will be cut from July 2009. The lack of consultation and the failure even to try to secure prior agreement is unbelievably inconsiderate and unacceptable if true. Tell me which employer in Anguilla could get away with informing his employees, without any prior discussion, that their salaries were about to be cut?

The third paragraph from the bottom, with the words “commit to giving back the suspended funds”, etc, makes it clear that the Executive Council believes that it has the right to take away the proposed salary cuts permanently. This is not guaranteed to be a temporary suspension, it is to be a possibly permanent cut in salary. That is contrary to section 7 of the Constitution of Anguilla. This letter infringes the “property rights” section of the Constitution, and as such is illegal.

One thing that is guaranteed to get me really vexed is when I see government not bothering to take legal advice on a matter of great importance and obvious contention such as this. This proposal is the wholesale cutting of salaries. That is a matter of great importance of obvious contention. There are civil servants who are already living at the limit of their means. There are house mortgages, car loans, university loans, vacation loans, and personal loans for furniture, all expected to be paid on time. Any reduction will call for civil servants to have to begin negotiations with creditors and other persons to whom there are obligations.

That is why I would contend that no competent department of public administration could possibly have circulated this memorandum without first having sought legal advice. And, I would go further and state that no lawyer in a West Indian Attorney-General’s Chambers could possibly have o-kayed it. Both contentions cannot be right. One must be wrong. The conclusion is that either the department took a risk, or the A-G’s Chambers was careless.

I know it is a long time ago, but government must retain files. About the year 1982 Verna Fahie was a young civil servant. She was sent by government on a Canadian scholarship to Barbados. After about a year, government wrote her a letter. They had just realized that she was getting a stipend from the Canadians. That was in addition to her Anguilla public service salary. That was considered too good for her. She was informed that after she came back to Anguilla they would begin deducting her salary until she had paid back the government of Anguilla the amount of the Canadian stipend. She protested that they were the ones that had organized the scholarship, and they should have known about the stipend from the beginning. She did not agree to any deduction from her salary. They went ahead and made the deductions anyway. She took the matter to the High Court. The judge’s decision was that salary is property as much as land is. Just as government is not allowed to confiscate your land without payment of full compensation, so they are not allowed to confiscate any part of your salary. They had to pay her back the salary that had been cut and pay her legal costs as well.

In what way is the proposed new cut any different from what was done to Verna Fahie?

Come on, public admin, get their consent first.

Viceroy Delayed

The July “soft opening” has just got even softer. As recently as a week ago, 8 June, the Hon Minister of Finance, Victor Banks, gave a reassuring speech over Radio Anguilla about Viceroy being “well on the way to a soft opening in July". This, he said, will result in the employment of a number of Anguillian workers. Certainly, as of that date the Viceroy management had not informed him that there was likely to be any delay in the previously announced soft opening scheduled for 1 July 2009.

The original opening was supposed to be in 2008

To go back in time a bit, we will all remember that the original soft opening was supposed to have been in December 2008.

Then, they announced that the opening was delayed until 1 April 2009.

Later, that date was quietly changed to 1 June without anyone giving any explanation.

I wonder what the investors in apartments or villas made of these repeated delays and disappointments. The amounts of money they had to commit were huge. Contracts were signed and deposits made on the promise that the project would be completed before December 2008:

Prospective purchasers committed large sums of money on a promise of a 2008 opening

I wonder how many deposits National Bank of Anguilla financed? The risk is that some of these purchasers, badly hit by the current recession that began only after they signed the contracts, will not complete their purchases and will not repay the bank loans.

Then, in May of this year, a visit to the Viceroy website indicated that reservations were not being taken for June any longer. They were only accepting reservations starting 1 July.

This delay was a big concern for us in Anguilla. We all remembered that in December 2008, the House of Assembly had debated and passed the national budget for 2009. At that time, members of the Opposition questioned how government could be anticipating an increase in revenue as they did. The Minister of Finance reassured them with these words:

“He said the increase in revenue of $4 million over the 2008 figure was mainly expected from Stamp Duties resulting from alien landholders’ licenses to be issued to purchasers of real estate when the Viceroy project opens for operation in 2009.”

Now comes the latest disappointment. Viceroy has, as of yesterday, just quietly stopped taking reservations for July. Its website shows that the planned resort now has its reservations commencing in August.

Viceroy online reservations now permits bookings only as of August 2009

Those persons who made reservations for July are being assigned rooms at Cap Juluca and Cuisinart. They have begun to question what is going on:

Yesterday's complaint on Trip Advisor about a cancellation of a reservation

There has not been any public announcement by Viceroy or anyone in government, far less the media. I would have thought that the event would have made the news. But, maybe, no one in government or the media knows yet.

The Hurricane Season has already begun.

I am sorry to be the one to have to tell Victor, but our 2009 Budget has just taken another hit. There will be no revenue from Viceroy for the first half of 2009.

Another clip from the same Trip Adviser page

There is a further concern. How can there be any expectation that Anguillians who were banking on taking up employment with Viceroy in 2009 will hang around to see if the Hotel will really open in August? If I were paranoid, I would ask if it is possible that these last minute changes could be partly designed to ensure there are no Anguillians available for employment when they do really open? Or, is there some more serious systemic problem that we do not know about?

In my humble opinion, we will be lucky to see any revenue at all from Viceroy for the balance of 2009. In my view it is unlikely that there will be any Anguillians employed at Viceroy for the foreseeable future.

The Labour Department better start hiring an interpreter qualified in Tagalog.

Related posts:

27 June 2007: Slave Labour

28 June 2007: Hunger Strike

22 July 2007: Kor Realty Group

20 January 2009: Soft Opening

26 February 2009: Barnes Bay

15 March 2009: Meads Bay

29 May 2009: Pinoys