The Tribune

TOUGH CALL

By LARRY SMITH

THE so-called “anchor project” model of development is a hot-button topic these days – critics say we are selling our birthright to foreign speculators for a mess of pottage.

But this model is not new. It dates back to the early years of the 20th century. And over the past hundred years, most examples in the out islands have failed, often leaving derelict buildings and environmental havoc in their wake.

Although the “anchor project” policy was codified by the Pindling government in the late 1970s, and promoted by the Christie government, the idea actually originated in response to the new-found prosperity generated by bootlegging in the 1920s.

During prohibition, liquor was profitably smuggled in huge quantities from the Bahamas to the United States, and since West End and Bimini were nearest to the American mainland – that’s where the first out island resorts were conceived.

The 100-room Bimini Bay Rod and Gun Club opened in 1920 with its own power plant. It employed scores of locals, but never made a profit. And within a few years it was abandoned.

At about the same time, hundreds of square miles on sparsely populated Grand Bahama were leased to foreign investors who were supposed to build a deep-water port and network of roads at West End. But the project never got off the ground.

Nevertheless, contemporary writers believed that Grand Bahama’s proximity to the affluent Florida enclave of West Palm Beach “simply begged” for a casino and exclusive residential resort development:

“Grand Bahama could be the mecca of quite a sporting and yachting fraternity,” a government publication enthused in 1931. “Estate developments are underway (and) developers have cast their eyes on this fertile island.” But the Great Depression put an end to these early ambitions.

After the Second World War, tourism was revived by international air travel. British investors launched a 500-room holiday village at West End, which operated for just one season before closing in 1950. Ironically, that was the year the government began promoting resort development throughout the islands.

A few years later, the Port Royale development on South Bimini got underway with a 38-room inn, marina, canals and other infrastructure on 95 acres. Although construction continued in fits and starts, there was never any widespread interest, and many properties are derelict today.

Port Royale was succeeded by other developments, but neither Buccaneer Point nor Bimini Sands prospered. Meanwhile, the original 1920s era fishing camp at Bimini Bay had accreted (through several owners) into a 700-acre estate – comprising about two thirds of the north island.

Grandiose plans by Robex, an American Express subsidiary, to build a mega-resort on this property in the 1980s foundered – but not until much dredging and land clearing had taken place.

On Abaco, Bahamian Leonard Thompson leased 930 acres of Crown land in 1957 to develop the Treasure Cay Resort with American investors. It eventually opened with its own airport and marina in 1963, but never took off. German-Bahamian investor Ludwig Meister bought it in 1982, and although the original hotel later closed, the marina (with 93 units), golf course and adjoining residential estate continued to operate successfully as Abaco’s tourist and second home economy boomed.

This article was originally published in 2007, when government policy was to promote large anchor projects in the Family Islands to help spur development. Both the FNM and the PLP have since moved away from this approach – at least rhetorically. The PLP’s Charter now calls for a mix of substantial tourism projects, small Bahamian-owned hotels and attractions, as well as environmentally sensitive industrial enterprises. The FNM Manifesto called for more infrastructure investment and a focus on small, environmentally friendly boutique hotels in the Family Islands, together with the development of heritage tourism. Both parties also support the development of mariculture facilities on the islands where feasible.

In 1960, six out of seven visitors came to Nassau, but that began to change as Freeport developed. The government had leased 80 square miles of Grand Bahama in 1955 to an American in return for construction of a deep-water port and industrial zone. Five years later the Grand Bahama Port Authority acquired another 200 square miles to embark on a resort development called Lucaya.

The 1960s were boom years for both America and the Bahamas. And according to historians Gail Saunders and Michael Craton, this led to “the most rapid phase of land dispersion in Bahamian history.” It also produced huge title conflicts – many of which are still ongoing today.

The Bowe estate on Exuma was one example. Attempts by the Bahamian owner to sell 4,000 acres in the centre of Great Exuma to a Florida developer led to a complex legal battle with adverse claimants. Eventually, roads were carved out of the bush for a residential resort subdivision. But the planned development never materialised.

“Within 20 years,” wrote Saunders and Craton in Islanders in the Stream, “the Forest Estate had reverted to bush, except for a dozen scattered new homes occupied for a few months a year and the areas cleared, planted and grazed by a new generation of squatters from the original settlement.”

Meanwhile, the “heads of agreement” for Freeport included the right to administer, plan, develop and license businesses on the island – and to be exempt from all taxes for up to a century. Critics said the government had “subcontracted its responsibility and surrendered its sovereignty”.

But Freeport managed to achieve some momentum. A harbour, highway and airport were built, along with the city itself. A cement plant, an oil terminal and other industries followed, along with hotels, casinos, resort amenities and residential estates.

The experience of most other out island developments has been mixed.

Many came on stream during the boom years of the 1960s and early 70s. When Tough Call worked for the Bahamas News Bureau back then, one could travel the entire island of Eleuthera stopping at boutique resorts all along the way – from the Current Club to the Pineapple Club, to the Potlatch Club, to French Leave, to Winding Bay, to Windermere to Cotton Bay, to the Rock Sound Club to Cape Eleuthera. Most are now either ruins or shadows of their former selves.

In 1963 a German investor (who had been involved with the Freeport oil terminal) bought 2500 acres on North Long Island and opened the Stella Maris Inn two years later. The husband and wife team of Gaby and Jorge Friese have been running it ever since. A 44-room dive resort with an adjoining residential estate, it is one of the few out island ventures to have achieved relative stability.

But that was not without difficulty. From a position in the early 1980s as the main employer on Long Island, the resort faced bankruptcy after 1983, when the Pindling government introduced a restrictive land sales policy “requiring applications that would not be processed.”

As a result, Stella Maris was forced to cancel scores of real estate, construction and commercial contracts, resulting in zero turnover until well into the 90s, when the Ingraham government liberalised the foreign investment regime.

Although the Pindling regime had paid expensive foreign consultants to produce the Family Island Master Plan recommending development of anchor projects on key islands, the economic tailspin caused by widespread drug trafficking, official corruption and restrictive investment policies, combined with recession in the United States, meant that virtually no new developments were being considered in the late 1980s.

In fact, the out islands remained in economic decline until investor confidence was restored in the mid-90s. It was only then that we began hearing renewed talk about anchor projects.

The first to materialise was a new mega-development at Bimini Bay, whose 700 acres were acquired by a Miami investor in 1997. Plans called for extensive development on uninhabited, pristine east Bimini, including a 150 slip marina, airport, golf course, resort centre and high-density residential estate.

As the Bahamas became a more desirable place to do business – and as coastal real estate opportunities dwindled in nearby Florida – new projects got underway: Emerald Bay on Exuma, Winding Bay and Baker’s Bay in the Abacos, a residential resort marina project on Rum Cay, a 10,000-acre residential project on Mayaguana and several revived projects on Eleuthera.

But unlike in the past, this renewed economic activity in the out islands generated resentment and protest from both environmentalists and local communities.

Comments by Bimini-based marine biologist Samuel Gruber, writing in the Bahamas Journal of Science in 2002, could easily apply to other islands: “Vast plans for attracting large numbers of wealthy visitors to Bimini through large and ‘appealing’ resort complexes have ended in failure time and again. Bimini, like much of the Caribbean region, is littered with failed and uncompleted resort projects.”

He added that “only small resorts that cater to the customer appreciative of the local culture, quiet charm, fishing traditions, small size and/or natural beauty of Bimini appear to enjoy any success. Bimini was never meant to be a five-star, global destination. Modest facilities have survived when others such as Robex’s Bimini Bay and Buccaneer Point have passed into history, often before they were completed.

“Further, the creation of even a single mammoth project in Bimini may destroy forever the very essence of that which lures the boating, fishing and diving enthusiasts.”

On Abaco, however, anchor projects dating from the 1960s do seem to have helped the island achieve growth. As historian Steve Dodge wrote: “Owens-Illinois and Treasure Cay, the automobile and the speedboat, and the influx of well-to-do foreigners who built vacation homes, as well as poor Haitian immigrants, all transformed Abaco.”

(Owens-Illinois ran a logging operation and sugar cane plantation on Abaco; building roads, housing, freight terminals and other infrastructure in the 1950s and 60s).

So where does this leave Nassau – which is over-populated, congested and suffering from such a lack of planning and enforcement that quality of life issues are reaching unprecedented levels? Rapid and uncontrolled growth on New Providence has produced social problems that include housing shortages, pollution, infrastructure breakdown and violent crime.

One solution that has been suggested over the years is to build an artificial city on Andros – either as a new administrative capital or a university complex. But the political will and investment required to achieve this would be enormous, and the record of both the Bahamian government and similar projects elsewhere leaves little room for optimism.

There remains the 50-year-old city of Freeport where, as lawyer Fred Smith says, we could drop hundreds of million of dollars to good effect: “Not on a small cay in the middle of nowhere; where there is minimal economic impact, where we get nothing in taxes, where we destroy the environment, and where the local people do not want it.”

On Grand Bahama, there are miles of beaches and paved roads; with infrastructure already in place in a master plan designed for 300,000 people, including under-utilised canals, golf courses, marinas, and an international airport and harbour. And more to the point, there is a large work force hungry for business and eager to see development happen.

As our second city, Freeport has always been something of an enigma and has never lived up to its potential, mostly due to government neglect and hostility. Nonetheless, it seems clear that this is where we should be putting most of our eggs.

According to this view, if investors want incentives and exemptions they should be directed to Freeport, where we are trying to create critical mass. The out islands should be reserved for small developments and investors should negotiate directly with local government authorities.

The fact is that big residential resort developments on the out islands have appeared throughout our recent history – under colonial authorities, the UBP, the first PLP, the FNM and the second PLP. But they have been implemented largely without due care and attention. And most have failed as a result.

Both politicians and investors have a lot to learn from this track record.

•What do you think? Send comments to larry@tribunemedia.net or visit www.bahamapundit.com.