By NEIL HARTNELL
Tribune Business Editor
Disney’s cruise port will have “a night and day” effect on South Eleuthera provided most of its forecast $32.2m annual impact remains in the community, a business leader said yesterday.
Thomas Sands, the Eleuthera Chamber of Commerce’s president, told Tribune Business that the area now needed “a strategy to maximise the benefits” that will flow from the cruise line’s planned $250m-$400m investment so that local businesses and workers feel the brunt of its advantages.
Speaking after the prime minister tabled the government’s Heads of Agreement with Disney in Parliament yesterday morning, Mr Sands said the deal’s details “sound like Christmas” on the surface if all sides fulfill their obligations.
He warned, though, that the government needed to assist in providing “another level of support” so that South Eleuthera residents and businesses were properly prepared to exploit the opportunity rather than “be overwhelmed by it”.
The Chamber president also said Eleutherans would be better able to judge the Disney project’s economic impact if the figures provided in the Heads of Agreement were broken down to show where the benefits will be most felt - such as employment/wages or spending with local businesses and suppliers.
The Government’s agreement with Disney for development of a new cruise destination at Lighthouse Point, on Eleuthera’s southern-most tip, contained several “headline-grabbing” figures from an assessment of the project’s likely economic impact by Oxford Economics.
“The analysis examined a 25-year timeline, including four years of development and construction, and capturing ongoing operations from 2023 to 2043,” the Heads of Agreement said. “Over the 25-year time horizon the project is expected to provide an $805.1m increase in Bahamian GDP and a $357.5m increase in government revenues.”
Dividing those numbers by 25 suggests the Disney project will generate an annual $32.2m boost to Bahamian GDP and economic output, and a $14.3m rise in government revenues. Yet Mr Sands said south Eleuthera needed the numbers to be broken down, and be able to understand what they mean, before being able to judge the beneficial impact on the community.
“I think the big question is how does that break out in terms of what is going to go into the local economy,” he told Tribune Business. “The actual community versus what spills out to the national and international.
“How do you break that down? Any increase in economic activity is positive, but my definitive question is what does that mean in terms of south Eleuthera? What tends to happen is that contractors come in, and services will be rendered, nationally and internationally.
“I preempt that by saying more economic activity happening is positive, and we assume it’s going to be significant in terms of economic activity,” the Eleuthera Chamber of Commerce chief continued.
“If we assume that the majority of that is going to filter into the local economy it’s significant; day and night for south Eleuthera. It’s a significant change. But one caveat with this is that, because the economy has been in recession for such a long time, there’s a lot of preparation that needs to happen from the local economy perspective to maximise the opportunity.”
Mr Sands reiterated previous calls for the Government to introduce legislation such as the Downtown Nassau Revitalisation Act, or designate south Eleuthera an Economic Empowerment Zone (EEZ) as it has done for Over-the-Hill, to provide a platform for businesses to exploit the spin-off possibilities to come from Disney Cruise Line’s destination.
Having previously told Tribune Business that the area had been in recession for 25 years, he argued that many businesses are “not capable of maximising the benefits” for themselves without an incentive-type regime being put in place.
“A strategy needs to be created to incentivise players in the local economy otherwise the percentage we’ll be able to retain is significantly less,” Mr Sands said. “On the surface it [the Disney] project does sound like an incredible opportunity for this community.
“This goes beyond Disney. What is coming is so significant there has to be an incentives initiative that is given or provided to the local economy to be prepared to execute. This is truly significant in a very positive way. I welcome Disney. I think it’s a hell of an opportunity. I’m concerned with: Are we prepared to maximise it and not be overwhelmed by it.
“It’s here. We’re pretty sure Disney will deliver the majority of what they indicated. It all sounds like Christmas. There’s another level of support needed from a government initiative to support businesses that are existing and businesses that are new.”
Mr Sands expressed hope that Disney, which is widely considered to be the most environmentally sensitive of all the cruise lines, will set the standard for other cruise destinations in The Bahamas.
“I think they have the expertise, and they have made a commitment to prove they are leaps and bounds above the other cruise lines, setting a trend for the future,” he told Tribune Business. “In my engagements with them I think they’re very committed to seeing it through.
“I hope it will make other cruise lines coming to The Bahamas as accountable as them, so this becomes a benchmark of what to expect in other locations.”
The Heads of Agreement does not explicitly commit Disney Cruise Line to increasing calls on Nassau and Freeport by 30-40 percent compared to 2018 figures, only stating that the Disney affiliate responsible for the 751-acre Lighthouse Point project “understands” this will occur.
Disney is poised to add an extra cruise ship to its fleet every year from 2021 to 2023, with each having capacity for 4,000 passenger. By the time Lighthouse Point’s cruise destination is fully completed, the cruise line’s fleet will be able to carry a total 25,000 passengers.
“The developer understands that once the three new cruise ships are added to the Disney Cruise Line fleet and in full service in 2024, Disney Cruise Line intends to increase the number of its ships’ calls at the Port of Nassau and/or the port of Freeport by 30-40 percent over the number of calls made by Disney Cruise Line ships at the Port of Nassau in 2018, subject always to berth availability,” the Heads of Agreement states.
That does not amount to a cast-iron guarantee calls will increase, with the document tabled by the Prime Minister yesterday revealing the Government has agreed to lease a portion of the seabed to Disney - to facilitate its cruise pier and docking - for a 50-year term at the “base rent” of $1,000 per acre per year.
The Heads of Agreement does not detail the size of this acreage, but says Disney will have the right to renew the lease for a 50-year term - effectively giving it a century-long lease. A “rent review” will take place at 10-yearly intervals with price increases indexed to inflation.
Disney, according to the Heads of Agreement, will also be constructing a private marina for its “invitees” and shore boat excursion providers. Construction on its project must begin within 24 months of the March 7 signing with the Government, provided it has acquired the property from The Related Group and Meritage Hospitality, and obtained all the necessary permits and approvals.
The cruise line’s planned investment covers a wide dollar range, extending from $250m to $400m, with most of this going into the cruise pier’s construction. Should the spend be less than $250m, the Heads of Agreement contains a formula to proportionately reduce the tax breaks and investment incentives Disney will receive.
It has the go-ahead to construct “dining and beverage facilities”, including the sale of alcohol, merchandise and retail facilities, and spa facilities, aquatics and recreational facilities. While the Heads of Agreement mentions roles for Bahamian retail vendors and tour/excursion providers, the document is silent on who will own and operate the “food and drink”, spa and aquatics.
Disney is said to have “committed” to develop just 20 percent of the 751-acre Lighthouse Point property, “much of it for low density uses”. A minimum of 120 Bahamians are to be employed during construction, with an 80/20 workforce ratio favouring Bahamians compared to expatriates.
This, though, is subject to qualified Bahamian workers “being available.... to meet such ratio”. And “the complexity of some construction works”, such as the pier, and need to meet international standards, may require higher numbers of expatriates. A total of 150 permanent Bahamian jobs is pledged.
Skills training is promised, and the Heads of Agreement pledges that space will be provided “at a minimal rent” to allow Bahamian vendors to sell authentic local goods to Disney’s cruise passengers. The developer, though, together with the Government will determine the number and type of vendors, who must all meet its standards.
The same applies to a variety of Bahamian sea and land-based tour/excursion providers, who will “be selected” by Disney and have to maintain sufficient passenger liability insurance and, again, meet the cruise line’s standards. Disney will also control the sale of its own branded merchandise and rental of aquatic gear, and commits to sourcing “a minimum 5 percent” of its food locally.
The cruise line is not to begin construction until all environmental approvals are in place, and has committed to providing the Government with tourism planning services upon request to help improve “the tourism experience at certain destinations in The Bahamas” among other things. At least 30 percent of the power produced by Disney for the project is to come from renewable sources.
The Government has also inserted a ‘Most Favoured Nation’ clause to ensure that Disney is treated no less favourably than other cruise lines when it comes to tax breaks and other investment incentives.
It has granted Disney the usual concessions, including exemptions on Customs, Stamp and Excise duties on all construction materials - something that has been extended to its contractors. The cruise line has also received a 20-year real property tax break, renewable for “successive 10 year” periods, and a two-decade exemption on levies on its revenues, earnings and dividends.
Environmentalists reacted angrily to the Heads of Agreement’s release, saying it represented the “realisation of our worst environmental, economic and societal fears”.
An alliance of Save the Bays, Waterkeepers Alliance, reEarth and BREEF said in a statement: “It is a betrayal of the promises made of the economic future to the people of south Eleuthera, and a betrayal of the very mandate of transparency and openness on which this Government was elected. Conspicuously absent from the document are the sections enumerating concessions made by the Government.
“What we see described in this Heads of Agreement is a high volume, high impact project encompassing not only massive infrastructure, but substantial and irreversible alteration of the natural surroundings at Lighthouse Point.
“What we see is a repeat (or worse) of Castaway Cay, where Disney quite literally manufactured an artificial beach, dredged an enormous channel, and turned what used to be a pristine island of stunning beauty into an amusement park that bears virtually no resemblance to the rest of The Bahamas.”
The group added: “What we see in this Heads of Agreement is Disney excluding Bahamians from any real economic opportunities as the company stipulates it will not only construct, but also operate, all dining and beverage, spa, aquatics and recreational facilities at Lighthouse Point.
“What we don’t see is any assurance of..... a level economic playing field on which Bahamians can effectively compete for tourist dollars. What we don’t see is any assurance that bringing 12,000 to 20,000 people to one of the most treasured and fragile sites in The Bahamas can create more than 150 jobs, at best.”