• Royal Caribbean in ‘minimum’ five 25-year renewals
• Annual lease payments $140k, or $3.5m for duration
• AG Office, Lands and Survey confusion on site plan
By NEIL HARTNELL
Tribune Business Editor
The Minnis administration has effectively given Royal Caribbean a minimum 150-year lease over seven Crown Land acres on Paradise Island for its multi-million dollar Beach Club project.
The lease, which has been obtained by Tribune Business, gives the cruise giant an initial 25-year extension plus “no less than four additional options”. All these “options” are 25 years in length, meaning that when they are added to the original 25-year lease, Royal Caribbean can exercise its rights to potentially occupy that land for one-and-half centuries.
The agreement, which was executed on May 25, 2021, also commits Royal Caribbean to paying an annual $140,000 rent to the Government for use of land that it holds in trust for the benefit of the Bahamian people. Over a 25-year lease, this amounts to $3.5m in total rental income with VAT at 10 percent contributing a further $350,000 to the Public Treasury.
These sums pale when set aside the extra $26m in annual visitor spending that the Royal Beach Club is projected to generate, a figure that rises to $650m when extended over the initial 25-year lease term. Royal Caribbean previously said its $110m Paradise Island investment will boost overall visitor spending by $1bn over a ten-year period, although it is uncertain where this impact falls.
The Minnis administration agreed the potential 150-year lease with the cruise giant even though three of the seven Crown Land acres involved are tied-up in a Supreme Court battle between the Government and Bahamian entrepreneur Toby Smith, who is arguing that they form part of a valid, binding lease he had obtained prior to Royal Caribbean’s deal.
Yet the lease terms seemingly give Royal Caribbean the power to determine whether there will be a renewal, rather than the Government. The cruise giant must only give notice of its intent to renew three months’ prior to the existing lease’s expiry, while also ensuring there has been no breach of existing conditions.
Once these terms are met, Royal Caribbean can renew “for a further term of 25 years from the expiration of the said term at a revised rent” that is to be based on the Crown Land’s value but not include any “improvements” made by the cruise giant.
“The lessee [Royal Caribbean] will be granted no less than four additional options. Each option term will consist of 25 years,” the Crown Land lease states. This gives the cruise giant a much longer occupancy than its senior executives have previously let on.
James Boink, Royal Caribbean’s vice-president of private destinations, told a virtual meeting held by the Department of Environmental Planning and Protection (DEPP) earlier this year that the seven-acre Crown Land parcel would be returned to the Bahamian people’s ownership eventually but did not state this might take up to 150 years.
Responding to a question from Ricardo Miller, he replied: “Our Crown Land lease is for 25 years with rights to renew and, yes, the land does revert back to The Bahamas.”
The lease, which is signed by former prime minister, Dr Hubert Minnis, in his capacity as the then-minister responsible for Crown Land, requires the rent to be paid annually on June 1 every year. Royal Caribbean is also to maintain public liability insurance of “not less than $1m” and keep comprehensive insurance coverage for the Beach Club property.
Tribune Business, meanwhile, has also obtained documents suggesting there was much confusion over which of eight site plan versions drawn up for Royal Caribbean’s project was the correct one.
A March 17, 2021, e-mail from Bryan Bynoe, acting surveyor-general in the Department of Lands and Surveys, asks an attorney in the Attorney General’s Office: “Thank you for the eight plans you forwarded to the Department of Lands and Surveys.
“Since we have so many versions of the plan of the location, my question is: ‘Which of the plans is final and approved?’ The final/approved plan is not on the related file at the Department.”
The attorney, senior counsel Petrocelli Edwards, replies: “Unfortunately I am unaware of which, if any, of the plans that I sent were approved. Those were the plans that I saw on our file here at the Office of the Attorney General. I do not know if maybe the Bahamas Investment Authority or the Office of the Prime Minister can assist in that regard.”
The Royal Caribbean lease refers to a site plan where the subject land has been coloured “pink”. Such a document was said, in handwritten notes, to have been dropped off to the Department of Lands and Surveys by Candia Ferguson, then-director of investments at the Bahamas Investment Authority (BIA).
Such a document should have been prepared by the Department of Lands and Surveys, given its responsibilities in administering Crown Land, which raises questions as to how involved it was in preparing the site plan and associated surveys for the Paradise Island Crown Land lease.
Toby Smith, the Bahamian entrepreneur behind a $2m investment in the adjacent Paradise Island Lighthouse & Beach Club project, yesterday suggested that the Minnis administration had merely “copied and pasted” the site plan for his rival Crown Land lease “to suit Royal Caribbean’s cause”.
He added: “So why would Minnis, having offered the Crown Land lease to Paradise Island Lighthouse & Beach Club in January 2020, then have someone within the Office of the Prime Minister draft a lease for Royal Caribbean in May 2021?
“The Government went to extensive measures, involving many government agencies, as they drafted the lease for Paradise Island Lighthouse & Beach Club. However, did they involve all the same agencies when they drafted the lease for Royal Caribbean?”
The newly-elected Davis administration must now deal with the issues raised by a battle that saw Mr Smith initiate Supreme Court action against the former government, which remains ongoing.
Royal Caribbean has steadily amassed around 13.5 acres on Paradise Island’s western end by buying out private landowners in the area, but its efforts to lease the extra seven Crown Land acres have brought it into conflict with Mr Smith.
He is seeking himself to lease two Crown Land parcels at Paradise Island’s western end, one of which involves two acres around the lighthouse and another three acres for the “beach break” element of his own $2m project. Two of the acres sought by Mr Smith are included in Royal Caribbean’s Crown Land lease.
Mr Smith’s court action is alleging that he was granted a valid Crown Land lease over both parcels, including the lighthouse and the area at Colonial Beach for his “beach break” destination, which is now legally binding.
The case is based on a January 7, 2020, letter from Richard Hardy, acting director of Lands and Surveys, that was headlined “approval for crown land lease” over the two tracts he wanted. This lease was agreed over a year before Dr Minnis signed off on Royal Caribbean’s deal.