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PI resort, development escape tax debt sell-off

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Paradise Island resort and Long Island investment project are among those that have escaped being sold-off by the Government through settling their alleged real property tax delinquency.

Details provided by the Department of Inland Revenue (DIR) reveal that Club Land’ Or, located at the heart of Paradise Island with its entrance immediately facing the Sir Sidney Poitier bridge exit, is among 14 New Providence commercial properties that have avoided being among the first auctioned off as the Government seeks to collect on up to $900m in tax arrears. This was also confirmed by this paper’s sources.

Described as a hotel on “Paradise Island opposite the Sir Sidney Poitier bridge”, the DIR’s website state its outstanding real property tax debt has been “resolved” ahead of the April 2, 2024, auctions of the first batch of delinquent commercial properties and vacant land. Club Land’ Or, which has been closed since the COVID pandemic as its owners continue to seek a buyer, was said to be valued at $11.436m.

Similarly, the near-15,000 acre site for a proposed Long Island development was also said to have “resolved” its real property tax status before going under the auctioneer’s hammer. That location was touted as recently as the Long Island Business Outlook conference on November 16, 2023. The acreage matches exactly the number given by Geoff Fulton, chairman of Maritek Bahamas, for his Chrysalis project.

Dexter Fernander, the Department of Inland Revenue’s (DIR) operations manager, told Tribune Business that the first set of of delinquent properties have been auctioned as scheduled and the tax authorities are now assessing the value and quality of bids received.

He voiced optimism that the Department of Inland Revenue’s move “will change the culture” among Bahamian taxpayers from one where paying real property tax was treated as an optional extra to an attitude and practice of being fully compliant.

“We are patiently waiting to see the results of it and to quantify it,” Mr Fernander said of the Department of Inland Revenue exercising its ‘power of sale’ over long-standing delinquent real estate and its owners. “Many have played the blame game, blaming their legal representative for not making the adjustment. Maybe there was a transfer or sale and it’s showing the old name.

“We’re doing continuous updates to some of the information coming in. Unfortunately, it has been a position where a foreigner has sold to another foreigner and there’s a lag with the lawyer on the clearance. We’re trying to change our message to tax registrants to make sure they are aware they have tax obligations, and that their legal representatives are declaring it in a timely manner.”

The Department of Inland Revenue is still determining how much real property tax arrears it has collected from advertising properties for sale - both from those owners whose assets who were in immediate danger of being auctioned to satisfy the debt, and others who - though not on the list - were sufficiently alarmed to begin reducing and paying off their arrears.

“We are starting to see individuals coming in or making their first attempt to come into the Department before it goes to sale,” Mr Fernander added. “Unfortunately, some did not come back, so we have concluded the first set of transactions. They have been put up for auction and the bid phase has closed.”

While providing no details on how many properties have been auctioned off, or the expected sales proceeds that will help the Government recoup some of its real property tax arrears, he said all offers are being reviewed by an “independent” group featuring professionals such as appraisers and surveyors, as well as public officials.

“The group is reviewing the bids and going through their due diligence and the process,” Mr Fernander added. “They will give us a better understanding of what is the current market value, looking at the interests of both the Government and the transaction.” The Government has previously asserted it is aiming to reclaim between $35m to $50m in unpaid real property tax annually through the auction process.

“We hope this will change the culture,” the Department of Inland Revenue’s operations chief told Tribune Business. “Individuals previously only moved to pay their tax bills if they were refinancing or selling their properties. You know you have tax obligations every year. We’re hoping this changes the culture of individuals with tax obligations.

“We had to reach this point. We’ve sent out third party collectors, tried for four to seven years to collect the revenue and have reached this point of power of sale. We cannot go for another ‘x’ years facing this astronomical debt amount.”

Mr Fernander said the delinquent property sell-off had also sent a message that Bahamians are not immune, as only owner-occupied property owned by this country’s citizens is exempt under the Real Property Tax Act from being auctioned over unpaid tax arrears.

He also called on executors to make sure property taxes were fully paid-up before estates are probated, while urging second homeowners with properties in the Family Islands to make sure their assets are properly registered.

In Club Land’ Or’s case, the threat of auction would have put paid to any hopes of selling the resort. Obie Ferguson QC, the Trades Union Congress (TUC) president, who is representing the hotel’s former middle managers who were members of the Bahamas Hotel Managerial Association (BHMA), yesterday said he had been informed its owners are “looking very aggressively” to find a buyer.

The property closed without staff being paid their due severance and other entitlements as required by the Employment Act, and Mr Ferguson said it was his understanding that these liabilities will have to be settled from any purchase price paid for the property. Club Land’ Or was being advertised for sale by one Bahamian realtor with a $25m asking price, a significant drop from the $40m originally sought.

“I was made to believe they are looking very aggressively in trying to find a buyer,” said Mr Ferguson, who estimated that - with interest - the collective $821,292 allegedly owed to his clients as well as the sums owed to former line staff will likely be approaching $1.5m-$2m.

“I’m made to believe they are seriously looking for a buyer,” he added. “I’ve been checking on the progress for the last couple of weeks but I have not gotten anything of substance. We are very interested because it affects a lot of people as a result of the monies due to them.

“I am of the view that on the sale of the property the workers will get what they are entitled to, the union dues they collected and never paid. They will not be able to sell the property unless and until payment is made as they will not be able to give the purchaser a valid receipt. Payment will be made out of the purchase price for the hotel.”

Comments

DWW 2 months, 1 week ago

They have been put up for auction and the bid phase has closed."

why am i not surprised. We all know the dozen or so lucky connected individuals who have personally benefitted from this. Nothing to see here, no transparency, no open visible decisions. In a few years we will find out exactly who go to buy valuable land for pennies without real public consultation. DIR now go back to the Law and reread it, have a look at the part of divulging of assets in lieu of unpaid taxes. can you share that part with the rest of us? How about the section of the constitution. In the absence of truth, one can only assume falsehoods...

DWW 2 months, 1 week ago

where were the details and advertisement of the property for sale? due care according to the courts ensure that daily publications advertisments for at least 6 weeks. But hey when the family islands don't have dailys what are they supposed to do? govt please fix the system.

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