BY NEIL HARTNELL
TRIBUNE Business Editor
nhartnell@tribunemedia.net
A GRAND Bahama attorney yesterday suggested the “huge discrepancy” between the value of recorded construction permits and projects actually starting is due to the two-stop shop “bottleneck” caused by investors also having to seek approvals from Nassau.
Caitlin Antoni-Wilkinson, an attorney with the Cafferata & Co law firm, told Tribune Business the data in the Government’s ‘Green Paper’ on the proposed Grand Bahama governance reforms exposes the “inefficiencies”, bureaucracy and red tape that investors in Freeport face from having to seek permits in both Nassau and from the Grand Bahama Port Authority (GBPA).
The data reveals that construction project values, based on recorded permits issued for Freeport and Grand Bahama, far exceeded the value of building starts over the four-year period between 2021 and 2024, with the worth of approved developments four times’ greater in the final year.
For 2024, some $66.911m worth of Grand Bahama and Freeport construction starts were dwarfed by $268.545m in recorded permits, with the former representing just 25 percent of the latter figure. In both 2022 and 2023, the combined value of construction projects that made it to the start-line was less than half, at 43 percent and 43.5 percent, of recorded permits.
The Government’s ‘Green Paper’ itself mused that the gap between permit and start values raised concerns as to “whether the approvals process itself causes delay”, and there was a need to accelerate the conversion of approved projects into actual development activity on the ground.
“Recorded permit project values were $66.758m in 2021, $73.968m in 2022, $117.294m in 2023 and $268.545m in 2024,” the Government’s ‘Green Paper’ said. “Recorded starts were $46.123m, B$31.941m, B$51.282m and B$66.911m, respectively.
“Completion values were $42.447m, $47.322m, $31.225m and $43.726m. Permitted value more than doubled in 2024, while starts and completions rose far less. The policy question is how to turn permitted projects into completed ones, and whether the approvals process itself causes delay.”
The ‘Green Paper’ then added: “Permits, starts and completions can relate to different projects and years, so the totals for a single year cannot be compared directly.
“The practical questions are these. Can an applicant find out which permissions a project needs? Are utility and road requirements raised early enough? Is there a deadline for a decision, and a route of appeal when a requirement is disputed?”
It said the issue of who should regulate building and planning applications in Freeport, whether it be a central government body or the Grand Bahama Port Authority (GBPA), and how decisions and appeals should work, is among the multiple questions that Freeport and Grand Bahama residents and businesses will have to answer in the upcoming public consultation that starts on November 1.
Ms Antoni-Wilkinson, though, told this newspaper that challenges encountered in turning building permit approvals into actual starts in Freeport are usually because a developer/investor has to subsequently obtain approvals from the Government regulators in Nassau after sign-off by the GBPA.
She added that, if the Government ultimately takes over building and planning approvals in Freeport, and other regulatory functions from the GBPA, it must ensure all its agencies are present on Grand Bahama with decision-making powers so applications do not have to be sent to Nassau for decisions - a move that typically creates delay and extra cost.
Nothing that the present system is often a two, as opposed to the touted ‘one-stop shop’ that Freeport was meant to be, Ms Antoni-Wilkinson said: “That’s an inefficiency that creates the bottleneck. I can have a client come in in the tourism industry, wanting to build a $50m boutique hotel, and interested in getting this process going.
“If it’s in the GBPA area, half of that is straightforward. But I cannot tell them what in their business proposal will ultimately be accepted because they have to get final approval from Nassau. The back and forth creates issues in the confidence we can provide for foreign direct investment (FDI). That’s why so many projects do not take off.”
Ms Antoni-Wilkinson, citing construction permits as an obvious example, added: “More often than not, the reasons it is not built is not because of the GBPA. If those permits are issued you can start digging. It’s usually because approvals have had to be sent to the Government, environmental approvals, and you can’t proceed until you get an answer from the regulators in Nassau.
“Grand Bahama cannot work that way if we want Grand Bahama to work independently. We need every single government agency approving these steps on our island and give them control and oversight on our island.”
Ms Antoni-Wilkinson said such agencies, whose Grand Bahama-based officials would need to have decision-making powers, would be the likes of the Bahamas Investment Authority (BIA), Customs, Immigration, the Central Bank, the Ministry of Works’ Building Control Department and the Department of Environmental Planning and Protection (DEPP).
These would be needed to give effect to the Government’s proposed Grand Bahama Development Act, and she added: “If they want the Government to come here and control the licensing and management of the island, they need to have representatives of their bodies here so they do not have to go to Nassau for secondary approvals.”
The Government, in its ‘Green Paper’ on proposed governance reforms for Grand Bahama and Freeport, said it has already decided that the latter’s founding treaty, the Hawksbill Creek Agreement, “has outlived its utility” and needs to be replaced by “transparent and equal governance and regulation” across the whole island and its cays.
Also determined is the creation of a Grand Bahama Development Act to govern tax breaks, incentives and an investment regime for the entire island, with elements of the Hawksbill Creek Agreement set to be “amended, repealed or replaced”. A Grand Bahama Development Council is also proposed as a body that would “co-ordinate” and review implementation of this strategy.
While the Davis administration will likely never admit it, the proposal appears to be a change in tactics after its $357m demand for the GBPA to compensate it for the value of public services provided in Freeport in excess of tax revenues generated by the city was rejected earlier this year by an arbitration panel.
This move was seeking sufficient leverage to force the GBPA’s two owners, the Hayward and St George families, to exit by winning a verdict that Freeport’s quasi-governmental authority owed the $357m or some other significant sum that it could not pay.
This would have either forced the families to sell or, if they proved reluctant, the Government would likely have petitioned the Supreme Court to appoint a receiver to take control of the Port Group of Companies and sell them off to a buyer. This, though, has been thwarted, and the Government likely realised pursuing this would lead to an exoensive decades’ long legal battle with the GBPA.
Its goal, based on the ‘Green Paper’ and the Prime Minister’s speech, now appears to be to use Parliament to legislate statute laws to do an ‘end-run’ around the GBPA, isolating and marginalising it with legislation that continually chips away at the Hawksbill Creek Agreement, and its quasi-governmental and regulatory powers, unless these are handed back to the Government.
Mr Davis signalled as much when he told the GBPA, its owners and management: “I would rather build this future with you than around you.” He added, though, that the Hayward and St George families can remain in Freeport as private investors through Port Group Ltd, which owns 50 percent equity interests in both Freeport Harbour Company and Grand Bahama Development Company.
The GBPA, in reply, yesterday said the rights it holds under the Hawksbill Creek Agreement, and those of its 3,500-plus licensees must be “respected” in any new governance set-up. “Any proposal to relinquish or vary them must be approached through agreement and demonstrate clear benefits for the local stakeholders whose interests they protect,” it added.
Asserting that any reforms “must improve the ease of doing business and make Freeport competitive internationally, attracting investment, supporting Bahamian enterprise and creating meaningful employment and opportunity for Bahamians”, the GBPA added that it was of “paramount importance” to protect recent “progress” signalling renewed economic hope for the island.
Describing the six-month public consultation timeframe as “ambitious”, the GBPA said: “At this stage of the island’s recovery we must take care to strengthen confidence and avoid creating uncertainty for existing businesses and prospective investors.”