“Last week the property was up for sale and this week it has been sold,” Parliamentary Secretary for Tourism, the Hon. Haydn Hughes, told reporters at the Chief Minister’s press conference on Tuesday this week.

Chief Minister Hon. Hubert Hughes and Parliamentary Secretary Hon. Haydn Hughes

He said a new Memorandum of Understanding had been signed with Starwood Capital, the new developer, following a meeting of the parties with Government. “Viceroy is a project which took over $500,000 million to construct and they are getting it at a deal; and anytime you can get a distressed project for pennies on a dollar, you go after it,” Hughes stated.
The Chief Minister, Hubert Hughes, said Viceroy had been under “serious stress and so Citibank, which financed it at $412 million, has not been paid, and moved in to sell ‘the note’ to Starwood Capital.” He stated that the Parliamentary Secretary was given the task to redeem some of the taxes lost under the previous MOA. “We have more or less squashed the MOA and have formulated an MOU,” he announced.
The Chief Minister allowed Haydn Hughes to speak on the matter. He said the negotiations started earlier in New York and culminated in the signing of a new MOU on Tuesday morning. “That MOU will see significant monies going to the Treasury, instead of the giveaways that we have had in the past,” the Parliamentary Secretary told the press. “We have hacked out a new MOU which, in the initial instance, will give us the full 5% stamp duty; 8% of the Alien Landholding Licence as opposed to a full waiver as in the past; and a 1% transfer fee which will bring us about $40 million into the Treasury. In my opinion that is windfall because it was not budgeted for and no one expected that. Further to that, Starwood has already started the moving [selling] of those villas that are up for sale and we will see significant returns on the stamp duty.
“The new agreement will see all of the new owners putting [the villas] into the rental pool. Instead of a waiver on the Alien Landholding Licence fee, they will have to pay no less than 9% on that fee plus other fees. In the rental pool there will obviously be the service charges, Accommodation Tax and so forth.

“Further to that, they are going to inject another $16 million into the project. Within six months, as a matter of fact ... that should be later this year, they will be constructing a conference centre, volleyball and basketball courts and other sporting facilities on the project. That will see a significant number of jobs and they have already agreed to use Anguillian contractors unlike in the past. In that way there will be more money circulating in the economy.

“This is definitely a win-win for both parties, without a doubt, because you have the tax dollars in the first instance. In the second and third instances…there will be the Accommodation Taxes and service charges to be collected. Then there is the job factor and they are looking to employ 100 new persons between now and January 2011; and once the construction gets underway, there will obviously be a number of jobs in that sector.” The Parliamentary Secretary said that Starwood Capital had looked at the project and saw how it could be enhanced.

Chief Minister Hughes interrupted: “We made it abundantly clear to Citibank and Starwood, in our long meetings, that we are not going to sign Memorandums of Agreement with any project. And, as far as we are concerned, we have to find money to pay our police, our civil service, our nurses and so forth. Basically what has gone on in the past will not be tolerated by this new Government. We will not continue to give away meaningful revenue. We must collect revenue to run our essential services.

“The process of recovery has begun and I can assure you that you will eventually see the results of what the new Government can do for Anguilla. A meaningful, responsible approach will be taken now to all these projects. We are starting with Viceroy and we will do the same thing with Cap Juluca and Flag Luxury.” He conceded that some tax relief incentives had been given with regard the Viceroy deal, as was expected with any project and that the Memorandum of Understanding would be taken to the House of Assembly.

Responding to a question, which the Chief Minister could not answer last week, the Parliamentary Secretary disclosed the amount of money Cap Juluca owed to the Government.
“Right now, Cap Juluca owes $1.618 million in the land lease which has already expired,” he reported. “We have sent several communiqués to them with no responses. As a matter of fact this morning I had a conversation with the General Manager and he said that the owner will be in next week, and hopefully he will be able to update us on what he is going to do. In total, Cap Juluca owes us just around $3 million EC in Accommodation Tax and land lease and so far we have not received any response in writing to any of our requests for payment.” He said the Chief Minister had already discussed the matter with the Attorney General.
Meanwhile, the Chief Minister, who was in a better frame of mind this week, than last week, due largely to the economic situation, was pleased to announce that the Caribbean Development Bank had approved a Policy Based Loan of US$55 million to the Government. This will be used to pay and consolidate the local debts owed to banks by the Government. Under the terms of the loan, there will be a waiver of interest to the CDB for some five years.

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