Former MP on February Point: Full disclosure needed
Guardian Business Editor
Published: Oct 28, 2013
As the government confirms that John McGarvey is “not the major shareholder” in a proposed development which would involve the purchase of February Point, Exuma, a former PLP Cabinet minister and MP has called on the government to provide a full disclosure of all who are involved before providing approval to his group.
George Smith, who served as Exuma’s MP for almost three decades, told Guardian Business that “the public has a right to know” that the person who will control the project which has potentially enormous significance for Exuma is of a “proper reputation” and means.
Meanwhile, he has expressed continued concern regarding the 1991 conviction for tax fraud of John McGarvey, who up until now has been identified as the lead individual in the development group seeking to take over the February Point project, and his plans to rely in large part on other investors and land sales to fund his overall development plans for the area.
In an interview with Guardian Business last week, Khaalis Rolle confirmed that approval for John McGarvey and a group of investors is still pending, but no “major issues” remain outstanding from the government’s perspective in the approval process. It’s a comment he’s repeated as far back as July of this year.
“I suspect that it is,” said Rolle, when asked if a final approval was imminent for the purchase of the 85-acre February Point and adjacent 815 acre Flamingo Bay, and the proposed development involving the property.
Rolle said that the government has determined it will not focus on “micro issues” that have been raised surrounding McGarvey’s eligibility as a suitable investor for the area.
“The government has to be concerned about more than one thing when it makes its decision. We have to be concerned about the overall well being of the citizens of Exuma. And we can’t get into the petty side of this – we have to take a very mature approach to how we develop the country.”
But Smith suggested that not only are McGarvey’s conviction and plans to finance the February Point and Flamingo Bay purchase and development from outside investors and land sales not a “micro issue”, but in addition, the government now has an obligation to reveal who is the main financial driver behind the project, if not McGarvey, as had been previously suggested.
“They must announce who that person is. The public has a right to know. We Exumians know when we talk about Sandals the principal person involved is the honorable (Gordon) ‘Butch’ Stewart; at Musha Cay, it’s David Copperfield; at Bell Island, it’s the Aga Khan. We must know so that the community can be satisfied that he is somebody who should control such an important location – the primary resort in Georgetown.
“They are doing a development, which could influence to a large extent the economy of Exuma and they must know he is operating above board, and those being brought in have a proper reputation in the community, and in The Bahamas. The public must be satisfied.”
While not revealing who the major shareholder is, Rolle said the government has looked at McGarvey’s “track record” of development in The Bahamas, including the $700,000 re-development of the former Coconut Cove Hotel into the Exuma Beach Resort, as it looks to make its final determination on the
approval for the February Point purchase.
McGarvey has already received final approval to develop a boutique hotel on nearby Stocking Island, in addition to re-developing the Coconut Cove Hotel. February Point is currently owned by the Hart family.
“I don’t know what the major issue is. McGarvey is only one of the players in this, and he is not the single largest shareholder. There are a number of different shareholders representing sizeable portions. The focus has been on McGarvey for whatever reason but McGarvey is only one part of the group. And there are some significant individuals involved in this process, including some of the homeowners of significant means,” said Rolle.
“You can’t just focus on McGarvey. The previous government approved McGarvey to develop (the $700,000 Coconut Cove hotel – now Exuma Beach Resort) and he’s lived up to his obligation to develop that, so why all of a sudden is there this major concern about capacity and history?” added Rolle.
In a previous interview with Guardian Business, McGarvey Development Company’s Vice President of Asset Management Bill Price called McGarvey’s 1991 tax conviction a “mistake” made by the developer and “water under the bridge”.
“We’ve probably done about half a billion dollars worth of business since that time,” said Price.
Concerned Exumians, speaking on condition of anonymity, had questioned at that time the value that McGarvey would bring to Exuma after he admitted that – in contrast to initially touted plans to establish a $40 million development project at February Point in Exuma – his group would make a $12 million “front end” investment of which McGarvey’s intended investment would amount to $700,000.
As revealed by Guardian Business, access to financing for this investment, which he confirmed would include a “front end” investment of $12 million in the property acquisitions, the construction of five condominiums, a sales office, an upgrade of the marina and some other small scale construction work, is contingent on approvals from the government, according to McGarvey.
Price stated that plans previously highlighted in the media for a “commercial village” within the property will be contingent on demand at some point in the future, with the question of whether it would take place “very difficult to project”.
Hotel development plans for February Point will depend on the group bringing in “a competent developer”.
“We are not hotel developers,” Price told Guardian Business.
McGarvey and Price’s confirmation of the group’s plans came after Guardian Business obtained details of a proforma document issued by McGarvey soliciting investors for the proposed investment.
In addition to highlighting how the company would earn $36 million gross revenue in land sales over the course of the next seven years, from sale of property within the parcel to be purchased, as property values continue to rise, the proforma document told the story of how the company has been successful since 2008 in achieving profits from investing in “distressed” properties.
It gave an example of a “successful turnaround” of a property in Florida, purchased for an $18.5 million profit after a “three year hold”.
In the case of February Point and nearby Flamingo Bay, however, Price said funds from land sales in the targeted Exuma projects would be continually “reinvested” into the development.
Asked specifically what proposals McGarvey submitted to the government with respect to developing Exuma, given the apparent discrepancy between public statements made by his representatives, and the details contained in the proforma document, Rolle said last week: “His plans are to develop the area.”
Pressed to be more specific, Rolle added: “I can’t say exactly. I don’t have the details offhand.”
Smith said he “has no problem” with the development, but only wishes to ensure that those involved are reliable and will bring long term benefits to Exuma, and involve Bahamians in the development.
“I personally have no problem with the development, provided it goes beyond the very prime pieces of land called February Point. To make it a meaningful project, the face of it has to be somebody with a reputation in whom people can repose confidence and I have long said it should be someone else – people who actually have the money and not just a desire to do the development out of land sales.”
Smith said he is confident the prime minister will “make the right decision” with respect to February Point when the matter is brought to a conclusion.
“It may have been beneficial that this matter was drawn out for such a long period – when you rush, you do make mistakes and this is so significant for Georgetown, to make a mistake will take a long time to correct.”