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Saturday, February 7, 2015

The never ending drama in Grand Bahama!

If you talk to any resident of Grand Bahama, they would tell you that they hate the government and their constant interference in Freeport and particularly with the Grand Bahama Port Authority (GBPA). But, walk away, and come back within 10 minutes, those same people will also tell you that they hate the GBPA and wish that the government would come in and stop them from being so mean and arbitrary to the residents and businesses of Freeport.

I was unclear of all of the issues as it relates to all of the cause for all of this vituperation coming from both sides of the argument, so I did the best thing one can do these days: I took the question to social media, and the returns were very interesting to say the very least. Refreshing and enlightening, while at the same time leaving me a little curious as to why some people decide to talk in codes and riddles about what ails them and the troubles they face with the government, Freeport, Grand Bahama and the GBPA nexus?

Well, the primary takeaway I had from those exchanges was that you just can't have your cake and eat it too. The other sad thing is that by the way the relationship between the residents, GBPA and the central government have evolved over the years, there is no easy solution to the madness as a lot of emotions are wrapped up in this, as well as a lot of distrust along with an overall lack of agreement on the direction Grand Bahama should take with the government and GBPA in addition to a lack of vision on the matter entirely.
One thing everyone can agree on is that calling it "quits" on the entire  GBPA project would do more harm than good. Because, it would not only show minor failure with regard to displaying that The Bahamas can't deliver on another development success story outside of New Providence. But, more importantly, a gigantic failure on the matter of the execution of a concept that has worked so well in other jurisdictions: i.e., the concept of a "Free-Trade-Zone".

Secondly, the government has little or no rights to involve themselves in the administration of the Freeport area until it is contractually obliged to do so, and every time that they do outside of the agreed upon term limit for the general Hawksbill Creek Agreement along with the subordinate and supporting agreements, as local Grand Bahamian lawyer and Queens Counsel Fred Smith always points out, the government loses the court battle. Yes, the government has never won not one single court battle against the GBPA. Not one! Not even close to winning one. Sad, but true.

Thirdly, it's clear that the GBPA Free-Trade-Zone has not worked out for the benefit of all and sundry. With massive unemployment in Grand Bahama with the rate over 18% as outlined in the last labour survey, in addition to businesses, from 2008, having steadily and surely shut their doors for good amidst cries of high-energy and electricity costs in addition to a weakening in consumer demand brought on by high unemployment, you don't need to be The Amazing Kreskin to understand how unfortunate the situation has become. 

As you can clearly see, this is what folks would call a huge boondoggle, to put it mildly. It all looks so useless, and on top of that such a tremendous waste of resources and human capital, to be brutally honest about it.

This kerfuffle, quite sadly, seems to have no end in sight. As we have been led to understand the extensions for the GBPA go into the year 2054, but only with the real property tax exemptions set for renegotiation in this year, 2015.

So, apparently, we are set for a "Showdown" at 2015 High with the central government folks on one side, and the pro-Freeport people on the other. High drama, indeed.

But, just to add my two cents based off of the exchanges I had, and not exclusively most recently about the problem in Freeport, having heard- and in some respects, not heard- a lot of other issues and concerns, I have come to understand and have taken into consideration four sticking points with regard to this affair:

  1. The now resolved dispute over the ownership of the GBPA still frightens persons, particularly that it may flare up again.
  2. The 2015 exemptions renegotiation process and possible sunset of said exemptions.
  3. The application of clear and transparent fee schedule and licensing for businesses
  4. Central government inaction with regard to even assisting in resolving all major and minor matters.
Perhaps someone from the outside with no emotional ties or sentiments towards the matter other than wanting to see it successfully working for the benefit of the entire Bahamas is what is needed.

The first thing is that the good news about this entire affair is that the GBPA shareholder dispute is over, for now. Apparently the "owners" were at odds for a brief period that ended up in logjam for quite some time, particularly families of the late Edward St. George and the recently deceased Sir Jack Hayward, but it has been settled and both sides have agreed to maintain the 50/50 equal split of the GBPA's ownership, with the government having a 7.5% share out of it all.

The second thing is that in, 2015 the real property tax exemptions are set for renegotiation. As the agreement stipulates, Freeport GBPA licensees are exempt from paying real property taxes to the central government. The national real property tax law mandates that real property taxes be exempt for properties valued under 250k; properties between 250k to 500k, 3/4 of one percent of the total value must be paid; between 500k and 5 million is 1% of the value; and any property over 5 million, one quarter of one percent the total value of the property must be paid as it is valued by the government.

I see no reason, considering that the price of property in Freeport is considerably less than that of New Providence, where in Freeport an acre of prime real estate on a Marina or Waterfront costs under $1 million dollars, compared to property of the same type locale in New Providence can fetch well into the multi-millions of dollars. So this should not be a critical issue seeing that real property taxes are as low as they are generally, and also considering if that you have the money to buy a property valued at over 250k, then you most likely should have the money to maintain it and pay taxes when most all else is waived. This is only fair.

Of course, renegotiating this exemption is not my call to make, but it wouldn't be unfair or damaging if it is allowed to sunset, all things considered with the current state of immobility in Freeport. The impact just seems negligible.

The third thing, and this is what I had to pry out of and talk to people on directly about the management of the GBPA, is that the rates and fees for licenses seem to be more than a little murky. They seem arbitrary, to put it very mildly. This was detailed to a great extent in the Grand Bahama Chamber of Commerce's Vision 2015 Paper that it presented to the government on their matters about Freeport and Grand Bahama development.

Some license fees are somewhat high, considering the lack of economic growth in Freeport in recent times, and particularly if we are talking about stimulating Freeport and Grand Bahama again.

But also, some license fees are set at a rate "to be determined". This lends itself to the idea that the rates are being set by the whim and fancy of someone, or some group of persons, feeling that one particular investor should be charged this amount for a particular enterprise, and another can be charged a totally separate rate for the same type of enterprise, with none of those rates set in stone with regard to the regularity of a particular set schedule they must adhere to or contractually agreed to.

So as it appears, if the GBPA doesn't like you today, for whatever reason, they can simply price you out of the market or revoke your license without nothing much an investor or licensee can do about it. That in itself is the largest investment risk to Freeport, and far outweighs, in my estimation, anything the government can do, has done but failed, or threatened to do with regard to any imposition of greater control and tax collections from the GBPA and Freeport.

With all of this into consideration, even when we factor in a minor issue with regard to the GBPA wanting greater control of their immigration and the skilled migrant worker program, with immigration being a national hot button issue right as this article is being penned, and a demand which seems more of a pipe dream by those pro-GBPA than it is closer to any sort of reality, government inaction on the proper sticking points throughout this entire debacle has been much of a problem as is everything else.

However, there is very little that the government can do based on all of the prevailing factors if the government wants to be seen as a democratic, free market friendly government- even though fair, clear and standard free market principles are not being adhered to in the GBPA as it relates to the arbitrary license fee schedule.

More importantly,  it's not as if the government has had success with regard to imposing their will on the GBPA at all, in any event. Also, it's probably not within the best interest, nationally, for the government to make Freeport into just another Family Island centre that has all of the issues that come along with either the capital in New Providence or, at worst, the problems of being a Family Island.

In my humble estimation, most of the major problems and the exacerbation of such within Freeport and the GBPA are self inflicted. Skilled migrant control issues notwithstanding, there has been nothing the government has done or can do for the GBPA in its current form and present state. Sad, but true.

This very unfortunate situation is like watching your little brother that was supposed to be bigger and better than you were in any and all respects, just destroy himself  and his potential off of sex, drugs, alcohol along with crude and unusual forms of self mutilation. You can't "stop" him from doing what he wants with his life. You can only offer occasional help from time to time and ensure that his problems do not become more of your problems.

Most persons that wish to complain would like to think that the central government is the problem in Freeport, but the truth is a lot more serious and real than is the perceived boogeymen sitting up in their Bay Street offices just looking for every which way to stick it to Freeport.

Alas, and as it may frighten some, but one day, and one day before 2054, the government will have to step in with the GBPA to ensure fairness and equity for all involved and those wishing to be involved in the success of Freeport.

As the government assisted back in, 1955 with the signing of the Hawksbill Creek Agreement which allowed for the establishment of the GBPA, so too will they have to be involved with the restructuring of the GBPA and the Hawksbill Creek Agreement in plotting a better and more clearer direction for Freeport.

It is simply just that with all of the options out there, but with the present mechanisms, management and wilful acceptance of the current arrangement by pro-GBPA affiliates as it stands, there is little else that can be done by government or anyone else for that matter. Which means a continuation of the woeful status quo, but that's just the way it will have to be.
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