THE St. Lucia Labour Party (SLP) is calling on government to break its silence on the ‘Pearl of the Caribbean’ project, specifically Phase One, which includes a race track, currently being built in Beausejour, Vieux Fort.
During a press conference on Thursday, the SLP said Prime Minister Allen Chastanet must respond to some basic questions that were raised since his pronouncements that Phase One, which is being funded by the developer, Desert Star Holdings (DSH), was a done deal.
Castries South MP, Dr. Ernest Hilaire, the party’s spokesperson on investment, raised several questions, including the following:
• The value of Phase One of the project
• Whether Phase One received DCA approval
• How much money DSH is investing in the commencement of Phase One
• Whether Phase One has been given CIP (Citizenship by Investment Programme) approval status
• The number of passports allocated to the Phase One aspect of the project
• Whether DSH is leasing the land at US$1 per acre
• Whether DSH will be allowed to use money from CIP held in escrow to operate the racetrack
• Whether farmers affected by the scope of the project have been served eviction notice
• Whether there has been any change to the Framework Agreements signed with DSH, particularly in regard to the buy-back clause, the escrow account, the exclusivity arrangements, the sale of Sandy Beach and the stadium, and the leasing of land at US$1 per acre
The VOICE understands that there has been no approval for the ‘Pearl of the Caribbean’ project from the Citizenship by Investment Unit (CIU) because details concerning the project are still a work in progress. Further, the project contains multiple phases, all of which have not yet been worked out.
Phase One of the project is not being financed by the CIP but by the developer, as noted several times by Prime Minister Chastanet. But the race track cannot stand alone as it comes with stables or barns and other equine facilities. The question as to whether the facilities that accompany the race track will all be funded by the developer — or by CIP — remains unanswered.
According to Dr. Hilaire, Saint Lucians need to know the status of DSH and, in particular, whether the developer had commenced selling passports seeing that the project has not yet started.
Documents released by the SLP on Thursday related to assessments of the project by both the CIU and Invest St. Lucia noted that the DSH proposal, which was received on March 8, 2016 was the seventh submission by DSH for review. A common feature of all the previous submissions and the present one is that the project would not qualify under the current legislation.
According to the documents, the CIP regulations provide for some measure of CIP financing and equity financing and that in submissions, almost 90% is CIP; the balance is equity put in by the developer of which most is in the form of his professional fees.
In the submission by the developer, the gross development cost is US$340 million. The developer also claims that during the construction phase between 500 and 800 employees will be at the site.
During the operational phase, it is projected that there will be 7,180 employees. For the race course operations, there will be 150 persons, for equine husbandry 3000 persons, retail and F&B 2000 persons, and hospitality and gaming 2000 persons.
The professional team that assessed the project, as noted by the documents, stated that despite the employment figures given, the developer had not provided any details of the operational aspect of the project in which the employment figures are based and that based on the CIP units required, there is a need for 990 CIP units. However, the developer is asking for 1843 CIP units, which amounts to US$550 million.
There’s a difference of US$256 million between the development cost and the value of the CIP units being requested. In response to the financial viability, the assessment team goes on to state that the project is highly leveraged and the probability of success is low.
Under the heading business/financial viability of the project, the assessors of the project claimed that the Master Developer has no experience with the CIP and, therefore, may not have the level of understanding that is required to market a CIP programme. Further, that this could lead to an over-reliance on established agents, who are often more interested in how much commission they can make rather than the potential success of the development.
Other points raised by the assessors of the project were that the marketing plan, as presented in the proposal, was very weak and that discussion with the developer revealed that they are still in the process of developing a marketing strategy.
In conclusion, the assessment made by the professional teams of both the CIP and Invest St. Lucia is that, among other things, the CIP funding percentage is too high, considering that the developer has no experience with the CIP and that there should be a more equitable distribution of owner and CIP funding, and that based on the analysis of the proposal, it is recommended that the ‘Pearl of the Caribbean’ not be given approval as real estate or enterprise project at this point.