The Chaguaramas Development Authority wishes to clarify several inaccuracies related to the Leasing of the Chaguaramas Hotel and Convention Center as reported in the media.
1. The Chaguaramas Hotel and Convention Center has NOT been sold but is leased for 30 years.
2. The Chaguaramas Hotel and Convention Center is in dire need of restoration and loses TT $ 0.4 million dollars annually.
3. It will cost in excess of TT $200 million dollars to refurbish and upgrade the property into a four star hotel.
4. A significant portion of the property is deemed unsafe and uninhabitable.
5. The financial burden on taxpayers has been going on for over 15 years.
6. For several years no investor wanted to assume responsibility for the huge sum which was required to be invested given the state of the building.
7. In 2009, the CDA at that time applied to the then Cabinet for TT $49 million dollars to refurbish and repair the Chaguaramas Hotel and Convention Center. Only TT $1.0 million dollars was provided, far short of the urgent requirement.
8. After an exhaustive search and stringent process, an investor who is solely responsible for refurbishing and upgrading the property and preserving its architectural history qualified for a 30 year lease in the amount of TT $ 30 million dollars.
Critical to this discussion is the fact that The Chaguaramas Development Authority Act states that the principal function of the CDA is to “… secure the undertaking of, the laying out and development of the North-West Peninsula…”. Part of our development mandate involves the management of land and property assets and the leasing of land as guided by section 14 (4) of the CDA Act.
“Notwithstanding the provisions of this section but subject to section 16 nothing in this Act shall be construed so as to permit or empower the Authority with respect to any land in the North West Peninsula (the subject matter of a Vesting Order) to alienate the freehold or grant leases for a term of more than thirty years with an option for a further term not exceeding thirty years, except with the consent of the President”.
In light of the above, two things are clear:
1. Land in the Chaguaramas region cannot be sold.
2. The CDA has the authority to lease lands for a period of thirty years.
The CDA currently owns and operates the Chaguaramas Hotel and Convention Centre (CHACC) which is located on the Peninsula. In 1999, the CDA conducted refurbishment works on the building, however to date, the overall condition of the property has significantly deteriorated.
The Chaguaramas Convention Center is a dilapidated facility in dire need of repairs. In 2009, the CDA applied to the previous Cabinet for some TT $49 million for the refurbishment and upgrade of the CHACC. TT $1 million dollars of government funding was allocated in response. This fell far short of the required financial input. In the meantime, the CHACC continued to be a drain on the coffers of the CDA. The current short term tenancy masks the true financial position of the hotel, which has an increasing annual deficit of TT $ 0.4 million.
According to an independent assessment undertaken by the CDA, during the period 2012 to 2014, a significant portion of the facility, particularly the unutilized section of the building is in dire need of repairs. The property is unsafe and unfit for tenancy.
In the past, several attempts were made by the CDA to operate and/or secure private investors for the development of the hotel. From 2002 to present, there have been a number of short term tenants, however, as articulated in the CDA Act on the management of its assets, the overall objectives of a self sustainable viable operating model for the hotel, has never been achieved.
On 5th February 2013, an invitation was issued in the public domain (Express, Guardian and Newsday) seeking proposals from qualified and experienced developers/investors for the refurbishment/reconstruction and operation of the Chaguaramas Hotel and Convention Centre.
The original advertisement provided May 31st 2013 as the deadline for the submission of proposals. The deadline was extended to 29th July 2013. A total of four companies expressed interest but only One (1) submission was received, but did not meet the qualifying requirements. Thereafter, several advertisements were placed in the media, in magazines, and attempts were made through foreign Embassies to seek prospective developers and investors. No investors committed.
Additionally, the CDA formally engaged the services of InvesTT to promote the many investment opportunities available on the Peninsula which included the Chaguaramas Hotel and Convention Center. Once again, no investor committed.
The underlying issue is that CDA is not a hotel operator, and as such, purely on the principle of competitive advantage, the Authority cannot as an entity succeed in the management and operation of the hotel particularly given its mandate and business model.
In November 2013, the CDA received an unsolicited expression of interest from an international Hotel Management Company to provide hotel management services, consumer and business sale representation. This model however required capital funding from another entity.
As such, the CDA recognised synergies between the unsuccessful proponent mentioned above and the Hotel Management Company, and facilitated introductions between the two entities.
The CDA also extended an offer to the National Insurance Board of Trinidad and Tobago to provide capital funding for this project. The proposed collaborative approach was not successful.
In July 2014, the CDA received a preliminary proposal from another local investor/developer. After a comprehensive review of their proposal, the CDA saw the need for a Hotel Management Operator and facilitated introductions between the prospective investor and the international Hotel Management Company. The following are key highlights of their joint proposal:
1. Based on the future recreation and tourism products to be developed in the Chaguaramas region, there was a need for a Hotel.
2. The existing Hotel and Convention Center was not viable in terms of cost and revenue.
3. The structure, design and configuration of the building were unsuitable for a modern four (4) star hotel and would require large scale investment to bring the structure to international standards.
In determining the terms and conditions of a prospective lease agreement, the CDA received advice from PricewaterhouseCoopers who reviewed the independent reports and all other financial information and advised as follows:
1. The CDA should consider the grant of a 30 year lease, TT $30
million in lump sum premium payments, in addition to a rental payment of no less than TT $15k per annum, taking into consideration a capital investment in the region of TT $200 million for the refurbishment of the facility.
Following negotiations on the proposal, the CDA granted the investor a 30 year lease. The successful investor is required to develop, manage and operate a four star leisure hotel, which will support the future recreational, and tourism products within the peninsula at no cost to the CDA.
At the investor’s own cost, the restoration of the St Chad’s Church and internship programs for students for the Trinidad and Tobago Hotel Institute and the University of Trinidad and Tobago are among the benefits to be derived. This is consistent with the CDA’s mandate for balanced development.
All development in Chaguaramas is premised on the essential condition that every investment produces a real benefit to the national community and no investment must ever be a burden to the taxpayer.
Chaguaramas Development Authority