PRESS RELEASE – For immediate release: Davies Associates report suggests the HCA effective area is reduced to its original 50k acres
Davies Associates Ltd, (DAL), a Freeport based Project Management consultancy, recently commissioned a study into the economic development of GBI with the objective of replacing unproductive criticism of the general climate of inactivity with new initiatives.
DAL has already proposed the development of Freeport’s Grand Bahama International Airport to establish a regional hub and has now released its conclusion that the Hawksbill Creek Agreement (HCA) must be reformed as a precursor to further economic development.
Andrew Davies said,
“When we discussed investing in our study we noted persistent hostility between GBPA and dissatisfied residents of GBI. It seemed that confrontation was unlikely to accomplish significant change over the short term especially as Government of the Bahamas appeared to adopt a neutral role as is wrestled with pressing problems in Nassau. Another way forward had to be found.”
“No one can be content with the recent economic history of GBI. There has been little progress and the GBPA zone has become littered with the dereliction of commercial failures.
Confrontation is unlikely to bring a change in the policy of GBPA or the beneficiaries of the HCA so either the status quo must be endured for another 40 years until the HCA expires or a new approach must be found.”
The key issue is that the beneficiaries of the HCA are unwilling to invest further. Their position is that to create the economic stimulus from which they can profit new inward investment should be attracted by the established infrastructure to create the economic stimulus from which they can profit.
This is unlikely but their mind set is understandable. They inherited an old fashioned monopoly contracted over too long a term (99 years from 1955). Such an agreement looks unreasonable and antiquated but it exists and its beneficiaries are focused on extracting the maximum value as they realize they are unlikely to have any opportunity to profit from the affairs of GBI when the HCA expires.
That they have become exploitative is understandable albeit unattractive.
Public concern regarding the GBI economy translates naturally into criticism of GBPA and the beneficiaries of the HCA and frustration that Government of the Bahamas isn’t more assertive in effecting change.
Rather than continue with this unproductive standoff Andrew Davies suggests that all parties recognize that the beneficiaries of the HCA are content with the impasse and a compromise that facilitates change must originate elsewhere.
The nature of the status quo:-
Freeport, GBPA and the HCA are concepts framed in the 1950’s that have been allowed to hold sway for much too long and now they have become the impediments to development.
The enthusiasm that must have surrounded the establishment and building of Freeport dissipated many years ago leaving inertia, discontent and the decaying relics of failed projects.
Government of the Bahamas’s engagement with the issue is to consider imposing additional taxation. A proposal that has been characterized as the doctor trying to take a blood donation from a dying patient.
The HCA beneficiaries appear to have the singular intent on extracting as much capital out of GBI as they are able to transfer overseas before the HCA expires in 2054.
Unemployment, minimal investment, a civic landscape despoiled by the derelict monuments to failed projects, a potential increase in tax and a minority elite seeking to maximize their profit from the final decades of a 99 year monopoly are not the characteristics that attract overseas investors.
So it is not surprising that citizens are outraged by the show of indifference the public record of which further deters potential investors.
If nothing changes further deterioration is inevitable and no-one who has committed their future to GBI wants that.
GBI residents want hope for the future and that cannot emerge from such a dysfunctional status quo.
Change is necessary.
Reform the HCA
Public concern about the economy of GBI and the ineptitude of the HCA will not dissipate.
“It is clear to most observers that the HCA is the principal problem. A 99 year monopolistic agreement entered into in 1955 is an anachronism. It is like sanctioning an occupying power to decide the fate of 150,000 acres of the island.
The agreement was initially beneficial. Freeport would not exist without it. But the establishment of Freeport and the surrounding infrastructure has proved insufficient to create a vibrant self-sustaining economy. The island is in danger of becoming moribund.”
What must be done?
DAL suggests that a compromise would be to modify the HCA such that the beneficiaries retain the zone that they have developed, which approximates the 50k acres of the original scope of the HCA.
This zone contains the existing development but also the derelict buildings and leaves the current HCA beneficiaries with their current developed monopoly.
Their reward for accepting this modification should be the retention of the tax benefits associated with HCA. In other words the beneficiaries of the HCA should be invited to voluntarily cede the remaining land, 100k acres to a new Trust company operating for the benefit of GBI.
The DAL report proposes that this ‘released’ land should be added to a newly created development zone to the east of the GBPA area to be developed around a new town not based on heavy industry but on knowledge industries.
“It was clear from our study that Freeport reached the zenith of its appeal some years ago and, as an investment brand, it is no longer likely to attract the investment necessary to invigorate the GBPA zone.
The HCA in its current form is bankrupt.
The geographical virtues of proximity to the US mainland and fiscal benefits remain but new investment is not focused on heavy industry and the living environment of employees is an important criterion that Freeport no longer satisfies.
Hence the development of GBI must make use of the virgin land to the east or west of GBPA.”
Government of the Bahamas should aim to complete reshaping of the structure of the GBI development zones by the end of 2015 with a new management team in place by March 2016 with the task of producing a new 10 year economic development plan by September 2016.
Andrew Davies said that DAL would be delighted to cooperate by gifting the findings of its study to the new venture.
For more information please contact: Andrew Davies on (242) 727 1466
Davies Associates Ltd. (DAL) is a Bahamian Development Advisory and Project Management Company based in Freeport.
DAL has worked extensively throughout the region and has acquired considerable knowledge of investment strategies and structures.