Baha Mar said in a statement yesterday it entered into its heads of agreement with the government in 2011 in good faith "and the terms are quite clear". Baha Mar said the government is trying to change the agreement and it called upon the government to live up to the agreement as it relates to its share of payment for the rerouted West Bay Street and related infrastructure. The resort development company was clearly responding to Deputy Prime Minister Philip Brave Davis, who said in the House of Assembly on Wednesday that the Baha Mar deal was "poorly negotiated". Davis also accused Baha Mar of being uncooperative in the negotiations to settle how much the government owes Baha Mar to cover its portion of the road work.
In its statement yesterday, Baha Mar said it has been engaged in ongoing discussions with the government for quite some time regarding the reimbursement for the JFK Drive connector road, the new West Bay Street, and associated public infrastructure, including landscaping, signage, lighting, footpaths, jogging trails and other amenities. The statement says that under Baha Mar's formal and restated heads of agreement signed with the government in 2011, Baha Mar agreed to pay the entire cost of the works, and the government agreed to reimburse Baha Mar for $43.5 million for the West Bay Street improvements and $2.8 million for the cost of the JFK connector, for a total of $48.1 million.
Under the agreement, the reimbursement from the government came due when the project's superstructure was constructed 100 feet above grade, which occurred in September 2012, the company said.
"Now the government is, in essence, trying to change the contract after the fact," Baha Mar said. "The heads of agreement states that if the cost of these works were less than $70 million, Baha Mar and the government would split the costs evenly. If the overall costs of these improvements exceeded $70 million -- which they did -- the formal agreement calls for the government to pay $48.1 million.
"We entered into the 2011 heads of agreement with the government in good faith, and the terms are quite clear. It's not a matter for interpretation and we expect the government of the Bahamas to honor its contractual obligations."
The government paid Baha Mar $30 million last year, but has not made any further payments since, The Nassau Guardian understands. Davis said Baha Mar is seeking a further $19.7 million.
"Two reasons can be given for the protracted road to settlement of this issue," he said. "The first is that Baha Mar in my view has not been cooperative in this process. There is no doubt that a greater amount of due diligence is required for settlement of the accounting. This includes independent verification of monies paid to contractors for works directly related to the road work and the scope as defined within the agreement.
"Baha Mar, though, has not been forthcoming with very specific information requests and has not attended agreed meetings. There are exchanges of correspondence that will back up these statements. The second reason is the fact that the provisions that provided for the testing of sums at industry standard in the original heads of agreement of 2006 were removed when the heads was renegotiated."
He said, "When that was negotiated and signed off the then administration didn't think that we should test the sums that were going to be spent against industry standard so they took that clause out. Given this result, it can only be concluded that this was a poorly negotiated deal for Bahamians, but we commit to ensuring that we get full and justifiable value for any monies that are to be paid once it is in the scope defined by the agreement."
Baha Mar Chairman Sarkis Izmirlian said recently he was not happy with the pace of the negotiations.
Prime Minister Perry Christie told The Nassau Guardian it appears the matter is headed to arbitration.
Baha Mar is set to open next month.
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