The Christie administration yesterday released the heads of agreement it signed last Tuesday with the new owners of Baha Mar, which includes value-added tax (VAT) and real property tax exemptions, the government's pledge of $4 million per annum for eight years in marketing dollars, and a commitment to provide for up to 300 work permits for foreigners in senior management positions and those with certain technical expertise.
Under the agreement, the new owners must keep employed a minimum of 5,500 Bahamian employees in the management and operation of the project once it is completed.
The agreement is between the government and CTF BM Holdings Ltd. and CTF BM Operations Ltd.
The heads of agreement notes that effective November 30, 2016, Chow Tai Fook Enterprises Limited (CTFEL) and CTF BM entered into a share purchase agreement with China Exim Bank and Perfect Luck Investments Limited for the sale and purchase of the project.
"The transaction shall close upon the completion of the project," the agreement states.
The heads of agreement states that the owners shall be entitled to all of the benefits and concessions agreed to in the August 22, 2016 deal entered into between the government, China Exim Bank, and Perfect Luck.
It is the August agreement that was the subject of a court seal.
The heads of agreement entered into between the government and the new owners states that VAT when applicable would have been paid on all materials and services necessary for the construction and equipping of the project.
It states that in order to complete and open the project, the owners shall be eligible for exemption through December 31, 2019 from VAT and all exemptions granted under the Hotels Encouragement Act and other existing legislation including, but not limited to, exemption from custom duty in respect of all materials and equipment used in the construction, equipping/furnishing, completing and opening of the project.
"The items subject to such relief shall specifically include but shall not be limited to construction materials, bunker oil and diesel, furniture, fixtures, casino games and equipment, and other equipment required for construction and equipping of all aspects of the project development," the agreement outlines.
The project is exempted from payment of real property tax for a period of 10 years, commencing on the date of opening for business of each facility within the project and subject to the maximum levy provided for by the Hotels Encouragement Act for a further period of 10 years.
The project shall pay no taxes on the excavation of any rock, sand, gravel, earth or fill taken from any lands owned by the developers. No royalties shall be payable by the owners on sand used for the restoration of Cable Beach.
As it relates to work permits, the agreement states the government shall grant at the request of the owners, the casino manager and their affiliates "up to 300 work permits...for non-Bahamian employees in senior management, employees with technical skills or specialty skills, including brand management, where there is a demonstrable need and lack of qualified Bahamian applicants.
"After the first 18 months of operations of the resort and casino the number of work permits is projected to reduce to 200. For the avoidance of doubt, at all times there will be continued efforts to maximize employment of Bahamans."
The agreement reveals that the government has already contributed $16 million for cooperative marketing to the project pursuant to its heads of agreement with the former developer.
"Notwithstanding any contributions already made, the government further agees to enter into a cooperative marketing campaign with the [new owners] on a match funding basis, to which the government and the [owners] will each contribute $10 million subject to substantial progress toward completion of the project," the agreement states.
As part of such marketing contribution, by September 30, 2017, the government shall contribution up to $5 million towards the costs and expenses of the marketing activities set forth above and the balance of $5 million on a date to be mutually agreed.

Timelines and casino taxes
Under the agreement, the new owners "shall diligently pursue" owning, operating and, in the case of the Rosewood hotel, refurbishing world-class, international resort-quality hotel rooms.
The owners are obligated to operate a Grand Hyatt hotel with a minimum of 1,800 rooms; a Rosewood hotel with a minimum of 232 rooms and an SLS-branded hotel with a minimum of 299 rooms.
Notwithstanding this, the number of rooms may vary from time to time, as a result of the owners seeking to optimize the economic viability of the project, the agreement states.
It notes that phased opening of the casino, the convention center, the golf course and portions of the convention hotel and casino hotel took place on April 21, and the remainder will open in phases over succeeding months.
The opening of the SLS will take place on or before December 1, 2017.
Due to upgrades to the Rosewood hotel its opening will take place on or before April 30, 2018 subject to any delays as a result of reasonable construction and rehabilitation delay or unforeseen circumstances.
As it relates to the casino, the agreement states that except for the license already granted to the Atlantis Casino and the obligation to facilitate the grant of a license to the operators of the hotel on the southwestern end of New Providence, presently known as the South Ocean Golf and Beach Resort, to the extent that such obligations still exists, no new casino license will be granted in New Providence and Paradise Island for 20 years.
The agreement states that at no time shall the owners, the casino manager, or their respective affiliates be treated on terms more or less favorable than those applied to other owners, managers or operators of casinos in New Providence or Paradise Island with respect to casino fees and casino taxes.
The agreement provides for an annual license and monitoring fee of $100,000 per thousand square feet of floor space of the new casino; minimum gaming tax of $4.3 million on taxable revenue of up to $20 million per year and gaming tax of 10 percent on taxable revenue in excess of $20 million per year.
The agreement also states that due to the liquidation of Baha Mar Ltd. (BML), casino taxes in the amount of $10.75 million that was deferred, will not be recoverable by the government and this debt shall not be the obligation of the new owners.
The heads of agreement also includes an anti-corruption clause.

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