September 25, 2022

Bermuda Minister: Plans for new airport terminal building/ Caymans balked at CCC airport deal

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AR-141129964Bermuda Minister: Plans for new airport terminal building

From Bernews

[Updated with video] The Government has reached an agreement with the Canadian Commercial Corporation [CCC] to pave the way for the construction of a new purpose built airport terminal building, Finance Minister Bob Richards announced [Nov 10].

The Minister said the construction phase will “produce hundreds of much-needed jobs for Bermudians,” and the “financing will rely entirely on the future revenue streams from the new airport itself.”

Speaking at a press conference this morning, Minister Richards said, “Today the Bermuda Government is announcing a historic agreement with the Canadian Commercial Corporation [CCC] to pave the way for the re-development of the Bermuda airport, including various sources of financing. This re-development will involve the construction of a new purpose built terminal building.

“The redevelopment of the Bermuda airport represents one of the most important capital projects ever undertaken on our island shores. It will play a crucial role in the renaissance of the Bermuda economy while also being one of the most costly. Its success will be paramount to all in Bermuda.”

“The construction phase will initially produce hundreds of much-needed jobs for Bermudians and deliver multiple layers of public benefit including, we believe, the basis for a new prosperity,” continued Minister Richards.

“One might ask, ‘Why do we need a new airport?’ The airport is Bermuda‘s principal gateway, the place where travelers to our island get their first impression. What do we want that impression to be? We want that first impression to be consistent with the brand that Bermuda presents to the world and that brand can be summed up as, ‘First Tier, First Class, First World.

“That is the brand we want to convey, whether the traveler is arriving for business or leisure. Certainly the current terminal building, with sections dating back to the 1940’s, does not convey that branded message.”

“Our intention is that the financing will rely entirely on the future revenue streams from the new airport itself,” added Minister Richards.

Tourism & Transport Minister Shawn Crockwell said, “Today is indeed an historic occasion for Bermuda, an occasion that I am quite pleased and honoured to be a part of.

“The signing of this agreement paves the way for the re-development of our airport, the first major upgrade to the L.F. Wade International Airport since it was constructed.

“This re-development project is significant for our island. One of the most important capital projects that we have ever undertaken, it is a costly project which will bring much needed jobs, something we are definitely quite pleased about.

“Notwithstanding all of the economic benefits that the Minister of Finance has outlined, as the Minister responsible for Tourism and Transport, I am excited that we are embarking on this first tier development that will leave us with a first class airport, one which we will all be very proud of.

“I believe that this new attractive and sophisticated modern facility will enhance our tourism product. It will impress everyone that passes through it, visitors and locals alike, and it will make that first impression for those coming to Bermuda, a lasting positive impression that is aligned with the Bermuda brand – quality, first class and world class.

“The construction of a new purpose built airport terminal is long overdue and this Government was determined to make it happen – we were very cognisant of the many obstacles presented to us and especially the financial implications that could have prevented this from happening. I am most pleased with the financial creativity that has brought us here today.

“This public private partnership between the Bermuda Government and the Canadian Commercial Corporation does indeed represent a renaissance for Bermuda – to our economy and to our product. I know that we can all agree that the success of this project will be legendary. As I said earlier, today marks the beginning of an innovative development that we can all be proud of,” concluded Minister Crockwell.

Update 10.39am: Minister Richards’ full statement follows below:

First let me introduce and acknowledge the presence of Mr. Luc Allary, Regional Director, Caribbean & Central America for the Canadian Commercial Corporation and of course acknowledge my colleague the Minister of Tourism Development and Transport, The Hon. Shawn Crockwell, and new Junior Minister Senator Vic Ball.

Today the Bermuda Government is announcing the signing of an historic agreement with the Canadian Commercial Corporation [CCC] to pave the way for the re-development of the Bermuda airport, including various sources of financing. to pave the way for the re-development of the Bermuda airport, including various sources of financing. This re-development will involve the construction of a new purpose built terminal building.

The redevelopment of the Bermuda airport represents one of the most important capital projects ever undertaken on our island shores. It will play a crucial role in the renaissance of the Bermuda economy while also being one of the most costly. Its success will be paramount to all in Bermuda.

The redevelopment of the Bermuda airport represents one of the most important capital projects ever undertaken on our island shores. It will play a crucial role in the renaissance of the Bermuda economy while also being one of the most costly. Its success will be paramount to all in Bermuda.

One might ask, “Why do we need a new airport?” The airport is Bermuda’s principal gateway, the place where travelers to our island get their first impression. What do we want that impression to be? We want that first impression to be consistent with the brand that Bermuda presents to the world and that brand can be summed up as, “First Tier, First Class, First World.” That is the brand we want to convey, whether the traveler is arriving for business or leisure. Certainly the current terminal building, with sections dating back to the 1940′s, does not convey that branded message.

The new terminal will show the arriving passenger that he/she has entered a country that is indeed First Tier, First Class and First World. The new terminal will create a buzz in tourism circles and substantially enhance the airport terminal experience for the travelling public.

For Bermudians, it will not only bring jobs, but it will engender a sense of pride, reaffirming our sense of self esteem for our island’s unique qualities as a tiny but first world nation.

For visitors, it will reinforce the island’s status as a successful and sophisticated up-market tourism destination as well as a leading international business centre.

A key and novel component of this project, and the reason I am announcing this instead of one of my colleagues, is the financing component. The fact is this project would have probably gone ahead long ago if funding was available for it. But with Government running large annual deficits and debt soaring, a new airport terminal had been impossible – until now.

Having carefully considered all its options, Government has decided to avail itself of a novel procurement model offered by way of an arrangement with the Canadian Commercial Corporation. CCC is wholly owned by the Government of Canada. The proposed transaction will take the form of a type of public private partnership, [P3], a model that will allow Bermuda to build, use and eventually take possession of the most modern of facilities for civil aviation, without significant burden on the Bermuda treasury.

Some of the benefits to using the CCC approach to redevelop the Airport are as follows:

This model cuts the procurement time dramatically, enabling shovels to be in the ground and jobs created much sooner than traditional methods.

This model significantly reduces the cost of procurement, particularly the use of expensive consultants.

The new terminal will be customized to Bermuda’s needs.

CCC will guarantee that the project will be delivered on time and on budget.

The project will be financially self sustaining.

There will be a Canadian infrastructure developer. CCC will conduct its own due diligence to be satisfied that the Canadian developer has the technical, financial and managerial capability to deliver on the contract.

The transactional approach will not require any initial expenditure for the airport by Bermuda.

The model demands total transparency, adhering to international best practices; with no recourse to the balance sheet of the Bermuda government, direct or contingent.

Our intention is that the financing will rely entirely on the future revenue streams from the new airport itself.

We will also benefit from the uncompromising standards, world class experience and expertise of CCC.

Established in 1946, CCC, a federal crown corporation, was mandated to facilitate international trade on behalf of Canadian industry, particularly within government markets.

CCC will select a Canadian developer from its already pre-selected stable of Canadian firms. This company will enter into a contract and Concession Agreement with the Bermuda Airport Authority to develop and manage the project. Title to the airport and adjacent property will remain in Government hands. This will be the core of our unique P3 arrangement.

This company will maximize local employment by way of sub-contracting opportunities, in the selection of contracting firms to actually carry out the work on the ground. The vast majority of these sub-contracting companies will be local Bermudian firms employing local labour.

The government has already chosen a world class financial adviser to formulate the financial model required to make this project financially viable and advise us on all economic aspects of this project.

We will also be engaging an independent construction firm to review the project model in all its aspects to formally verify that Bermuda is getting value for money from this arrangement.

This structure, which is tried and tested in other countries, has a number of reduction advantages:

reducing the risk and expense of procurement,

reducing the risk of budget overruns,

reducing the risk of late delivery,

reducing the risk to the Bermuda Government treasury and balance sheet,

reducing unemployment in our island and validating value for money issues.

It is a winning formula on all fronts.

We are now at the start of a long and complex process with many milestones along the way. The next important milestone will be a Go-No-Go decision, and assuming it’s a Go, the final construction contract and a facility management service Agreement [and related financing arrangements], which will govern all aspects of the project, will be developed and concluded. At that time the final costs and design features will have been ironed out.

There are few options to create jobs by way of infrastructure projects for a government that already has high debt and is adding to it annually, by running deficits. The traditional way of financing such projects surely would significantly increase government debt. In collaboration with CCC, our unique P3 model will enable Bermuda to create hundreds of jobs for Bermudians without significantly putting your government further into debt.

There are a myriad of questions you may have about the physical aspects of the new terminal but these will have to be the subject of subsequent public announcements as we move forward with the process.

Update 3.37pm: It is expected to cost in the “range of $200 million” the Minister said, and the building will not be in the same spot as the present one, it will be located “between the round-a-bout and Stonecrusher Corner.”

The Minister said the plan is to break ground in about a year, and the project should take about three years.

For more on this story and video go to: http://bernews.com/2014/11/minister-airport-redevelopment-plan/

 

Related story:

Caymans balked at CCC airport deal

By Simon Jones from The Royal Gazette

IMAGE: The master plan for the LF Wade International Airport terminal building. There are proposals for shopping and a possible solar farm

The Canadian Government firm involved with plans to redevelop LF Wade International had previously been in talks with the Cayman Government about a similar project.

This according to the Cayman Compass, which reported today that the deal in Cayman collapsed after “the UK expressed concerns about a lack of open tendering for the development”.

The proposal would have involved Canadian Commercial Corporation (CCC) financing and building expansions to the Cayman airport and runway in exchange for a 30 to 40-year operating concession and the right to collect “aeronautical and non-aeronautical revenues.”

The Compass report reveals that concerns were expressed about a loss of direct government revenue, loss of control over a key strategic asset for the country and potential loss of jobs at the airport.

Last month Finance Minister Bob Richards announced that Government had signed an agreement with CCC “to pave the way for the redevelopment of the Bermuda airport” through “various sources of financing”.

Mr Richards said that the development would be financed through “future revenue streams from the new airport itself”.

The deal has come under intense scrutiny from the Opposition for the lack of transparency involved in the process as well as the absence of a tendering process.

The Cayman Compass report states: “Cayman officials will get the chance to see if the island missed a golden opportunity or dodged a bullet after the United Kingdom vetoed plans for a $200 million partnership with a Canadian government company to redevelop Owen Roberts International Airport.

“The Bermuda Government announced last week that it was entering into an agreement with the same firm, the Canadian Commercial Corp, to develop its airport in a public-private partnership similar to one that was on the table for Cayman in the early part of 2013.”

The report by James Whittaker added: “Cayman Islands officials have since opted for a more modest redevelopment of the terminal to be financed through existing Cayman Islands Airports Authority revenues, following an analysis of the options by PwC.

“The Canadian Commercial Corp appears to have taken a version of the deal mooted for Cayman to authorities in Bermuda.

“According to Mr Glidden, who headed the Ministry of Tourism in the Cayman Islands when the deal fell through in March 2013, the FCO’s economic adviser had indicated that the Cayman Government needed to follow a competitive tendering process.”

For more on this story go to: http://www.royalgazette.com/article/20141202/NEWS/141209925&source=RSS

 

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