An­tho­ny Wil­son

Two Fri­day's ago, a no-con­fi­dence mo­tion in the name of Ch­agua­nas West Mem­ber of Par­lia­ment, Jack Warn­er, came to a pre­ma­ture end as the sub­stance of the mo­tion was not de­bat­ed.

The mo­tion of cen­sure, ac­cord­ing to an en­try on Mr Warn­er's of­fi­cial Face­book page, "sought to chal­lenge the pro­fes­sion­al com­pe­tence of Sen­a­tor Lar­ry Howai to be the Min­is­ter of Fi­nance and the Econ­o­my at this dif­fi­cult time."

Mr Warn­er's mo­tion must have been based on the as­sump­tion that Mr Howai is not fit to hold to hold pub­lic of­fice be­cause he presided over a fi­nan­cial in­sti­tu­tion that lent mon­ey to some high-pro­file busi­ness­men, such as Arthur Lok Jack, and that First Cit­i­zens was not paid back.

In my view, Mr Warn­er's mo­tion was ill con­ceived as banks are in the busi­ness of lend­ing mon­ey and it is a fact of bank­ing that some loans go sour. There are hun­dreds of thou­sands of banks in the world and Mr Warn­er would be hard pressed to find one bank in the whole world that did not have a "bad" loan in the pe­ri­od 2006 to 2009. Loans that go sour have been part of the his­to­ry of bank­ing since the first Baby­lon­ian mer­chant made a loan to a farmer around 2000 BC.

The Carl­ton Sa­van­nah project was one of many con­struc­tion projects in this coun­try that suf­fered from cost over­runs and de­lays in the 2007 and 2008 pe­ri­od.

That's be­cause the cost of con­struc­tion es­ca­lat­ed sharply in that pe­ri­od as a re­sult of sharply high­er labour and ma­te­r­i­al costs that im­pact­ed al­most every con­struc­tion project in the world dur­ing the years 2007 and 2008. That was the pe­ri­od dur­ing which the price of all steel prod­ucts more than dou­bled on the glob­al mar­ket.

While there were sig­nif­i­cant cost over­runs glob­al­ly for con­struc­tion projects in 2007 and 2008, lo­cal­ly the cost of con­struc­tion was ex­ac­er­bat­ed by the fact that the then ad­min­is­tra­tion con­tributed to heat­ing up the con­struc­tion sec­tor by opt­ing to build a num­ber of high-pro­file projects–such as the Port-of-Spain Wa­ter­front, the Rich­mond St Gov­ern­ment Com­plex, NA­PA and oth­er state-spon­sored projects–at the same time.

Most lo­cal con­struc­tion projects start­ed dur­ing the years 2006, 2007 and 2008 suf­fered from the im­pact of high­er labour and ma­te­r­i­al costs.

Carl­ton Sa­van­nah was not the ex­cep­tion.

Con­struc­tion on the project, which was orig­i­nal­ly de­signed to be a con­do/ho­tel, be­gan in 2007 with a loan of $150 mil­lion from First Cit­i­zens and with the share­hold­ers and po­ten­tial con­do­mini­um pur­chasers putting up $40 mil­lion.

Even­tu­al­ly, be­cause of the cost over­runs caused by the sharp and un­pre­dict­ed es­ca­la­tion of con­struc­tion costs in 2008, the bank lent the project $286 mil­lion.

Dis­creet en­quir­ing have re­vealed that First Cit­i­zens is close to clos­ing the sale of the Carl­ton Sa­van­nah prop­er­ty to some British in­vestors for about $150 mil­lion.

I was told last week that the project's share­hold­ers, who put up a to­tal of $40 mil­lion, were en­tire­ly wiped out but that the prospec­tive con­do­mini­um own­ers got back much of what they had in­vest­ed main­ly be­cause there was a threat of a law­suit that would have pre­vent­ed the prop­er­ty from open­ing in time for the Com­mon­wealth Heads of Gov­ern­ment con­fer­ence that was held here in late 2009.

Al­so as a re­sult the cost es­ca­la­tion prob­lem, Guardian Hold­ings, which co­in­ci­den­tal­ly is chaired by Mr Lok Jack, was forced to take a $457 mil­lion write­down on a Mar­tinique prop­er­ty de­vel­op­ment named Pointe Si­mon in 2013. The 2013 write­down fol­lowed a $150 mil­lion non-cash pro­vi­sion GHL took in 2012.

GHL de­clared net prof­its of $46 mil­lion in 2013, a sharp de­cline from the $353 mil­lion the group re­port­ed in 2012.

The ad­just­ments on the Pointe Si­mon project–which com­pris­es a 22-storey of­fice tow­er, a sev­en-storey con­do­mini­um unit and a eight-storey, mixed-used bou­tique ho­tel–were due to the "longer ex­pect­ed ab­sorp­tion pe­ri­od and low­er than an­tic­i­pat­ed fu­ture rev­enue than we orig­i­nal­ly fore­cast­ed," ac­cord­ing to GHL's 2012 an­nu­al re­port.

Cana­di­an-owned RBC Caribbean, which was GHL's part­ner in the project when it start­ed con­struc­tion in 2007, ex­it­ed Pointe Si­mon in 2010.

But RBC is one of two Cana­di­an banks, the oth­er be­ing CIBC First Caribbean that lent a huge sum of mon­ey to the Shore­lands Re­nais­sance project. It's es­ti­mat­ed that the two Cana­di­an banks lent the de­vel­op­ers of the project the eye-wa­ter­ing sum of $850 mil­lion (US$132 mil­lion). The Re­nais­sance project end­ed cost­ing a to­tal of $1.1 bil­lion.

The project, which start­ed in March 2006 was due to be com­plet­ed in April 2008. The project ex­pe­ri­enced prob­lems with the orig­i­nal con­trac­tors, which re­sult­ed in ex­pen­sive re­me­di­al work hav­ing to be com­mis­sioned. And giv­en the prob­lems with orig­i­nal con­trac­tor and the es­ca­la­tion in con­struc­tion costs, the de­vel­op­ers were forced to seek new fi­nanc­ing in April 2010.

This was be­cause the project had run out of mon­ey and was al­ready two years late. In April 2010, the de­vel­op­ers need­ed an ad­di­tion­al $425 mil­lion to com­plete the two-tow­er com­plex which com­pris­es 74 res­i­dences: Eight pent­hous­es, 28 four-bed­room units, 26 three-bed­room units and 12 two-bed­room units.

The de­vel­op­ers were the Ra­hael fam­i­ly hold­ing com­pa­ny, with 50 per cent. A 25 per cent stake each was owned by prop­er­ty de­vel­op­ers Jef­frey Guillen and Richard Woodruff.

The com­plex, which com­plet­ed con­struc­tion in mid 2012, is built on 90,000 square feet of land, which was ac­quired for about $30 mil­lion in 2004. That's $333 a square foot or near­ly $15 mil­lion an acre.

Lo­cat­ed on the wa­ter's edge at Shore­lands, just op­po­site the Hi-Lo in Glen­coe, the Shore­lands Re­nais­sance comes with an in­fin­i­ty pool, a ful­ly fit­ted out gym with ac­com­pa­ny­ing saunas, one for men and the oth­er for women, a large com­mon room with bar and flat-screen tele­vi­sion as well as a 24-hour concierge ser­vice and a re­cep­tion­ist.

Each of four-bed­room units has ex­clu­sive el­e­va­tor ac­cess, is en-suite with its own walk-in clos­et and show­er and toi­let fa­cil­i­ties. The four-bed­room units, all of which have ten-foot high ceil­ings, al­so come with an ex­tra room for a helper, which is al­so en-suite.

Even to­day, the price for the res­i­dences is about $3,000 per square foot. The four-bed­room units are 5,200 square feet, which means that this res­i­dence will put a $15.6 mil­lion dent in the pur­chas­er's bank ac­count. The three-bed­room units are 4,200 square feet and the two bed­room units are 2,800 square feet.

It is in­ter­est­ing to note that Toron­to-based bankers from RBC and CIBC vis­it­ed the Min­istry of Fi­nance two Fri­day's ago in an at­tempt to ne­go­ti­ate a stamp du­ty con­ces­sion from the Gov­ern­ment.

The stamp du­ty is­sue arose be­cause the po­ten­tial own­ers of prop­er­ties at the Re­nais­sance were asked to sub­scribe as share­hold­ers in Hy­acinth Akow Ltd, the de­vel­op­ment com­pa­ny.

It is be­lieved that the prop­er­ty de­vel­op­ment was struc­tured so that the share­hold­ing own­ers would not have to pay mil­lions of dol­lars in stamp du­ty to con­vey their prop­er­ties.

Board of In­land Rev­enue sources say the re­quest by the Cana­di­an banks for some con­sid­er­a­tion on the stamp du­ty is­sue is un­der ac­tive re­view but that such con­sid­er­a­tion would in­volve the BIR set­ting a prece­dent that might be dif­fi­cult to jus­ti­fy.

In 2012, the Cana­di­an banks is­sued a warn­ing e-mail to the share­hold­ers threat­en­ing to have the com­pa­ny that owns the prop­er­ty placed in­to re­ceiver­ship. The threat of los­ing the de­posits made on the mil­lion-dol­lar res­i­dences in­fu­ri­at­ed the share­hold­ers, some of whom have been wait­ing to take de­liv­ery of their homes for more than six years now.

The Sun­day BG un­der­stands that 34 of the 76 apart­ments re­main as "in­ven­to­ry."

Asked on Fri­day about the stamp du­ty is­sue, Ra­hael said: "The share­hold­ers of the de­vel­op­ment sub­scribed to shares in the de­vel­op­ment com­pa­ny.

"Those who have sub­scribed for shares are await­ing the dis­tri­b­u­tion of as­sets pur­suant to the vol­un­tary liq­ui­da­tion process. There have been some de­lays in the dis­tri­b­u­tion of the as­sets as the liq­uida­tor is re­quired to com­plete cer­tain statu­to­ry and le­gal du­ties.

"The stamp du­ty is­sue has noth­ing to do with the vol­un­tary liq­ui­da­tion process, but there is an ex­pec­ta­tion that the sub­scribers would pay a stamp du­ty of $25, which is the pre­scribed pay­ment for sit­u­a­tions of liq­ui­da­tion, AF­TER the process of vol­un­tary liq­ui­da­tion is com­plet­ed and in keep­ing with the law.

"I don't re­call when the process of vol­un­tary liq­ui­da­tion be­gan but it was some­time af­ter we spoke in Ju­ly 2012.

Last week, Nicole Duke-West­field, RBC Fi­nan­cial's se­nior man­ag­er of cor­po­rate com­mu­ni­ca­tions was asked to con­firm or de­ny that RBC sent of­fi­cials from Toron­to to Port-of-Spain for a Jan­u­ary 23 meet­ing to dis­cuss with the Gov­ern­ment the pos­si­bil­i­ty of a tax con­ces­sion on the $1.1 bil­lion Re­nais­sance at Shore­lands project, which was fi­nanced by loans to­tal­ing $850 mil­lion from CIBC First­Caribbean and RBC Roy­al Bank.Ms Duke-West­field re­spond­ed: "No. The banks (FCIB & RBC) have not re­quest­ed any tax con­ces­sions from Gov­ern­ment.

"The bank(s) meets reg­u­lar­ly with the Trinidad and To­ba­go gov­ern­ment and gov­ern­ment of­fi­cials. It is our pol­i­cy not to con­firm nor de­ny such meet­ings, nor to com­ment on the sub­stance of such meet­ings due to client con­fi­den­tial­i­ty."