After a public share offering failed to raise enough money to complete the cruise pier’s landside development – a village of 17 buildings that will reportedly house at least 54 companies – legislators signed off on a $15 million bank loan for the project during a Monday House of Assembly meeting.
But while officials said the government-guaranteed loan should suffice to cover funding shortfalls, the project faces other problems, including major cost overruns and lost tax revenue that could already stretch into the six figures.
The extended cruise pier, which was opened on April 29, has enabled the Norwegian Getaway to visit the territory each Wednesday since then.But the ship has been paying only a $7-per-passenger head tax instead of the expected $15, an arrangement that will continue until Oct. 1, according to a statement released Thursday by BVI Ports Authority Information Officer April Glasgow.
BVIPA officials did not respond to requests to be interviewed, but the decreased tax rate is likely due to delays in construction.
A timeline for when different components are to be completed is attached to the berthing agreement between the government and Norwegian Cruise Lines: Buildings one through five and the “surrounding hardscape” were supposed to be completed by June 15, with the remaining 12 buildings and their respective surrounding hardscapes finished by next Wednesday.
However, now the expected date for substantial completion for 10 of the 11 leasable is Oct. 31, according to Ms. Glasgow.
Ports officials didn’t confirm how much tax revenue has been lost due to missing the April deadline, but assuming that Norwegian delivers 4,000 passengers weekly between April 2015 and April 2016 and only has to pay $7 for half of that period, that would put the losses at more than $800,000.
“I am surprised [Norwegian] is paying anything to dock at a construction site,” said Hugh Darley, who was involved with Tortola Pier Partners — a consortium of developers contracted to construct the complex before the deal fell apart in September 2013 — and then continued to work with the BVIPA as a consultant through at least April 2014.
Norwegian has the right to terminate the agreement if construction isn’t finished by December.
Units leased
The good news for project managers is that they’ve reportedly fulfilled the requirement to lease out at least 50 percent of the units in the landside development.
According to Ms. Glasgow, the number of businesses approved for lease in the pier park is 54 – four international companies and 50 local businesses. An earlier advertisement for the park said that it would house about 50 leasable spaces.
However, there have been cost overruns in the effort to complete the complex.
During the HOA sitting, Premier Dr. Orlando Smith said construction costs on the pier extension reached $36 million, which is $5.3 million more than the initial projection of $30.7 million.
Dr. Smith attributed the overrun to legal fees, consultants, and other ancillary costs, and Communications and Works Minister Mark Vanterpool added that new bollards and additional safety measures had to be installed.
Public offering
Developers originally hoped to raise the outstanding $16.5 million for the landside construction through a public offering of preferential shares, but few people invested.
When the March 2 deadline came and went, only $6,326,000 had been raised, with $5 million of that amount coming from the Social Security Board, according to Dr. Smith.
Tortola Pier Park — the subsidiary created by the Ports Authority to oversee the fundraising — reopened the offering in May with a new June 18 deadline, but it’s unclear if that offering garnered further interest.
Shortly after the deadline passed, placement agent Clarence Faulkner said that TPP was in the process of reviewing applications.
During Monday’s HOA sitting, Mr. Vanterpool estimated that some $6.5 million had been raised. However, BVIPA officials haven’t responded to requests to confirm that figure.
With the December construction deadline looming, officials apparently decided to forego the public offering in favour of the $15 million loan from FirstCaribbean International Bank that they approved on Monday.
Design questions
For his part, Mr. Darley complained that the development will likely be different from his original concept.
“Originally, the project was supposed to be traditional British colonial. We didn’t want another commercial or strip centre,” he said. “We wanted to write a story that talked about an old waterfront village.”
The fact that the facilities don’t seem to be shaping up to his original intent has hurt his company’s relationship with Norwegian and Disney cruise lines, he claimed.
“We’ve lost a relationship with Disney that I had for 30 years,” he said. “We lost NCL over this project because we couldn’t see it through and guarantee them a good port.”
This article has been updated from the print version to reflect comments from the BVI Ports Authority that were provided after press time.
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