Posted by: Editor on Aug 18, 2006 – 11:27 AM
newsandinfo  EIC Resorts has never had a problem with the financing of the new French Leave Resort and Marina that company plans to build at Governor’s Harbour, Eleuthera, according to an official of the development group, who said the plans for the resort will be submitted to the government for approval by early next week.

EIC principal Eddie Lauth sought to set the record straight over the delay between the signing of the heads of agreement between his company and the government and the start of construction on the project.

North Eleuthera MP Alvin Smith, in the context of a venomous diatribe blasting the Christie administration’s approach to so-called “anchor projects,” expressed grave concerns about the French Leave development.

Mr. Smith suggested that the reason nothing had as yet happened – some two years after the signing of the heads of agreement – was because the developers did not have the funds to complete the project.

Mr. Lauth confirmed that construction had not yet begun.

“That’s true as far as the construction, but everyone this past year – from expensive architects and engineers – has all been hired and working behind the scenes to develop the plans to submit to the Bahamian government for subdivision approval,” he said.

“We are not allowed to start anything without the subdivision approvals, so I anticipate that Friday or as early as next Monday or Tuesday, our entire French Leave Resort subdivision plans will be submitted to the Bahamian government for subdivision approval.”

According to Mr. Lauth, the company has been working “day and night over the past year to get that done.”

Mr. Smith confirmed that Mr. Lauth had been in touch with him on Wednesday, and explained the delay to him. According to Mr. Smith, “so many different dates” had been given that he would simply “wait and see what is going to happen over the next couple of days.”

He said he would be excited if the project gets completed, but added that he was very concerned by the amount of real estate the government has sold EIC.
According to Mr. Smith, this is a concern raised by many residents of Eleuthera.

If the majority of the land sold to EIC is used for second homes, according to Mr. Smith, that would be problematic because “second homes do not hire a lot of people. (Eleutherans are) looking for projects that are going to hire people.”

“Hotel rooms hire people, even marinas – his focus is on marinas. Now marinas really don’t hire a lot of people, but there are some spin-offs from marinas, because once the people get ashore they would spend money,” Mr. Smith said.

“But I’m going to wait and see what happens in a few days.”

On the question of using the land as equity to raise the necessary funds to complete the development, Mr. Lauth explained how that was not the case.

“The banks don’t lend money without equity in the deal, and EIC exceeds the equity requirement because we have no debt, so it’s just the opposite – funding has never been our issue,” he said.

According to Mr. Lauth, all banks in The Bahamas and the United States require the property used for development as collateral, so he said that even if a developer did not wish to use the land, the banks require that as part of the collateral.

This, he said, is because most people borrow money to buy land.

“We didn’t borrow a dime. We paid 100 percent in cash, so we exceed the bank requirements for equity in the deal.”

He added that all banks in The Bahamas require a “pre-sales programme” – what this means, he said, is that EIC cannot begin construction until the company completes that programme, whereby a certain percentage of the units must be pre-sold.

“And we’re very confident that we’re going to meet that pre-sale programme, but I can’t start the pre-sale programme until I get subdivision approval,” Mr. Lauth explained.

The developer was quick to point out that he was not blaming anyone, insisting that he took full responsibility for the delay in construction. He added that EIC had done a lot of research on what had happened to the other unsuccessful developments on the island.

“So in our research, we know that it was important to have a hotel flag, so we spent a lot of time with St. Regis hotels, and as you know, last year we got left at the altar for Baha Mar, so we lost valuable time on that,” Mr. Lauth said.

“I’m not blaming anybody; it was bad luck. We had a couple of other hotel deals that fell through because we didn’t have the marinas for them, and one of the things we found out in this homework that we’ve done is that you need marinas to drive the economy, not only of the resorts, but also of the island. So we had to plan for these things – it’s important for this resort to be successful.”

He added that EIC has to build a $6 million breakwater for its marina because the harbour at Governor’s Harbour is not protected. According to Mr. Lauth, the breakwater is so expensive because it will be engineered, designed and built to withstand category four and five hurricanes.

Along with the Park Hyatt hotel, the new French Leave Resort will also encompass Savannah Hill, which Mr. Lauth describes as “an upscale residential community,” a marina, restaurants, full-service spa and restaurants.

By Quincy Parker, The Bahama Journal