|Monday, 10 September 2012 15:59|
There are significant benefits to be gained from the BOLT (Build Own Lease Transfer) arrangement entered into by the Tobago House of Assembly (THA) with the special purpose company, MILSHIV Limited to build an administrative office complex for the Division of Agriculture, Marine Affairs, Marketing and the Environment, according to Peter Forde, managing director of Project Specialist Limited of Chaguanas, Trinidad.
The project at the junction of the Claude Noel highway and Shirvan Road in west Tobago has drawn criticism from a number of Tobagonians who felt that the Assembly could have borrowed the money instead of entering into the BOLT arrangement which was new to Tobago. The $143 million complex will comprise a three storey building of 83,000 square feet of floor space.
Forde explained in an interview on Thursday (6th September 2012) that the THA would not have to put out any money for the project; it would pay a fixed rate at the present market price of $15.61 per square foot per month over the 20-year period of the lease; the rate would not change as a result of inflation; Assembly would not be responsible for the external maintenance of the building constructed under the arrangement; the developer would take all the risk in the investment; at the end of every three-year period the Assembly could capitalise the rent to the end of the lease period and pay off for the building; and at the end of the 20-year period the property would automatically be owned by the Assembly.
He said to borrow money for the project required the use of Assembly funds, its own resources and collateral while the lease rental would be a charge on recurrent expenditure thus freeing up development funds for other projects.
Forde held a senior position at the Ministry of Works for 17 years and later at Republic Bank Limited and London Street Limited before launching his own consulting company in 2011. He said the BOLT arrangement was not uncommon to Trinidad and Tobago since this arrangement was entered into to build the Ministry of Works head office, the National Library, Police Stations and the Unit Trust Corporation (UTC) head office in Port of Spain, adding that a similar arrangement was used for projects in Barbados and Grenada.
He said the monthly payment of $15.61per square foot per month was not an unreasonable rate because there were properties in Scarborough where tenants were paying as much as $10.00 per square foot. He stressed that even if there was inflation the rate will remain the same.
Forde said the 131,000 square feet of land which was previously owned by Amera Caribbean Development Limited was valued at $12 million in 2006 by the Commissioner of Valuations of the Central Government and purchased by the Assembly at that price in 2011. He said all BOLT arrangements required a special purpose company for the project and as a result MILSHIV was formed as the developer. The land was then leased to MILSHIR at a pepper corn rental of $10.00 per year for 199 years in order for it to secure long term financing for the project.
Senior legal adviser Alvin Pascall who sat in on the interview also sought to clear the air on reports that the Assembly owned the property opposite and therefore could have utilised it for the complex. He said this was far from the truth since the Assembly had no legal right to the land because although it was acquired through compulsory acquisition the Central Government had not released funds to pay off for it.