$200M airport deal on table

$200M airport deal on table

Posted on Mon, 10/29/2012 – 07:38 in Local News
2373.jpg(CNS): A deal to redevelop Owen Roberts International Airport under the coordination of the Canadian government’s procurement agency is still on the table more than a year after the premier announced the possible public-private partnership last August. According to a presentation given by Canadian Commercial Corporation along with its local partner the Paramount Group last week, it will be taking on the $200 milllion project to double the airport’s capacity via a concession agreement and leasing the airport for as long as 40 years. The CCC says there will be no cost to government and it will return as much as $13 million to the CIAA. However, it is still not clear if the arrangement will pass muster with the Framework for Fiscal Responsibility.

If government goes ahead with the proposed deal the corporation will be taking fees from the airport that would have gone to the government owned company. It will use that money to develop what will remain a public owned resource, which makes it subject to UK fiscal supervision.
Furthermore, it is not clear if the decision to work with the Candian corporation and the various partners involved, including the local partner, will be considered by the FCO as meeting best international l procurement practice. In a presentation last week to local stakeholders, the various partners on the project were revealed but no tendering process has ever taken place.

Although the company has stated that it will return millions of dollars annually to the Cayman Islands Airport Authority during the 40 year concession, it will be taking landing and other taxes from those using the airport. The corporation and its partners will make their profit mostly from the retail that will form part of the redevelopment and, it said, from doubling traffic to the airport. The $200 million development will include the extension of the runway and an expansion of the terminals. The proposed deal also includes an up-front payment to the Cayman government of $30 million.
The corporation will be responsible for the project but alongside the Paramount Group, which was described as the “strategic local partner”, the lead developer will be Aecon group inc, the aviation advisor will be Mott MacDonald Limited, the lead architect will be Scott Associates, and the money will come from Scotiabank, with Heenan Blaikie LLP, as the “Co-developer and Legal Advisor”.
The presentation reveals a commitment to employ local sub-contractors and to help civil servants working at the airport to transition into the private sector. The corporation also promises to train local staff and provide employment and engage local businesses to develop the new Airport.

The corporation said it would also work with the Cayman Islands Tourism Association (CITA) and the Department of Tourism to increase air traffic to Cayman. Under the deal the Canadian government will guarantee contract performance and to pay a yearly concession fee to the CIAA. It will run and maintain the airport to the required service levels and uphold international environmental standards.
The local airport authority will still own the airport, set the performance standards, regulate and monitor the concession and receive a share of the profits. It will also retain responsibility for air traffic control, weather, fire and rescue, security and the airports emergency plan.

Paramount released a statement as well as the CCC’s presentation regarding the talks Thursday, which stated that positive feedback had been received at all meetings held by the Canadian team. Pointing to the doubling of capacity and the cash for government, Paramount said there would be important short term safety upgrades, and the generation of significant employment opportunities and dramatically improved customer service experience, all at no cost to the Cayman Islands public purse.
“Canada, through the Canadian Commercial Corporation, offers the advantage of contracting for the delivery of complex infrastructure projects on a Government-to-Government basis. Simplified acquisition, reduced risk and an enhanced bilateral relationship are key advantages of this approach. Collaborative project definition and planning are the foundation of the project development and implementation process proposed by the Canadian team,” Paramount stated in the release.
See press statement below.
Although Paramount sent the details of the Canadian Commercial Corporation presentaiton unsolicited to all the media it has requested that the documents were removed from the CNS website after they were posted with the story this morning. CNS is not sure why this request, which flies in the face of transparency, has been made.However, until we have clarified the position we have removed the documents. CNS has a policy of publishing all documents it receives as we believe this is in the public interest.

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