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UPDATED: Financial secretary recognises gov't spending $400m at Oceana could raise concerns

Published:Wednesday | June 29, 2016 | 12:16 PM
Financial Secretary Devon Rowe made the admission at a meeting this morning of the Public Appropriation and Administration Committee of Parliament.

Jovan Johnson, Parliamentary Reporter

The Finance Ministry has acknowledged that the spending of sums by the government to refurbish a floor of the old Oceana Hotel in downtown Kingston, at a greater cost than the figure the building was sold for, could raise concerns without all facts considered.

Financial Secretary Devon Rowe made the admission during a meeting this morning of the Public Administration and Appropriation Committee (PAAC) of Parliament.

Finance Minister Audley Shaw triggered public debate when he disclosed that the government was spending $400 million to renovate the ground floor of the building.

The Urban Development Corporation (UDC) sold the entire building for $385 million to a private sector company in 2014 at the 2011 market price.

Shaw had controversially questioned whether it was a sweetheart deal.

But today the financial secretary said his ministry was never interested in buying the building when the UDC put the property up for sale.

Rowe explained that, when full building renovation cost was factored in, acquiring the property would have required  a more than $2-billion spend.

According to data provided at the meeting by the UDC, in 2012 the bill for repairs to the property would have been $1 billion in addition to a purchase price of $350 million.   

Rowe told the PAAC that the ministry would have preferred to construct a building to house the Accountant General’s Department which has been searching for a home since 2002.

He said he understood the concerns about the process,  especially because the UDC, which sold the building, later became the project managers for the refurbishing works.

Meanwhile, Rowe revealed that a lease agreement was signed with the owners of the building months before the October 2015 timeline for the Accountant General's Department to move in.

He said the 10-year lease agreement which was signed in June last year had to be done early because of the competition for the first floor of the hotel.

However, delays due largely to the discovery of asbestos affected the relocation timeline which also forced a renegotiation of the lease agreement.

Rowe said the Accountant General’s Department is expected to move into the building in September.

The government department is to pay $91 million per year in rental.

The offices of the Contractor General and the Auditor General are probing the deal.

EDITOR'S NOTE: A previous version of this article may have given the impression that Financial Secretary Devon Rowe was concerned about the renovation costs government has incurred on the old Oceana hotel building.