More questions, not many answers on Bloody Bay sale
Published:Thursday | October 27, 2011 | 12:00 AM
Erica Virtue, Senior Gleaner Writer
Despite exhaustive questioning of Urban Development Corporation (UDC) representatives during yesterday's meeting of Parliament's Public Administration and Appropriations Committee (PAAC), members were no closer to understanding whether Government received the best value from the $351-million sale of 23.5 acres of a 39-acre property in Negril, Westmoreland, known as Little Bloody Bay.
Committee members tried unsuccessfully to determine how the property, also referred to as Ireland Pen 1 and Ireland Pen 2, had its value reduced by 50 per cent within months after a valuation by the same vendor and was sold to Selective Homes (Negril) Limited.
PAAC members expressed further confusion when the UDC accepted a price lower than the forced sale value of $380 million, based on the second valuation of $400 million for open market sale.
Opposition committee members Fitz Jackson, Dr Omar Davies and Ronald Thwaites grilled the UDC representatives, headed by acting general manager Desmond Young, but were no more enlightened in their search for answers, despite a commitment by former Prime Minister Bruce Golding to provide a full listing of assets to be divested.
Committee Chairman Dr Wykeham McNeill said the PAAC had not been provided to date with any information about government assets to be divested.
The committee heard that Clinton Cunningham and Associates, in their valuation report received by the UDC on May 22, 2009, said the open market value of the property was $800 million with a forced sale value of $650 million, based on an inspection completed May 8, 2009.
The company said the valuation was based on market appeal as the land was located in an area earmarked for eco-resort residential development.
"There continues to be optimism that the tourist product will hold its own, despite the current downturn in the economy and the current global recession. Given these factors, we would expect fairly good market support for this property if placed on the market for sale on bona fide terms," the valuation report said inter alia.
$2.1-million offer rejected
Members, however, tried unsuccessfully to ascertain if the best price was received for the property, given that the valuation report said "the basis of the valuation is the open market value and this is intended to mean the best price which might reasonably be expected to be obtained for the interest in the property at the date of valuation".
Young said another valuator recommended a forced sale value of $460 million, while the eventual purchaser commissioned its own valuation which recommended a sale price of $220 million for 29 acres. According to Young, the UDC rejected an offer of J$2.1 million, and since Selective Homes was the only other bidder, the UDC proceeded to negotiate with the company.
Committee member Franklyn Witter wanted to know if the Commissioner of Lands was among those valuing the property.
"No (it) wasn't'," Young said.
Davies noted that during his administration's tenure, a Cabinet decision instructed that any disposal of land by the State should include a valuation from the Commissioner of Lands.
"Was the UDC aware of this decision," Davies asked.
Young said if the policy was in place, the UDC should have used it.
"They didn't," quipped Davies.
Deputy general manager for legal services, Yvette Sibble, said, in divesting assets, the UDC asks for two market-driven valuations. She said the Commissioner of Lands recommends valuators, as it does not normally "do valuations of statutory bodies, unless you ask specifically".