'Reckless' UDC feels heat at PAAC meeting
Livern Barrett, Gleaner Writer
LAWMAKERS ON the Public Administration and Appropriations Committee (PAAC) of Parliament yesterday questioned whether the Urban Development Corporation (UDC) was "frolicking" with the country's resources when it purchased a number of abandoned properties.
Using the $80-million purchase of the Machado Complex in Kingston as an example, PAAC member Mikael Phillips said he is not satisfied that the proper due diligence was done.
Phillips said it was his understanding, at the time of the purchase in 2010, that the UDC would spend some $1.2 billion to refurbish the 3.5-acre complex located at the corner of Victoria Avenue and South Camp Road to be used as its headquarters.
"We know that the UDC was never in a position to spend this money to refurbish the property. Yet, still, we went ahead and purchased this property and we have it there sitting down now (attracting) monthly expense," Phillips said.
He added: "And I'm sure as night follow day that when we sell this property, we are going to end up with a net loss."
According to Phillips, "It's as if there was a frolic (among) individuals or whoever it may be, both the board and the management, in purchasing these properties."
The concerns came after Donald Hamilton, deputy general manager in charge of finance, treasury and investment at the UDC, told the committee that the company has racked up losses of nearly $760 million over the first seven months of this fiscal year.
This disclosure drew strong criticism from another member of the PAAC, Fitz Jackson.
RACKING UP LOSSES
"On the surface of it, this would represent recklessness and irresponsibility on the path of the UDC to rack up these losses on its operations," Jackson chided.
But Hamilton pointed out that the UDC's involvement in the redevelopment of Falmouth accounted for $300 million of the amount.
In addition, he said the company is owed $149 million in rentals by several government ministries and agencies and has identified a number of real estates and non-performing assets that are costing millions of dollars to maintain.
As a result, Hamilton said the UDC is in "advanced negotiations" to divest at least five of these properties by the end of the current financial year.
The UDC says it expects to net about $1 billion from the sale of the properties, which include the Machado Complex, the old Jamintel Building in Kingston, and the old Cotton Polyester Mill Factory in St Catherine.