Copy/Excerpts: Airport Development Agreement

January 19, 2016

The Airport Development Agreement between the Bermuda Government and the Canadian Commercial Corporation was made available, with the Agreement setting out the terms of the project. A few excerpts, as well as the copy of the agreement, are below.

Purpose

The purpose of this Airport Development Agreement is to, inter alia:

[a] confirm the agreement of the Parties to proceed with the Project and implement the Airport Project Concept subject to, and in accordance with, the terms of this Airport Development Agreement;

[b] agree to the process by which the Project will be developed to Financial Close and identify certain specific events that may cause the Parties to elect to terminate this Airport Development Agreement [and the basis on which termination would occur] prior to Financial Close;

[c] set out the heads of terms for the subject matter and agreements set out in Section 1.1 above, including the Project Agreement [the “Project Agreement Heads of Terms”] that will establish the process for implementation of the Project from and after Financial Close; and

Expiry Date

5.1 Unless extended by the mutual agreement of the Parties, this Airport Development Agreement will commence upon the Effective Date and will continue until expiration on the earlier of:

[a] Financial Close;

[b] the termination of this Airport Development Agreement by either Party pursuant to, and as expressly permitted by, this Airport Development Agreement; and,

[c] Match 31, 2017 [the “Expiry Date”].

Airport Personnel Transition Plan

[i] agreeing with Bermuda on a transition plan for Airport Personnel [the “Airport Personnel Transition Plan”] which shall include transitioning all Airport Personnel to either Project Co, Airport Quango or Bermuda, and, in the case of the transition of Airport Personnel to Project Co [and subject to receipt by Aecon Concessions of further information and the conduct of further due diligence and without prejudice to Section 6.3[j] below], on terms and conditions which, taken as a whole, are no less favourable than such employees’ then existing employment terms and conditions;

Development of Bermudian Labour Plan

[ii] subject to Sections 6.2 and 6.3[j][i] and 6.3[k][i] Project Co shall establish a “Development of Bermudian Labour Plan” prior to the commencement of Airport Operations pursuant to the Project Agreement, which shall describe, among other things, the ongoing obligations, systems, undertakings and management processes that Project Co will implement to identify, train, develop and preferentially employ qualified Bermudian Labour. Such plan shall include, without limitations, the following: description of how staff shall be trained on the job; description of training provided for subcontractors; description of special training and method for recording training outputs; description of how training will be assessed and measured; description of training for Bermudians leading to progressive advancement; Bermudian succession planning in compliance with applicable immigration and work permit Laws; and, strategies designed with the objective of accessing overseas training; and,

Relief from Custom Duty

A. Project Co, Aecon Construction and its Affiliates, and all Subcontractors, will have full relief from custom duty in respect of capital items [and excluding consumable items] such as any building materials, furnishings, fixtures, and equipment which are necessary for the building, furnishing and equipping of the airport construction and for Airport Operations. For greater certainty, such relief from customs duty for Subcontractors related to Airport Operations shall only apply to capital works associated with Airport Operations that are undertaken by Subcontractors;

Payroll Tax

Project Co, Aecon Construction and its Affiliates, and all Subcontractors will be exempt from paying the employer’s share of payroll tax under the Payroll Tax Act 1995 [or any successor applicable Law], with respect to all work done concerning the Project during the term of the Construction Contract and with respect to any capital works, capital refurbishment or capital improvements that are undertaken concerning Airport Operations pursuant to the Project Agreement. The employer’s share of payroll tax means that portion of payroll tax which the employer is not entitled to deduct from an employee’s wages under section 19 of the Payroll Tax Act 1995;

Project Co will be exempt from paying the employer’s share of payroll tax under the Payroll Tax Act 1995 [or any successor applicable Law];

On Financial Close

12.4 On Financial Close:

[a] Project Co will acquire operational control of the Airport from Bermuda [subject to Bermuda retaining control over the Retained Government Services], and will commence the Airport Operations;

[b] Bermuda will contribute the MP Reserve to Project Co as stipulated herein;

[c] all Airport revenue dedicated to the Project will accrue to and be received by or on behalf of Project Co;

[d] all accrued and pre-paid maintenance costs and other expenses associated with the Airport Assets will be reconciled, adjusted and attributed on a pro-rated basis between Bermuda and Project Co in accordance with their respective rights and obligations; and

[e] without any further financial obligations of Bermuda other than as expressly set out herein and in the Project Agreement, Project Co will avail itself of sufficient debt, equity and other sources of funds to fund the Airport Operations and the Construction.

The 34-page Airport Development Agreement follows below [PDF here]:

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  1. Jonathan Eve says:

    Looks like if this project was put out to tender, we would surely have gotten a better deal.

    • Ya and if P L.P did a shady move like this, a certain segment of society would be crying corruption.
      Two Bermudas.

      • Double S says:

        This project has multiple layers of oversight.

        We have a 200+ page Deloitte report identifying gaps that need to be remediated before commencement.

        We have a letter of entrustment from the UK which is to ensure the identified deficiencies are remedied and thus providing an additional layer of oversight.

        We have had 2000+ emails disseminated by the People’s Campaign and not one highlighted any malfeasance or corruption.

        There has been permission granted by the relevant civil servants with one stating that they are satisfied with the continuous flow of information being provided by the Ministry.

        Now show me where any sole sourced PLP contract ever had this much transparency and multiple levels of oversight and that didn’t result in the customary millions of dollars of so called ‘overruns.’

        Stop comparing apples to avocadoes.

      • Try It says:

        they did their shady moves

    • serengeti says:

      What, like with Berkeley? And TCD? And the golf course? And the swimming pool? And Dockyard? yeah, tendered contracts always run so well.

      • Johnny says:

        All things for Bermudians to enjoy. OBA only does stuff for foreigners.

        • serengeti says:

          How many Bermudians are “enjoying” Grand Atlantic?

          And you add up the overruns on Berkeley, the golf course, TCD and the swimming pool it comes to about $100m. In overruns. What a resounding success it is when you put things out to tender. It only costs 4100m more than it should cost. But in the PLP world, that’s fine. Just borrow more, and tax more, and stick your head in the sand.

    • Bullseye says:

      Why do you make that assumption?

  2. Encyclopedia says:

    What about the several other side agreements?

  3. We all we got says:

    Ok, March 1st, let the building begin

  4. Coffee says:

    Naft ..

  5. Reality Check says:

    With over 60% of the population opposed to this plan;

    with the plan requiring a huge and long term giveaway of desperately needed government revenues;

    with government having to compensate for the revenue loss by raising tax rates in other areas;

    with it clear that local residents and taxpayers, not the ‘other people’, will provide about 40% of the Departure Tax revenue;

    with government being asked to give away the employer/contractor portion of Payroll Tax (but the employee still pays);

    with government giving up Customs Duty;

    with so much wrong with this project, why is the Premier (and other Cabinet Ministers) allowing this Airport Folly to continue?

    Why?

    • Because the majority of the people who oppose it allow it by not showing their physical presence on a continous basis.
      Occupy Airport or Cabinet.

    • Matthew says:

      Strange since when did they have an island wide poll for this LOL. Can tell you don’t know much on business.

  6. Guy Smiley says:

    My friends, how can a deal this large NOT be put out to tender for competitive bids?
    Apart from that question…
    Project has a budget that is MULTIPLES per sq ft of other similar and recent airport projects. Ok, Bermuda is more expensive. Now throw in payroll relief and ALL customs duties and compare the price (or profit?) per sq ft. What a fantastic deal for the Cdns.
    No I am not saying Bda could afford to finance the project. But at least we could’ve had an honest and competitive bidding process with reputable investors.

    • Matthew says:

      Who is going to front the costs for building an airport?? No one you do relies that the bulk of the revenue will be used on running the new airport? As opposed to paying a bank back which would be even more expensive over a 30 year period.

  7. Coffee says:

    Deput Governor Ginny Ferguson is now in St.Helena , a BOT which has a brand new airport . Hard negotiations and tendering processes over many years have yielded , with the help of the UK government , a facility that all the stakeholders are proud of , produces many benefits and is cost effective , and is designed to provide a source of revenue to the government of St.Helena .
    The reason for this post is purely to educate my people that what this government is doing and the way they are doing it is a “wool pulling over the eyes” exercise that will strip Bermuda of its ability to control the only airport it has .
    I can only hope that Ginny Ferguson stumbles upon and brings back to Bermuda and it’s people serious documentation that supports the case that the UBP/BDA/OBA government is intent in its self serving effort to brainwash the Bermudian public into believing their egregious lies in convincing people that Bob Richards has made the absolute best choice for us .

    • Build a Better Bermuda says:

      Important note on the St. Helena airport

      1. They never had an airport before, previous access to the island was a week long ship ride, it would provide immediate payoff, something that would assist in getting a loan
      2. It is built to only service 2 aircraft, about a quarter of the traffic ours is being built to
      3. They really don’t recognize having 4 distinct seasons, so they haven’t built for jetways to allow for weather like we are in the middle of. What a joy it is to debark into sleeting rain in 40kmh winds at 57 degrees Celsius, particularly for elderly or disabled, or carry a small child down metal stairs.
      4. Their airport is only 1 level, being built some 300′ above sea level, storm surge isn’t really a concern for flooding, so they also don’t have to think about keeping the ocean out.
      5. The airport is being funded by the UK, Department for International Development, not the St. Helena government, as part of their commitment to maintaining access to St. Helena, a more dependant BoT than Bermuda

      To date, no one has been able to show that the Airport Redevelopment project is a bad deal for us, in fact, to date, Minister Richards has made this the most transparent project this island has had.

      • Encyclopedia says:

        Honestly, you don’t think that tendering would have at least proved to us if we are getting the best deal?

  8. Helicopter Man says:

    Don’t care, not interested, we get a new NEEDED airport. get the damn shovels in the ground NOW

  9. As long as you understand that funding does not in any way come from my trust to me…build yourselves a jail cell otherwise. …why…why do you insist on an airport?…we need a causeway and a swing or draw bridge…please incorporate a hydro electric system throughout the causeway…water flows both directions underneath quite strongly…I can see it paying for itself then astounding profits!

  10. You have to make converted effort…( look the other way), not to view this as an obvious truth!

  11. This is a fail …not to adhere to people to whom need adherence…our wishes fall apon deaf ears once again…

  12. rhonda says:

    Didn’t the oba bypass financial instructions with or without permission to do so.

    So we get what, we get.

    • rhonda says:

      to do this.

    • Build a Better Bermuda says:

      Nope, the Accountant General’s memo gave them open permission to single source provided he is kept in the loop… which he has been, even admitted it in the PAC. If he didn’t intend for it to be open ended, that means he wrote a bad memo… not the MoF’s fault

  13. bluebird says:

    We Elected a Government to “PULL US OUT OF THE FINANCIAL MESS WE ARE IN”
    They are doing it slowly as it will take years.
    The PLP/BIU have left the children and grandchildren of Bermuda a “HUGE DEBT” that will not be “PAID” off in our lifetime.
    There is NO wand and there is no money trees we have to earn it.
    That will be a new concept to quite a few.

  14. craig looby says:

    From: craig Looby
    Date: Thu, Jan 7, 2016 at 3:13 PM
    Subject: Re: UMI and the Bermuda airport redevelopment
    To: Deborah Harris , “Richards, Everard T.” , Rhonda Woods-Smith , karen@ariesenterprise.com, Peter Yeung , Arthur Brangman , “Dunkley, Michael H.” , ccannonier@gov.bm, sgcrockwell@gov.bm, “Gibbons, E. Grant” , “Baron, Jeffrey C.” , jjardine@ibl.bm, tmdavis@gov.bm, amanders@gov.bm, dsbinns@gov.bm, clwhitter@gov.bm, jballor@hydrogen411technology.com, “Hayward, Carol B.” , mazhar@gov.bm, vleader@gov.bm, jmtaylor@gov.bm, dgrearson@gov.bm, rbutterfield@gov.bm, tmoniz@gov.bm, hdurham@gov.bm, spgift@gov.bm, lrdickens@gov.bm, agc@gov.bm, oag@oagbermuda.bm, dao@gov.bm, pmhavlicek@gov.bm, energy@gov.bm
    Good day Governor, Premier, and Ministers Richards, Dr Gibbons, Cannonier, and Crockwell,
    Urban Maximum Industries Inc (UMI) has a superior proposal to the current airport redevelopment plan proposed by the CCC and AECON. We are currently being runaround in circles in our attempt to fully engage the Bermuda government to bring much needed direct foreign investment and infrastructure development to Bermuda.
    Technology exists to end the dependence on imported fuels to power island nations. UMI also has a superior plan for Bermuda energy production that can replace the poorly designed BELCO plan for deployment of LNG infrastructure. The deployment of a 200 MW utility scale power production facility based on renewable energy systems.
    The Bermuda Government established the Department of Energy to take the lead in meeting both the challenges of Bermuda’s own need for energy and our responsibility to set an example for the rest of the world.
    The Department of Energy’s strategic goals are to:
    1, Ensure a secure energy supply, in terms of both quantity and cost
    2, Reduce fossil fuel dependency
    3, Encourage greenhouse gas emissions, reductions related to energy
    The current draft energy legislation does not fulfill the Dept of Energy’s strategic goals.
    The UMI Power Master Plan for Bermuda does the following:
    1, Provides a secure energy supply in 200 MW quantity at lower rates to consumers than LNG
    2, Ends fossil fuel dependency; Bermuda will make its own fuel
    3, Ends greenhouse gas emissions related to energy production and certain classes of vehicles.
    UMI is also prepared to present an alternative proposal for the St Georges hotel development, if the public wants an option. We have been hearing concerns from Bermudians that the current developers plans feature a small hotel, and the main focus is on fractional property ownership. A model that has not increased hotel bed numbers to required amounts.
    We want to be vetted by the BMA, so the Government of Bermuda knows in advance that, every thing UMI is proposing can be delivered, and funds are available. We are requesting that the Finance Ministry and the Ministry of Economic Development, direct the BMA to vet our group.
    We contacted The BMA and they have stated that both ministries have the power to direct the BMA to vet us, without UMI being engaged in any application process for any RFP.
    We again highlight that UMI has been approached by two groups shortlisted by WEDCO and BLDC to fund projects that have gone out for RFP.
    In addition to the information below we provide the following websites for Dr Gibbons review, that outline the capacity, experience, projects undertaken, under construction, and scheduled for start, by Peter Yeung and the various partners within his network.
    http://WWW.ariesenterprise.com
    http://WWW.castlerockfinancial.ca
    http://WWW.internationalaseancorp.com
    To ensure clarity of our mission as per our LOI, we also highlight our interest in bundling the construction of the “Bridge and causeway and the Airport”, to form a totally new regional airport. We are prepared to also look at replacing the swing bridge gateway to St Georges.
    Investors are in support of a Bermuda airline, with multiple gateway city routes, the planes will be purchased by the investors, and the operation and marketing of the airline will be funded by the investors, new road paving technologies, with the addition of an island wide, rapid mass transportation mono rail system” as a strategic infrastructure, There are other aspects of our airport development plan outlined in our overview that has been sent in the LOI package, which we have sent out previously, and are re sending now, see below.
    This ensures that the significant investment for the new Airport is logically supported by the key Bridges, and mass transit requirements. We have the capacity to replace the CCC / AECON, and cover the penalty fees associated with ending that relationship with the Bermuda government, so the tax payers pay nothing.
    We have been engaged in talks with the CCC for some time, in an attempt to partner with them and AECON, and they fully accept that the Bermudian people can at any time choose to go with another option in regard to another proposal from a group like UMI, to develop the airport.
    And with polls indicating upwards of 75% of the population are against the current proposal on the table from the CCC/AECON, UMI seeks to provide Bermuda with a superior option for the program delivery.
    The investors working with UMI are prepared to visit Bermuda in January / February 2016, for face to face talks with the government. We are seeking a MOU with the government in order to present our proposals in detail.
    PS…Premier and The Governor’s office, can you confirm receipt of this email.
    Sincerely,
    Craig Looby
    UMI Inc. Founder and President

  15. craig looby says:

    Premier Michael Dunkley via gov.bm JAN 19
    Jan 19 (2 days ago)
    to Deputy, me, Grant, Carol, Everard
    Good Afternoon,
    Thank you for the below message sent on January 7th to which I believe the Cabinet Office did acknowledge receipt.
    I am aware that you have been in contact with Minister Gibbons and discussed projects. He in turn has kept myself and colleagues on the Economic Development Committee updated on the discussions.
    All development that the Government of Bermuda undertakes is put out to tender. I would hope, due to the interest and ability that you believe UMI can offer, that you submit the required documents to a tender. They will be considered.
    Thank you for your interest and support of Bermuda.
    All the best.
    Premier.
    The Hon. Michael H. Dunkley, J.P., M.P
    Premier of Bermuda
    Minister for National Security

  16. craig looby says:

    craig Looby Thurs Jan 21 2016
    1:43 PM (6 hours ago)
    to burtd06, William, Deborah, Everard, Rhonda, karen, Peter, Arthur, Michael, ccannonier, sgcrockwell, Grant, Jeffrey, jjardine, tmdavis, amanders, Derrick, clwhitter, jballor, Carol, mazhar, vleader, Jackqueline, dgrearson, rbutterfield
    Sir
    Thank you for your response. We very much appreciate and all points are respectfully noted.
    However…..we have been following instructions to make contact with Dr Gibbons, we have also been referred to other Ministers, to date we are still awaiting the information we have been requesting.
    We are attempting to secure a detailed and comprehensive check list of documents that needs to be provided so the BMA / Ministry of Development / Finance can properly vet the overseas investors, who are wanting to secure a MOU to engage in officially discussing our proposals with the Bermuda Government.
    A few points for your awareness as we continue to believe that not withstanding your supportive feedback is that due to the scope and depth of our overall engagement package (alliance consortium) is that UMI in using the public private partnership model seeks to partner not in an isolated and somewhat disconnected fashion as you state via projects (Request for Proposals, Expression of Interests,etc) but by having meaningful and structured national program development:
    The public private partnering seeks to facilitate a program development that is structured, integrated and timely
    The track record of Government project delivery is not consistent and is somewhat disjointed in its transparency or lack of transparency
    Government has a track record of engaging via both the RFP and un-solicited program delivery
    RFP –
    Unsolicited Proposals – Airport Development
    The Airport Project Program via a UMI program would include a bundling of projects which would deliver a significant, structured and timely delivery which establishes a national catalyst for rejuvenation – foreign direct investment, a wide range of employment and training and critical infrastructure program based on an overall tenets of sustainability.
    UMI is engaged with two current invitation initiatives via both BLDC* and WEDCo. We are seeking an expeditious exercise so that we can satisfy and support the Governments stated focus to establish a significant sustainable employment program which enables our country to increasingly move to stability and then growth.
    BLDC – Marginal Wharf – we are entering our xx month of process
    We do appreciate your guidance and continue to hope that in noting that the methodology of an overall national program delivery would be best served by a comprehensive and co-ordinated program .
    Sincerely,
    Craig Looby
    UMI Inc. Founder and President

  17. craig looby says:

    Bermuda has some serious issues with its governance system….and its time to get rid of party politics completely.
    We are being bounced around like a ping pong ball from one minister to the next as each says another minister is in charge of the process and decision making..RE the airport deal….while we are being told all govt projects are to be done via RFP…as the govt makes excuses not to vet the UMI Urban Maximum Industries Inc. group…while the airport deal that didnt go out to RFP continues development….and the finance ministry has been avoiding talking to UMI Urban Maximum Industries Inc. completely.
    .
    We will be responding to Dr Gibbons email of Jan 21 2016 shortly.

    Nanna Peggy has a petition to stop the current airport proposal…the 75% of Bermudians polled that want the current CCC / AECON deal stopped and want to see another option, need to sign the petition….only a petition with over 50% of registered voters signed will carry any weight.

    We encourage Bermudians to reach out to Nanna Peggy, perhaps the petition can be made available at the up coming by election for voters to sign.

    The longer Bermudians take to organize / unite / stop the process…the higher in price the penalty clause payment will be to end the CCC / AECON relationship with the Bermuda Government…..the CCC / AECON will continue with work until Bermudians stop them.
    the plp has not been doing its job as opposition to present the information to the public that UMI Urban Maximum Industries Inc. has presented to all politicians for months now…. As a result we have taken to social media to reach the public…..we ask the public to spread the word.

    Sincerely,

    Craig Looby
    UMI Inc. Founder and President

  18. smile909 says:

    Build the solar farm insted