Video: Minister Richards On Airport Project
“Millions of Government revenue will not be ‘shipped out to Canada.’ That money will go to paying interest, repaying debt, airport operations and maintenance of our airport,” Minister of Finance Bob Richards said today.
The Minister was responding to criticism of the airport redevelopment project from Craig Mayor and Larry Burchall, who have said they believe the costs to be understated, and called for the Auditor-General to give an opinion on the matter.
“Government will hand over all Airport Revenues, currently $37m/year and Project Co will assume approximately $10m/year of Government’s Airport Expenses,” a paper [PDF] written by Mr Mayor and Mr Burchall said. “On an aggregate basis Government will therefore hand over Net Revenues of $37m/year less $10m/year or $27m/year.”
Speaking at a press conference today, Minister Richards said, “The Government has reviewed the paper prepared by Messrs Mayor and Burchall [the Commentators]. With the advice of its advisors, the Government has prepared a point by point response to the items raised by the Commentators. This is available on the Government portal.
“I would like to note that I personally have responded to written concerns by these two gentlemen as well as extended an invitation to the Ministry to provide further information. They have chosen, instead, to make public pronouncements on the project that totally ignore information already provided to them by the Government.
“The Government has retained several independent third party advisors in order to help assess the airport project, each of them world class, with expertise in different disciplines and experience having worked on similar projects globally.
“This list of advisors includes: KPMG Canada/Bermuda; Bennett Jones; CIBC: Infrastructure and Project Finance team; Leigh Fisher; HNTB; independent Value For Money consultant Steer Davies & Gleave. Their expertise and experience can be found in our detailed response.
“The Commentators have no such expertise or experience. The tenor of their entire commentary starts from a position of “not” as opposed to, “how can we.” Their commentary and analysis is reverse engineered to lead to a predetermined conclusion. They propose no alternative plan, only criticism.
18-minute live video replay of the Minister’s press conference:
“The Government, on the other hand, has a duty to think positively, provide solutions, and in this case, the G2G P3 solution ticks all the boxes in terms of the strategic objectives for the Government and value for money. The independent VFM report by Steer Davies & Gleave confirms this.
“The paper prepared by the Commentators is replete with errors and presents a flawed analysis of the project. I cannot go through all of them here, as time does not permit but, I invite members of the public to read our response that identifies each one. I would, however, like to clarify three points:
- 1.Fact:- The “missing $27mn” the Commentators refer to is based on a false premise and is not the standard way project finance professionals evaluate alternative project options. Therefore there is no missing $27mn.
- 2.Fact:- The Minimum Regulated Revenue Guarantee does not guarantee Aecon’s profits. The guarantee will only be triggered if traffic for a particular year falls below the worst case scenario threshold. Government will make up the revenue shortfall and place that money into a trust account which can only be used to support lenders. It is specifically forbidden for that money to be used to support Aecon or other equity investors in Bermuda Skyport Corp.
- 3.Fact:- Millions of Government revenue will not be “shipped out to Canada.” That money will go to paying interest, repaying debt, airport operations and maintenance of our airport. Equity investors’ profit will be capped, above which a 50/50 revenue sharing arrangement with Government will kick in, so that your government will share in the success of this enterprise.
“Overall, it is evident through the numerous errors and incorrect assumptions made by the Commentators that they lack the knowledge and experience in several areas and their conclusions are not credible. The Government retained several third party advisors with global experience such that these types of errors would not be made and that the correct conclusions would be reached.”
“Again, I encourage everyone to visit the Bermuda Government Portal to get the facts about the Airport Redevelopment Project.”
The paper from Larry Burchall & Craig Mayor follows below [PDF here]:
The Ministry’s response follows below [PDF here]:
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Thank you Min Richards for once again schooling the peanut gallery! This constant miss-information needs to keep being addressed, but in the mean time keep pushing ahead and let’s get the shovels in the ground post haste!! The plp/unions along with mayor and burchall need to just stop getting in the way of progress!
thank you for tje double digberis talk from the Min…
what is the year over year projected ROI being guaranteed to AECON.
transparency..is the only way to stop those making projected prediction…
You speak english bra?
You obviously don’t, ‘bra’.
Perhaps if you watched the video and read the documents you wouldn’t ask such silly questions. ROI for Aecon is not being guaranteed – the guarantee relates to those who will be lending money for the project.
If the lenders have to be paid back before any roi is achieved, and we are ensuring that the lenders get paid back… then doesn’t that mean by having the revenue guarantee, we are still indirectly ensuring that there is an ROI?
The minister keeps playing with words.
Umm, no! Lenders always have to be paid back, if they don’t get paid back, they foreclose! No different than if you don’t pay your car loan or your house mortgage payments! It really is that simple! When the plp were racking up $500 million ++’deficits every year before they were finally relieved of our misery, they didn’t and don’t to this day seem to have grasped that fact?
If we borrowed from a bank, we would still have to pay back the money plus interest. This is what the Minister is saying. The revenue garantee is the money owed for the contract and any profit beyond that is then split between the private and public in the partnership. Once all money owed is paid back, then the whole profits of the venture are split.
Have you ever heard of a lender that will accept not being paid back?
The PLP borrowed money by the billion, and said they would borrow more money to build the airport. The interest is the first thing to be paid. Even Larry Burchall understands that. Look at his columns about Nanci.
Crickets…
In too deep, laughing stock of de world.
Yea, let’s do really good projects….like Grand Atlantic, the envy of the world.
World laughed at us when the PLP were running things, the OBA has gotten international recognition for the creative approach to the airport deal… as well as in many other areas
Misinformation needs to be addressed?
You mean from the Minister of Misinformation!
Craig and Larry are more tuned in than the Minister will ever be!
Not according to all the reports
Good stuff, Bob. You have provided more information on this project than any capital project in Bermuda’s history. Let’s get this airport terminal built!
Thats because he’s been forced too.
We aint gutt no money.
Hunyon Jooze halp huzz howt…..
No amount of information, unbiased reports or facts will stop the PLP protesting and spreading false information. Maybe the Auditor General should be provided with all this information and asked for input, even though it would be outside the role and probably resources of the AG, but if the AG supported the project it would be trashed as biased.
That would be a waste of taxpayer dollars, because even though the PLP are demanding this, when asked directly if they would accept the Auditor General giving this deal a go ahead, they refused to say they would. they refused to say that they would then support the project if the Auditor General, whom they are demanding review this project, gave support to the deal.
For the PLP this is about pure politricks and prolonging unemployment for as long as possible to make the OBA look like a failure. Even though the OBA has succeeded in so many areas where the PLP failed, economic turn around, putting the brakes on the out of control unemployment, turning around the business exodus, creating a vehicle to turn around our tourism, increase in hotel development and redevelopment, wrangling down the unsustainable government deficit…
All.
It is really time to get the facts out to the public. We know an airport is being proposed. We now need someone to independently and objectively explain the finances. The best suggestion I have heard is for a 3 or 5 person panel to review all financial information and then report to the public.
Perhaps 3 qualified accountants (a total of 3) or 3 qualified accountants and 2 lawyers (a total of 5). If 3, one should be nominated by the PLP. If 5, 2 should be nominated by the PLP. The others should be chosen by the OBA.
Some may object to the suggestion but the risk to Bermuda financially and socially is too great to carry on as were are. thus far, each side is spinning the information to appeal to their support base.
The mandate of the group should be very defined – Explain the factual basis of the proposed financing of the airport. They should be specifically prohibited from commenting on the selection process of Aecon, alternative procurement methods etc. since those elements are inherently political.
As long as all participants are professionally qualified, Bermuda should benefit from their report.
There are some on either side of the political divide that will not be persuaded to change their minds about whether or not they support the project but there are several persons that would simply like to know the facts.
The facts are already out. Any idiot can ask another stupid question, and that is essentially what the PLP will do for decades, if it they think it will stop the project. Last weeks questions have been answered, so they will come up with a bunch more, full of myths and lies to keep the peanut gallery entertained.
Your response proves the point. Asking questions does not equate to idiocy.
Prove me wrong and provide a concise financial summary of the financial fact of the airport deal (over the 30 year agreement) in response to this post.
What is the cost of the proposed airport, what revenues and expenses will be involved, how does the revenue guarantee work, how does the loan repayment factor into the ROI, at what points do the government and Aecon share in the ‘profit’, what costs does government retain etc etc… these are ‘simple’ questions that come to mind…
Lastly, if ‘idiots’ should know, offer a critique of what has been presented by Mr. Burchall and Mr. Mayor. A simple rebuttal of ‘our experts have said so’ is not sufficient. After all the Big 4 audit firms have missed major financial irregularities in the past.
Your response proves the point. Asking questions does not equate to idiocy.
Prove me wrong and provide a concise financial summary of the financial fact of the airport deal (over the 30 year agreement) in response to this post.
What is the cost of the proposed airport, what revenues and expenses will be involved, how does the revenue guarantee work, how does the loan repayment factor into the ROI, at what points do the government and Aecon share in the ‘profit’, what costs does government retain etc etc… these are ‘simple’ questions that come to mind…
Lastly, if ‘idiots’ should know, offer a critique of what has been presented by Mr. Burchall and Mr. Mayor. A simple rebuttal of ‘our experts have said so’ is not sufficient. After all the Big 4 audit firms have missed major financial irregularities in the past.
They already had the indepentent review. It backed the project.
More transparency, scrutiny, review, due diligence than any project in Bermuda’s history. The PLP deserve credit for some of that but it’s time to debate it in Parliament.
And the name should not change. Don’t confuse Mr. Wade with what has come forth since.
@ Orders
My suggestion is not for anyone to support or reject the airport, only to provide a factual explanation of the proposed costs of the airport.
Will it still be called L.F. Wade International Airport? That’s the elephant in the room nobody is talking about.
I think the name should be changed to Bob Richards International! Has a really good ring to it! Sadly LF Wade can only be equated to the plp who … us into a financial mess and that is why we are having to do a ppp with the Canadians!
So in other words any Black person who dont support U.B.P. are not worthy, a real Eurocentric ideology.
If it wasnt for Doc(which of whom I’m not a big fan off) we would’ve had no buildings of interest named after Black Bermudians.
Why should it be? That is the name given to the old terminal. The actual airport is still Kindley Field.
The last name the new terminal needs to have is the name of a politician. JMO, but the new terminal should carry the name of somebody who had a major part to play in the founding of aviation in Bermuda.
Were J.F.K. and Ronald Reagan politicians, I think there are airports named after them of I’m correct, and most ALL caribbean Islands have their airports named after someone.
Opps, but this is Bermuda and certain people of a certain ethnicity or who are affiliated with certain esteblishments are not qualified to have buildings named after them.
Come to think of it thats why de Doc is hated so much, he initiated namings of schools and buildings of interest after people of a certain ethnicity or were affiliated with a certain establishment that Historically would have NEVER been considered by the powers that be!!!!!!!!!!!!
Mmmmmmm
The entire airport is named L.F. Wade International, this should have nothing to do with the terminal. When have you ever seen an airport renamed just because a new terminal has been built? Kindley Field was the name of the airport when it was a U.S. Air Force Base decades ago.
I never understood that name change either. WTH was wrong with Bermuda International Airport anyway? the cost of changing the name was another ego project
is that what all this is about?
Seriously, wouldn’t that be the pettiest of all? Build a new facility just so they could justify renaming it? Good lord I hope Riley’s suggestion is less an elephant and more a speck of dust.
Wow! Started posting under multiple names again huh zevon, zendrive, lmao
How much has KPMG & the rest of the advisors added to the project? Non of these people work for free. Yet we still have the foot stompers wanting somebody else to look at it hoping that somebody will tell them whay they want to hear.
No we just want someone who doesnt have a vetted interest.
Do you mean “vested interest”. Says it all
Like the Court Building? You know…the one that levelled the playing field for certain people.
And it is not “vetted” it is “vested”.
Ok, Lets be for real. I’m a black Bermudian btw. Thought I ll clear that up right now before I hear racist crap…. Last week it rain so frigging hard, I had to meet friends at the airport. Get rid of this 3rd World leaking bucket of water holding place. Its old, outdated, and below any decent countries standards if you ask me.
I along with others had to wait an extra 35 mins for them to disembark. Why? Because there is no JETWAY. This is 2017 ABOUT… And be damn if Im about to witness PLP Go back in office to put us back in the fri%%in dungeons. That so called Party is selfish and distructive with multiple FAKE IDEAS. THEY CAN CARE LESS about the positive direction we heading. If its no hand outs for them they act likes a%%holes.
Can you imaging Burt as Premier!!!!!!! Are you serious….lmfao!!! Burt. Oh hell to the NOOOOOOO……. HE ALREADY HELL BENT AND JUST STARTING……. WAKE UP YOU PEOPLE before our money be 150 /1..
“I’m a black Bermudian by the way”, like thats a consolation. U.B.P. have used up that card and its played out.
Everybody brown aint down.
Cue the usual paid plp bloggers to pull the race card thus proving they have no real argument to make.
@James H. I second third and forth that.
My God OJ is on another bender and thank Goodness we all don’t think like him.
O.J. stop with the race card mat is you expect to ever be taken seriously
I say stall the airport development until the PLP are back in power, that way the Friends and Family plan can kick back in. The airport will cost 150% more than projected and everyone will be happy when lenders start carving up Bermuda assets and selling them to foreign interest for 10 cents on the dollar. Good plan as it is “our turn to get” and “I am only a cog in the wheel.”
Like de Friends and Family plan is not active now, oh I forgot when certain people do it its called networking.
LMFAO
Jealous OJ? Sounds like u wanna be “networking” too. Get on board and help them then. Oh wait…..that means helping the enemy right? Cant have none of dat dur!
If YOU can still support this project after watching this video…SAD
‘We pay it anyway’ is not good enough Bob, the airport currently pays for it’s bills and monies to pay the electric WILL BE AN EXTRA/ADDED EXPENSE going forward with this deal.
Little example for the blind supporters ~
If You had an apartment complex.
No matter what, the land tax is Your Expense.
You have monies coming in from tenants and that monies can go towards the land tax and pay it completely.
If You had no tenants and No Monies coming in, the land tax will have to come OUT OF YOUR POCKET!!!
That would mean LESS monies in Your pocket to do other things
So Yes while it is an expense ‘we pay anyway’, it is paid for by revenue generated by the airport and not from OUR Pockets, which it will be the case with this deal
“Therefore there is no missing $27mn.”
If that’s the case the perhaps Mr. Richards could explain the following found in the recently released Airport Overall Business Case:
“Based on review of the Government’s historical revenues since 2009 as well as projected revenues to 2018, the Project would result in a maximum 2.6% to 3.0% decrease in Government revenues” – page 90
Forecasted revenue for 2017 is $997m. A 2.6% to 3.0% decrease in Government revenues would therefore equal $25.922m to $29.91m.
Mr. Richards are you saying that the information you provided in the business case is wrong?
Revenue is not profit, no matter how many times Burt claims they are the same. Yes revenues would drop, but so would expenses. Why do you people always forget about the expenses?
How hard is it to understand that this analysis, both the Government’s own and Mayor/Burchall is talking about NET REVENUE. That’s revenue AFTER deducting expenses.
And FYI. While revenue from the airport to government will drop to ZERO expenses will only decline 26%!
Net revenue results from the sharing of revenues:
“Equity investors’ profit will be capped, above which a 50/50 revenue sharing arrangement with Government will kick in, so that your government will share in the success of this enterprise.”
Revenue minus expenses does NOT equal net revenue, it means profit.
While we are “at it” where was all your diligence on evaluating projects from 1998 to 2012? I don’t recall any posts from you about Grand Atlantic or any of the other fiascos under the PLP. You’ll see plenty from me. This one really seems to bother you….
Lack of “diligence on evaluating projects from 1998 to 2012″ is EXACTLY why this project is receiving this amount of scrutiny.
Everytime someone uses that as a defense it starts to look more suspicious.
Dah! Expense decrease too?
This is why Governments do not put this into the public arena. Too complicated for the inexperienced!
Stop pretending to be experts when clearly you’ll are not!
You cannot simplify a complex issue!
Smiths
Expenses decrease by 21% while revenue decreases by 100%.
@ Finance
Simplifying a complex issue is called teaching.
Do not buy into the narrative that the transaction is so complex that the average person cannot understand it.
If it was so complex, then how does Bob Richards understand it and the majority of the OBA MPs that will be required to vote in favour of it.
If your comment is taken to its logical conclusion, the agreement should not be debated by the MPs and Senators since our elected representatives can not understand such a complex issue.
It is hard to trust any opinion on the airport because I find it hard to trust any politician ,PLP,OBA,Dem,or Rep.The minute you get your hands on a government till/cash register ideologies transform into doing it for the (quotation fingers)good of the people.And this happens in spite of the will of the people I am as distrustful of this government as I was of the last.Who in the hell are you politicians really working for?…..ffs
Am sure the airport is wonderful but the schools are closing down and the Parks department doesn’t have any senior staff, we need bridges fixed and the list goes on and on and on. and Bob Richards and the good people in government are spending all their time on this airport. they simply don’t have time to address the people’s business plus the airport. when are they going to listen to the people?
Parks doesn’t have any senior staff because they are on administrative leave
and everyone know why they are on administrative leave.
So why the hell didn’t PLP FIX THE BRIDGE WHILST IN POWER???????? HELLOOOOOOOOOO FFS….. FABIAN hit us long before OBA came in office……
Mr. Richards seems to be agreeing with that the generally accepted accountings rules were not used in the accounting for this airport. He states that alternative accounting measures for project alternatives was instead used. What exactly is that he does not say. Further he states that several consultations have been used to vet this project including KPMG both in Bermuda and Canada, but he does not produce a statement from either to say that the figures or the methodology that he has used is correct or acceptable. I note the one accounting firm he did not mention is the one that originally found fault with this project(Deloitte). If he really wants to get buy in from the people he can simply get Deloitte to opine on the true cost of this project.
Yes. Why has Deloite NOT been reengaged to determine whether their concerns have been dealt with?
“Why has Deloite NOT been reengaged to determine whether their concerns have been dealt with?”
These are “plantation questions”, and you need not be answered.