Minister: $5.7 Million Transferred To Skyport
[Updated] The Government has paid $5.7 million as the revenue received by Skyport “fell short of the Guaranteed Minimum Regulated Revenue for the quarter as set out in the Project Agreement,” Minister of Transport Neville Tyrrell said.
Speaking in the House of Assembly today [July 24], the Minister said, “The Project Agreement provides for Skyport to receive a Guaranteed Minimum Regulated Revenue. This Minimum Revenue is backstopped by the Government of Bermuda.”
“When regularly scheduled commercial flights were necessarily stopped in March due to the global pandemic, there was an immediate drop in revenue to Skyport.
“Skyport duly delivered the required “Revenue Guarantee Certificate” to the Airport Authority within ten days of the end of the second quarter of the calendar year [1 April to 30 June].
“This certified the Actual Regulated Revenue received by Skyport during the second quarter fell short of the Guaranteed Minimum Regulated Revenue for the quarter as set out in the Project Agreement. As a result, the Airport Authority is obliged to transfer funds to cover the shortfall.
“This means the Bermuda Airport Authority must transfer five million, seven hundred and seventy thousand, nine hundred and ninety-five dollars and fifty-four cents [US$5,770,995.54] to the Guaranteed Revenue Reserve Account, which is managed by Skyport at the Bank of New York Mellon, and that was done this week.
“Make no mistake: this hurts. Bermuda’s economy has taken a significant ‘hit’ as a result of the coronavirus. There are many people unemployed or underemployed, businesses are unable to generate sufficient revenue to cover their costs, there are limited air leisure visitors and no cruise ship calls at all.
“Although commercial flights resumed at the beginning of July, it will take time to build up to the air arrival numbers we enjoyed previously.
“Therefore, the Government assumes it will be forced to provide the Airport Authority with additional supplementary funds at quarterly intervals this year. And, yes, this will impact the support and services we are able to deliver to our people.
“This Government remains deeply dismayed with the framing of the Project Agreement, and particularly troubled by the revenue structure of the deal. However, as we have stated before, we are a responsible Government, and we will ensure the Bermuda Airport Authority is able to honour its contractual obligations.”
Update 4.38pm: OBA Leader Craig Cannonier said, “Premier David Burt’s outburst over the airport at the Covid-19 press conference and the Minister of Transport’s statement to Parliament were misleading and hypocritical.
“Bermuda: the money the PLP are talking about is not going to AECON. It is a lie to say it is going to AECON. It is going to our lenders.
“The OBA was attacked for not including a clause in the airport contract to protect against a pandemic. If the Premier, the Minister and the BAA were all so concerned about this, then why – over the last three years since 2017 – did they not take out insurance themselves?
“Did the Premier foresee a pandemic? Did the Minister of Transport, Neville Tyrell, foresee a pandemic? No. The Ministers’ own words today to the House: “who could predict a pandemic”.
“The only reason the lenders are getting some money is because too few planes have been flying here – because of the pandemic.
“Through a profit-sharing deal with Skyport, it is likely that the money paid to the lenders will be recovered. The same cannot be said of the Government’s annual $2 million-plus subsidy to airlines. The PLP was the Government in 2007 when these subsidies were entered into.
“The OBA Government insured against the most probable risk. Risk of overruns – like Heritage Wharf. Risk of delays – like the Berkeley Institute. Risk of poor quality work. The OBA ensured all of these were guaranteed at the airport by CCC.
“Since 2017, has this Premier purchased any insurance against a pandemic?
“This nonsense is PLP deflection and deception, trying to distract Bermudians from the fact the PLP has no economic plan,” Mr Cannonier added.
Update: MP Lawrence Scott said, “The previous OBA Government, led by Michael Dunkey, entered into the airport deal. That deal requires Bermuda to maintain predetermined air arrival numbers. This agreement also included a clause that stipulated that if airport traffic numbers were to fall the Government would provide a Minimum Regulated Revenue Guarantee.”
“The bottom line is, we, the Bermudian taxpayers have paid out $5,770,995.54 (five million, seven hundred and seventy thousand, nine hundred and ninety-five dollars and fifty-four cents), and counting because of the deal that Michael Dunkley and the OBA negotiated.
“That is money that could be going to relief for families hurting at this time due to the COVID-19 pandemic. That is money that could be invested in our public education. That is money that could be used to bring down the cost of living. That is money that could be going to expand COVID-19 relief efforts.
“We have many insurance experts in this country. In fact, we have many of the world’s insurance experts right here in Bermuda. And, our country is uniquely vulnerable to various acts of God, including climate change, hurricanes and other weather events and pandemics, among a myriad of other potential acts of God.
“Although the OBA says that the Bermudian people should have paid for insurance relating to this airport deal that they brokered, the fact remains that the Airport Authority looked into an insurance policy, and it was determined not to be financially feasible nor would it have protected against a Force Majeure event such as COVID-19.
“Part of the 2017 legal review into the Project Agreement stated that type of protection should have been included into the original contract and that “it was highly unusual” for a contract with such an extended duration (30 years) not to include a variation clause. Michael Dunkley and the OBA should have negotiated a better deal than to put the onus on AECON to buy this insurance to mitigate for this risk.
“Because of the OBA’s failure to protect the interests of Bermudians, we the people, are having to pay the bill for their costly mistake,” Mr Scott added.
The Minister’s full statement follows below:
Mr Speaker, today I am bringing to the attention of the House the impact on the people of Bermuda of the Project Agreement for the L.F. Wade International Airport Redevelopment scheme in this time of the coronavirus pandemic.
Mr Speaker, the House will recall that at the last election this Government pledged to review that Project Agreement to see if Bermuda could get a better deal.
As we stated categorically at the time, the review was necessary because of the lack of transparency, the lack of consultation on the Airport Redevelopment Project by the previous Government, the lack of competitive procurement and real concerns regarding the transfer off- island of revenues from the airport.
Mr Speaker, as many will now know, the review uncovered some unwelcome facts, not least of which concerns the revenue structure of the deal.
In addition to the Government no longer sharing in the revenues generated by the airport, the Project Agreement enshrines an obligation on the Government of Bermuda to provide support to the Bermuda Skyport Corporation Limited (“Skyport”) in certain circumstances.
Mr Speaker, to fully understand the situation we find ourselves in, it is important to know the Project Agreement provides for Skyport to receive a Guaranteed Minimum Regulated Revenue. This Minimum Revenue is backstopped by the Government of Bermuda.
The onset of Covid-19 was likely to trigger the Limited Government Support provisions of the Project Agreement, and earlier this month it did. When regularly scheduled commercial flights were necessarily stopped in March due to the global pandemic, there was an immediate drop in revenue to Skyport.
Skyport duly delivered the required “Revenue Guarantee Certificate” to the Airport Authority within ten (10) days of the end of the second quarter of the calendar year [1 April to 30 June].
This certified the Actual Regulated Revenue received by Skyport during the second quarter fell short of the Guaranteed Minimum Regulated Revenue for the quarter as set out in the Project Agreement. As a result, the Airport Authority is obliged to transfer funds to cover the shortfall.
This means the Bermuda Airport Authority must transfer five million, seven hundred and seventy thousand, nine hundred and ninety-five dollars and fifty-four cents [US$5,770,995.54] to the Guaranteed Revenue Reserve Account, which is managed by Skyport at the Bank of New York Mellon, and that was done this week.
However, in doing so, the Government has had to authorize an additional grant to the Airport Authority to enable it to meet its obligation.
Make no mistake: this hurts. Bermuda’s economy has taken a significant ‘hit’ as a result of the coronavirus. There are many people unemployed or underemployed, businesses are unable to generate sufficient revenue to cover their costs, there are limited air leisure visitors and no cruise ship calls at all.
This Government has pledged that no person will go hungry. And, instead of caring for our local community, which is in desperate need, the Government is having to put money towards an airport redevelopment project we were assured was structured in a way that transferred the development risks away from the people of Bermuda, ensuring the redevelopment was financed through airport revenues. However, as it turns out, if the revenues are not coming in then restitution lies with the Bermuda Government.
Mr Speaker, although commercial flights resumed at the beginning of July, it will take time to build up to the air arrival numbers we enjoyed previously. Therefore, the Government assumes it will be forced to provide the Airport Authority with additional supplementary funds at quarterly intervals this year. And, yes, this will impact the support and services we are able to deliver to our people.
Mr Speaker, it is hard to avoid thinking about just what could be done for the people of Bermuda if we were to inject $5.7M elsewhere. For that sum of money, we could:
- start much needed capital upgrades at the National Sports Center, or
- enhance food security, providing sites for new types of farming, such as vertical farming, aquaculture and mariculture, or,
- we could respond positively to the needs of charities especially those providing for families in need as a result of Covi19.
Some may ask, “Well, why don’t you just terminate the Agreement?”
First of all, as we have indicated in the past, the Project Agreement is not easily terminated, and the negative consequences of doing so, although legally possible, would have severe ramifications for Bermuda’s reputation to the extent that it would be irresponsible to pursue it at this time.
Others may say, “Well, just change the Agreement.”
The review of the Project Agreement carried out in late 2017 highlighted the fact that there is no ability to change any of the provisions in the Agreement. The only way to make substantive changes to its terms and conditions is to terminate it – and, again, this would have harsh consequences.
Mr Speaker, this Government remains deeply dismayed with the framing of the Project Agreement, and particularly troubled by the revenue structure of the deal. However, as we have stated before, we are a responsible Government, and we will ensure the Bermuda Airport Authority is able to honour its contractual obligations.
Thank You, Mr Speaker.
“This Government remains deeply dismayed with the framing of the Project Agreement, and particularly troubled by the revenue structure of the deal.”
I’m willing to bet that the PLP Government has been waiting for an opportunity to flog that dead horse again. Bermuda is not alone in the world, everyone is suffering in the biggest recession in 90 years.
The oba/UBP fail us on the 185 mill Morgans Point and now the airport that the majority of Bermudians told them not to build. Not to worry Jetgate will help them win or lose again and they might not have to change the name again.
PLP overspends equal $65 – 13 times this payment which was made for when the airport was CLOSED! No payment was made for the first quarter: when arrivals are down!
Why should Aecon build an airport for free?? Why are govt ministers spending on their taxpayers funded cars and other perks???
Imaging knowing a party changing it’s name to escape it’s racist past and also failing Bermuda, on all levels by costing the VOTERS $$$$$$.
We don’t have to imagine when we have the ubp aka OBA…and you wonder why so many black voters left the party. The PLP didn’t beat you last election you beat yourself’s by being arrogant and stupid.
Now the trolls come on here to blog damage control. Start a third party because the oba experiment is a complete failure.
Real talk
“Imaging knowing a party changing it’s name to escape it’s racist past … We don’t have to imagine when we have the ubp aka OBA”
Why do you continue to perpetuate such lies? The UBP did not change its name to the OBA and repeating such lies will never make them true … it can only undermine what credibility the PLP has
LOL where was your concern when PLP overspent millions to build an Emissions Center that in its history NEVER failed a single car or truck for an emissions test because they never set a base model. What about the $60 million on Berkeley and ProActive? Yes they awarded a contract to a new company that had zero construction history. That project cost us $60 million extra and the tax payers took another hit because the PLP government bailed out the BIU that had backed the project?
How many millions did the Centre in Sandys cost us to build and run before it failed! What about the tens of millions more on TCD, DLBE Building, T-Street / Bermuda Housing Corporation Scandal. Maybe you forgot Globalhue tourism contracts being awarded without going out to tender?
Did you forget that in the PLPs last 14 years there were $800 million unaccounted for? You feel more comfortable with that government! LOL LOL LOL
Oh forgot the 20+ million over for Port Royal Golf Course?
Oh forgot the 20+ million over for Port Royal Golf Course? 1.2 million paid to Dr. Brown. How much for Dockyard peir that had to be fixed right after?
25-11
LAY DOWN!!!!!!!!!!!!!
No, the PLP paid $10million before it was due by the developers. This triggered a clause to put the government on the hook for the guarantee. Why was this done? LAND GRAB. Sadly it wasn’t the amount of land originally thought. Embarrassing PLP play spending our money.
Yes but dead horses win elections.
Is the new transport minister going to disclose to the public that the oba obstructed competing bids from competing against the aecon deal? Is the new transport minister going to tell the public that one of the bids that was blocked by the oba was vetted by the CCC and given the green light to compete? The plp has know since 2017 that the oba has obstructed competing bids RE the airport redevelopment…why has the plp not disclosed this to the bermuda public? The plp has grounds to terminate the airport agreement because the oba obstructed competing bids from participating in the tendering process
the reason for the gaurantee kicking in is covid. simple. could that have been forecast? No. Did Government forecast it? No. Tyrrell spoke about what this money could have been spent on. Well Minister, what could the $64m in overspends on PLP projects be used for? What about the promised budget surplus of $7m have been spent on? What about the $1.2m to a former Premier? Would the Minister rather it had not been built and provide 100s of jobs for bermudians? Is he trying to deflect on the fact that now there is nothing else to help GDP? what is the PLP doing to help GDP? what is it doing to help retail? remember – the economy was poor before covid. it is at death’s door now and this Government is caught in the headlights like rabbits
I agree. Did Tyrrell talk about all of the things the money we paid out in unemployment benefits could have been spent on? Covid cost us lots of money that could have been used for other things – it’s not just the airport.
Don’t try to over simplify this and bend facts to make a half-azzed attempt to smear the airport.
“Well Minister, what could the $64m in overspends on PLP projects be used for?”
The cost overrun on the Berkeley alone was that much , you overlooked the others it seems.
And they’ve got the nerve to talk about the new air terminal … lol NO credibility whatsoever.
exactly
25-11
LAY DOWN!!!!!!!!!!!!!
The PLP had 3 years to put aside funds for the guarantee, except they, like the OBA didn’t predict a worldwide pandemic in 2020. For 3 years the PLP have run deficit budgets instead of creating a surplus to provide a cushion against unknown events such as Covid. At least it gives Bermuda a new airport, compared to the $49 million spent on the Grand Atlantic fiasco.
Thanks Bob Richards and OBA
And we have to come out off our pockets for de next 30+ years!!!!!!!!!!!!!!!
This is what we got pepper sprayed for.
F@#$ing PATHETIC!!!!!!!!!!!!!!!!
Now do a Hospital PPP rant that seas the developers paid $30mn a year for 30 years and all we got was a hospital wing.
I dare you.
and Burt has twice promised to release an unredacted version of that contract – we are still waiting
Nooo… that doesn’t win elections.
First off you spelled sees wrong. Second please provide the source of what you just said. You are the first person I have heard say that and I’m very use to the OBA and its followers telling LIES so please provide something to back up that claim.
The hospital PPP is costing us 30million a year. Suck on that lozenger Onion Juice. Why didn’t you kick up a stink on that.
Of course you are not aware, because you demand transparency from one Party and let another do whatever they want without consequence. Hence why Bermuda is in the state is in. So it doesn’t surprise me that one bit that a PLP supporter isn’t aware of facts.
That hospital WING costs just amount as the whole brand new aiprort. I suggest instead of posting on here use thaie keyboard strokes to do some research yourself.
Your screen name is ironic given your support for the ‘we had yo deceive you’ Party.
Will OJ and friends be marching on the HOA to protest the new Arbitration Centre to be built by a foreign firm as a PPP – exactly the same as the airport? Looking forward to seeing the crowds soon. You may get pepper sprayed again though.
is it also pathetic that the PLP has just given the contract to a US firm, under a PPP< for the new arbitration centre? All that money over dozens of years to the US?
And yet just today Col. Burch says the Bermuda Government will “partner” with an American company to redevelop the old Hamilton Police Station.
It seems to me that to some people everything the PLP Government does is good (despite the crushing debt we are under) and everything the OBA Government did was bad
PLP overspends equal $65 – 13 times this payment which was made for when the airport was CLOSED! No payment was made for the first quarter: when arrivals are down!
You STILL moaning about a bit of pepper spray. People get sprayed everyday in other places and somehow survive and don’t continuously moan about it. Privilege much.
PLP – you need to stop the bleeding. You need to get serious and cut your costs.
Time to become unpopular and do what you have to do and that isn’t increase the cost of living yet again. The camel’s back will break.
Thank you Bob!
This is the gift that keeps giving us a bill every quarter we are going to owe millions to the airport and here we get NO income from! OBA stupidity on display! The privileged few made $ on airport construction and have taken it and ran! Another Caroline Bay fiasco!
Can you breathe with your mouth closed?
during the winter, with fewer flights, the guarantee did not kick in – it only kicked in during the pandemic when the airport was closed.
There is also a profit share with Skyport, so we will probably get the money back.
If the PLP is so concerned, what are they doing to increased airlift?
There is a profit share with Skyport – the money will be made back. PLus this only happened because the airport closed! There was no payment for the first quarter – when arrivals were low!
There was no clause allowing the payments to be withheld in case of a disaster (or pandemic)?
name me anyone who has that clause – have you not read about Hiscox? They are trying not to pay business interruption insurance from people affected by covid!
Force Majeure?
Is that one of them kinky french things?
No, it is a legal term that our brilliant legal “consultants” should know about. Google it.
What about force majeure?
OBA had the nerve to ask where is the PLP going to get the money from to pay.. as if it’s a choice in paying it.
Thanks Bob – for nothing! You and your OBA cronies thought you were so sharp when all the while you were played for the naive fools you are – and not just by these guys. Has anybody ever heard of gambling a country on a sailboat race? Of course not, except here. Then there’s that not even half built hotel that we’re now paying for not to be built. None of it is coincidence – it’s ignorance and they all saw you coming.
You forgot the millions on Port Royal, the Dockyard north pier, the PGA Tour, the Emissions Control Centre and other projects undertaken by the PLP Government
As for half-build hotels, what about the Grand Atlantic?
And people are still here deflecting from the travesty of Governing that the OBA was! You people call the protesters everything but a child of God, and look at us now. THE PROTESTERS WERE RIGHT!!
Now you revert to “well there was a pandemic”. How convenient is that when it suits your narrative? As the a Premier said, “you mean the ‘Worlds Risk Capital’ did not factor this possibility into the agreement?”
I mean the last pandemic was what 100 years ago, and this being a once in a century event? Smh
My advise to your OBA group is to chew that humble pie up very well and accept that your beloved group was a total failure (in only 4yrs).
The $100m or so wasted on Grand Atlantic would come in handy right now, wouldn’t it.
The $70M or so overun on Berkley would be handy too. How about those too expensive ferrys shipped from the other side of the world or the never used police boat?
So the Minister howls about $5.7M incurred because of covid 19. Just to put $5.7M into perspective, $5.7M would not even cover 14 days of finance charges that the taxpayers have to come up with for the PLP created debt.
$120m a year in interest only which is about to go up as the debt ceiling is now $3.5bn – but it’s OK, the PLP did not see covid coming, it’s just the OBA that is meant to have a covid crystal ball.
No Crystal Ball was ever needed, because the PEOPLE of the country TOLD YOU it was a bad deal!!!
Yep, that crowd who did as they were told & shut down the HOA was just loaded with airport managers, airport designers, airport engineers & other airport experts well versed on what is & what is not a good deal in terminal construction.
Never overestimate the collective wisdom of the PEOPLE. 25-11. Yeah, that is really working out well for Bermuda.
The people of the country knew Grand Atlantic was a waste of money. And they’re still wasting more money on it.
Yeah, the protesters were against it because there was no pandemic coverage. Sure they were. Even the PLP Minister said yesterday that the pandemic was unforeseen.
That airport has provided more economic stimulus to BDA than anything your PLP has been able to drum up in their 3 years in power. Take a look at the GDP reports from the past few GDP reports. Your Party has simply failed to build any sustainable economic model in 3 years. Facts are facts whether you like them or not.
There is also a claw back agreement that the PLP have failed to mention that if arrivals exceed a certain number the Government receives the money back. So it’s now up the the Premier to get the money back since he has set himself up as the Tourism guru.
And the Peanut Gallery goes wild again.. lmaoro. Yup they AeCon saw the political and social war going on and used it to their advantage!! MrB Richards who claimed to be a economic guru and great contract negotiator made decisions ! He cut off his nose to spite his face . In too Deep to turn back wanting to make a good impression because of political pressure . Well he Failed and Bermuda will pay for the next 50 Years . And all the poety in the OBA can’t deny that . But the PLP aink Saints Either ! That horse will get it’s Flogging when it’s their turn as well !
I pledge my Alligence to Humanity ! Not flag or country or something else!!
At the end of the day, WHAT THE HELL WAS WRONG WITH OUR OLD AIRPORT? When you can’t afford a new house, you live in the old one! The people of Bermuda DID NOT WANT A NEW AIRPORT! But the OBA needed to get reelected!!!!!
PLP admitted we needed a new airport but they wanted to manage the construction and you know they manage to mismanage.
They’re furious that the OBA was able to pull that off because that would have been their ultimate financial over-run disaster. If you think a 60mil over-run on the Berkeley , that was supposed to cost 60-65mil , was bad can you imagine what would have happened with the new air terminal ? And all the material that would have mysteriously been ordered to be delivered to other places ?
Unfortunately their creativity is endless and now they have their eyes on the Hamilton waterfront. Stay tuned .
Ya ya ya, we know your narrative, Black People cant manage properly, that does not exclude Uncle Bob.
Something looks Fuzzy!
LMAO
Yup.
Have you ever worked in that decrepit building? Have you ever seen anything but the public areas? It was out of date & in sad need of replacement almost 40 years ago yet it was patched up & pushed on for another few years.
Just like a car, there comes a time when patching it up does not make any sense. Time to junk it & get new. The world of aviation has changed drastically since the first blocks of the old terminal were put down more than 70 years ago.
Seriously kathy…you might want to tone down your stupidity.
TRUST ?
Maybe the covid pandemic was the OBAS fault too..
“WHAT THE HELL WAS WRONG WITH OUR OLD AIRPORT? ”
SERIOUSLY? You DON”t know?
It didn’t meet the new security standards put in place after 9/11. Every country had 20 years to comply. If we had not, then other first world countries could have, and would have, refused flights to and from Bermuda.
How would you get to Atlanta twice a year? Swim?
And we got Best Award for most improved Airport after SpongeBob said it gets flooded to the ceiling evrrytime it rains!!!!!
Just like Americas Cup, we got played like a fiddle.
LMAO
Care to discuss the port royal overrun. The hospital, Berkeley, the court Building. Beyonce..
How about dusting off those lawsuits taken out following the findings of the COI about alleged bad conduct and quietly filed? The amounts at issue would be very useful now.
MP Lawrence Scott would do better to not say anything based on 20 years of PLP incompetence. His party is costing taxpayers hundreds of millions of dollars in interest with no likelihood of ever paying down any principal sum.