DEVELOPERS behind the $250 million Chub Cay resort development are still seeking refinancing to restart the project, the area's MP telling The Tribune that the current stand still had had a "devastating" impact on the north Andros economy and employment there.

Vincent Peet, former minister of financial services and investments in the Christie administration, said: "I met with the developers a few days ago, and know they are seeking refinancing. They are presently engaged in meetings with prospective financiers to, as it were, kickstart the project.

"I've been in contact with them constantly as it concerns expansion and the need to get more economic activities going in Chub Cay. They've ssured me they're in meetings with prospective financiers, and we'll have to see what develops from that."

Mr Peet, though, acknowledged that the global financial system's liquidity/credit crunch, resulting from the US sub-prime mortgage fiasco, meant it was "a challenging time" for major resort projects such as Chub Cay to find new debt financing lines.

The Tribune revealed on September 12 and 13, 2007, that construction work on the Chub Cay development had slowed to a crawl because the developers needed to access additional financing to complete the full build-out.

Walt McCrory, one of the three main shareholders in the project, along with fellow south Floridians Kaye Pearson and construction magnate Bob Moss, said that after pumping $16 million into the island's infrastructure, they had been relying on cash flow generated from real estate and lot sales to finance the remaining build-out.

However, real estate sales had been negatively impacted by the downturn in the Florida and wider US real estate markets, Mr McCrory said, and there was a limit to what the investors themselves could "pay out of pocket" for without these revenue streams. The Tribune has also learnt that the Chub Cay developers have made little progress in paying Bahamian contractors money they are owed for work done on the development.

One contractor, speaking to this newspaper on condition of anonymity, said his company was "still owed substantial sums of money. Every contractor who worked on the project is still owed money. A lot of Bahamian contractors are owed".The contractor said a group of Bahamian companies who were owed money by the Chub Cay developers was attempting to "put a petition to the Prime Minister" over the situation and lack of payment. Stephen Wrinkle, the Bahamian Contractors Association's (BCA) president, said that while he knew nothing about a petition, the Chub Cay episode had strengthened the association and industry's call for developers to be mandated to post performance bonds.

Mr Wrinkle said the BCA had urged Prime Minister Hubert Ingraham to mandate that developers put up a performance bond that was equivalent in value to 10 per cent of the construction work. If developers defaulted on due payments, Bahamian contractors would then have some recourse by claiming against the bond.

"Because the Government has not mandated performance bonds for foreign developers, we have little recourse, if any, to recover this money. Hopefully, this strengthens the case for a performance bond," Mr Wrinkle said of Chub Cay. Describing 10 per cent as "nominal", he added that "it guarantees Bahamian contractors will be paid". The BCA president said such a clause on performance bonds could be inserted into Heads of Agreements between the Government and developers, but to date this had not been done. Mr Wrinkle said the BCA had brought the issue of Chub Cay, and the fact that its members were owed several hundred thousand dollars - possibly as much as $400,000 - by the developers, to the Prime Minister's attention when they met with him several months ago. "He said he had revenues and recourses available to him, and his office could bring pressure to bear on Chub Cay. We've heard nothing to date," Mr Wrinkle said. Yet the main issue was likely to be that Chub Cay simply had no financing. "It's not for lack of trying on his part, but you can't get blood from a stone," Mr Wrinkle said. "He's made a good effort."

Meanwhile, the other contractor told The Tribune that purchasers of lots and real estate at Chub Cay had "taken matters into their own hands" and themselves hired contractors to start constructing their homes and residences. This was instead of letting the developers handle the process.

Mr Peet confirmed this was the case, and said the developers had told him they had no intention of walking away from the project. "The interest is still strong from the investors," he said. "A lot of money has been put into Phases I and II. The marina has been completed and is open, hosting a number of boat shows.

"The investment has been substantial to this point, and they've assured me they certainly want to protect it and expand it. They've assured me they're making every effort to raise financing."

Mr Peet added: "A year ago, there were over 400 persons employed on Chub Cay, and now there's less than 50 outside of the clubhouse. We're talking about a smaller number than before, so it's devastating for the economy."

The MP added that many of the construction workers formerly employed on Chub Cay had come from North Andros, and the slowdown had left many of those without jobs.

"Many of them are now out of work, and it's causing a severe impact on the North Andros economy, which is very bad now," Mr Peet said. "I am more than anxious to see ho* they can get going."

Messrs Pearson, McCrory and Moss did not return The Tribune's calls seeking comment on Friday, despite detailed phone messages being left.

Mr McCrory last year acknowledged to The Tribune that the developers had fallen behind on contractor payments, but were working to catch up.

Source: The Tribune