FAQ
Frequently Asked Questions
WHAT IS A FRAMEWORK AGREEMENT?
In the framework agreement, itself, in clause 25.1 it states that this agreement and any documents referred to in the agreement constitutes the whole agreement, this includes the supplementary agreement as that is the amendment mechanism. Clause 25.2 continues to state that by entering the agreement both parties acknowledge that the only binding statements are expressly set out in the framework agreement. This means that nothing the government may promise to the public in their fact sheet has authority over what is set out in the framework agreement.
Referenced from a document on the Chartered Institute of Procurement & Supply website, Which has been posted to this site as resource document, distinguishing a ‘Framework Contract’ from a ‘Framework Agreement’ when dealing with the purchasing of goods or services (in our case – land):
A Framework Contract is an agreement between two parties which commits one to buying at least a certain volume of product from the other over a specified period; whereas a Framework agreement is an agreement between two parties for the supply of an unspecified amount of a product over a specified period. Therefore, a framework agreement is the same arrangement without the up-front consideration - instead, each time a buyer uses the agreement a separate contract is formed by the consideration paid for the order in question.
This means that the terms and conditions of the DSH framework agreement are final with only the exchange of product for monetary consideration missing. This will come as each phase of the development comes and goes. The framework agreement will govern how each phase transactions are handles. The only thing that may happen from time to time are amendments which need the consent of both parties to come into force.
WHAT IS THE PROPOSED PROJECT PLAN BETWEEN THE GOVERNMENT AND DSH?
For the Government of Saint Lucia to acquire and transfer lands to the master developer who will be the investment vehicle for a consortium of investors from our citizenship by investment program (CIP). The CIP funds will be used for the development and construction of the land over phases. These lands will either be leased for $1 and acre per year if put to public use as an eco-site or if capitalized, $60,000 – $90,000 an acre due at the end of the development of that phase. As of yet, we do not know when any of the phases are scheduled to begin or be completed, but the overall project lifetime is estimated to be between 20 and 25 years.
WHAT IS THE STATUS OF THE JOINT VENTURE PEARL OF THE CARIBBEAN?
There is no indication that the project is a joint venture, in fact clause 28 of the framework agreement explicitly state otherwise. The government of Saint has no equity stake, neither are there any claims to royalties. The Government of Saint Lucia will merely be receiving payment for lands transferred under the structure laid out in the framework agreement and supplementary agreement. As for the Status of the project, Phase 1 has been projected to start sometime in the first quarter of 2017.
Point of interest: In the supplementary agreement clause 4.1 the master developer shall capitalize the development company with no less than US$5,000,000. Clause 4.2 continues to stipulate that the capitalization shall be executed no fewer than 60 days prior to start of construction. That means either the funds were mobilized last year or we have a bit longer to wait for construction of the race track to start.
WILL THIS PROJECT BRING 2.6 BILLION DOLLARS TO OUR ECONOMY?
MAYBE
It is impossible to say what the exact economic impact the development will have. It could end up costing us money, or bringing millions to local hands. The estimation is based on perfect conditions, no unexpected issues, and the willingness of the developer to contribute to the local economy.
WILL THERE BE PUBLIC ACCESS TO ALL BEACHES WITHIN THE PEARL OF THE CARIBBEAN LOCATION?
The Government of Saint Lucia has made statements that the Public Access is not under threat but in the supplementary agreement that was leaked, under clause 2.5(b) it indicates that due to the unavailability of the Vieux-Fort Landfill and the Mankote Mangrove, that the framework agreement shall be amended to include a 92 plus acre site south of the Hewanorra International Airport runway and east of the Vieux-Fort town. This designated are is referred to as "site B”, but we know it as Sandy Beach. Site B has a specific footprint required for a mixed- use development which includes a 3 to 5-star hotel, park, and villas with fractional ownership.
Where it becomes speculative, because we are working with leaked documents, is that if you go to the document posted on this site you will notice a line struck out and signed. This line was where beach access would be preserved where applicable.
If the line does not make it through, then the only access we may have is via the water. But even if the line makes it through and access is preserved there is still a threat to the local enjoyment of the beach. In every local example where accommodations have been constructed near the beach we can see a decline or elimination of the local presence. The residents of Gros-Islet are very familiar with this effect and most St. Lucians who remember traveling to the north on a holiday can attest to the decline in local enjoyment of traditional beaches.
WILL THIS DEVELOPMENT BRING IMMEDIATE INVESTMENT TO THE COUNTRY?
YES
In clause 4.1, of the supplementary agreement, the Master Developer shall capitalize ‘the company’ undertaking phase 1 of the development, in the amount of no less than US $5,000,000 dollars. Clause 4.2 in the supplementary agreement continues to stipulate that the funds must be mobilized no closer than 60 days prior to construction.
It is important to note that in 4.1 it states that only part! of the US $5,000,000 dollars of capitalization will be used as capital investment for the construction of phase 1 of the development, provided that 'no' part of the 'race track' shall be financed by CIP proceeds.
The only thing I can reasonable infer from that is, some of the US $5,000,000 dollars will be invested directly into the construction of the race track but there is no indication to how much that will end up being.
WILL THE GOVERNMENT SELL LAND AT US $1 AN ACRE?
Most people are already aware that no land will be sold for US$1 per acre. But there is a misunderstanding about lease and sale price. In the Framework Agreement, clause 2.7 identifies the purchase price as being a range from US $60,000 to US $90,000 specifically for land the master developer will sell. Clause 2.8 continues by indicating the master developer has an option to lease rather than purchase, and that if the lease option was engaged that it would be at a discounted rate to what was stipulated in clause 2.7 for a term of 99 years. At the end of that section, at clause 2.10, the discounted rate is introduced. The lease rate shall be US $1 per acre per year and that this lease rate is for noncommercial lands designated as an eco-site. Just to note, the race track falls under the eco-site. Something important to note in 2.10, any lands that will be commercialized can no longer be leased and will be subject to the established purchase price in 2.7
WHAT WILL HAPPEN TO MANKOTE MANGROVES?
It has been removed from the development by amendment to the framework agreement, which can be found in clause 2.5 which indicates that “…Due to the unavailability of the Vieux-Fort Landfill and the Mankote Mangrove, the land and master plan will be amended to include the following:” What follows is
a)To avoid:
•The existing Vieux-Fort Landfill
•The existing access road which joins with the Vieux-Fort - Castries Hwy
•The Mankote Mangrove
b)Addition of 92 plus acres south of the airport runway and east of the Vieux-Fort Town. (Sandy Beach)
c)Addition of 43 plus acres south of the airport runway and west of the Vieux-Fort Town
There was a trade of the Mankote Mangrove for Sandy Beach
ARE LIVESTOCK AND PIG FARMERS GOING TO BE DISLOCATED AND WHAT IS BEING PUT IN PLACE TO PROTECT THEIR BUSINESSES?
Yes, they will be dislocated and there is nothing that we know of being done to protect their businesses. Per the World Organization for Animal Health an Equine Disease Free Zone (EDFZ) is dependent on the local conditions and terrain and should be approved by the Veterinary Authority, which has not yet been established. Due to the lack of engagement by the government and its ministry of agriculture we are still unclear of the extent of the EDFZ or how different areas that will fall in that zone will be affected. The Government of Saint Lucia has advised that they have already engaged the ranchers in the Beausejour area with regards to phase 1 of the development but are yet to engage any other area. Farmers have indicated that they have not yet been consulted.
WILL THE GEORGE ODLUM STADIUM BE DEMOLISHED AS PART OF THE DSH PROJECT?
Yes, we believe it will. The Government of St Lucia has invited the master developer to propose a plan for what can be done with the George Odlum Stadium that would enhance the educational offerings in St. Lucia. In the framework agreement clause 11 indicates that the Government of Saint Lucia in partnership with the master developer (Note this is the only time they are considered partners) to establish an Educational Training Fund for the Equine Industry. Therefore, it would be logical that they will turn George Odlum Stadium into a training center for employment in the equine industry. Note that this can only happen after St Jude’s is open and running.
HOW MANY SAINT LUCIANS WILL BE EMPLOYED IN THE CONSTRUCTION PHASE OF THE RACETRACK AND BEYOND?
We do not know. The master developer is not required to estimate how many jobs will be created and the government does not make any stipulations about many of those jobs will go to Saint Lucia-born citizens. The real question is, as a matter of national security, what percentage of labor supply can be preferential to the local market excluding CIP. If we can protect our chicken farmers, why can’t we protect our workers? Unfortunately, the answer to that is still the same. There is nothing in the framework of supplementary agreement that gives any peace of mind that what has happened before will not happen again.
IS SAINT LUCIA GOVERNMENT TAKING ALL THE RISK ON THE DSH PROJECT?
No, with a project of this magnitude there is enough risk to go around. In the Government’s “Fact Sheet” when answering this question, they claim again that it is a “Joint Project”. Their justification for this is that the Government of St. Lucia is contributing the leasing of State lands, funds from approved CIP investors, and standard tax exemptions. In return the master developer offers as consideration, the construction of a horse race track and the rebuilding of the abattoir which needs to be decommissioned to satisfy the requirements of the Equine Disease Free Zone. The Government of St Lucia is receiving no equity in any public or privity capitalized phase of the project and will only profit from the leasing and sale of land. Considering that the funds to be used to develop everything outside of the above-mentioned facilities shall come from approved CIP investors, with none coming from the master developer, the people of St Lucia are carrying the most risk of all.
I need to highlight clause 28 in the framework agreement explicitly states the “Nothing in this agreement is intended to or shall be construed as establishing or implying a partnership of any kind between the parties.”
WILL THE DEVELOPER GET ALL THE PROFITS?
Yes, the government of St. Lucia will only gain direct revenue from the leasing and sale of land. They will also gain indirectly from a projected increase in economic activity and tax collection from any jobs created. The master developer, being a private party undertaking a commercial project will seek to maximize their return on investment, of our CIP funds. This was clearly expressed in the fact sheet and directly contradicts all prior claims to this being a joint venture or partnership.
Furthermore, Clause 28 in the framework agreement explicitly states the “Nothing in this agreement is intended to or shall be construed as establishing or implying a partnership of any kind between the parties.”
WHAT ARE THE FAILSAFE FOR SAINT LUCIA IF THE PROJECT HAS CHALLENGES?
The governments fact sheet points to the buy-back clause as our safeguard, which is 10.1 in the framework agreement. When you read this clause, you will find that it is only the master developer that can initiate the bay back if at least 200 investors have not been secured and both parties have held true to their obligations. When you continue reading the agreement, 10.2 outlines that the once notice has been given, the Government has 90 to complete the transaction and that the cost owed is that of the original price paid for the land plus the cost of any infrastructure erected on the land. This only works to protect the interests of the developer and not the people of St Lucia.
The only safeguard can be found in the supplementary agreement in clause 6.1 where the escrow account has been amended to require that the master developer submit a “Withdrawal Notice” to the Chief Executive Officer of the Citizenship by Investment Unit. Receipt of this notice will be acknowledged within 24 hours. Since there is no mention of required approval needed this is not actually a safeguard, but at least it can allow for a degree of transparency.
IS CITIZENSHIP BY INVESTMENT PROGRAM BEING CHANGED SOLELY FOR DSH?
Yes, in clause 5.1 of the supplementary agreement it is explicitly stated that the Government of Saint Lucia undertakes to amend the CIP Regulations to include a mixed use real estate project, to be a qualifying investment (6.1a of the framework agreement indicates that this will be inclusive of thoroughbred purchases) and the removal of the limitation on CIP applicants per year by December 31st 2016. These among other changes became effective on January 1st 2017.
WILL THERE BE A LARGE INFLUX OF CHINESE PERSONS TAKING UP RESIDENCE IN SAINT LUCIA?
This is impossible to answer because it depends on what you consider to be a large influx. Although CIP is a globally offered product, it is logical that the master developer will have a major focus on the Asian market and we may see a substantial influx of Chinese persons.