Effective 31 May 2020, the outgoing Anguilla United Front government signed a memorandum of understanding (called “a Definitive Agreement” but referred to in this article as “the MOU” or “the Agreement”) with a Swiss Group to develop a marina in the Sandy Ground’s Road Salt Pond. The objective of the project is said to be the development, construction, and operation of a mixed-use mega-yacht marina, waterfront, and resort at a cost of some US$270 million.
A few short weeks later (on 29 June) the AUF lost the general election and was replaced by an Anguilla Progressive Movement administration. The APM administration inherited the MOU. Residents of Sandy Ground are calling on the new administration to repudiate the MOU. They oppose the MOU on several grounds including that it will disrupt the village, poison the people, and produce no benefit to the country.
A first look at the MOU reveals that it is essentially a real estate development project. The document says that the Developer will build a 150-berth marina. Crucially, it will also build a hotel and sell ocean estate lots, port town villas, seafront residences, sea view town homes, and commercial space. The real estate units are to be sold as condominium and time share-type properties.
Some of the objections advanced by residents of Sandy Ground include engineering, environmental, feasibility, and amenity issues. Let us look at some of them.
The engineering objections to the development of a mega-yacht marina in the Road Pond are formidable. The pond was apparently created in prehistoric times by a sand bank forming across the middle of the bay. Experts can tell us approximately when this happened. It is likely to have been many thousands of years ago, perhaps as long ago as a hundred thousand years. During the intervening period, and from time to time, glaciers covered large areas of the earth causing sea levels to lower. Subsequent melting resulted in rising sea levels. The result was that the sand bank was sometimes above and sometimes below the surface of the surrounding sea. The present village of Sandy Ground is constructed on this sand bank which is no more than 10 feet above sea level.
During the periods when Sandy Ground was above sea level, sea water permeated through the sandy bank and filled the trapped bay behind. This formed the familiar Road Salt Pond. As the water in the pond evaporated, crystals of salt precipitated out and sank to the bottom. For thousands of years, this salt lay unmolested on the bottom of the pond, gradually becoming compressed as more and more layers formed on top the previous ones. Presently, the water in the pond is no more than some six inches deep. Below that is a thin layer of mud and a much thicker layer of fossilized salt.
The old-timers among us recall when, some thirty years ago, the US TV entertainment billionaire Bob Johnson owned a villa at Cove Castles Resort in West End. He first proposed to the then Government a project for converting the Road Pond into a Marina. He is supposed to have had a geological survey of the bottom of the pond done to determine the feasibility of dredging it. This survey is said to have found that there was a layer of some forty feet of rock salt overlying the deepest part of the rocky limestone basement. One of the reasons why he was said to have dropped the idea of a marina was the advice that it would take a great deal of blasting with dynamite to remove this rock salt layer. Sandy Ground village would have to be vacated, and the people located elsewhere for a period of up to two or three years, while the blasting was carried out. This proposition was too expensive even for a billionaire, and the project fell through. With increased development in Sandy Ground village since that time, temporary relocation of the villagers is likely to be more expensive now than it was at that time. No doubt Government has a copy of this feasibility study, or with a little effort can get access to it.
Even if the residents of the village do not have to be relocated, questions have been asked about the quality of the air once the mud on the bottom of the pond is disturbed. We are all familiar with the great stink that comes from the pond from time to time. The question is asked if a disturbance of the mud layer will result in the air flow over the village being poisoned. Only a feasibility study of the mud layer and its qualities will reveal the true situation.
Residents doubt that another marina in the Leeward Islands is feasible. Why would any boat owner choose to dock his mega yacht in an expensive little island like Anguilla when the established marinas of nearby St Maarten, Tortola, and Antigua are willing and able to provide all their necessities?
Reading the MOU, one gets the impression that the main interest of the Developer is not the marina but the sale of condominiums. The proposed marina appears no more than the hook to bring in purchasers of the luxury units. If that bait fails, the feasibility of the real estate aspect of the project also fails.
What evidence do we have that this Developer has US$270 million to invest? The question must be asked, whether after the “great financial success” of Starwood (remember them?) and other failed projects, any other than an idiot would take this project on? Could this project be another case of a penniless “developer” obtaining a licence or agreement with a view of going into the market to find money?
Hurricanes pass through the Leeward Islands (of which Anguilla is the most northerly) nearly every year. Any boat (whether berthed or beached) remaining in an Anguillian harbour during a hurricane will suffer catastrophic damage. We have seen what happens in the existing nearby marinas. For this reason, luxury boat owners sail their vessels to Trinidad or Aruba for safety during the hurricane season which lasts for some six months. The existing marinas in St Maarten (where they have an international airport and marine supply and diesel repair infrastructure in place) remain half-empty for much of the year.
It is notorious that insurance companies do not insure boats that remain in these waters between June and November. Which mega yacht owner will choose to leave his valuable boat in Anguillian waters uninsured during the hurricane season? Any new marina built in Anguilla must plan to close for six months in every year for want of business. The associated hotel and condominiums will probably be unoccupied during this period.
With the onslaught of the Covid-19 pandemic, the holiday and cruise industries have collapsed. The number of people who will venture overseas by ‘plane or by boat for leisure in the foreseeable future will be limited. Mega yachts are more likely to remain safely moored in Florida or in Monaco than sailing across the seas to under-resourced destinations like Anguilla. It is not likely there will be any market for the projected marina, hotel, or condominium units until the world-wide economy has recovered. This must take at least the next three to five years. Investors are not all stupid people. The economic feasibility of such a situation is much to be doubted.
Article 8 of the MOU provides for Environmental Impact Assessments to be carried out. Government is obliged by the MOU to approve all construction subject to adequate environmental and engineering studies. If the Developer fails to commence work within 3 years of the effective date, Government has the right to revoke the Agreement. It is likely that this provision will operate to save the people of Sandy Ground from the planned economic and other inconveniences that they were facing.
Article 11 provides that in the event of any disagreement between the parties, they will submit the issue to arbitration. Government may only terminate the Agreement if the arbitration process concludes that it has the right to do so because of a material breach by the Developer that cannot be amicably resolved. It is likely that the failure to carry out the planned development in the coming three years will provide Government with the opportunity to bring this misconceived project to an early end. It would be quite wrong for Government to give in to public pressure and terminate the Agreement without a good reason as contemplated by the Agreement. They will probably lose any resulting lawsuit and be obliged to pay the Developer damages.
The new administration has been lumbered with this MOU by the outgoing one. There is probably little or nothing they can do at this time to get out of their obligation to let the preparation and planning move forward. What the Government’s expert advisers must look out for is the opportunity in due course to use the escape clauses in the Agreement.
