This article will examine the proposed HDC Housing Bonds announced by Finance Minister Imbert in Parliament on Friday, 20 September 2019. The proposal is to borrow $1.0 Billion via bonds in various tenors offering investors tax-free returns of 4.5%. The funds raised are to be used for purchasing HDC homes, which was stated to be of importance in addressing critical financial challenges in that State Agency.
SIDEBAR: The Minister responds
This is a short video (courtesy of TV6) in which the Minister of Land & Marine Resources, Jairam Seemungal, responds to questions on the occupation of State lands in Couva by SIS Ltd, one of the main financiers of the Peoples Partnership.
The ‘Land for the Landless’ program, which is being implemented by the Land Settlement Agency (LSA), has now been redefined in such stark terms that I have decided to call it by a more appropriate title ‘Land for Everybody’.
The previous article set out the main points of the revised program. That detrimental law was approved by the House of Representatives on Wednesday 3rd June. Although we have now heard that the new law to amend the State Lands 1998 Act was withdrawn just before the close of our Parliament on Friday 12th June 2015, we are also being told that it will be approved if the Peoples Partnership is returned to office after the national elections in September.
This change to our country’s squatter regularisation law is therefore now being held out as an expansive election promise to regularise the status of some 60,000 landless people. That proposed program is a severely detrimental one which will likely lead to greater problems in the important question of our country’s human settlement policy. It is therefore necessary to highlight the dangers this new ‘Land for Everybody‘ program poses to our collective interests.
The Minister of Land and Marine Resources, Jairam Seemungal, gave several interviews which attempted to rebut my criticisms, so it is important that that these fundamental issues be properly understood. The public interest demands nothing less.
Food security is that elusive state in which we can feed ourselves at a decent standard of nourishment and at an affordable price, without heavy reliance on imported food. The very issue of how food security is defined is hotly debated, but it is clear that we are far away from even the simple one I offered.
In March 2012 the then Ministry of Agriculture, Land & Marine Resources published its Food Production Action Plan 2012-2015. The major goal of that Action Plan was to halve the country’s annual $4.0 Billion food import bill. Yet in March 2014, the Food Production Minister, Senator Devant Maharaj, stated that the food import bill had been reduced by only 2% since 2010. That is a sobering reflection on how serious is the challenge of moving to some significant degree of food security, even for an administration with substantial links in the agricultural sector.
The significant reduction of our food import bill will require a flexible plan, with dedicated implementation and continuous monitoring. The one inescapable requirement is for farmers to have access to land of suitable quantity, quality and location. Without a good supply of land, no food security plan can succeed.
The issue is a long-term one, so it is clear from the failure to achieve the targets that a deeper commitment of resources and monitoring is needed if we are to improve our collective position. The Food Production Action Plan 2012-2015 is now up for thorough review which must include serious input from the public and stakeholders.
Shiraz Khan, President of the Trinidad United Farmers’ Association, has spoken out about the disastrous land use policies now unfolding and I have also heard Omardath Maharaj join the calls for a holistic discussion of agriculture policy.
What is the policy?
We are reliably informed that the new ‘Land for the Landless’ policy was approved by Cabinet on 19th March 2015, but there is no clarity as to whether this policy conforms to the existing 1992 Land Policy. The recently-approved policy ought to be subordinate to the wider Land Policy, which states at page 9 –
“4. LAND USE POLICY
4.2 The New Land Policy proposes:
(a) that the existing system of land use zoning be strengthened to ensure that prime agricultural land is not mis-managed or converted to non-agricultural uses except on the basis of a significant spatial or economic development rationale…”
It is imperative that our country’s human settlement policies take proper account of the need to preserve our limited supply of arable land, so that we can maintain some degree of food security.
The critical point is that our total supply of land is very limited, due to the tiny size of our country. The supply of arable land which has not been developed is even more limited, so the choices are stark. There is not enough land for us to continue with this reckless policy of land distribution or large-scale building of houses with gardens. To continue with those policies would be watching a disaster unfold before our very eyes.
I have heard occasional statements from the HDC or Housing Ministry, in this and previous administrations, but that is merely to mention a major issue. This is a serious issue with dire long-term consequences for our society and a proper, wide-ranging policy review is urgently required. That review must include the 2002 Housing Policy, the 2003 UWI Report on the future of Caroni lands, the 1992 Land Policy and the Land for the Landless policy.
How many people will be affected by this policy?
There was some dispute over numbers, with the PM claiming that 30,000 squatters were to be regularised, the Minister of Land & Marine Resources doubling that to 60,000, all while the LSA website states that there are 250,000 squatters.
At one point, the official rebuttal seemed to be that there were 60,000 households with 250,000 inhabitants, but since the three cited statements were referring to ‘squatters’, that line has now been abandoned. We are now told that the intention is to regularise 60,000 of an estimated total of 250,000 ‘squatters’.
How are the 60,000 eligible persons to be selected?
So, which 60,000 people are to be regularised out of the 250,000? How is that selection to be made? Even after all this defensive talk, I am not at all clear on that.
Will the decisive point be the date of application or the length of time a squatter community has been established? The date-based approach would have some legal weight, given that squatters’ rights have usually accrued in accordance with the period of occupation. To my mind, that would be a weak basis on which to proceed, given the shortage of land and variety in its quality.
In the alternative would the choices of communities to be regularised be based on an assessment of alternative uses or land value? What role would the fertility of the soil play in making these important decisions? If we are to have a reasonable chance of tackling the food security issue, it is critical that these factors play an important part in making these decisions. That is not negotiable.
Finally, one has to mention the elephant in the room. Could it be that the selection of those 60,000 squatters is a political one? Are marginal constituencies to be favoured? Is that a possible outcome we ought to guard against? Which are the constituencies in which the selected communities are located?
The Bill to amend the State Lands Act 1998 comprised 24 pages and we need to note that 20 of those pages was an expansive list covering at least 500 areas or districts in our country. I quipped ‘Charlotteville to Los Iros‘, but the point is that with so expansive a list of areas, just about anywhere could be eligible for regularisation. You see?
The point of how these critical selections are being made is one which must be answered as soon and as clearly as possible.
Who qualifies as ‘landless’?
SIDEBAR: The LSA’s abortive meeting with JCC
In March 2015, the LSA wrote informally to seek dialogue with JCC on this revised ‘Land for the Landless’ program and we responded by requesting an agenda and a formal invitation. Despite our constant efforts, we are still awaiting a response.
This is the most damaging part of this proposed policy shift, with the new income levels having shifted to a monthly maximum of $30,000, together with the elimination of ‘disadvantaged’ as a decisive criteria having the combined impact of making these scarce lands available to anyone. The fact is that a family with a monthly income in the $30,000 can readily qualify for a mortgage in the $1.6-1.7M range and there are plenty of good-quality homes in that price range for sale in our country.
The CSO’s 2009 data on monthly Household Income shows a national average in the $8,000 range. Yet we have a Minister, supported by his professional staff, advancing a policy which is seeking to extend a program intended for the benefit of our neediest citizens to just about anyone.
One can only wonder what was the research on which this bizarre policy was based.
This is no time for inadvisable and ill-considered electoral promises, from either side. Our children’s children will wonder just what kind of intentions did we have. History will judge us harshly if we continue with this foolhardy basket of policies.
A detrimental ‘land grab’ is almost upon our country and we all need to be alert to prevent the destruction of our patrimony and prospects.
The State owns most of the land in the country – recent estimates by Minister of Land & Marine Resources, Jairam Seemungal, place the proportion of State-owned land in the 63% range – and as such those lands are critical national assets with which a progressive government could seek to address issues of poverty in a sustainable fashion. Those policies would have to be redistributive in nature if they are to effectively address the serious poverty faced by some of our citizens. That means the State using our resources to provide affordable land and housing to those who are unable to do so in the open market. It is critical to ensure that these redistributive programs operate properly so that the benefits will go to the needy persons for whom they are intended. Those are objectives which I fully support.
I quipped that the ‘Land for the Landless’ program should be re-named ‘Land for Everybody’, but recent developments have turned that quip into a growing reality.
There have been three big changes which have effectively undermined the very meaning of these important redistributive programs –
THE CARONI AGRICULTURAL LANDS
The Trinidad Express reported that the Minister of Finance & the Economy, Larry Howai, announced a significant change in the original policy in the 2015 budget, in that the ex-workers receiving agricultural leases were now free to sell these lands. Those lands which are sold will likely leave the agricultural use for which they were allocated, representing a significant and detrimental ‘alienation’ of those limited lands.
THE NEW ‘LAND FOR THE LANDLESS’ PROGRAM
This important program has been revised to now provide for an annual target of 3,000 to 4,000 lots at an estimated annual cost of $1.0 Billion. Even if one makes the most optimistic assumptions that the upper target of 4,000 lots is achieved at the estimated cost of $1.0 Billion, the cost per lot is $250,000. I do not know if the cost of the land is included in those estimates, but experience suggests that it would have been excluded, which would be a serious gap in the planning for the development of these important public assets.Most alarmingly, the income limits have now been increased in a manner which suggests that this program is no longer intended for the benefit of the disadvantaged in our society. The original ‘Land for the Landless’ program set an upper limit of $8,000 on the family’s monthly income, but that has now been increased to $30,000. A family with a monthly income of $30,000 can readily afford to buy a home with private mortgage financing. Apart from that, there are serious questions as to whether the inclusion of those upper-income applicants would force-out the poorer people this program is intended to assist.
It is just impossible to reconcile the new family income limit of $30,000 for the ‘Land for the Landless’ program, which is only for residential lots, with the Housing Development Corporation’s (HDC) $25,000 limit on the monthly family income of applicants for homes.
THE NEW LAND REFORMS
The government laid the State Land (Regularisation of Tenure) (Miscellaneous Amendments) Bill, 2015 in Parliament on Friday 29 May and those proposed amendments were passed in the House of Representatives on Wednesday 3 June 2015.
The main points of this proposed new law, which still has to be approved by the Senate, are –
- Application date – formerly, persons who had illegally occupied State Lands up to January 1998 were entitled to be regularised – the new law would move that date to June 2014. That means that more persons will be regularised;
- The numbers – There are serious questions arising about the numbers to be regularised in this process – the PM said recently that 30,000 were to be given Certificates of Comfort, Minister Seemungal is now saying that it is really 60,000, while the LSA website gives estimates of 250,000 persons. So, just what are we counting? Do these numbers represent inhabitants or is it the number of lots? We have no real clarity on just how much additional land is to be allocated in this new process.
- Who is ‘Landless’? – In the original 1998 Act, a ‘landless’ person is defined at S.2 (1) as –
“…“landless” refers to a person who falls within a category designated as disadvantage (sic) by the Minister to whom responsibility for Social Development is assigned and who has no legal or equitable interest or any other interest or claim to such an interest, in a dwelling house, residential land, or agricultural land upon which a dwelling house is permitted to be built…”
Obviously, the original law was intended to assist the most needy persons in our society.In the proposed amendment, just approved by the House of Representatives, ‘landless’ has been redefined as follows –
“…(c) in the definition of “landless”, by deleting the words “who falls within a category designated as disadvantage by the Minister to whom responsibility for Social Development is assigned and…” (the emphases are mine)
The landless class has now been expanded by our Parliament to eliminate any mention of disadvantage. I tell you.
- Where is the land? – The Schedule of the new law is an A to Z list of designated areas in every district of our country, so these are really expansive proposals. All areas will be affected, from Charlotteville to Los Iros.
- The rationale – Minister Seemungal stated that there are extensive aerial surveys from 2014 and other information being used to guide this process, but I think significant caution is necessary. The lack of an open process of policy review and formation in this important matter is proving very expensive for our collective interests. Have other State agencies and stakeholders been consulted? These critical policy changes must be underpinned by substantial research and consultation which can earn the required degree of public confidence.
- Who benefits? – We do not have any open database on the allocation of public housing, state land or any property at all. These records must be open and searchable so that the potential for serious improper behaviour amounting to a ‘land grab’ is minimised. In the present opaque arrangement the real beneficiaries could remain unknown for too long. Of course that is a recipe for the misallocation of State lands on an epic scale, so it is important to establish some transparent mechanism to examine what is happening.
When one considers the numbers involved, there is a clear sense that these programs, which were intended to benefit the poorer class of citizen, are being systematically ‘gamed’. It is even possible that officials are assisting those elements for the advancement of their own political agendas. The numbers wrangle is beyond the scope of this column, but I will be exploring it in the near future to explain how they relate a particular story.
The degree of confusion is immense, with LSA officers denying the existence of the national Land Policy. If we are to go by his evasive response to simple questions on the SIS occupation of State lands at Couva in disputed circumstances, the very Minister Seemungal can be seen as hostile to providing essential facts. The PM told the Parliament the next day that the Minister had denied making those televised statements.
We need to be alert to protect our patrimony, particularly in relation to property.
The Trinidad & Tobago Land Policy of 1992 has not been reviewed, withdrawn or superceded. Those are the facts. The responses of various public officials when queried, and the routine conduct of public bodies in relation to public land, are both in conflict with the existing policy. This article will explore the gap between the official policy and official conduct.
The 1992 Policy contains elements which are substantially beneficial to our nation.
Land is very important, especially because the quantity is very limited, so we need future-looking and properly-enforced Land Policy if we are to have a sustainable future in our country. I am specifically using ‘we’, since the important role of land requires us all to have a stake in these progressive outcomes. I am also specifically using ‘in our country‘, to emphasise the fact that most of us will have to live here.
This week’s column will set out some of the key elements in the 1992 Land Policy, so that we can begin to understand just why it has been effectively dismissed from official consideration.
An important consideration is the high proportion of public land in our country, at para 1.2 on page 2 of the Land Policy we learn that an estimated 52% of the whole is State land. We also recently heard Land & Marine Resources Minister, Jairam Seemungal, state that the proportion of land belonging to the State is of the order of 58% of the whole. Because so much of the country’s land belongs to the State, it is therefore critical to ensure we have a robust policy in respect of State land.
An estimated 47% of State land is forested and therefore subject to certain controls. The non-forested State lands are about 133,000 hectares, which is about 329,000 acres.
The estimated land area designated as suitable for cultivation is about 35% of the whole, comprising about 179,000 hectares or 442,000 acres.
According to the 1992 policy, there is a significant decline in the proportion of suitable land actually under cultivation, from 74% in 1963 to about 60% in 1982.
We need to consider food security as an important part of our country’s security. Our taste for foreign food and drinks; the uncertainty of our foreign exchange supply and the continuing loss of agricultural land, all mean that it is critical for land use policy to support our country’s food security policies.
History shows that once land is removed from agricultural use for other types of development, it is almost always lost for future agricultural use. That is described as ‘land alienation’ to signify a complete loss.
We have already lost some of our most fertile lands to contemporary development – eg three major areas completely lost are Valsayn as well as the River and Diamond Estates in Diego Martin. The very fertile Aranjuez lands are being rapidly developed with housing and commercial uses.
In fact, the lands at Tucker Valley in Chaguaramas are some of the last remaining first-class agricultural land in the country. To my mind this means that extra attention must be paid to any proposals for the use or development of those lands. Most importantly, those proposals must be ventilated and considered within the context of the land policy.
So, what does our official land policy state on this critical issue?
At page 9 –
4. LAND USE POLICY
4.1 During the period of the oil boom (1974-1982) there was great incentive to shift land out of agricultural into other uses such as housing developments and industrial/commercial activity. In the process much good agricultural land was irretrievably misallocated. This is confirmed by the 1982 Agricultural Census.
4.2 The New Land Policy proposes:
(a) that the existing system of land use zoning be strengthened to ensure that prime agricultural land is not mis-managed or converted to non-agricultural uses except on the basis of a significant spatial or economic development rationale…
Land for the Landless
The expanded program is to provide between 3,000 to 4,000 lots each year, at an estimated annual cost of $1.0 Billion. The Minister also proposed an increase of the income limits for applicants from the previous figure to a new joint monthly income of $30,000.
This ‘Land for the Landless‘ program will require our sternest scrutiny, given its key features. For one thing, the annual target of 3,000 to 4,000 lots means that about 200 hectares (or 500 acres) of land would be distributed each year. How can we ensure that this program does not cause more loss of our limited agricultural land? Where is all this land going to come from? Given the fact that most officials seem unaware of our country’s existing land policy, this is a serious issue. Indeed, the very Land Settlement Agency stated that they were unaware of any State land policy when we contacted them before starting this series. So that is the problem, the officials who should know, don’t know and what is more, they don’t know that they don’t know. I tell you.
But the situation becomes even less acceptable when we consider the increased income levels in the expanded program. The intention of this program, as I understand it, is to provide subsidised housing lots to poorer people who are unable to afford land and intend to build their own homes. A family with a combined monthly income of $30,000 would comfortably qualify for private mortgage financing to buy a home in the $1.5M+ price range. To expand a program intended to serve the poorer groups of hopeful homeowners in this way is a wanton diversion of limited State resources – both land and finance – for some other purpose.
HDC allocation policy sets a monthly household income limit at $25,000 and LSA is now racing ahead to offer subsidised land to families earning up to $30,000 a month. I tell you.
It seems like this program is really ‘Land for Everybody’.
…With this, Mr. Speaker, you would find that you have lands all over the place, they have thousands and thousands and thousands of acres. Just under the Caroni (1975) Limited alone, they had over 70,000 acres of land, and now I am finding it is closer to 90,000 aces to 100,000 acres of land they had, and we can only know that, Mr. Speaker, by using a scientific approach…
So, there is official uncertainty as to the true land area of the Caroni estate.
The most important finding, thus far, is the extent to which the basic policy and information is unknown, which would be a very bad situation, or it is known and is being purposely ignored. The former case would be a very sorry story in terms of how our country has been run for too long, but the latter case would be far, far worse. So, which is it?
What we need as a starting-point in this process of managing the critical asset of land, is an open, searchable database with details of all the country’s property, public and private. The 2009 Property Tax proposals made by the Manning administration would have required such a database if the new system was to have worked. There was considerable merit in those proposals, but the strong opposition killed the idea and the Peoples Partnership shelved the Property Tax after winning elections in May 2010.
There are substantial landowners and land-grabbers who would have had their holdings and operations exposed to critical scrutiny if such a database had been established. Those people have benefitted from the continued opaque arrangements.
So, what does the Land Policy say on this?
“…Establishment of National Land Information System
3.4 …Lack of timely information results in loss of revenues, loss of investment opportunities and inefficiencies in land management…
3.5 The New Land Policy proposes establishment of an integrated graphic and non-graphic national land information system as a matter of priority. This system will be computer-based…”
Of course, back in 1992, the internet was in its infancy, so the proposal was not for online access.
There have been some steps to complete the required database, but given the amount of money which has flowed through our Treasury and the enlightened policy being established in 1992, we are still without the required detailed, public information.
The question is ‘Which interests are served by operating in the shadows?‘
Our country has severe limits on the available land, so we need a proper system to ensure that those lands are used in a sustainable and equitable manner. Despite its beneficial aspects, it is clear to me that the 1992 Land Policy is in need of revision. In the interim, that policy must be observed. The concerned members of the public need to inform themselves to defend our patrimony.
To be continued…
Property ownership is a critical ingredient of the society we are trying to build. No one can deny that. The wealthiest people and companies in this society have made a great part of their wealth through property dealings – buying, leasing, sub-dividing, selling, renovating and so on. We all know that property is critical to amassing and holding wealth.
The single largest owner of all classes of property in the Republic is of course, the State. Those properties are described as ‘Public Property‘ in the Public Procurement & Disposal of Public Property Bill 2014 which is now being debated in Parliament. The penultimate paragraph of the Private Sector Civil Society group (PSCS) group statement of 13 June 2014, is clear –
“…Whilst very pleased with the progress to date and while not having sight of the amended bill we note two areas that remain of serious concern; the Role of civil society and the acquisition and disposal of public property…“.
At pg 7 of that Bill – “public property” means real or personal property owned by a public body;”
‘Real Property’ usually means real estate (freehold or leasehold), while ‘Personal Property’ usually means all other types of property such as licenses, concessions and tangible items of worth.
‘Owned’ usually means literally owned, as in the case of a freehold or leasehold interest, but there are other important types of property which are not literally in the ownership of a public body. Public Property is important because it is extremely valuable. The power of the State or its agencies to allocate those Public Properties must therefore be exercised in an equitable and transparent fashion if we are to foster proper conduct of our country’s public affairs.
In relation to real estate, it is important to note that the system of Crown Grants was used during the colonial period to encourage immigrants of a particular type. Immigrants who were of acceptable race, religious belief or station in life were allocated public lands for the purpose of agriculture. The actual documents are called ‘Crown Grants’ and they can be seen in our country’s records. The allocation of those lands to those selected people established a pattern of substantial wealth which took generations to displace. Of course such a system of property allocation, on the basis of ones’ external appearance and belief system, would be incompatible with our Republican status.
That history and the important role which property plays in today’s society are both reasons why the ‘disposal of public property‘ is an inescapable part of the new law, so that we can ensure good governance in these matters.
The Maha Saba Episode
This is a good example of a type of Public Property not literally owned by a Public Body. The dispute was over the decision of the previous administration to allocate radio licenses overnight to the Citadel Group, which was owned by a PNM member, at the same time as delaying the grant of broadcast licenses applied for by the Maha Saba. The Maha Saba had to take legal action all the way to the Privy Council to obtain a favourable judgment as to the breaches of principles of good public administration by that PNM government.
A new law intended to control dealings in Public Property as defined above would be one which extended beyond those literally owned by Public Bodies to include species of property in the ‘care, custody or control‘ of those bodies. That would allow future occurrences of a ‘Maha Saba episode’ to be rapidly rectified, also at less expense, by the Procurement Regulator as that type of property transaction would be within oversight of the new law.
In point of fact, it was reported that the Citadel group which comprised three radio stations was sold in 2012 to the CCN group (owners of this newspaper) in 2012 for a sum reported to be over $50M. So it is clear that these species of property have serious value, quite apart from any other aspects.
When Caroni Ltd. was closed in August 2004, about 76,000 acres came out of cultivation and become available for alternative uses. The Caroni lands stretch from Orange Grove at Trincity (near the large new Blue Water facility) as far south as Princes Town.
Given the fact that Chaguanas has been our fastest-growing town for almost 20 years now and the ongoing growth of investment in San Fernando and its outlying districts, it is clear that the Caroni lands have a critical role to play in our medium to long-term prospects. But those possible outcomes would be conditional on just how the Caroni lands are allocated in the short-term. As far as I am aware, a decade after abandoning sugar cultivation, there is still no strategic plan for how these lands are to be utilised. In the absence of a proper strategy for the management of those important State lands, there is scope for missed opportunity in terms of development and re-distribution.
The decisive land allocation issues would include –
- How does the allocation policy work together with the State’s broader economic policies?
- To whom are the lands allocated?
- On what terms are the lands allocated – i.e. for how long are the lands to be leased and with what restrictions? Some of the ex-Caroni workers are demanding grants of freehold interests from the State, but no decision seems to have been made on that.
- Does the State have the right to repossess the lands upon expiry of the lease?
- Does the allocation strategy have dynamic measures to control speculation? This is to prevent the growth of ‘flippers’ who just acquire property to hold and re-sell. There is a serious view that ‘flippers’ are a part of the market, but there is also a way that their presence can retard development as they do not typically improve or maintain their properties.
All of those issues must be located within equitable and transparent arrangements as required by the new law.
State Leases of offices
When the State leases offices or other property it is in fact procuring property via a transaction in Public Money. Those transactions must take place within a modern system which ensures good governance by attaining accountability, transparency and value for money.
There is a huge oversupply of offices in greater POS as a result of the State’s overbuilding during the last regime and the current administration is now shifting significant public offices out of POS. The combined impact of those ought to be a steady decline in both the gross amounts paid to landlords via State leases and the amounts paid per sq. ft.. That kind of change can only be obtained and monitored if the State’s leases of offices and other property are also part of the new Procurement system, so that the details are published as part of the database of State contracts.
The State-owned reclaimed lands at Invader’s Bay in west POS are another pregnant example of how the use of improper land allocation processes can injure the public interest. The JCC has mounted a legal challenge to seek publication of the legal advice obtained by the Ministry of Planning & Sustainable Development as to the legality of their activity ‘thus far’ in respect of that 70-acre parcel of prime land.
It is interesting to recall that one of the legal opinions on which the State seems to be relying, notes that this proposal was to grant long leases (about 99 years) to the successful bidders at Invader’s Bay. That was not considered a disposal since the State would have retained the freehold interest. Now that is probably the best example of why these types of transactions must be controlled by these modern and effective laws. The attempt to conflate a residual freehold interest with ownership, while at the same time denying the tremendous commercial value of a 99-year lease over prime lands was scandalous.
The most valuable properties in the capital are the leaseholds in St. Clair and Woodbrook, that much is indisputable, which is why we have guard against this kind of evasive advice to facilitate arrangements to escape proper oversight.
The Landed Interests
The ill-fated 2009 proposals for a new Property Tax would have required an updated and open database of the entire country’s property holdings. The campaign to ‘Axe the Tax’ was successful and that database never saw the light of day, which entirely suited the Landed Interests who are wary of any system which would expose their operations to easy scrutiny.
We need to be vigilant to ensure that the Public Procurement & Disposal of Public Property Bill 2014 does not leave a gaping, purposeful loophole thorough which our Public Money will continue to pour.
Given that our political parties receive financing from business-people, how will those party financiers be rewarded? In a situation which properly controls the award of State contracts for goods, works and services, how can they be rewarded?
The answer is Public Property.
Last week I set out my main concerns in relation to poor procurement processes with the THA/BOLT project. A large amount of Public Money was being committed to a project with little apparent regard to Value for Money concerns in an arrangement which seems to expose the THA to the principal risks at a time of limited financial resources.
This article is a critical examination of the controversial proposed purchase of 50.6 acres of land at Calcutta Settlement by the Housing Development Corporation (HDC).
The HDC’s role is to build and maintain homes to satisfy the requirements of its main client, the Ministry of Housing and the Environment. According to that Ministry –
The Corporation is mandated by the Act to:
- Provide affordable shelter and associated community facilities for low and middle income persons and;
- Carry out the broad policy of the Government in relation to housing.
With over 125,000 applicants on the HDC’s waiting-list, there is no doubt that, for many poor people, the HDC is their only hope of getting a reasonably affordable home of decent quality. That means that the HDC is an important implementing agency in our nation’s welfare provisions, which is a role I fully support.
This post is about ‘Eden Gardens’, which is on the western side of Calcutta Settlement Road No. 2 in Freeport, just north of Central Park, opposite to Madoo Trace. The property comprises 264 residential lots at an average size of 5,600 square feet, 2 residential/commercial lots, 2 nursery school sites, 2 recreation grounds and 4 playgrounds.
In November 2011, the HDC obtained a valuation from Linden Scott & Associates at $52M. In January 2012, the owners of Eden Gardens, Point Lisas Park Limited, offered the property to the HDC at $200M.
That is an intriguing sequence of events, since the HDC would hardly pay for a valuation on a property they were not interested in. If we accept that the property was likely offered to the HDC before they ordered the Scott valuation, then one has to ask on what terms was it offered. That letter of offer, the original one, must be disclosed now.
In April 2012 the Commissioner of Valuations advised the HDC that the current open market value of the property was $180M. In June 2012 Cabinet approved the HDC purchase of that property for $175M, which is $663,000 per lot – at an average lot size of 5,600sf that equates to $118 per sf.
The normal professional and commercial practice when buying in this quantity, is to obtain a discount on the unit price. It would be reasonable to expect that these lots could be sold for significantly more than the HDC agreed to pay. We will see.
There was a lot of argument in the public about this transaction, so I was prompted to look closely at the deal.
I have these serious concerns –
- Point Lisas Park Limited (PLP)
- On 1 June 2004, Anthony Sampath, Patrick Soo Ting and Azad Niamat agreed with the owner, Sookdeo Deousaran, to buy the property for $17M. That Sale Agreement is registered as deed # DE2006 023638 20D001.
- On 26 April 2007, PLP was incorporated as Co. # P2956 (95), with the same three individuals who agreed to buy the property for $17M as its Directors. On 6 May 2011, the Companies Register recorded that Kayam Mohammed became a Director.
- On 3 February 2010, according to deed # DE2010 007816 95D001, PLP purchased the property from Sookdeo Deousaran for $5M, paying Stamp Duty of $350,000.
These purchasers were prepared to pay $17M for this undeveloped property in mid-2004, but ended up paying only $5M for it in early 2010. This is the same property which was offered to the HDC at $200M in early 2012, two years later. Literally unbelievable.
The stated payment of $5M shown in that 2010 deed is a massive understatement of value, probably being only 10% of the true market value. The Stamp Duty properly payable on a $50M sale of land would have been $3.5M. The Stamp Duty Section of the Board of Inland Revenue has the discretion to refer transactions to the Commissioner of Valuations in cases where they suspect that the consideration shown on the deeds is understated. I am reliably informed that in this case the BIR did not seek an opinion from the Commissioner of Valuations.
I am calling for that 2010 transaction to be revisited immediately, with a view to the State recouping the proper Stamp Duty. The Public Interest demands no less.
- The missing link
Between 2004 and 2012, the infrastructure for Eden Gardens was built, which included the roads, street lights, drains, water and electricity supply. Eden Gardens lots were available in 2011 via at least two real estate agents – Golden Key Real Estate Ltd. and Samko Realty – at $400,000 per lot. This was widely advertised.
- The valuations
- Linden Scott & Associates in November 2011 – $52M
- Commissioner of Valuations in April 2012 – $180M
Those lots were known to have been on sale at $400,000 in 2011, so the entire development of 264 lots could have earned its owners a total of say $106M. Even if we allow a figure of $5M for the “2 residential/commercial lots and the 2 nursery school sites”, we are still in the range of $110M as the ‘Gross Development Value’.
Given that these lots were clearly not selling at the $400,000 price-point, those estimates are at the upper end of possibility. Which means that we have to adopt a lower ‘Gross Development Value’, say $95M-100M.
If the entire development is to be acquired by a single purchaser in early 2012, that purchaser must deduct from the Gross Development Value to cater for –
- Stamp Duty – at 7% of the Purchase Price;
- Legal Fees;
- Developer’s Profit – at a minimum of 25%;
- Agents’ fees for the sale of the lots;
- Cost of Finance to account for the cost of borrowing that sum until the lots are sold;
- Time Value of Money, to account for the element of delay in recouping one’s investment.
I estimate that those discounts would amount to 35-40% of the Gross Development Value. If we adopt that approach, the maximum net present value of Eden Gardens in early 2012 as a fully-infrastructured property would be in the $60M range.
The meaning of it all
The usual accepted practice of residential development can be expressed by this ‘rule-of-thumb’, to spend less than twice the cost of the lot does not make best use of that land.
Even if we ignore the ‘rule-of-thumb’, one has to wonder
‘In what way does this transaction satisfy the HDC’s mandate?’
It is most disturbing that there has been this amount of debate without the issue of the end-user ever being mentioned. How do the real needs of the homeless feature in this massive HDC transaction, if at all?
To my mind this Calcutta Settlement scheme resembles the HDC’s flagship project at Fidelis Heights in St. Augustine which created an elaborate, expensive multiple-family project with no allocation of new homes to the needy people on the waiting-list.
I have established via a separate enquiry that only about 2% of the HDC output of new homes is allocated to those who can only afford to rent and this project is likely to be a continuation of that detrimental trend. The HDC continues to allocate vast sums of money to housing those who can afford to buy, while leaving the left-overs for those who can only afford to rent. That policy is inimical to the interest of the poorest members of the public, to whom the HDC is literally the last refuge for decent housing.
In all the circumstances, it seems that we need to have the air cleared on these issues –
- What is being done about the under-stated consideration in the 2010 deed for the sale of Eden Gardens?
- How many of the 264 lots were sold at the 2011 asking-price of $400,000? That is important since it establishes a benchmark for the proper value of these lots in the open market.
- When did Eden Gardens receive all the required approvals?
- When was the infrastructure completed at Eden Gardens?
- On what terms was Eden Gardens originally offered to the HDC?
- There is an abundance of develop-able State-owned lands in the vicinity, particularly since the 2004 closure of Caroni Ltd. So why did Cabinet agree to buy private lands in Calcutta Settlement at these prices?
- Who owns Point Lisas Park Limited?
I close by reminding readers of the corruption ratio set out in the first article. As I wrote in June 2008, referring to the Manning government and its UDECOTT antics –
…Either the Cabinet or its advisers are responsible. We are either dealing with a lack of rectitude at the highest level of our republic or a sobering naivete…
- Raymond & Pierre Limited, under my leadership, provided certain professional advice on this property in 2007. No aspect of that advice has formed part of this article.
- Linden Scott is a former colleague of mine, having trained at Raymond & Pierre Limited. He is now a rival professional.
- Raymond & Pierre Limited have provided professional advice to the HDC in the past.
As part of this pre-budget series, I am going to ‘take stock’ of some recent, significant happenings in relevant areas.
Given the unstable situation in relation to the State and its operations, many examples of which have been set out in previous ‘Property Matters’ columns, it is very important that a critical stance be maintained. That said, it is also important that any progress be properly recorded and acknowledged.
The notable items were –
Housing Development Corporation (HDC)
I was very pleased to read of the success HDC was having in collecting the serious rent arrears owed by its tenants, reportedly in excess of $240M. Of course this is not the first time there has been an effort to rectify this situation, so hopefully this will be a sustained program as it is vital that housing be treated with proper responsibility. That responsibility would extend from the quality of the designs and construction, the treatment of contractors and suppliers all the way to housing policies which respond to the needs of the needy.
Last week, there was a report in this newspaper that the Housing and Environment Minister, Dr. Roodal Moonilal, disclosed a new housing policy. According to that report, the new policy will favour distribution of serviced lots, with foundation slabs, over the provision of new homes. I have been calling for a review of our housing policy for some time now, so it was very disappointing to read that Cabinet had recently approved this important new policy without some formal process of dialogue or seeking wider views, much less a thorough examination of the shortcomings of the 2002 policy. Yes, a new housing policy was sorely needed, but there are solid benefits to wider dialogue.
Housing is too important an element of our Welfare State to ever become solely a creature of Cabinet, whatever the credentials of the current crop of Ministers.
This leads directly into my point about the poor flow of basic information, which can be detrimental to the best intentions. The 2002 housing policy disappeared from the internet about 6 months ago, but despite several written requests I have had no success in having those links restored, for whatever reason. The new housing policy is also not available online. In contrast, last month the Ministry of Finance issued a revised State Enterprises Performance Monitoring Manual and that is available online, together with the 2008 Manual it replaced.
The impending new Building Code is to be welcomed, having been developed in collaboration with key stakeholders. There needs to be a solid commitment by all parties to establishing proper enforcement of those critical standards. The Building Code will cover important areas such as earthquake and fire hazards as well as other quality issues.
The initiative is being piloted by Dr. Roodal Moonilal, Minister of Housing and the Environment. UDECOTT and the HDC both form part of his responsibilities, so that is a good fit. We will have to be vigilant to ensure that all State construction conforms to the new standards.
I can scarcely believe that the very Minister who understands the importance of collaborating with stakeholders on the new National Building Code, would state a week earlier that the new Housing Policy had been agreed by Cabinet, with no visible attempt at consultation. Incredible, but true.
A Culture of Consequence
I have consistently stated that the absence of consequence is inimical to any development and that consequence has to be restored to a proper place if we are to progress. Up to last Thursday, 11 August, I stated at a public meeting that I was unaware of any government in this country taking decisive action against its own appointees in the State Enterprises. The pattern has been one of charging people from the last political administration in what almost always looks like revenge.
The Sunday Guardian headline of 14 August ‘Cabinet fires Chairman of School-feeding Programme’ was as welcome as it was surprising. It was reported that the Cabinet had taken decisive action to fire a Chairman who had been appointed about 6 months before and that is a positive step, the first time any government in this country has done that, as far as I am aware.
According to that exclusive story, the fired Chairwoman of the National Schools Dietary Services Ltd (NSDSL)—Dawn Annamunthodo – had obtained extensive and expensive security guards for herself, due to some alleged death threats. There were also details of what seemed to be deceptive attempts by that individual to become a signatory to the bank accounts of that State-owned company. If those reports are true, there are two serious implications –
Firstly, it is extremely unlikely that this is the first time that this individual was involved in acts of that kind. Grown people do not just change their behaviour in a few months’ time, we all know that. My point being that this episode calls into question the screening which is carried out in relation to these appointments. Whatever screening processes now exist, will definitely have to be made stronger, together with ongoing reviews of Board performance.
Given that the Prime Minister is widely reported to have approved the Chairpersons of State Boards, that screening process needs to be reviewed urgently so as to preserve the integrity of that office.
Secondly, this individual is reported to have attempted to convince Republic Bank’s Ellerslie Plaza branch to make her a signatory and that matter must be promptly investigated by the Fraud Squad, with charges to follow if those allegations are true. It is an echo of the point I made here last week about a dutiful police officer allowing a motorist with a defective vehicle to just drive-off after a ticket is issued. Not good enough, if we are serious about road-safety. We have to restore a Culture of Consequence if White-Collar Crime is to be challenged.
But, even though no money appears to have been stolen in that School-Feeding episode, the saddest part was the bold-faced question that individual asked the Guardian reporter, when invited to give a comment
How did you get hold of those documents? Those are state documents. These questions are state business.
It reminded me very much of the response of Jewan Ramcharitar, former PriceWaterhouseCoopers partner, who suddenly resigned as eTeck Chairman almost a month ago. That entire affair remains mysterious, with Stephen Cadiz, the line Minister, stating that it was due to a ‘difference of opinion’ and the departed Chairman reportedly stating –
I am actually working on a project in the public service arena on a full-time basis and my time at eTeck is eroding the time and attention I pay to that.
“Just what that project is, he won’t say.”
I wonder if Ramcharitar would have found that dismissive answer to be acceptable when he was a partner at PWC? Probably not, yet we are continually beset by these evasive attitudes in public affairs. We need to hold our leaders to a high standard.
The latest twist is the sudden resignation of George Nicholas as Chairman of Caribbean Airlines and the opaque statement by the Minister of Transport, Devant Maharaj – “…Yes. I can confirm this. I am in receipt of his letter but I cannot say anything more…”
In the three cases, bare-faced conflation of State Business with Business which is private, personal or confidential.
Good steps are to be recognized and applauded, but we must always strive for better. We need to continue onward and upward. It would be good to have a statement from the Minister of Foreign Affairs and Communications as to the governments’ commitment to a progressive policy in these important matters. The Housing policy needs to be published for comment and we also need to have a clear statement as to whether there can be any such thing as a confidential state policy.
Confidential State Policy may seem like an oxymoron, but readers will be aware of the reluctance of the Education Facilities Company Limited to publish its new Confidentiality Policy. I don’t want to say refusal, but when this budget season is over we will be continuing to examine those EFCL operations.