Developer wants government to finish administration building – $9.1 million down the drain

POSTED: 10/11/12 3:31 PM

St. Maarten – By the end of this year tax payers in St. Maarten will have forked over $9.1 million in rent for the government administration building on Pond Island, but so far no civil servant has ever worked there. Developer RGM has had enough of the stalemate and filed a lawsuit against the government last week Thursday. “We demand that the government begins with the tenant improvement and that it occupies the building,” RGM CEO Gerard d’Arcy said at a press conference at the offices of Lexwell Attorneys yesterday afternoon.

D’Arcy said that the government is in “well-advanced negotiations” with the American Continental Finance Corporation” to buy out RGM and to refinance the project so that there is money to finish the building’s interior, the access road and the parking lot.

But the developer is not too sure that results will materialize when the month ends. “That is why we filed a law suit,” d’Arcy said.

Asked what the problem is for RGM, since the government is up to date with paying its quarterly rent of $481,000, attorney Mark Kortenoever said: “It is about protecting RGM’s reputation as a developer and also about protecting its outstanding investment.”

The new administration building was financed through a so-called Boot-construction (Build, own, operate, transfer) whereby RGM would finance the construction and the government would repay the investment in installments over a period of 16 years. At the end of that term, the building would become the government’s property for a symbolic $1.

RGM is a property development company based in Trinidad. It is a consortium of three partners: RBC, Guardian Life and Sagico. The company has developed ten buildings so far; nine of them are in Trinidad and the building in Philipsburg is number ten.

“We signed an agreement with the government in 2003 and then it took another five years before a spade went into the ground,” d’Arcy said. “It is a fantastic building but it has never been occupied. In the last four years the government has paid $9.1 million in rent which is an amazing amount by any standards.”

What concerns the developer is that the building has begun to deteriorate. A brief inspection of the building’s exterior after the press conference confirms this. Windows are apparently broken and boarded up, bushes are growing uncontrolled around the building, the terrace at the rear is flooded with filthy water and the direct surroundings look like the scrap yard of a bankrupt construction company.

“This is terrible, it is a shame,” d’Arcy said. There are lizards in the place, there are pigeons. This is no longer a building we would like to have our name attached to. This is not a living and breathing building.”

The developer has been in court with the government for quite some time. There are disputes about who is responsible for maintenance and insurance, among other things. “We are doing the structural maintenance under protest, and we also insure the building,” d’Arcy said. “That is costing us approximately between $200,000 and $300,000 a year. But the government, as the tenant, is responsible for maintaining the interior, and that is not happening.”

The RGM CEO said that the construction cost of the building was $16.27 million and that its replacement value (if the building had to be constructed today) is probably around $24 million.


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