By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Government will pay a gross $34.089 million over 10 years to rent the Eight Mile Rock administrative complex being constructed through a Public-Private Partnership (PPP) agreement.

Details of the deal struck by the Christie administration with PPP Investments & Construction Company are disclosed in the latter's $25 million bond offering, as it seeks to raise the necessary financing from private investors to complete the construction project.

The financials accompanying the offering memorandum, which has been seen by Tribune Business, reveal that the Government will pay a fixed quarterly rent of $852,224, or $3.409 million per year, to PPP Investments & Construction Company throughout the duration of its 10-year lease.

"Upon completion of the buildings, the company will enter into a lease-to-purchase agreement with the Government, whereas it is agreed that the Government will lease the buildings for a period of 10 years," the documents state.

"During the 10-year period, the Government will pay a sum of $852,224 on a quarterly basis until the lease payments are paid in full. On completion, the buildings will be conveyed to the Government for $100."

The financials also reveal that the Government is to pay PPP Investments & Construction Company a $535,000 'handover fee' once construction of the complex is completed, which is projected to be 2019.

PPP Investments & Construction Company, which was formed in late November 2016, is a vehicle specifically designed to construct and manage the Eight Mile Rock administrative complex. It is 100 per cent-owned by New Providence-based Top Notch Builders, which is located on Adelaide Road.

Its principals include Samson Heild as lead contractor; financial consultant Marc Robinson; and building/consulting engineer, Randolph John. Winston Rolle, the former Bahamas Chamber of Commerce president, is listed as a director in the offering documents.

"PPP Investments & Construction Company is a privately-owned construction and real estate development firm which has been contracted by the Government of the Bahamas to construct a compound on a 2.83 acre tract of land at Eight Mile Rock, Grand Bahama, comprised of two buildings for the Government's usage," the bond offering document states.

"Building 'A' will be 33,000 square feet with three floors to be used as a Government administrative building to house NIB (National Insurance Board) and other local government-related offices. Building 'B' will be 13,000 square feet with two floors to be used as a court house, a police station and a fire station."

Among the prospective tenants are the Ministry of Finance, Passport Office, Department of Environmental Health, Urban Renewal, the Registrar General's Office and the Grand Bahama island administrator.

"PPP Investments & Construction Company has injected $6 million into the project as of September 2017, and is at the second floor of the building A's three storeys, and at the ground floor of Building B. The project is estimated to be completed by May 2019," the offering document added.

The $25 million bond issue, which carries an 8 per cent interest coupon and 10-year maturity, is due to launch on Monday. It is being arranged by Leno Corporate Services and scheduled to close on March 2 but, as a private offering, members of the Bahamian public should not seek to become involved. The bonds issued will not be listed for trading on the Bahamas International Securities Exchange (BISX).

Almost $22 million of the targeted offering proceeds will be used to meet construction costs, with another $2.029 million covering project management and legal fees. The remainder will be used to meet insurance costs, the $345,000 land purchase and $275,000 conveyance.

PPPs are typically designed to reduce the financial stress on cash-strapped governments by contracting the private sector to provide the funding, development and expertise to construct public buildings or run services.

The Government's cash flow pressures are eased by requiring the private sector to finance the up-front capital costs, with the latter earning a return on investment by leasing the buildings they construct to the public sector or receiving a fee for services provided.