By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

Five property owners have teamed to challenge New Providence Development Company’s long-standing control over the island’s western district while arguing that this is anti-competitive.

The five, who own separate parcels of about five acres each on the southern side of Western Road between the Old Fort Bay roundabout and Lyford Cay, are urging the Town Planning Committee to “extinguish restrictive covenants” previously imposed by New Providence’s largest private landowner that prevent their properties from being used for commercial purposes.

Owen Wells, a McKinney, Turner and Company attorney, representing the five property owners, who are presently restricted to just single-family residential development, argued in a letter to the Department of Physical Planning that the restrictive covenants had long outlived their usefulness and intended purpose.

He added that they were imposed to prevent the emergence of competition, and rival developments, while New Providence Development Company was constructing the Old Fort Bay community and, later the Old Fort Bay Town Centre. Both projects have now long been completed, Mr Wells asserted, meaning that the need for the covenants has faded away.

And, arguing that the covenants’ primary purpose is to “restrict competition”, he added that their continued existence will only serve to undermine western New Providence property values, deter development and cause land to sit idle “instead of being put to productive use” - thereby retarding economic growth, job creation and potential quality of life improvements.

Suggesting that “no actual and substantial benefit” will accrue from continuing to enforce the restrictive covenants, Mr Wells wrote: “There are no identifiable parties currently benefiting from the enforcement of the restrictions.

“At this point, the restrictions are of no actual and substantial benefit to any person since the purpose of the restrictions has already been accomplished or, by reason of changed conditions, is no longer capable of being accomplished.

“As previously mentioned, the implied purpose of the restrictions was, in general, to preserve and protect the success of the Old Fort Bay community while selling property outside the planned development area to raise funds,” Mr Wells continued. 

“For example, by prohibiting any trade, manufacture business, commercial undertaking or profession from being carried on upon the property, the New Providence Development Company and Old Fort Bay Company [an affiliate of the former] were able to protect Old Fort Bay Town Centre from the development of competitive retail and commercial space along Western Road.

“As another example, by granting to the New Providence Development Company Board approval rights over the development of the property, New Providence Development Company and Old Fort Bay Company preserved de facto control over any development of the property,” he further added.

“The Old Fort Bay community, including the residential, retail and commercial components, has been completed as of the date hereof. Given the Old Fort Bay community is complete and has had sufficient time to stabilise, there remains no actual and substantial benefit to any person that should keep the Committee from extinguishing the restrictions.”

Mr Wells is representing Llan-Y-Rafon Investments, Lorishill Ltd, BRAM, New Hope Investments and Michael Symonette, all of whom own parcels of between five to 5.053 acres. It is not known from the documents on file with the Department of Physical Planning whether all or some have common ownership.

However, on behalf of his clients, he wrote that western New Providence has “evolved” to include more commercial activity. As a result, enforcing the restrictions on his clients’ land will reduce property values by stopping them being put to their “highest and best use” and prevent both economic growth and tax revenue generation.

“More generally, the character of the western district of New Providence has evolved and surrounding land owners, not subject to the same restrictive covenants as the property, have transitioned to developing retail and commercial usages to meet the demand of the growing residential communities,” said Mr Wells.

“Enforcement of the restrictions will impede the productive development of the property in a manner consistent with current trends along West Bay Street and Western Road, and cause actual and substantial detriment to the public because, among other things, broadly prohibiting land use and granting broad approval rights over the development of property to a third party will reduce property values and receipts from real property taxes as well as slow economic growth, prevent job creation and deprive the public of improved services and amenities.”

Mr Wells argued that allowing the restrictive covenants to remain will effectively grant New Providence Development Company (NPDCo) approval rights and give it control over competing developers, which “adds a layer of risk and uncertainty” to property use in the area.

“By broadly prohibiting all other uses, the restrictions collectively limit any development of the property to a residence of two or more storeys and an interior area of 2,000 or more square feet,” he added.

“Additionally, by enforcing New Providence Development Company’s Board approval rights over the development of the property, New Providence Development Company preserves de facto control over any development of the property (and each other property with similar restrictive covenants).

“Generally speaking, granting approval rights over the development of property to a third-party adds a layer of risk and uncertainty to the use of property that will cause a decrease in the values of property and subject otherwise market-driven decisions (’highest and best use’) to the sole discretion of a probable competitor.”

Mr Wells reiterated that the purpose of the covenants was to restrict competition to Old Fort Bay, which has been completed for some years and now hosts 185 residences along with a mixed-use commercial and retail centre at the Old Fort Bay Town Centre. He added that the covenants only remaining purpose is to “unreasonably limit the use and development of the property relative to competitive properties”.

“The implied purpose of the restrictions is primarily to restrict competition. Specifically, it was for New Providence Development Company and Old Fort Bay Company to preserve and protect the success of the Old Fort Bay community while selling property outside the planned development area to raise funds. The Old Fort Bay community is a private, gated residential community of 185 homes supported by the Old Fort Bay Town Centre, a mixed-use of retail and commercial centre,” said Mr Wells.

“Construction of the Old Fort Bay community commenced by 2002 but, by 1992, at the time that the restrictions were agreed to, New Providence Development Company and Old Fort Bay Company had already commenced the pre-development process and intended for the restrictions to minimise any adverse effects the development of the property could have on the Old Fort Bay community.

“Now, with the implied purpose of the restrictions accomplished, and by reason of changed conditions in the western district of New Providence, the only remaining effect is to unreasonably limit the use and development of the property relative to competitive properties.”

This is far from the first time that New Providence Development Company’s use of restrictive covenants has been challenged. However, as with previous cases, it is likely to result in a long and costly legal battle that makes its way from the planning process to the court system.

Nick Dean, principal of Integrated Building Services (IBS), won at both the Town Planning and appeals levels over his call to extinguish restrictive covenants imposed by Old Fort Company when it sold a three-acre parcel - located between Charlotteville and Old Fort Bay - to his father some 26 years ago in 1998.

These limited the site’s development to two private residential dwellings of “no more than 3,000 square feet each” which, if not removed, would have blocked Mr Dean’s ambitions to develop the 30-unit Azumi community. However, New Providence Development Company is now challenging these decisions before the courts.

And, again, despite defeats before both the Town Planning Committee and Appeals Board, New Providence Development Company has also asked the Supreme Court to overturn the approval granted for rezoning five acres near Lyford Cay owned by Henry F Storr from residential to commercial.

The electrical retailer is arguing that the rezoning will facilitate the property’s sale and enable it to achieve a higher price, but New Providence Development Company is arguing - in similar fashion to Mr Dean’s case - that the restrictive covenants imposed in the conveyance when it sold the property to Henry F Storr should remain in place and not be extinguished.

These battles, together with the Supreme Court’s verdict in the dispute between New Providence Development Company and the One West Plaza retail/office park’s developer, highlight what appears to be growing conflict over the former’s use of restrictive covenants to guide and/or limit the type or scale of development that occurs in western New Providence.

Sir Ian Winder, the chief justice, in his recent verdict on the One West dispute wrote that New Providence Development Company, in its role as the area’s master developer, has sought to use these covenants to “exert control” over the activities of other developers to protect its own interests and backed this up with “its ‘economic clout’”. The latter, he added, included refusing to sell extra land to others.