Dart deal aims for economic sustainability

At the core of the ForCayman Investment Alliance ‘mega deal’ between the Cayman Islands Government and the Dart Group was a desire to immediately stimulate the economy and to make prosperity sustainable for decades to come. 

It’s no secret that the state of the Cayman Islands Government finances haven’t been good since the global financial crisis started in the fall of 2008. 

When announcing the ForCayman Investment Alliance on 15 June, Premier McKeeva Bush said the Cayman Islands was “ill-prepared to face the local impacts of the world’s economic fallout” and as a result, the local economy was hard hit, particularly starting in the summer of 2010. 

To deal with a deficit budget caused by reduced revenues, the government had to halt or abandon several planned infrastructure projects. To reduce operating costs, the government implemented a number of measures in the civil service, including a hiring freeze, a 3.2 per cent pay cut and not renewing the contracts of many expatriate employees.  

The private sector felt the pinch just as keenly as the population contracted with the loss of thousands of financial sector employees and their families. Tourist arrivals also suffered. 

The construction industry took one of the hardest hits and hundreds – if not more – of jobs were lost as building activity slowed to a near stop. 

“Consistent through all of this is our Government’s commitment to a policy of reviving the country’s economic activity by encouraging investment, creating jobs, enhancing opportunities for our people and creating opportunities for small businesses to be able to participate in the revival of our economy – essentially to create sustainable economic growth for our children and grandchildren,” Bush said. 

As 2010 was coming to a close, however, the Cayman Islands Government still faced a serious challenge in 

the country’s economy back to more prosperous times.  


Dart makes a proposal 

The Dart Group faced and equally challenging dilemma at Camana Bay. The George Town Landfill problem, one that successive governments had talked about resolving for some 15 years, had grown in ways no one could have seen. The area not only smelled bad, toxins coming from the landfill were leaching into the North Sound.  

To make matters worse, the Cayman Islands Government was entertaining the thought of dealing with the problem by contracting another private entity to mine the landfill and incinerate what trash it could to covert waste into energy. This process would have taken years and would have exposed decaying garbage to open air, creating odour and the potential for even more leachate into the North Sound. 

With the Camana Bay property just to the north of the landfill, it posed a serious problem for the 500-acre, multi-decade, master-planned development that was only about 20 per cent built out. 

With the commercial ‘Town Centre’ phase of Camana Bay fully functional, the Dart Group w 

as making plans to commence the first for-sale residential phase, but potential purchasers were hesitant because of the landfill situation. The Dart Group realised it could not proceed with the residential build-out without a resolution to the landfill problem first. 

In December 2010, knowing the government didn’t have the ability to tackle significant capital projects, the Dart Group approached the Government with a proposal that would provide a satisfactory resolution to the landfill problem while at the same time helping to stimulate the local economy starting in 2011.  

“When the Dart Group first approached the Government, it was to discuss a much narrower proposal, one that focused solely on the real estate development and Camana Bay  

and the unresolved issue of the George Town Landfill,” Bush said. 

The basic proposal called for the Government to transfer the George Town Landfill property to the Dart Group, which would then cap, remediate and close that facility and provide land and the built-out first phase of a new, modern solid waste management facility in Bodden Town. With this resolution to the landfill problem, the Dart Group was prepared to commit to a further $200 million of investment at Camana Bay between 2011 and 2013. 

But the Government had bigger needs. 

“In the genuine spirit of true partnership, we expanded the discussions to look at and evaluate the pressing needs of the country, and analysed where we could work together to solve urgent, national challenges,” Bush said. 

Four months of sometimes intense negotiations with the Dart Group ensued. In April, the two sides signed a Heads of Terms agreement on a wide-ranging deal that went far beyond the scope of the Dart Group’s original proposal. 

Dart Realty (Cayman) Ltd. Chief Operating Officer Jackie Doak spoke about what the agreement meant when the ForCayman Investment Alliance was announced. 

“This provides Dart with the confidence and certainty to proceed with our development plans now as it demonstrates Government’s willingness to create a positive and facilitating environment for proven and thoughtful development,” she said. 


Expanded deal 

An opportunity to expand the deal came in January, when the Dart Group bought the land holdings of Stan Thomas, the developer who ran in to severe financial difficulties in the United States. 

The patchwork of properties included the closed 232-room hotel that was formerly the Courtyard Marriott, the Cayman Islands Yacht Club and 

extensive raw land that include 1,500 feet of Seven Mile Beach property. 

The government held a big bargaining chip when it came to these properties in that Thomas and then Dart both wanted to see a 2,500-foot section of West Bay Road relocated to facilitate development on the oceanfront part of the properties. Because the distance from the ocean to the road is too narrow, it severely limits how the property can be developed. Relocating the road inland will free up one of the last available undeveloped properties on Seven Mile Beach for high-end hotel/tourism development. 

The two parties negotiated provisions for the road to be relocated, with the Dart Group agreeing to pay for the extension of the Esterley Tibbetts Highway from where it now ends at Raleigh Quay Road all the way to Batabano Road in West Bay. The Dart Group will also provide land to significantly widen the West Bay Road Public Beach and also enhance its facilities. In addition, it will provide another, small public beach at the northern end of their properties. 

The Dart Group will then redevelop, expand and improve the former Courtyard Marriott, creating a better, name-branded hotel with more rooms and some conference facilities. 

“We plan to bring a new and game-changing hote,  

which will rejuvenate our tourism product, bringing a new level of services and amenities,” said Doak. 

In addition to the approximately $85 million it will spend on the roadworks, landfill remediation and establishment of a new solid waste management facility, the Dart Group will also provide funding for some $18 million of community projects and education, as well as some other land swaps between the government and the Dart Group. 


Economic benefits 

Bush said the deal would accomplish several objectives, starting with jobs for Caymanians in the short and medium term, particularly in the construction and road works industry. 

“Conservative estimates indicate that 500-600 jobs will be directly created and another 335-375 jobs indirectly created as a result of this investment during the next five years,” Bush said. 

Cayman’s tourism product would also likely benefit from the building of  

at least one other hotel in the medium term because a boutique hotel is part of the overall plan for Camana Bay. In the longer term, once the section of West Bay Road is relocated, the remainder of the Stan Thomas properties would become a prime location for hotel development.  

Even just the one hotel, however, will bring jobs to the tourism sector, plus business to taxi drivers, watersports businesses, restaurants and so forth. 

In total, the Dart Group committed to US$415 of direct investment over the next five years, with US$200 million of that in the next two years. Over the next 20 years, the Dart Group anticipates spending more than $1.2 billion. 

The government will also benefit from the generation of what Doak termed “tens of million of dollars in direct Government revenues” through real estate stamp duty payments for residential properties in Camana Bay and many other fees that will be collected as a result of the deal. 

“This is good for Cayman,” she said. 

Bush called the ForCayman Investment Alliance “a true partnership”. 

“We believe that the best strategy for achieving sustainable growth in the Cayman Islands’ economy is to inspire the private sector to do what the private sector does best: Cr 

eate wealth and generate jobs,” he said. “This partnership agreement provides incentives for the private sector to create a large and immediate economic stimulus, one that creates jobs, helps create wealth through investments, and stimulates economic activity across several industries utilising both small and large businesses.” 



With all the benefits the Cayman Islands would derive from the deal, Bush said it was natural the government had to provide Dart with certain incentives and assurances. 

With regard to the incentives, the Dart Group will be allowed to recover up to US$45 million in import duty concessions and waivers, and up to US$54 million if the cost of remediation of the George Town Landfill exceeds current cost estimates. Once the duty cap is reached, Dart will get a 50 per cent abatement of development fees and import duties for a further period of 15 years. 

“To be clear, they only are able to avail themselves of these duty waivers and reductions if they spend even more money to start their development projects,” Bush said. 

With regard to hotel development, for a period of 30 years past the date the definitive agreement is signed, Dart will receive a 50 per cent rebate of hotel room taxes for all hotels it develops, acquires and renovates or refurbishes for a period of 10 years after each hotel is opened. 

Bush said the incentives created “a more level playing field in the developer’s cost structure” regarding government fees. He noted that similar concessions were given to the Dragon Bay developer by the previous government administration and were now also being offered to Dr. Devi Shetty for his hospital/medical school project. 

Doak noted that the Dart Group hadn’t asked for or received any incentives in Cayman to date for the $600 million of construction work it has done so far at Camana Bay and its two downtown buildings. 

“This partnership provides us with development incentives,” she said. “They are not retroactive, do not credit our historical development and are not applicable to existing businesses within the Dart Group of companies. They apply only if we continue to invest and develop in Cayman in the future.” 

Bush was keen to remind people of that point. 

“Nothing from nothing is nothing,” he said. “If Dart does not spend its money here, there will be [no duties] for the government to collect and no benefits to Dart.” 


The heads of termsis an agreement in principle between the Government and the Dart Group and it is subject to Cabinet approval and the execution of a definitive agreement. Because of some of the technical aspects of the deal, particularly relating to the capping and remediation of the George Town Landfill and the establishment of a new solid waste management facility, it is expected to take several months before the definitive agreement can be signed. 

However, in advance of that signing, Doak said the Dart Group was prepared to commence some development work immediately, including the summer commencement of the first “for-sale” residential phase at Camana Bay. She said 13 different construction packages would be sent out for bid in the coming months. 

Dart GT Landfill. Leachate. Aerial photo taken April 1 2010

This photo taken last year shows leachate from Mount Trashmore – the George Town Landfill – going into North Sound.