Recently in Housing Category

And in other news, no-one attended a meeting that no-one knew about.

If I were a Bermudian married to a not yet Bermudian - which I'm not - and government was jerking me around with a license costing over $1,000 to own property, while allowing corporations to buy hotel residential units - with tax breaks, I'd be incorporating myself a little company, taking the savings from my tax concession and calling room service from my hotel residence.

Bermudian families get penalised while big business gets special treatment.

Yet another crazy example of compartmentalisation and cognitive dissonance from the party that demonises anyone who dare add branches to the Bermuda family tree and own property in Bermuda. Remember that? The whole we're protecting land from nasty foreign spouses shtick.

Just so we're all clear here:

Everyday Bermudians have to license their foreign spouses if they want to own property, can't own more than one property with their foreign spouse and can't sell previously qualified properties to non-Bermudians, but a PLP benefactor at Coco Reef gets the sweetheart lease of the century and a green light to sell off Bermuda Government land for 120 years.

OK then.

I'm convinced that if you sprained your ankle the PLP would propose amputating both your legs as a long term solution to ankle sprains.

This land license legislation is completely over the top, offensive, and unnecessary. Vexed is absolutely correct. Marginalising families because their spouses are non-Bermudian is only going to further drive wedges through this community. And what exactly does all this achieve?

Properties owned by Bermudian families with one not-yet Bermudian spouse should not be classified as foreign owned. Those are Bermudian owned. This claim of 37% foreign ownership of land is nonsense, because it's inflated by classifying mixed status couples as foreign.

What problem are we solving here? Fronting? This will do nothing to prevent fronting, because if you're going to front you sure as hell aren't going to register the front with the Government. And Vexed makes another good point that this same Government is happy to sell off tourism zoned land as fractionals with massive tax concessions to foreign owners, yet discriminates against Bermudian mixed status couple who buy property.

This is all compounded by the fact that it's impossible to make any sort of a nuanced argument when the Minister foams at the mouth if anyone dare suggest there's an easier more sensible way to go about things.

Right now the Minister and the PLP are creating huge legal uncertainties and expense without actually remedying a supposed problem.

This is the identical sledgehammer approach that we're seeing on term limits which is undermining Bermuda's viability as a financial domicile.

Contrary to Kath Bell's Letter to the Editor an autocracy is not a good thing, not even temporarily. In fact, Mr. Burch is a huge liability to Bermuda as a legislator. His skills lie elsewhere.

A friend recently said to me that there are thinkers and doers and that Mr. Burch is a doer. Give him a policy to implement and he'll get that done quickly and as intended, but ask him to think about the solution to a problem? Yikes. His trail of devastation is testament to this.

At its core, both of these issues boil down to the PLP's view of Bermuda being far too insular and inwards looking. Their dogma doesn't reflect the reality of life and the real world of interdependence that Bermuda has thrived in, and in many cases led the way.

Instead we've seen a shift in already restrictive but realistic immigration policies from the UBP era to ones that make no practical sense and end up alienating huge segments of the community, both local and foreign who have close social and economic ties.

Bermuda is a cosmopolitan place. We can't continue to thrive if we're at the mercy of an outdated mentality built on a fantasy about what Bermuda is and should be implemented by a guy who clearly has anger issues.

I said in my Gazette column that there was going to be the need for a big fact checking exercise in this campaign, well the UBP sent me a press release dismantling the rather sparse content of what appears to be a rather hastily put together and misleading PLP housing insert in today's paper.

PLP “Progress Report” shows no real progress

By Jon Brunson, United Bermuda Party Shadow Minister for Housing

Most people know the PLP Government has done a poor job meeting the housing needs of people during its nine years in power.

And we believe most people have seen the frantic photo-op “activities” over the past few months – of groundbreakings and ministers touring half-completed projects – as nothing more than a last-minute pre-election scramble to portray successes where there have been none.

Today, the PLP itself has shown how empty its record on housing has been.

The glossy, multi-coloured “Progress Report” on housing inserted into The Royal Gazette is a sham. There is no other word for it.

We begin with the front cover. The photograph shows a blue cottage with a caption reading Rockaway Senior Housing Project.

But the cottage is not part of the Rockaway project. It is in fact a cottage located at Southside, St. David’s – a cottage that was designated for first-time homebuyers under a plan created with the United Bermuda Party in the mid 1990s.

Page 2. Here we see the image of what appears to be a pleasant family home under the headline: “Geared-to-income Housing a Success.” Well, it’s no home. It’s the Dame Marjorie Bean Hope Academy, a government school that provides educational and therapeutic services to students, ages 4 through 19.

It is, in our view, an extreme example of misleading advertising.

Page 3. Here we see the Rockaway Senior Housing Project in “various stages of completion.” Where to begin?

It is perhaps symbolic that 3 of the 4 photographs show incomplete buildings, but that’s not the story. The Rockaway development is a project of the Bermuda Housing Trust, a charitable organization to provide affordable housing for seniors. Yes, the government donated the land, but for the PLP to now take credit and score political points for housing built by an outside agency, without acknowledging the Trust, is not exactly being upfront.

On page 4 the brochure takes us back to the Dame Marjorie Bean Hope Academy.

On page 5, we’re back at Southside. Again, all the houses pictured were designed for sale to first-time homebuyers under the United Bermuda Party Government in the late 1990s, a huge success at the time. The plan broke new ground commercially by enabling purchases with a five per cent down payment – making it possible for many people to own their first home.

On page 6, we see photographs of ‘new housing’ at Anchorage Road in St. George’s. We celebrate the end result – 16 families living in 16 units, but one must remember that the project, from start to finish, took eight years to complete; eight years to build and renovate 16 housing units. Perhaps nothing better typifies PLP Government’s casual, disengaged approach to this basic issue than the eight-year Anchorage Road project.

Finally on page 7, we return for the third time to the Dame Marjorie Bean Hope Academy.

The glossy brochure finishes on the last page with the PLP slogan “Solid! As The Rock”, but the photographic claims in the preceding pages are anything but solid.

Finally, as a footnote, we must call people’s attention to the fact that two years ago when the Bermuda Housing Trust tried to impose huge rent increases on seniors in 82 units, the government sought to distance itself from the controversy and declined to intervene.

The United Bermuda Party Opposition led by John Barritt took up the cause of the seniors and launched a court action. The Government said at the time that we were playing politics with the issue. The court action was eventually settled on behalf of the protesting seniors, with the rent increases phased in over two years.

A reader writes:

Question: If I do want to buy property and I have a non-Bermudian wife, I have to get her licensed..... Now does she have to wear that license around her neck or is the Government gonna just tattoo that right on her arm or something???

A recurring theme in Housing Minister David Burch's complaints about delivering affordable housing is "greedy landlords". On September 27th he held a press conference where he eviscerated "greedy" landlords who are "wreaking havoc in the housing market."

"You have people around here extorting money from other people for accommodation that's up for rent and they're able to get away with it because the demand is so great," Sen. Burch added.

Ignoring the Minister's inability to grasp basic supply and demand economics and market forces, I thought it only appropriate to provide a very illuminating example of arguably Bermuda's greediest landlord: Senator Burch's Government.

You'll recall that Government spent 1.5M to renovate Clifton as the "Official Premier's Residence", which Alex Scott lived in for a few short months.

Subsequently, on acceding to the Premiership, Dr. Brown opted not to move in to the mandatory "Official Residence" and we were told that Government would be renting this property out to provide some revenue and recoup the renovation cost (seems reasonable).

Clifton was put on the rental market in April, with a target rent of $25,000 - $35,000 / month, easily qualifying as among the absolute highest rents in Bermuda.

How has that worked out?

Six months later it remains empty, the rent slashed almost in half and seemingly continues to generate little interest.

That's a greedy landlord indeed.

So let's work this out:

By pitching the rent so high the property has been empty for 6 months, which, if we assume it could ultimately be rented for say $15,000 per month (questionable at best as it has no pool) has lost the greedy landlord $90,000 - half of the annual rent they could have got if they put a more realistic asking price on it.

Now who's greedy?

Sure, it's greedy, but it's also just the Government asking above market for an inferior property, and the market correcting it. Welcome to Bermuda and the real world of capitalism.

That's what goes on every day in Bermuda's rental market. People want to get the most rent/sale price for their properties...including the PLP Government.

Another egregious example of greed was the Premier strong-arming the Bermuda Housing Corporation into buying his Flatts house, after it was rejected several times, for over the appraised value. The non-Ministerial home sellers wouldn't have been able to swing that kind of a deal. Membership has its privileges.

So let's drop the greedy landlord nonsense can we. Bermuda is a free market and the Government is playing the game just like everyone else.

The alternative (Government fixing rental prices) is far worse.

(All of this is in addition to the question of why a $1.5M renovation of a centrally located historic 4 bedroom property with extensive grounds has produced a home that can't command the rent that one would expect.)

Newspaper headlines are important, because they are all that some people remember about an article and they set the tone for the reader before they read the first sentence.

So, the headline in yesterday's Bermuda Sun is both incorrect and irresponsible.

Is the "Average family home now $1.8m"? No. The article explicitly says so.

The "Average price of a home sold this year is $1.8M". Big difference. That's the average of transactions. To know what the average market value of a home is you'd have to do some sort of an appraisal on every property.

I know headlines are designed to grab a reader, the more sensational the better in a lot of cases, but this a) sets some sellers expectations to high, and b) further alienates those trying to get into an expensive market.

It's much like the headline recently where the Gazette said: "UBP is doomed to lose next election" - in quotes - from an interview with a former UBP party worker. First problem, he never said that. Those were the reporter's words, not Mr. Sullivan's. Since when does a paper quote its own reporters?

The other example was the Gazette's headline which read "Expert: Island is still a 'white supremacist society'".

What he said was:

"Is Bermuda a white-supremacist society? That's obviously a more complex question in a country with a black majority and a black-led government, the distribution of wealth remains racialised, however. And the attitudes of at least some white Bermudians reflect a commitment to white supremacy.

"As an outsider, I don't think my job is to answer that question but to raise questions that can help Bermudians understand their own society."

Mr. Jensen came close to saying what the headline said, but he didn't (although that is the sole reason he was hired...to get that headline.)

Headlines are important, perhaps more so, than the content of the article oftentimes. Many people don't pick up the nuances, they just take a superficial skim of the paper and take away little more than the headline and the first paragraph.

The papers (and this is more a fault of the editorial staff than the reporters who don't have much input into headlines) have a responsibility to be more accurate.

Business Week has an interesting look at how the land crunch in and around Tokyo has inspired some architects to come up with some innovative designs.

Make sure to view the slide show.

Get a load of this Bermudian sensationalism in Barbados:

[Opposition MP David Estick] charged that Arthur was leading Barbados down a similar path that now afflicted Bermuda, when instead he should be learning from the Bermudan experience.

The St Philip West MP said the average price of a house in Bermuda was $3.5 million and that price could increase to as much as $37 million.

He said that similar to Barbados, average Bermudans found themselves in a position where they could not afford to buy land or house.

He added it had got so bad that real estate agents had taken the Bermudan government to court on the issue of land sales.

Estwick added the government there had subsequently put a law in place where Bermudans were not supposed to sell their land to foreigners.

I'll ignore the use of the term 'Bermudan' over 'Bermudian'...damn you Microsoft spell-checker but...

Real estate agents taking the Government to court? Well, a private individual did.

The Government 'subsequently put a law in place' to block land sales to foreigners? Well not quite. They were taken to court after they put the ban in place.

But why let the facts get in the way of a good rant.

[CORRECTION: Originally I'd said that the average home price was more like $1.2M not $3.5M, but as someone pointed out, I was forgetting about the conversion between USD and the BBD, which resolves the discrepancy of the average sale price.]

The controversial Tuckers Town House GoldenEye is being offered for sale on Coldwell Banker Bermuda Realty's website this morning. [I can't do a direct link. It shows up as a new listing on the first page right now, but if you really want to find it easily just sort by price descending.]

Interestingly the price is pegged at $22M. The numbers during the court case were much more in the 40M plus range I thought.

According to the reporting of the legal battle, the Marshall's invested $37M.

It's a bargain!

Today's Washington Post has a guest Op-Ed by Daniel Mitchell of The Heritage Foundation, calling for the repeal of the recent US expat tax enacted by Congress.

UPDATE: A point of clarification. The article was not just calling for a repeal of the recent reduction in tax exemptions (ie. a tax increase) for US expats, but ceasing to tax US expats on their non-US income at all.

Parental duties prevented me attending the Open House today of the Premier's new residence at Clifton.

If anyone did go I'd be interested in your comments.

What a bunch of idiots. And that's being kind.

After dropping some serious change on a foreign lawyer (I guess the guys who crow about being pro-Bermudian have no faith in their own lawyers) to handle their appeal in the GoldenEye case, the Minister realizes that he's about to get his ass kicked a second time and begs for mercy.

The Minister feigned concern that a precedent would be set (ie. he was going to lose his appeal) and called off the appeal, allowing his impotent policy to stand...for now:

The impact of events on other Bermudians who may wish to sell their top-of-the-market homes to foreigners remains unclear. Mr. Jowell told the Appeal judges that the declaration that the policy was unlawful related entirely to Mr. and Mrs. Marshall who, he found, had their legitimate expectation to sell GoldenEye breached. He said that while that did not technically set a precedent for other people there are others who would like Mr. Froomkin to establish that they, too, had a legitimate expectation to sell their homes on the international market.

"The Minister is concerned that we don't in any way endorse the notion of a legitimate expectation," he said, explaining that the Government wishes the policy to stay in place. Mr. Froomkin said "anyone can bring a case at any time. The declaration is personal".

So, to be clear, the only reason the policy stands is because the decision overturning it has been stayed, not because it has withstood a legal test. No matter how they dress it up, Government completely and unequivocally capitulated.

I hope someone has informed the hapless Minister that a precedent has already been set. The next person who wants to sell will make the exact same case of legitimate expectation, and win; the Government's own Solicitor General was unable to argue successfully against that case, and it's obvious the big-money foreign lawyer they hired was about to suffer the same fate.

The lawyers must be salivating over the easy money they're going to make bringing case after case against the Minister.

We'll be back in November presumably, to revisit the appeal if Goldeneye isn't sold by then. Why did they defer it? Bad press? Imminent election?

Idiots.

Ok, so here's what I can tell on this tax change to US expats that makes their housing allowances taxable.

It looks like both the House and Senate have approved this bill (click here for PWC Bermuda's analysis), so it goes on to President Bush to be signed, which he is expected to do.

So it will be interesting to see what the impact is on the local real estate market, if any. Maybe the companies here will just make this tax neutral to their employees, grossing up for the associated tax impact, or maybe they'll start getting a little more sensitive on rents.

That doesn't come without a cost. High rents has been one way that international business dollars have been transferred into the local economy (understanding the trickle down effect), and those folks who are highly leveraged in Bermuda real estate based on high expectations of rental returns from American expats with housing allowances, might get a little skittish.

Following-up on my earlier post on the potential impact (positive or negative depending on your perspective) of the proposed removal of the tax exemption for US citizens on their foreign housing expenses, I've been trying to find out if this is the final bill to be presented to the President.

If this is the Senate bill, my understanding is that it will have to be reconciled with the House version, which tends to create a lot of room for modification.

It does seem that every year this housing exemption issues crops up, only to be eventually removed. So maybe it won't happen as it's not clear just what stage this bill is at.

As the saying goes, when the US sneezes Bermuda catches a cold. Well, this unexpected change to the US tax code will surely have an impact on the local rental market as housing costs are no longer tax exempt:

"American taxpayers working abroad can deduct some housing expenses, a benefit that has helped attract American executives to jobs in high-cost European capitals such as London or Paris.

"But under the new system, this tax exemption on housing will be capped at $11,536, although is some cases the Internal Revenue Service could adjust it based on geographic differences in the cost of living."

There's a bit of wiggle room in that last sentence, and the bill hasn't been passed into law yet, but how many Americans currently residing in Bermuda pay more than $11,536 in rent? A fair amount pay that in a month! And how many Bermudians are highly leveraged based on the guarantee of that rental income? And how much of the current valuation of Bermudian real estate is driven by a crazy rental market, particularly at the high end?

Of course this is a tax issue. And I'm sure it's extremely complicated and some enterprising accountant will find a loophole, but I've got to believe that this will have an impact locally.

Not surprisingly, today the courts overturned the real estate policy implemented a year ago, which prevented Bermudians who owned property previously eligible from selling to non-Bermudians.

The policy was stupid to begin with, and would neither alleviate the housing problem on the island or prevent fronting, which were the two lame justifications used by Miniter Horton in defending the rash decision.

This policy was as pointless and counter-productive as another hasty, but in this case act of desperate electioneering, imposing work-permit term limits of 6 years.

Tom Vesey, writing in The Bermuda Sun recently, had a great run-down on the problems with work-permit term limits (with a good discussion ensuing at Limey in Bermuda), an issue the Cayman Islands is currently experiencing.

This Government's propensity to cavalierly announce significant policy or legislative changes, with the sole intent of satisfying a short term political outcome, is a terrible trait.

It doesn't just make them look foolish, it's impacting our economy. At least in the real estate case, the courts had some good sense and an ability to intervene.

If our politicians want to be paid like professionals, then they need to start acting like professionals.

"Speaking in the House of Assembly yesterday, Mr. Scott likened his job to being CEO of a large, modern day corporation in an era of sound-bites and provocative headlines."

Alex Scott speaking in Parliament, The Royal Gazette 27 Feb. 2006

While the housing development announced yesterday is a good initiative, the fact that the Government won't put a price tag on it is unacceptable.

If Alex Scott sees himself as the CEO of Bermuda, then we're the shareholders, and it's our money he's spending and we're entitled to know where its going.

Breaking News Alert: Seven years later PLP Government gets a clue on housing!

Finally, the Government takes a page out of the UBP's housing plan and partners with a private developer - in this case the prolific Gilbert Lopes - to build a 90 unit affordable home development (at Loughlands in Paget) for first time homeowners, as announced today by the Housing Minister.

And whose idea was it? Not the Government's. Mr. Lopes approached them. But at least they had the good sense to get out of the way and let someone who has a track record of developing housing take over.

By the way, which developer do you think the UBP had talked to prior to the 2003 election about their First Homes plan? Three guesses and the first two don't count.

Amid the distortion, evasion and absurdity around the swanky and expensive renovation of the second Official Premier's residence in 7 years, of which I'll discuss in a follow up comment, I wanted to point out something else that's been going on over the past couple of weeks.

One of the key elements of parliamentary systems is the right of the Opposition to ask probing questions of the Government. And the United Bermuda Party has been using this quite effectively over the past few years in particular. Too effectively evidently.

Why do I say that? Because the Government has taken to not answering Parliamentary questions in Parliament; Sen. David Burch has pre-empted the proper Parliamentary response with his answers in the Senate last week about his quango consultancy and then yesterday regarding Clifton.

Why would they do that? Simple. Because they're ashamed of what's going on and they don't want to be subjected to probing follow-ups on the floor of Parliament, preferring to hide behind the Department of Communication. [Note: more on Parliamentary Questions can be found in this week's View From the Hill]

Parliamentary Question time is a long established precedent that must be respected. It's one of the few tools that the Opposition have to drive accountability. Sadly, the Speaker of the House is the PLP's poodle. Otherwise he'd demand that Parliament be respected by the PLP Government.

I'll follow-up later on the content of yesterday's press release.

I guess it's better late than never, but evidently it's finally sunk in that Bermuda has an affordable housing crisis.

Mr. Burch - surely the most sour-faced person in Bermuda politics - didn't say anything earth-shattering, but he did hit a couple of areas where he thinks he can make a dent, namely:

- cracking down on people who keep units empty to get a second car (something that I think is already technically illegal, but easily circumvented and hard to police)

- assessing BHC tenants to ensure their rents don't exceed 25% of their income

- working with tenants to save and buy their own homes

- bringing in cheap labour (can anyone say Cuba?) to curb building costs

It's a start I guess, albeit 7 years too late.

What's wrong with this scenario?

"At 4.30 p.m. yesterday afternoon, Gus Logie was a three-bedroom cottage away from signing a four-year deal to lead Bermuda to 2011 World Cup qualification.

"And following the intervention of Premier Alex Scott and Government, the former West Indies Test star has no more stumbling blocks to keep him from putting pen to paper and taking Island cricket on to further success.

...

"The spiralling cost of housing meant the BCB could not find suitable accommodation for Logie, his wife and three children, and were considering a public appeal to help find either affordable housing or a sponsor to subsidise the rent.

"But the Premier and Government stepped in yesterday, leaving Logie ready to settle here and continue the job for which he has already earned considerable praise."

So let's just get this right (and for the record this has nothing to do with Mr. Logie), but...

The Premier and Cabinet can step in to provide an as yet unknown intervention to secure housing for the island's national cricket coach, but didn't do anything to secure the 200 homes lost when Bermuda Homes for People collapsed.

RG Opinion (14 Sept. 2005)

What we all knew would come to pass, has. Cabinet incompetence has destroyed Bermuda Homes for People (BHP), which formally disconnected itself from Government’s public relations life support systems; the latest casualty of The Social Agenda. And don’t let the latest promises fool you, the project isn’t “postponed”, it’s dead.

In fact, the housing portfolio is in such dire straits that even the mobile homes are homeless, and immobile; parked out of sight gathering dust while the Minister ponders their home.

What’s revealing about the BHP collapse isn’t that it failed, it’s that no-one’s surprised; not the lottery winners, not those who paid deposits, not the Opposition who predicted this long ago and definitely not a jaded public resigned to either failure or scandal at most Ministries, but in particular Housing.

If it wasn’t so predictable it would be sad. If the affordable housing crisis wasn’t so acute it would be comical. But it’s not. The implosion of the latest housing initiative and the hopes of too many is a tragedy.

That’s not entirely fair though. There have been several successes, even at the redundantly named BHP. Why the redundancy, the equivalent of saying “Paget Kennels for Dogs”? Well, because all the previous projects haven’t been for the people, they’ve been for the politicians.

Take Bermuda Homes for Premiers for example. Bermuda Homes for Premiers is a testament to Cabinet efficiency with the right motivation, achieving unprecedented success providing two Premiers different, and freshly renovated residences, as a compliment to Camden, the entertaining residence.

Premier Scott’s housing situation was evidently so severe that he’s yet to move into “Clifton”, formerly the Chief Justice’s home. According to the Premier’s PR flack, Mr. Scott is sacrificing on our behalf, reluctant to divert critical Works and Engineering resources from other projects.

Or perhaps the usurping of the Chief Justice’s residence wasn’t really necessary in the first place, occurring solely as signal to the Governor that “The Man” is the boss, after Mr. Vereker failed to heed Cabinet’s advice on the appointment? It couldn’t be the latter could it? That would be juvenile.

But wait, there’s more. Bermuda Homes for Ministers for example. Unlike Bermuda Homes for Premiers, this initiative doesn’t house Cabinet Ministers; it manages their real estate portfolios through the Bermuda Housing Corporation (BHC).

In Dr. Brown’s case BHM even facilitated the sale of his Flatts property to the BHC – after the BHC renovated it at their expense – for a vastly inflated post-renovation price; all in the name of increasing the affordable housing pool of course.

And least we forget Bermuda Cars for Ministers, Bermuda Travel for Ministers, Bermuda Credit Cards for Ministers. But I digress.

If the Government felt the same sense of urgency at housing “people” as housing Premiers they might get somewhere. Instead we’ll hear that familiar refrain: “Another chance, give us another chance. It’s not our fault. More time, give us more time.”

Cabinet isn’t committed to public policy, they’re addicted to public relations, spending our tax dollars to buy more time and more perks. The results are self-evident.

Day after day, failed initiative after failed initiative, scandal after scandal, we’re treated to press conferences trotting out the usual litany of excuses and finger pointing, followed by hype promising an imminent turnaround, again.

The creative but doomed Bermuda Homes for People saga is all too illustrative of the cynicism, desperation and callous manipulation of this hapless government.

Only 3 short months ago, amid a climate of uncertainty, Government staged a high-profile publicity stunt known as the Bermuda Homes for People Lottery, surely aware that the project was closer to failure than success.

Undeterred, the Premier and his Housing Minister used the hopes and dreams of potential homeowners as currency to acquire more time, three months to be precise. The manufactured public scenes of Bermudians literally dancing in their seats at the news that they’d won a house in the BHP lottery will live in infamy. All that remains today is a short lived photo-op and a gushing headline.

A responsible government, a caring government, a competent government would have ensured that the project was secured, financed and well underway before raising the aspirations of Bermudians. Using aspiring homeowners as props in a stage-managed public relations sham is disgraceful.

The public are so justifiably cynical that there’s been relatively little reaction to the announcement of BHP’s collapse. Instead there’s only resignation; no not a Cabinet one, just that of a jaded and spurned public, resigned to these outcomes.

It’s all too typical. The seven year parade of empty promises and grandly titled initiatives heralding the next big thing will continue unabated. Bermuda isn’t at a crossroads as the Premier said in his televised speech, we’re trapped in a house of smoke and mirrors. Political vaporware is the primary product of the New Bermuda, spewed out as glossy mailings, newspaper ads, press conferences and self-congratulatory speeches promising that more will be promised.

But there’s an elephant in the room, a huge one.

Few people are willing to say it out loud but everyone is thinking it: If this Government is so incompetent that they can’t build a house, what makes them think they can build a country?

A little more of serious comment, after my last post, on the Bermuda Homes for People issue (of which I have a Gazette column on tomorrow):

Perhaps what has struck me the most is just how little reaction there has been to the news that BHP has wrapped up. I don't think this is because people don't care, it's because it was expected. The UBP, in particular Maxwell Burgess, have been telegraphing this for months.

The PLP have misfired on so many initiatives, made so many empty promises and denied the truth so many times, that the general sentiment seems to be that projects are more likely to fail than succeed or get mired in scandal and costs overruns. Sad but true.

But if we go back a few days to when I first heard about this, in a small piece in the Mid Ocean News, I wondered why there was so little in it about the press.

After going back I did find short stories on both ZBM and VSB on the Thursday night and then Saturday's Gazette had a story. It seems that the print media had so little on it as the story broke late on Thursday, in time for the evening news broadcasts but too late for the print media to get on it.

The UBP also seemed pretty quiet, probably not to waste their ammo during the weekend, with Wayne Furbert eventually coming out yesterday with a press conference, calling for Ashfield DeVent and the Premier's resignations (yet again...keep wishing), and posing some questions which they'd like answering (keep wishing).

To be honest, the UBP's response has been inadequate. They've called for resignations so often that no-one pays attention to it, me too, and I agree heads should roll, but they won't, for a number of different reasons. They should drop it and take a different approach. More on that in a future post.

Today's story in the Gazette is very enlightening on what went on behind the scenes and eventually led to the project's demise, which jives with exactly what Maxwell Burgess had alleged many months ago.

So, the Premier's comments to the press yesterday assuring Bermudians that the project is going ahead and that the BLDC is doing their "due diligence" is farcical when presented with the comments of the Chairperson of Bermuda Homes for People as reported today:

Mr. Gaston laid blame for the collapse at the feet of the Bermuda Land Development Company (BLDC) which he said refused to hand over 18 acres of harbour-front property in St. David’s.

Mr. Gaston held nothing back as he spoke out about the project while preparing to leave the Island this week as a result of his frustration.

“The BLDC really fought this every step of the way,” Mr. Gaston said. “We had wonderful support from the community. ACE had promised $5 million. XL, Partner and Ren Re were all willing to go in. Usually the hard part is not the land, usually the hard part is finding the industry and financing.”

BLDC was the problem, yet the Premier wants us to believe that it's the solution! His lack of shame is impressive.

The Premier denied for months that the project was in jeopardy, he dined BHP was insolvent months ago, he denied that Berkeley would be late, he'll deny anything regardless of the amount of evidence to the contrary.

Hasn't he learned his lesson since Maxwell Burgess cut his tail on this very issue in Parliament, when the Premier outright lied when asked if BHP was insolvent?

Evidently not.

Shortest post ever?

The BLDC made BHP DOA, the Minister is AWOL, the PLP are SOL and the UBP are no longer MIA.

There's a little story - but a big story - on p. 3 of the Mid Ocean News today, entitled "BHP winds up".

From the little info that is available it appears that an announcement was made yesterday that the Bermuda Homes for People development at Southside is being "put on hold" (translation: dead), and that those who had put down deposits will have them returned.

Details are sketchy, so I've put a few calls in to see what the complete story is, but I can't help but feel disgusted that the Government staged a high profile housing lottery for BHP to score a few points, while the project was about to fail, is terrible.

To get people's hopes up like that, to only quickly destroy their dream is a sad inidictment of this Government's willingness to focus on public relations not public policy.

More to come on this I'm sure.

The debate on the Auditor's BHC report is in progress in Parliament, and the strategy seems to be to say nothing, other than Points of Order and Information, and let the Opposition have their say and get this whole ugly mess behind them.

Which is understandable.

This makes me think that after the speech last night, the roll-out of the crime initiatives, the imminent Social Agenda mailing, and the moving up of the BHC motion to the first item of this Parliamentary sitting, that the Premier and his Government want to try and make a fresh start, putting their high profile scandals and failures behind them.

It's not a bad strategy.

The problem? It's probably too late. The public seem pretty convinced that the PLP are arrogant self-dealers who've presided over unprecedented corruption while failing to execute on critical portfolios. That image may be too entrenched.

We'll have to see if they get any bounce over the coming months.

Isn't being 'Technically Insolvent' like being partially pregnant?

I always thought it was a binary thing. Ones or zeros.

It's not often that the elected leader of a country and another Minister are exposed as outright liars, to their faces, on live radio, complete with the Government's own indisputable documentation.

But it happened on Friday night in Parliament when Maxwell Burgess, baited Premier Scott and Ashfield DeVent into denials over the financial status of the housing development at Southside, and then exposed them as liars.

That's made for TV stuff, unfortunately Parliament isn't televised. Now you know why not.

Mr. Burgess knows how to play ball PLP-style.

And as the RG article explains, Burg outflanked the PLP by producing the Government commissioned KPMG report on BHP, and refused to table it as they'd have hoped.

Because the Speaker, who does as he's told by the Government, would have thanked Mr. Burgess, and then turned around at the Government's direction and let the Government table it themselves, leaving it on the orders and undebatable forever, just like the Premier is doing with the BHC reports.

"The report risked becoming part of the Government censorship programme," said Mr. Burgess.

The RG article makes for great reading:

On Friday night Mr. Burgess went further and revealed the project was technically insolvent and the principal person behind it had walked away and was demanding a $730,000 pay-off.

Premier Alex Scott accused Mr. Burgess of putting out rumour and challenged him to confirm the claims. However Mr. Burgess challenged Mr. Scott to deny the story.

When Mr. Scott again said Mr. Burgess was putting out innuendo Mr. Burgess produced the KPMG report with a flourish and said: "There’s the proof right here."

He ignored requests by the Government and Speaker to table the document for the House to debate later and said he would give it to The Royal Gazette.

Yesterday Mr. Burgess said he had gone this route because tabling it can allow Government to suppress debate for months until they finally set time to debate it.

"The report risked becoming part of the Government censorship programme," said Mr. Burgess.

He questioned why Government could hold a Press conference on Sunday morning admitting something they were not prepared to confirm on Friday night.

Now all of a sudden talks were well advanced with BLDC said Mr. Burgess. "When did they do that? On Saturday morning?

"If I didn’t have the report it was the intention of the Premier to have the country believe what I said wasn’t true.

Lies, and the Lying Liars Who Tell Them, the Bermudian edition, coming soon in paperback.

Anywhere else there'd be resignations. Don't hold your breath.

The headline writers at RG take the glass half full approach today with this headline:

'More than 240 homes planned'

Me, I'd have gone the other way with:

'7 years later, 240 homes not built'

But that's just me.

RG Opinion (15 Feb. 2005)

Politicking by class warfare

If you’re going to pull the pin and roll out a grenade, the correct etiquette is to at least shout “Fire in the hole”.

Instead, the PLP Government whispered “Policy Statement and Notes for the Acquisition of Residential Property by Non-Bermudians”, hoping to distract us from the coming explosion with boredom. Then, in an act of supremely strong leadership, Cabinet thrust a civil servant out on point to absorb the shrapnel, while the politicians ran for cover.

And while the majority of ink over the coming weeks, months and potentially years, will most likely be devoted to the relative wisdom of the PLP’s attempt at market manipulation, it’s worth setting the policy itself aside briefly and focusing on the potential fallout from the way this major policy change was implemented.

The old adage that if you say something often enough people will start to believe it, is very appropriate in the New Bermuda. And what are we told the most often? We’re told that this is a Government that listens and consults.

Reasonable people would then expect that a move such as this, that stands to be hugely controversial with widespread and far-reaching social and economic implications, would be more than deserving of this much-heralded but rarely witnessed consultation. Nope.

How’s about gambling? Of course we’d receive widespread consultation on this most contentious of issues, particularly when all the polls suggest that we’re split right down the middle. Nope. Just a press conference to say Government has decided on our behalf.

But it’s not always this way. We are being ‘consulted’ on independence for example, the issue almost all of us don’t want. Evidently, because the overwhelming majority of the population don’t want something that the Government are salivating for, we’re in need of some consultation (translation: re-programming) on the subject.

An issue however, like drastically altering the dynamics of the real-estate market and the value of thousands of people’s most significant investment however, is worthy of only a press conference to announce the done deal.

Government by press conference. How quaint.

So what’s up with this consistently inconsistent approach to consultation from the PLP? The answer lies in the excuse we inevitably hear after poor consultation or unpopular initiatives. The word is ‘leadership’.

After the votes are counted and the victor crowned, the PLP Government feel entitled to make unilateral declarations on any issue, whether part of the campaign or not, or whether the administration exists as a result of a swiftly executed coup only minutes after the election.

When a Government without a mandate undertakes this type of social engineering and wealth redistribution, something you might recall the Premier recently vehemently denying he was about to engage in, the consequences can’t be predicted.

Mandate-less Governments that don’t consult are by no means providing leadership, they’re a destabilizing threat. This is why the events which culminated in the formation of the Alex Scott administration should necessitate an even greater – not reduced – level of consultation. But we’re seeing nothing of the sort.

Most reasonable people are aware that you can’t just rock the foundation of the Bermuda real estate market and walk away unconcerned.

But there’s a pattern here. We’ve been through this politically motivated meddling before. Last week’s events are strikingly similar to another act of non-consultative heavy-handedness.

In July of 2003, shortly before the election, the Government rolled out the work permit term limits grenade – yet another politically motivated policy initiative with potentially destabilizing effects.

In that case, then Labour Minister Terry Lister proudly declared that all non-Bermudians would be sent packing after 6 years (with the nice ones allowed to stay for an additional 3). And it might just have worked, judging by the 70 or so votes which decided the election island-wide.

But what occurred shortly after the election results were in – and Jennifer Smith’s colleagues demonstrated that they had her back, by stabbing her in it – is more revealing. The new Minister discreetly put the pin back in the grenade, and gutted the term limits policy of any real teeth. The election was over and the policy had served its purpose. Now there’s leadership.

So with the Premier’s poll numbers rapidly plunging to Jennifer Smith-like levels, we’re witnessing more dangerous politicking through class warfare. Because this isn’t about housing, it’s about politics (and taxes).

But unlike the term limit turn-around, which was easily revoked, this latest unilateral action isn’t. We’ll be feeling these shockwaves for a long time, and not just in the real estate market.

Governments can’t, without preparing the stake-holders, fundamentally affect capital markets overnight without undermining the confidence and stability of every sector of our economy. Serious doubts will have been created in our continued desirability as a business jurisdiction. No longer can investors be assured that their money can be put to work free from undue political interference.

While any one move alone might not be enough to tip the boat, the cumulative effect of term-limits, an unpopular independence initiative and now this real estate policy could be severe.

Our economy exists solely because of a well-deserved reputation as an attractive and stable destination for capital investments. The moment the PLP Government decided to devalue real-estate prices overnight – without advance warning or consultation – it generated significant doubt and instability.

That’s not leadership.

Here's the official bone-headed policy statement issued by the PLP Government on the changes to the land policy.

The statement is formally titled "Policy Statement and Notes for the Acquisition of Residential Property by Non-Bermudians" but should be called "Policy Statement and Notes Creating an Extremely Lucrative Non-Bermudian Real Estate Market while Devaluing the Properties Available to Locals".

More to come later on this I'm sure as this one will have legs, due to it's far-reaching implications on the rights of Bermudians and our ability to make a return on an investment.

Just so I'm clear on this:

Dr. Brown strong arms the BHC to by his property - one they rejected twice - by dispatching then Housing Minister Nelson Bascome to apply pressure, for double the market rate, unethically fails to disclose it, offers to buy it back below the current estimated market value and claims that it "flies in the face of the accusation they got ripped off" and that it "was, and is, my firm belief that BHC paid a fair, if not below market, price for the property".

Seems to me like he's trying to rip us off again and rehabilitate his reputation simultaneously. No wonder he doesn't want to talk about this anymore.

At least he understands the second rule of political survival.

I try to not make a habit of commenting too much on other columnists, particularly in my columns, but after reading Cal Smith's column yesterday I found a couple of things worthy of note:

Firstly, Mr. Smith nicely captures the atmosphere in NY and the general value which Americans attach to their freedom of speech - although there do seem to be plenty of threats on it lately...most noticeably the 'balance' between security and free speech/protesting that has begun in the post Sept 11 world. (At both party's Presidential conventions this year protesters were intended to be confined to ironically named 'Free Speech Zones', although in NY I think the numbers were overwhelming and they didn't cooperate as well.)

Also of note is that the Bush Cheney campaign requires attendees at their campaign events to sign a pledge of support for the President in order to gain access. These are their events (and it's all marketing anyway) so they are entitled - I guess - to be selective on who attends, but it is a bit 'un-American' I would think and suggests a fear of the public.

Anyway, that's all a bit off topic. My point is that free speech is under threat in the US, but Mr. Smith's underlying thrust is correct I think that it has high value in the psyche of Americans.

What I really want to talk about is this assertion at the end of Mr. Smith's column:

Still there is legitimate concern that at least one high ranking member of the UBP, the Deputy Leader Mr. Michael Dunkley, does not place a high value on freedom of speech.

This man has declared that whatever I have to say has no relevance because I am a political �has been�.

Michael Dunkley in his original letter (included at the end of this post as it is not on RG's website) never said that, and he never questioned anyone's right to speak, although I don't think there was any need to go after Cal Smith, Rolfe Commissiong and Senator Roban. This strategy distracted from his underlying point and made it seem a bit too personal.

Mr. Dunkley's point was that there was a noticable absence of Cabinet Ministers and elected members around the Premier willing to lend their support. The Premier was sent out alone and could only rustle up a few of the party's most reliable, unconditional, staunchest defenders. That's ok, there's nothing wrong with that, but it was telling and suggested a lack of unity within the elected PLP group.

What concerns me about Mr. Smith's misrepresentation here is that while a clever tactic to try and dismiss the criticism, undermine Mr. Dunkley's credibility and change the topic from dishonesty in the Government ranks - it suggests a move towards another trait of US political discourse.

Free speech in the US has been increasingly invoked as an defense for political dishonesty, allowing people to present your opponents' words in a false light. Mr. Smith invokes this method in his article attempting to portray Mr. Dunkley as anti-free speech. Mr. Dunkley never questioned anyone's right to free speech, he questioned the weight the messengers carried, which is a judgment everyone makes when listening to public debate.

Perhaps Mr. Smith took the Republican convention and free speech a little much to heart. He's adopted their tactic of lying about the war and voting record of John Kerry, picking his words and presenting them in a dishonest way. John Kerry and the Democrats do this less often and less effectively than the Republicans but they can do it as well.

The Democrats angle at their convention wasn't to lie about Bush's record but to be selective in what they presented about their candidate, focusing almost exclusively on his Vietnam service. This was responded to by the Republicans in the form of dishonesty and distortion with the Swift Boat Vets ads. Being selective is ok, being dishonest is not.

The intentional misrepresentation of people's statements is something that I hope doesn't start to become pervasive in Bermuda politics, although it appears to have already arrived.

--- Michael Dunkley's Letter to the Editor ---

August 17th, 2004

The Editor
Royal Gazette

Dear Sir,

I read with great interest the article in the Royal Gazette on Saturday August 14th titled �PLP rallies around the Premier.� The support that the headline referred to is delivered by Calvin Smith, �Commentator� Rolfe Commissiong and Senator Walter Roban.

I believe there are a few important observations that need to be highlighted as a result of the comments in this article.

First, it is my opinion that Calvin Smith is a �has been� in political terms; when was the last time he was elected by the people to serve the people? On the other hand both Mr. Commissiong and Roban are political �wannabees�; when have they ever been elected by the people to serve the people?

Secondly, if this is all the support that the Premier can get as he faces the sharp uphill climb trying to dig out of the deep negative hole of public opinion dug by himself and his PLP colleagues in connection with the BHC matter, then one would have thought that the Premier could have rustled up a few people with credibility to speak.

After reading this article I am more convinced than ever that the PLP will do whatever it can to cover up their unethical, incompetent or �practices of criminal nature�, as Mr. Commissiong commented.

Mr. Commissiong is quoted in the article as saying �But yet the UBP, after having whipped up the degree of hysteria solely for a political game that they have yet to see realized, continue with the tactics of division and innuendo in attempt to irresponsibly cause a loss of confidence in the Government.�

Firstly in reply to that comment, the PLP themselves have caused the public to lose confidence in them.

Secondly, please allow me to make the record clear; nothing could be farther from the truth. As an opposition one of our mandates is to stimulate the best from the government. In this case within the BHC we have pointed out gross mismanagement, corruption, unethical behavior, incompetence or call it whatever you choose.

This culture was developed since 1998, under a PLP government.
The UBP, while in Opposition, will continue to fight for an ethical, responsible and competent government.

Isn�t that what all Bermudians want?

Sincerely,

Michael H.Dunkley, J.P, M.P.
Devonshire

Linked below is the pdf of the just released "Report of the Auditor General on matters arising from an investigation into the affairs of the Bermuda Housing Corportation, May 2002".

Read it for yourself.

Download the file here

The Pondblogger, writing as Gavin Shorto, in yesterday's Gazette has turned his sights locally again with an excellent piece on the BHC - now online.

Ed Cowen, the former Bermuda Housing Corporation's General Manager, is firing back - and quite well I might add - after the Premier, in an ill-advised attempt to fend off legitimate questions, engaged in rumour and innuendo...after saying that would be unethical. The Premier, the leader of the country, casually and irresponsibly smeared the reputations of those working for the BHC before the PLP took over in November 1998.

Not to have their reputations tarnished some of the previous appointees and employees of the BHC have begun speaking out, including Mr. Cowen and Ward Young (on VSB news), a former chair of the Housing Corporation under the UBP.

They can certainly speak for themselves but a couple of sentences in Ed Cowen's interview with the Mid Ocean News on Friday are worthy of mentioning, specifically the sentences referring to efforts to push him out as General Manager so a PLP crony could be installed. Mr. Cowen says the following:

---Mid Ocean News Quote---

In his statement he added: "During the same year I was hounded by the chairman Larry Burchall and the Minister Nelson Bascome to resign. I refused and walked out when it suited me in the September of 1999. As a result I now receive no pension from the Government. They then appointed their candidate (Raymonde Dill) and it was then that the BHC's decline started."

"The word was already around town that my replacement would be Raymonde Dill, even though he was chairman of the Hospitals Board at the time. I didn't resign until it suited me."

--- End of Quote---

This is notable because at its core, all Mr. Cowen has is his credibility in making his case. But maybe he has a little confirmation from one of those he accuses. Why do I say that? Well have a read of a recent Bermuda Sun column by Larry Burchall (the first PLP Chair of the BHC) when he took issue with a column I wrote in the Royal Gazette (see my follow-up post here).

Mr. Burchall took a quite extraordinary position in his column. He began by making a strong case as to why the abuse of power and perks was bad...until Nov. 9, 1998 that is, when the abuse of power and perks suddenly became wonderful. See the quote below:

---Larry Burchall Quote---

"But �it� did happen. �It� happened for my �us�. Power shifted to my �us�. The power to award perks shifted to my �us�. The power to make change came into the hands of the real majority �most of us�. Not Dunleavy�s actual minority �most of us�. "

He goes on later to say:

"The �us� that was so silent and sat upon for all those years from 1834 to 1998, now has power. It knows it and it uses it. "

---End of Quote---

There you have it. Those sentences quite succintly affirm what Mr. Cowen alleges; that the PLP pushed him out because "it was obvious that they intended to use the BHC for their own personal gain".

Mr. Burchall's own words suggest that it wouldn't be a leap for him to see nothing wrong with using the BHC as a means of awarding perks to his political buddies.

I've intentionally filed this post under the "Crime" category because everyone, including those MPs who are still hiding the truth, know that what was done at the BHC was criminal even if the law is outdated.

I also intentionally held off commenting on this for the past few days until the Premier made a statement, which he did last night. The Premier's position at the press conference, although not surprising, has brought Bermuda to a new low, cementing Alex Scott as someone completely unsuited to hold any public office.

His obstruction and accusations that the Opposition's call for naming names and releasing the details are "unethical' is a sad indictment of the hollowness of his claim to be for openness, transparency, accountability, a Freedom of Information Act, blah, blah, blah.

The prior and continuing actions of elected officials have forever tarnished the reputation of successive PLP administrations and us all. Evidently Mr. Scott has calculated that this damage is less risky than to be honest with the public about what went on.

Every PLP MP and member who was not involved should be demanding that the Premier clear their own names by holding those who were involved accountable The public should be outraged and demand that this information be released and those who ripped off every Bermudian be fired and never allowed to hold another elected office.

Don't be fooled into thinking that this type of corrupt, unethical and yes - criminal by any other standard - behaviour won't continue. It will merely be done more discreetly than before as the same mistakes won't happen twice.

The only way the Government can regain any sense of credibility is not to engage in another cover up but to let the public decide for themselves.

In my RG column tomorrow I comment that Housing Minister Ashfield De Vent didn't inspire a lot of confidence in his interview in the Royal Gazette last week. The quote that caught my eye was:

�I would have probably chosen something a little less demanding and controversial but I guess they all have their challenges,� he said. �And I am a team player so, I accepted.�

What the Minister is essentially saying is that he would have preferred a cushier portfolio and only accetped because no-one else would. So he gets an 'A' for taking one for the team but a 'F' for everything after.

In addition to being the only one who'd accept the portfolio, I imagine the rationale behind giving it to him was largely due to the constituency which the Minister represents. Constituency 21 (Pembroke South East 21) is as safe a PLP seat as they come, as Paget or Devonshire South Central is to the UBP (click here for 2003 election results). So no matter how bad of a job he does there is no way, absolutely none, that the constituency would throw him out. Representatives in marginal seats, or those with aspirations for greater things in Cabinet won't touch housing with a ten foot pole. They prefer to buy fast ferries for example.

As for Mr. De Vent's performance. My sense is that he's just making this up as he goes along. Whenever he gets a call from a reporter he just throws another idea out there to see what sticks:

- He's got a plan, he'd like support in developing one;
- He's thinking about an apartment complex in town, like the one John Swan built (that isn't selling by the way)
- and now he's thinking about portable homes.

A few thoughts on the portable home idea, which is all it is at this point although Mr. De Vent seems to think random thoughts equal a plan.

Pros
- inexpensive
- fast solution
- short-term fix

Cons
- cheap
- short-term solution
- can't withstand high winds
- requires utility hookups that we don't have here (ie. sewage, water)
- create eyesore 'trailer parks'
- mobiel homes seem to have an inexplicable phenomenon of actually spawning hurricanes and tornadoes

You can't just drop a mobile home on a tiny lot of land somewhere. It needs to be tied into the utlities which we don't really have here. The logical solution is to cluster them together and tie them in to some shared system. Once you do this it will no doubt become permanent and will most likely create a slum. A trailer park won't help our affordable housing crisis and will also ruin one of our greatest assets, our unique Bermudian architecture and renowned beauty. Just look at the 'Eco Village' at Daniels Head. It's an eyesore and is the closest thing to a trailer park we've got.

Anyway, my sense is that these things will no doubt become permanent as most short-term Government fixes do. But I don't think much thought has really been put into this. It seems more like a case of thinking out loud in the hopes that the public think he's actually doing something.

Today's press conference announcing a major private sector initiative to combat the housing crisis in Bermuda is an example of good things happening to bad Governments.

I heard this was coming a few days ago and expect the Government to be all over it for PR purposes I'm sure. But we should be clear. This is a project conceived without any input from the Government, and all we can hope is they Government stay out of the way so they don't build $250,000 homes for $450,000 as they did at Perryville on South Shore. This thing was presented to them as a complete package, all Government needed to do was provide the land at a reasonable cost, as the UBP planned to do in their First Homes proposal during the 2003 election.

It shouldn't be a surpise that the more creative solutions to the housing problem will come from the private sector. This will be presented by the spin doctors as a partnership between the public and private sector, but don't be fooled....Government did nothing and will do nothing more than provide the land. That's ok, I support keeping Government out of the construction business, but let's all keep that in mind when the PLP come looking for some pats on the back.

It will be interesting to follow this and see how it develops over time but while the 'Bermuda Houses for People' company is a charitable organisation established by Cliff Shorer (Sonesta Beach developer) it will have to be profitable to be viable.

The question: Why couldn't Government have come up with something like this?

The answer: They had the land but not the vision or sense of urgency.

Parliament this morning started debating the UBP's motion of that 'This House deplores the fact that the PLP have failed to produce an act to creatig a plan to deal with housing' (or something along those lines).

The motion was just amended by the PLP to say something like:

'This House will work together to produce a plan for addressing the housing problem.'

Here's the problem with that motion: the PLP has been claiming that they already have a plan.

Ashfield DeVent at the Budget press conference said:

"I definitely have a plan and the fact that I have been told that I�ve got some more money to facilitate that plan, I�m very excited today and I am looking forward to working as quickly as possible with members of the Housing Corporation to get my plan on the way."

So which one is it?

Could the US IRS be helping or hurting us? An issue which could impact Bermuda's (re)insurance industry has re-emerged after not materialising in 2003.

The U.S. Senate recently passed a bill (Senate Finance Bill [S. 1627] "Jumpstart Our Business Strength Act" or "JOBS Act") on May 11, 2004 which includes a provision to limit the Foreign Housing exclusion under section 911 of the Internal Revenue Code (section 454 of the Bill is the relevant clause I think) . Under current tax law a qualified individual may exclude up to $80,000 of foreign earned compensation and a certain amount of their foreign housing cost from income.

The new US Senate proposal would restrict the combined foreign earned income exclusion and foreign housing exclusion to a maximum of $80,000 in total for tax years beginning after December 31, 2003.

Bear in mind that this is a Senate Bill at this point and would have to be reconciled with a House Bill and signed by the President. Considering the House is Republican controlled there's a strong likelihood that any final bill would be different than the current Senate version and this provision may be removed.

What this would mean is that US taxpayers claiming the full $80,000 foreign earned income exclusion (most reinsurance execs) for 2004 onwards won't be able to deduct their housing costs. For those of us who live blissfully free of income tax nightmares this can be translated to mean a drastically higher effective taxable income for individuals working in Bermuda who receive a housing allowance (some as large as $15,000/month and up).

My take is that there are a couple of potential outcomes if this were to occur.

1) Bermuda becomes a less desirable place to work and our companies can't hire the best staff unless they do item 2 below.
2) Operating in Bermuda could become even more expensive as the salaries of US employees would have to be grossed up to mitigate the personal income tax hit they'll take, flowing through to higher expenses for the employer.
3) US employees and the big companies here will develop a sudden vested interest in not paying crazy housing allowances, bringing down rents somewhat. This might provide some relief but will also take dollars out of the pockets of those Bermudian landlords who are making a mint off of $12,000 and $15,000 a month rental incomes.

I don't think Bermudians should see this a potential silver bullet to the housing crisis because a supply and demand problem remains from restricted available land and a thriving international business sector. But clearly a lot of employees don't negotiate their rents as hard as they would if it were their own money. Now that their employer and their own bottom lines could be affected the allowances may be reigned in somewhat.

I'm sure we'll see this develop as the House Bill (House Ways and Means Bill [H.R. 2896] "American Jobs Creation Act of 2003 or "AJC Act") makes it way through the process.

I'm looking for suggestions on just what Housing Minister Ashfield DeVent meant when he said yesterday:

�For us to make political usage (of the housing crisis) is sin, suicidal, and genocidal."

"Genocidal"? I didn't see that aspect of the UBP's motion!

The Bermuda housing crisis is getting worse, much worse. Admittedly it is a complex problem but the lack of vision from the Government to resolve this is surely a contributor to the problem.

To highlight the PLP's head in the sand attitude over this problem you need only look at the Deputy Premier Ewart Brown's, accusation that the UBP was being negative about the housing situation in Bermuda. The emergency housing list has increased by almost 90% since the PLP took power in 1998! That's even better than the return Dr. Brown got on the shady sale of a home to the BHC. I can understand why he doesn't have a negative perception of housing in Bermuda but most other people do.

Wayne Furbert and the UBP are being realistic, and today's data from the BHC is confirmation. I imagine every one of the more than 1,000 people on the waiting list would concur with that assessment.

Until the Government stops spinning this issue and acknowledges that we have a serious housing problem (among others) I doubt we'll make much progress. So far what little has been done to address this has been conducted in a piecemeal manner.

Both parties need to work together, developing a long term development plan to make a real dent in this problem. Consideration of the UBP's First Homes proposal from the 2003 election is a good starting point.

CORRECTION: I mis-interpreted the housing list as having increased from 125 to over 1,000. Actually the emergency list was at 56 under the UBP, 125 in 2001 under the PLP and now at 106. So the emergency list is up by about 80-90%. It's the rental list that has skyrocketed to 976 names. My apologies for the error.

Phillip Wells wonders why the Minister would want to build another golf course at Morgan's Point? This is one of the few things that I think Ms. Webb is on the right track with, although her Cabinet colleagues don't seem to agree.

Morgan's Point is the last large land mass available for a major new tourism development. Bermuda has not had a new resort in over 20 years. Our current properties are aging and showing it.

In fact, prior to the 98 election, the UBP (under Pam Gordon), had this ready for development but Terry Lister killed the deal with the developer, mostly because the UBP initiated it.

The thinking behind developing Morgan's Point is along these lines:

Tourism in the Bahamas was single-handedly resurrected with the Atlantis resort. A similar high-profile development here could do the same, and this is the last location where it can be done. Missing this opportunity will probably indicate that we've given up on tourism.

Unless we accept that we are out of the tourism business, we should move on this as a development immediately. The golf component was intended, under the UBP, to have a PGA tour quality course that major PGA events could be hosted at, bringing in high-earning visitors. It would also be attractive to our international businesses for entertaining their clients (who have large expense accounts). This makes sense to me as it is compatible with our target demographic. Remember this is much more than just a golf course development.

Now, with regards to the concern that this should be used for housing:

Bermuda has, as Phil points out, an 'affordable' housing problem. There is ample land - and derelict homes, around the island to develop units in a more distributed manner, preventing clusters. We could also relax some of the planning laws to allow higher rise developments in some lower, sheltered areas that wouldn't create a blight on the landscape.

Chances are that any development on this site would be too concerntrated with low-income housing, potentially creating a ghetto. Although the original plans, pre-1998, did have a housing component to it. If I remember correctly there was a range of price levels.

I don't support building a big residential development at Morgan's Point. Having a 'marquee' resort would do much more good for the island and stimulate other areas of the tourist sector.

This is a broad, complex topic but I think this is a decent summary of the main issues. There is much more that could be discussed like traffic, environmental liablity/issues etc..

More confirmation that Terry Lister is winging it with housing came today from Renee Webb on VSB:

Ms. Webb, in response to a question about last night's Tourism Forum, commented that the annual Cabinet retreat will take place in January with the topic being Tourism and Housing. Everything that came up last night was on the table. She went on to say that at this event the attendees will put together the party's vision for tourism and housing. I guess the press conferences around housing over the past few weeks are just a stop-gap measure.

It's a shame that they are only now getting around to addressing two of the biggest issues facing the island in their 5th year at the helm.

Now that the PLP seems to have decided to firmly enter the real estate business I'd like to pose a simple question to the Minister:

What are we getting for our tax dollar when the Government is selling 2 bedroom properties for between $600,000 and $700,000?

$700,000 for a 2 bedroom, 2 bathroom in St. George's is the market price. Granted this is an estimate, but my guess - based on the BHC track record - is that the price will go up not down.

If our tax dollars aren't helping cut the cost of home ownership and rental with public sector developments we should just let the private sector do it. They'll do a better job.

Anyone who thought the PLP's recently announced Housing Plan wasn't a hastily put together plan, and actually involved consultation, should check out this story from the Royal Gazette's Wednesday edition.

Seems the MP for Constituency 13, the area to get the bulk of the new units (my old neighbourhood), wasn't consulted on this proposal either!

Mr. Blakeney is trying to save himself from being seen as an out-of-touch and ineffective area MP and backbencer, while Mr. Lister is letting it be known that he makes the decisions.

The more things change the more they stay the same. A change of tone, but the methods and results remain the same.

A follow up to a couple of comments on my housing article:

If Graeme Outerbridge had any integrity he would have declared his interest before calling me biased. I'll do it for him: Graeme was the sole candidate of the NLP at the last election.

Unfortunately, as expected, he didn't make one constructive suggestion on the issue. He just attacked the messenger.

He did however say that the PLP doesn't have a solution on the horizon - so he agrees with me. I can only then assume that Graeme doesn't think that a plan to offer affordable homes for purchase (not rent), at lower than market interest rates is a good thing. I however do.

Graeme just throws his hands up and says that labour and materials are too expensive so this is hopeless. Perhaps this is why the NLP have fared so poorly over the past 20 years, they are as devoid of ideas as the PLP.

Yes, I support the UBP's Plan.

First Homes wasn't aimed at the Graeme Outerbridge's of the world - who don't need help finding housing, it was aimed at those who have lost the hope of owning a home in Bermuda. I lived in Bermuda Housing Corporation houses for 17 years of my life, I know the sense of hopelessness people feel, and the crisis was far less severe then. In fact one of the areas they are proposing to build 2 story houses is my old neighbourhood (Alexandra Rd, St Mary's Rd.).

With regards to Angelo's comments I agree with the first part and disagree with the second. Components of the UBP's proposal included tax breaks on materials and the use of newer, low cost construction methods which would make the under $2,000 mortgage possible. Otherwise labour, materials etc. are an issue.

I disagree that Government building the houses will be more affordable. In the past 5 years the PLP Government has proven that they cannot manage a capital project properly - cost overruns, fraud etc. have all been well documented. I'm certain that the partnering with the private sector will result in a better, more cost effective project than Government workers building homes. The PLP have managed it badly in the past and a purely Government construction firm would be a disaster.

Government pay scales are notoriously high. Labour costs aren't high due to a lack of competiton but from a small pool to pick from (This can spiral - if you bring in more labour then you need more houses, more labour and on and on and on). Scan the Government employment ads for comfirmation of the pay scales. I doubt we'd see them more effective in residential construction than the many private firms out there.

I listened to Terry Lister's Press Conference last night on the news and couldn't help but think that something was amiss. Granted he plans on doing a couple more announcements over the next few weeks to reap maximum PR out of the hastily put together housing plan, but the thrust of it seems misguided.

I've never understood why the PLP is fixated on rental units whenever they talk about housing. The controversial and outrageously expensive "Perryville" development on South Shore began as properties for sale. However as the project dragged - and costs increased, they changed course, withdrawing the previously agreed on sales agreements, increasing the prices or attempting to rent the units.

Renting is fine and well as a short term fix, but home ownership is what is really going to solve the housing problem. The barriers to entry in the Bermuda real estate market are high. With rents as they are, even the BHC rents, it is difficult for many families to save enough for the downpayment.

During the Campaign the PLP heaped scorn on the UBP's First Homes Plan, but it was the buzz of the community as it offered many a chance to "Buy Bermuda" at a realistic level.

Surely Government should put in place a plan to allow tenants in good standing to rent-to-own properties and shift their focus away from rental units. It isn't the Government's role to become a real estate manager.

While rental units may provide steady income for Government coffers the primary objective should be to facilitate home ownership among Bermudians.