It was to a crammed ballroom last month at the Marriott Resort that Cline Glidden gave a detailed presentation on how far the government has come in the development of cruise berthing in Cayman. Due to time constraints, much of the information was delivered at a rapid pace, so the Journal sat down with Glidden for an exclusive one-to-one for a detailed look at the project

How far has the cruise berthing plan come as at the beginning of October?
Following the signing of a MOU with the developer Dart Enterprises Construction Co. earlier this year, in September the government entered into a second agreement with the developer, which outlines the framework and the scope of the development. We are now working toward agreeing the main agreement, which will finalise the details of the project, including its construction and cost. We hope to have this agreement signed by the end of October.

Why didn’t government take on the development itself? Why does the project need a developer?
Government does not have the funds to build a project of this size, which could cost US$200 million to US$300 million. Government also has borrowing restrictions, which prevent it from borrowing funds in the traditional way. So it had to come up with an innovative new method of providing this much-needed infrastructure.

Why didn’t government enlist the assistance of the cruise lines, which have injected large sums of cash into similar projects around the Caribbean?
Back in 2003 the government was in discussions with the cruise lines with regard to the development of cruise berthing facilities; however the change of government in 2005 meant a change in emphasis, couple this with the severe down turn in the economy in 2008 and 2009, which led the cruise lines to constrict their project developments and we had to look elsewhere. 

Why did the government choose DECCO?
DECCO is already a significant investor in the Cayman Islands and thus the continued success of Cayman is extremely important to them. DECCO has already undertaken its own environmental impact assessment even before it came on board to ensure that the project will not detrimentally affect both the area of development and areas outside the development, such as Seven Mile Beach and the South Sound area.  

What was the initial scope of the project framework?
We wanted to build two piers that could accommodate the new Oasis-sized cruise ships. At the same time it was important to government that the project should be entirely funded by the developer, that government (the Port Authority) should retain complete control of the port and that existing retailers in the vicinity of the new development should be protected.

And now?
The government realised that we needed to build more than just piers to attract cruise visitors to Cayman and remain competitive; we needed to create an enhanced world class destination and harbour that would be recognised regionally as a world class facility. The project now includes the reclamation of land to the size of about 8.3 acres, which will give much more scope for development.  Even with this enhanced project, however, the protection of existing business is of crucial importance.

How far have you come with the Environmental Impact Assessment? 
The EIA is extensive and compliant with the components listed in the draft Terms of Reference, prepared by the Cayman Islands DoE in April 2009. Additionally, as part of the team’s self-imposed due diligence, it also referenced the World Bank’s ‘Environmental, Health and Safety Guidelines for Ports, Harbours and Terminals’ and internationally accepted standards and criteria. The EIA included the analysis of existing data and studies; and a large number of special investigations and studies, computer simulations, surveys, etc., with respect to the Project site and areas affected.

It is important to note that the EIA is not to determine whether this is the right site or not, this is a functioning port with significant infrastructure and business investments surrounding it on both the sea and the land sides. The primary purpose of the EIA is to inform the design and construction methodology. When a final design has been agreed to, the design will then identify any outstanding areas required for study and subsequently, the full EIAR can be completed. We intend to make a summary of the findings available.

How does the developer make any money?
The government will own all the land that the cruise berthing facility sits on and will lease the land back to the developer at an agreed rate and for an agreed period. The developer will be able to develop any residual land that the facility does not directly use for the berthing of passengers. Suggestions for the use of the excess land include the possible construction of a convention centre, an amphitheatre and diving facility/pool. The developer will also receive head taxes from the cruise lines. Those two revenue streams will pay for the development.

So government does nothave to pay anything?
If the government decides to terminate the agreement prior to its four month expiry (which runs until 31 December) then we have an obligation to pay half of the developer’s expense up to a maximum of US$250,000. If agreement is reached or if the agreement expires then the government will pay nothing but the exposure is capped at US$250,000. That is government’s only financial exposure to the project.

The cruise lines have already developed their itineraries for 2011 and 2012 and those with the Oasis-sized ships (Royal Caribbean) cannot berth in Cayman until our new facility has been opened. How does government retain an interest from the cruise lines until we are ready to receive them?
Though intensive discussions with the cruise lines I can say that there is still a demand for this destination by cruise tourists – it is still a favourable and sought-after as a destination - and they are the ones who dictate the itineraries. That said, cruise lines shared their concerns that Cayman had fallen behind in its facilities and that their discerning passengers were demanding enhancement to what we had to offer. We have a commitment by the cruise lines at the highest level to retain Cayman on their itineraries in 2012 and beyond so long as we can show them we have improved our facilities with the new berthing facilities. This means that we will inevitably see a drop in cruise passengers in the next two years before the facility is opened.

What happens if the final agreement is not reached by the end of this month?
The developer is now working out the finer details of the construction as well as exactly how much the project will cost. We hope that, even if they cannot achieve this by 31 October, they will at least be able to give us a sound estimate of pricing within a five per cent range. This means that even if we haven’t reached an absolute agreement we can still put the project out to tender in terms of financing and its construction. Negotiations can take place notwithstanding the precise figures. The government and the developer then have a further two months to agree the final master plan, as final agreement must be reached by 31 December.

What’s the final opening goal?
We hope to have final confirmation that Cayman will be hosting the Florida and Caribbean Cruise Association annual conference in November 2012 and we would hope to have the facility up and running by then. We anticipate that the cruise lines will have us on their itineraries again
for 2013. 

It was to a crammed ballroom last month at the Marriott Resort that Cline Glidden gave a detailed presentation on how far the government has come in the development of cruise berthing in Cayman. Due to time constraints, much of the information was delivered at a rapid pace, so the Journal sat down with Glidden for an exclusive one-to-one for a detailed look at the project.

How far has the cruise berthing plan come as at the beginning of October?
Following the signing of a MOU with the developer Dart Enterprises Construction Co. earlier this year, in September the government entered into a second agreement with the developer, which outlines the framework and the scope of the development. We are now working toward agreeing the main agreement, which will finalise the details of the project, including its construction and cost. We hope to have this agreement signed by the end of October.

Why didn’t government take on the development itself? Why does the project need a developer?
Government does not have the funds to build a project of this size, which could cost US$200 million to US$300 million. Government also has borrowing restrictions, which prevent it from borrowing funds in the traditional way. So it had to come up with an innovative new method of providing this much-needed infrastructure.

Why didn’t government enlist the assistance of the cruise lines, which have injected large sums of cash into similar projects around the Caribbean?
Back in 2003 the government was in discussions with the cruise lines with regard to the development of cruise berthing facilities; however the change of government in 2005 meant a change in emphasis, couple this with the severe down turn in the economy in 2008 and 2009, which led the cruise lines to constrict their project developments and we had to look elsewhere.

Why did the government choose DECCO?
DECCO is already a significant investor in the Cayman Islands and thus the continued success of Cayman is extremely important to them. DECCO has already undertaken its own environmental impact assessment even before it came on board to ensure that the project will not detrimentally affect both the area of development and areas outside the development, such as Seven Mile Beach and the South Sound area. 

What was the initial scope of the project framework?
We wanted to build two piers that could accommodate the new Oasis-sized cruise ships. At the same time it was important to government that the project should be entirely funded by the developer, that government (the Port Authority) should retain complete control of the port and that existing retailers in the vicinity of the new development should be protected.

And now?
The government realised that we needed to build more than just piers to attract cruise visitors to Cayman and remain competitive; we needed to create an enhanced world class destination and harbour that would be recognised regionally as a world class facility. The project now includes the reclamation of land to the size of about 8.3 acres, which will give much more scope for development.  Even with this enhanced project, however, the protection of existing business is of crucial importance.

How far have you come with the Environmental Impact Assessment? 
The EIA is extensive and compliant with the components listed in the draft Terms of Reference, prepared by the Cayman Islands DoE in April 2009. Additionally, as part of the team’s self-imposed due diligence, it also referenced the World Bank’s ‘Environmental, Health and Safety Guidelines for Ports, Harbours and Terminals’ and internationally accepted standards and criteria. The EIA included the analysis of existing data and studies; and a large number of special investigations and studies, computer simulations, surveys, etc., with respect to the Project site and areas affected.

It is important to note that the EIA is not to determine whether this is the right site or not, this is a functioning port with significant infrastructure and business investments surrounding it on both the sea and the land sides. The primary purpose of the EIA is to inform the design and construction methodology. When a final design has been agreed to, the design will then identify any outstanding areas required for study and subsequently, the full EIAR can be completed. We intend to make a summary of the findings available.

How does the developer make any money?
The government will own all the land that the cruise berthing facility sits on and will lease the land back to the developer at an agreed rate and for an agreed period. The developer will be able to develop any residual land that the facility does not directly use for the berthing of passengers. Suggestions for the use of the excess land include the possible construction of a convention centre, an amphitheatre and diving facility/pool. The developer will also receive head taxes from the cruise lines. Those two revenue streams will pay for the development.

So government does not have to pay anything?
If the government decides to terminate the agreement prior to its four month expiry (which runs until 31 December) then we have an obligation to pay half of the developer’s expense up to a maximum of US$250,000. If agreement is reached or if the agreement expires then the government will pay nothing but the exposure is capped at US$250,000. That is government’s only financial exposure to the project.

The cruise lines have already developed their itineraries for 2011 and 2012 and those with the Oasis-sized ships (Royal Caribbean) cannot berth in Cayman until our new facility has been opened. How does government retain an interest from the cruise lines until we are ready to receive them?
Though intensive discussions with the cruise lines I can say that there is still a demand for this destination by cruise tourists – it is still a favourable and sought-after as a destination - and they are the ones who dictate the itineraries. That said, cruise lines shared their concerns that Cayman had fallen behind in its facilities and that their discerning passengers were demanding enhancement to what we had to offer. We have a commitment by the cruise lines at the highest level to retain Cayman on their itineraries in 2012 and beyond so long as we can show them we have improved our facilities with the new berthing facilities. This means that we will inevitably see a drop in cruise passengers in the next two years before the facility is opened.

What happens if the final agreement is not reached by the end of this month?
The developer is now working out the finer details of the construction as well as exactly how much the project will cost. We hope that, even if they cannot achieve this by 31 October, they will at least be able to give us a sound estimate of pricing within a five per cent range. This means that even if we haven’t reached an absolute agreement we can still put the project out to tender in terms of financing and its construction. Negotiations can take place notwithstanding the precise figures. The government and the developer then have a further two months to agree the final master plan, as final agreement must be reached by 31 December.

What’s the final opening goal?
We hope to have final confirmation that Cayman will be hosting the Florida and Caribbean Cruise Association annual conference in November 2012 and we would hope to have the facility up and running by then. We anticipate that the cruise lines will have us on their itineraries again for 2013.