Category: Cabinet

Hold on one UDeCOTT-on-picking minute!

March 9, 2010 by Edmund Gall

I just watched one of the most enlightening discussions on the concerns about UDeCOTT on C TV with Afra Raymond.  I wish C TV posted clips of its First Up breakfast show online.  Here were the key points from the interview.

All special purpose state bodies are supposed to publish annual financial accounts.  UDeCOTT's last published accounts were for 2006.

When determining whether to proceed with commercial property projects, developers usually do a feasibility study to examine, for e.g., what's the expected return on investment and break-even rents.  Raymond asked Calder Hart if this was done for any UDeCOTT projects and he replied it was done for only one commercial project - the International Waterfront Complex (IWC).  Note: Raymond didn't expect such benchmarks to apply for projects involving public goods, e.g. NAPA, schools, health centres.

When asked what was the IWC's break-even rent, Hart replied approx. TT$20 per sqft.  Break-even rent is calculated based on UDeCOTT's monthly bank loan repayments.  Raymond indicated that this raised questions immediately since at the time the market rental for commercial properties in Port of Spain was TT$15 per sqft, i.e. if you placed a property on the market you could not expect more than TT$15 per sqft.  In other words, the total earned from a fully-rented IWC would still be below the expected loan repayment figure - the gap would have to be funded from somewhere.  So how could UDeCOTT say the project was feasible when the break-even rent was above the expected market rental rates?

Further, when Raymond asked what was the value attributed to the land on which the IWC was built, as used for its feasibility study, Hart replied: "Nil." That can't be right, and if it was included, then the break-even rent would be higher than TT$20 per sqft. {Read more}