$106 million upkeep for shuttered Outameni property
The government, through the National Housing Trust (NHT), continues to spend millions of dollars for the Orange Grove property in Trelawny, former home of the Outameni heritage and cultural attraction and tour, as would-be investors shy away from buying or leasing the non-performing real estate asset.
That leaves the housing and mortgage agency saddled with the land and building and equipment bought by the Trust for just over $182 million more than six years ago – a purchase that sparked controversy.
In response to questions from the Financial Gleaner about the property that the NHT has again been advertising – for the fifth time, it turns out– since October 23 this year, the NHT says it has already spent $106 million in upkeep for the property.
“Between the period June 2013 to August 2019 the National Housing Trust has expended J$106 million to maintain the 9.12-acre property,” the Trust said in an emailed response at the weekend. It added: “It is worth noting that since 2015 costs have been contained to the barest minimum required to insure and secure the property and to pay basic utilities.”
Tax Administration Jamaica records show that the NHT has also paid $837,300 in property taxes on the land over the six years. The tax authorities use a $30-million unimproved land valuation to levy taxes on the real estate.
While the total cost to maintain the property over the six-year period is nearly 60 per cent of the purchase price, it represents on an annual basis less than the $21 million the Trust had to fork out for upkeep in the first year of possession in 2013. The yearly maintenance cost now averages $17.6 million a year.
The NHT has confirmed that the property, initially bought by the NHT for its cultural and heritage value and tourism potential, has never been put to productive use since its March 2013 acquisition. “Since acquisition, the NHT has not utilised the property in any way and it was placed on the market in 2015,” the Trust said.
In fact, the property has been advertised for sale five times, the agency revealed: on August 23, 2015; August 21 to September 16, 2016; December 10, 2017 to January 28, 2018; April 1 to 30, 2018 and, most recently, on October 23, 2019 when it was advertised in national newspapers and listed on the NHT’s website.
The Trust explains the difficulty it has encountered offloading the real estate. “Since the initial advertisement for sale in 2015, the NHT has received four expressions of interest, including an offer to lease. After due diligence, only one entity satisfied the requirement. The interested party’s offer was accepted. However, the company subsequently rescinded its offer.”
The agency said that despite its efforts to find a buyer, it is yet to conclude a sale or lease agreement.
For more than a year after the NHT’s purchase of the property became public in 2014, the then People’s National Party administration came in for heavy criticisms of the transaction. The NHT board approved and went ahead with the purchase of the property from Orange Valley Holdings Limited (OVH), which was headed by film-maker Lenbert ‘Lennie’ Little White.
The company was said to have been indebted in the amount of $180 million to Capital and Credit Merchant Bank (CCMB) and the bank’s ultimate owners Jamaica Money Market Brokers Group, which was moved to sell the property, and later collateral used to secure it, to recover loans to OVH. A decision, which appears to have been taken after the initial purchase of the property, to restart the Jamaican history and culture tour was never activated by the NHT, which at the time estimated that it would have had to find another $211 million to get the venture up and running.
A land valuation commissioned by the NHT in February 2013 placed a value of $280 million and a forced sale value of $224 million on the property. A previous valuation, said to have been commissioned by CCMB, had valued the property at $311 million. Real estate industry sources say the value of the property, and its shunning by the market, could have been affected by the public furore that ensued in 2016 and took on political overtones. It is believed that the property’s relatively small acreage would make it expensive to convert to other uses, such as for housing.