Lease Policy Details
CONCEPTUAL FRAMEWORK - It is recognized that in pursuit of the development objectives for the Chaguaramas Peninsula and its outer islands, the CDA may act as a landlord, an implementing agency or a development agent in its own right. This Leasing Policy guides and describes the Authority in its role as landlord.
ENABLING LEGISLATION - The CHAGUARAMAS DEVELOPMENT AUTHORITY Act Ch. 35:02 provides for the establishment and operation of the Authority for the development of the North-West Peninsula, in the interest of the people of Trinidad and Tobago.
More particularly, Section 14 of the Act states the functions and the powers of the Authority; and it also prescribes the limitations that the Authority must adhere to, in respect of the alienation of any land in the Peninsula, as follows:
14:4 Notwithstanding the provisions of this section but subject to Section 16, nothing in this Act shall be construed so as to permit or empower the Authority with respect to any land in the North-West Peninsula (the subject matter of a Vesting Order) to alienate the freehold or grant leases for a term of more than thirty years with an option for a further term not exceeding thirty years, except with the consent of the President.
The Vision of the Authority which informed the creation of the leasing policy of the Chaguaramas Development Authority took cognizance of the limitation set out and is expressed as follows:
"The Peninsula of Chaguaramas and its off-shore islands will be accessible to all, managed with emphasis on maintaining a pristine environment and economic vibrancy for present and future generations."
The thrust of the Leasing Policy therefore is to capture both the provisions of the Act as well as the Vision Statement: this combination has guided the f
formulation of a Leasing Policy to promote and to ensure the development of the following:
· Eco-Tourism and the Resort Hotel Industry;
· Leisure and Recreation Facilities;
· THE Marine Industry; and
· Knowledge-Based Industries;
This impetus will ensure the promotion and development of activities that are sensitive to and protective of the environment, to ensure that the Peninsula is maintained in a pristine state for the future generations of peoples of Trinidad and Tobago.
LEASING FRAMEWORK - As the preeminent lesser of real estate in Trinidad and Tobago, the CDA has a responsibility to ensure that the rent reserve is maintained in keeping with current market value; inflationary trends within the country; and within the real estate market, both locally and internationally, depending on the nature of the development within the contemplation of the Authority.
The nature of development within the Chaguaramas Peninsula is unique to Trinidad and Tobago and as such is capable of attracting capital recovery rates assessed at international standards for the development of prime resort properties. The leasing policy of the CDA must take cognizance of, and be capable of, adjusting its values to international standards for developments of the type and nature envisaged within the Chaguaramas Peninsula.
4.1 The main components of a Leasing Policy of the CDA are:
(I) The rent reserved;
(ii) The term of years for the lease; and
(iii) The grant of short term licenses, including concessions.
As a corollary, the power of assignment either by way of a sub-lease or an under-lease will be considered under this section.
Rent Reserve - Current policy of the CDA is that lease rental is based on capital recovery rates, depending on use, in keeping with the inherent mandate of the Chaguaramas Development Authority to maximize the value and use of its assets.
Capital Recovery Rates are pegged at a minimum of five points above inflation, as measured by the Consumer Price Index.
Notwithstanding
the description of the land and the nature of the land to be leased,
whether or not for agricultural or any other purpose whatsoever, the
Authority reserves the right to value its lands in order to obtain the
maximum benefit, which are as follows: Brent Augustus,
Raymond & Pierre, Linden Scott & Associates, Gladstone Staple and
Mervyn Thompson. Where the Authority grants a lease of land for
agricultural purposes only, it reserves the right to apply a multiple land
use assessment to the value of the land. The Authority also retains the
right to reserve and fix a charge of up to 25% of the total value of the
land at a commercial rate. The agricultural projects of each tenant shall
be assessed at every rent review to ascertain whether the tenant’s
project still retains at least 75% of an agricultural base. In the event
that the tenant has varied his project, the Authority reserves the right
to reassess the tenant’s entire property at commercial rates or any
other rates that it may from time to time employ.
Appointment and Selection of Valuers - The CDA appoints or selects Valuers for the assessment and determination of open market values. Valuers may include The Valuation Division of the Ministry of Planning and Development, or any organ of the State that is empowered with executing this function; private sector valuers or valuation firms; and any other recognized member of the Association of Valuers of Trinidad and Tobago, experienced in providing international valuation bases when required.
The CDA has been using both documents set out and contained in Exhibits 1 and II in implementing its Leasing Policy. Consequently, the requirement of the payment for a capital value amount should be reassessed
Rent Review:- The CDA’s policy is for rental reviews for periods not exceeding five (5) years, and within succeeding periods the reviews will be as specified in the lease.
Duration of the Lease - The policy imperative with respect to the term of years, subject to the limitation outlined in Section 14 (4) of the CDA Act, will be premised on the nature of the activity. This should enable the North West Peninsula to develop along the lines indicated in the Sections entitled "The Nature of Business" and the "Promotion of Small Business." This will enable these areas to achieve holistic, organic and sustainable development.
Hence the open market value assessment under rent reserved shall be linked to the form of permitted activity and the performance of the tenant.
The CDA Board expects that from Strategic and selective marketing it will enable the CDA to offer its maximum leases for the erection of permanent structures, in conformity with Town and Country Planning Division (T&CPD) and Development Plans for specific areas.
Large scale developer landholding within the peninsula shall be generally limited to less than 100 acres in order that no one developer, or group of developers may control contiguous landholdings in excess of 100 acres.
With respect to all Marine development, the term of years to be granted shall be on a case by case basis because of the assessment, relative to the saturation of the propose dis activity in at present on the Peninsula, and This approach would encourage entry and minimize the cost of exiting.
For industrial activities, the Board should be permitted and empowered to make a case by case assessment of the financial viability of the project in accordance with the systems, rules and procedures set out in the Tenancy Administration Manual of the CDA, as amended and up-dated from time to time..
Granting of Options - Options may be granted to applicants for a period not exceeding six (6) months on a parcel of land, for potential investors to undertake feasibility and other studies. The granting of this option must be explicitly to undertake the financial viability of the identified and agreed projects. The price of the option is at the discretion of the Authority.
Sub-leases and the Assignment of Leases - The CDA encourages business to acquire leases for their operation. However, it is recognized that multi-business operations may necessitate sub-leases. Accordingly, full disclosure is required from an original lessee regarding sub-leases. Such disclosure shall include, but is not limited to:
- The names of the Owner/Directors/Shareholders and Corporate Secretary;
- The land area in question along with the proposed land use;
- The sub-lease and/or under-lease premium and review period applicable to the sub-lease;
- Duration of the sub-lease and/or under-lease with CDA. The Authority reserves the right to meet with prospective sub-lessees and/or under-lessees, so that all pertinent information may be made available to the sub-lessees and/or under-lessees, including alternative site/s for the accommodation of their businesses.
A potential sub-lessee and/or under-lessee who so desires may subsequently consider entering into a lease directly with the CDA.
The CDA reserves the right to demand and receive from the lessee as additional rent or fees due and payable to it, up to a maximum of 10% of the annual/monthly rental paid by any approved sub-tenant of the lessee
MONITORING OF LEASES - The Authority will monitor and ensure that the activities carried out by a lessee are consistent with the provisions of the lease.
Environmental Compliance - All applications for proposed projects will be reviewed against environmental guidelines set out and updated from time to time in the CDA’s Tenancy Administration Manual. The state of environmental technology, socioeconomic and socio-cultural framework, economic and regulatory requirements are factors that will be taken into account to ensure that the critical environmental elements of all proposed projects are quantitatively and qualitatively acceptable. The Authority may require additional information on a project specific basis to evaluate the environmental impact of certain applications.
Estate Service Fees - For all successful applicants, an estate service fee equivalent to no more than 10% of the annual rent of the leased property shall be payable to the CDA as the tenants’ contribution towards the upkeep of the security and general maintenance of the common areas of the Peninsula and its outer islands.
Building Codes - Successful applicants shall be required to comply with the building codes and practices established by the Authority. Such compliance shall be in addition to, and not be an alternative to, all other building and other regulations that have been established by other appropriate bodies under the laws of Trinidad and Tobago.
MARKETING AND INVESTMENT PROMOTION - The Authority shall effectively utilize its key assets including the historic and environmentally unique locations and heritage sites in the North-West Peninsula as part of its marketing and investment promotion strategy.
In order to ensure as far as possible that information related to investment and real estate opportunities available within the Chaguaramas peninsula are a matter of public record and to ensure that the Authority maintains the highest levels of transparency and objectivity in treating with the lands under its control so that the broadest public participation in the development of the region is encouraged, the Authority shall:
a. on a half yearly basis, publish simultaneously in at least two local daily newspapers a listing of all investment and real estate opportunities that it proposes to invite participants to pursue within the Chaguaramas Peninsula within any particular year; and
b. publish from time to time any specific parcels of land that it proposes or wishes to lease either for a specific purpose or generally
The Authority may, where it deems fit and in accordance with its approved plans and the Act under which it was established, specifically target and solicit proposals from groups engaged in particular types of business or investment activities, and invite them to submit proposals, in keeping with the nature of development that the Authority wishes to pursue at that time.
Invitations issued by the Authority shall not however prohibit the Authority from approaching directly or entertaining the original proposal of a specific investor for development of an identified project provided that in the opinion of the Authority,
(i) The project is a desirable one that fits into the Authority’s vision
(ii) the proposer/applicant has a well documented capability and track record of financial sustained success in treating with the nature and the type of project that it has contemplated
(iii) the Authority’s investigations of the proposer/applicant/investor have been made with due diligence by a party professionally qualified to submit such a written report and such report is specifically noted in full and recorded in the Minutes of the Statutory board Meeting of the Authority.
FINANCIAL VIABILITY
Procedure for Assessment of Financial Integrity of an Investment - Before a lease can be granted, the CDA must be assured that the investor(s) have considered and met conditions, consistent with the CDA’s mission/vision.
It is therefore incumbent on the CDA to assess the financial robustness of any given project, to safeguard the interests of both the investor and the Authority.
TENANCY ADMINISTRATION MANUAL - The Tenancy Administration Manual of the CDA shall be used as the standard to guide the assessment criterion in each phase of any project proposal for the leasing of property under the control of the Authority.
CONCLUSION - A Leasing Policy approved by Cabinet shall be adopted by the Authority and incorporated as a policy of the Authority by way of Standing Order provided under Section 6 (4) of the CDA Act Ch.35:02.
L/O - 01/05/00