WASHINGTON, D.C., July 26, 2022 — To fully appreciate the excellent leadership being provided to the Grand Bahama Port Authority (GBPA) by Acting GBPA Chairman Sarah St. George and her Executive Management Team, it is first necessary to reflect on some of the reasons why a once booming city awash with prosperity is still struggling to return to economic normalcy in the aftermath of the crippling destruction caused to Grand Bahama my Hurricane Dorian in September of 2019.
Some background information on the early years and the growth and development of Freeport is necessary to put the current moribund state of what was once known as “The Magic City” in perspective.
In a manner of speaking, what we know today as Freeport is the result of what was one of the most important political developments in The Bahamas’ history. Indeed, the second most populous city in The Bahamas was part of a pine forest when Sir Stafford Sands, then head of the Bahamas Development Board, arranged for American financier Wallace Groves, a client of his law firm, to purchase 50,000 acres of Crown Land in Grand Bahama for one pound sterling (the equivalent of $2.80) per acre, resulting in the signing of the Hawksbill Creek Agreement on August 5, 1955.
The agreement was designed to establish a “free port” – hence the current name of the city –that would encourage foreign investors to come to Grand Bahama through a variety of tax exemptions.
In return, the Port Authority was required to dredge a deep-water harbour, construct an airport, hospitals and schools and provide other services and amenities. Later the Port acquired additional land from the crown and from private sources, giving it a total of 150,000 acres or 233 square miles for development.
The Government of The Bahamas gave the Port the right to grant business licenses as an incentive and later the Port was given permission to license casinos and to develop tourism within the Freeport area.
Under the initial agreement, which has been changed throughout the years, residents and licensees in the Port area were free from personal income taxes, corporate profit taxes, capital gains taxes, death taxes or property tax until 1992, which was eventually pushed back to 2015.
As 2015 approached, a vigorous debate ensued over whether the exemptions granted under the Hawksbill Creek Agreement should be extended until 2054 – in essence for the life of the Agreement.
The then Prime Minister, Perry Christie, in a communication to the House of Assembly on March 3, 2016, addressed “the issues and objectives that our government deems important as we move the Hawksbill Creek Agreement forward,” according to an article written by Carey Leonard in The Bahama Post on February 10, 2016.
“Transparency in negotiations, such as the extension and review of certain provisions, of the Hawksbill Creek Agreement, which affect the livelihood of the tens of thousands of Residents and Licensees of the Port Area, is critical,” noted Leonard, a Freeport-based former lawyer for the GBPA.
Whatever issues existed back then were successfully reconciled and the exemptions were extended to 2054.
Groves’s idea for his new land acquisition was to develop an industrial area. As noted in this excerpt from Wikipedia: “…House of Assembly member Stafford Sands served as Wallace Groves’s lawyer and helped pave the way for his business interests. In 1955, Groves secured the seminal Hawksbill Creek Agreement with the colonial government, ceding to him 211 square miles of Grand Bahama Island upon which to develop a free-trade industrial and resort zone. (Groves obtained supplemental agreements in 1960 and 1966.) The agreement freed the Grand Bahama Port Authority from paying taxes, tolls, and excises for 25 years (since extended to 2054), and exempted it from other Bahamian laws, notably immigration laws. By 1965, 416 companies operated under license to the main exempted company. The zone gradually became the most modern, well-run, and prosperous part of the colony, although it was described as only nominally Bahamian.”
After internal self-government was granted to The Bahamas in 1963, Wikipedia notes that Groves “further secured the right to operate gambling establishments at Freeport, using the services of Stafford Sands. At the same time, Sands and other high government officials received payments exceeding $1,000,000 from the Grand Bahamas Port Authority. The complex system of continuing payoffs to almost the entire Bahamian elite (known universally as the “Bay Street Boys”) was detailed by the Royal Commission of Inquiry of 1967…”
Freeport was really an exciting place to visit in the early 1960s. After the opening of the Monte Carlo Casino adjacent to the Lucayan Beach Hotel in 1964, Freeport was a boomtown with nightclubs jammed to capacity nightly and some restaurants remaining open all night. There are differing opinions as to what precipitated the end of the “glory years.”
There is a body of opinion, however, that a hard-hitting “bend-or-break” speech at the opening of the Bahamas Oil Refinery in Freeport in August of 1969 by Prime Minister Sir Lynden Pindling, in which he alluded to the open racism that existed in Freeport at the time, may have been the reason why some investors had second thoughts about their investment projects. Some actually left Grand Bahama.
Be that as it may, Freeport continued to flourish for the ensuing decades, thanks in no small measure to the genius of the late Edward St. George during his tenure as Chairman of the GBPA.
Mr. St. George, who died in December 2004, and Sir Jack Hayward — whose deceased father, Sir Charles Hayward, was an early co-investor with Groves in Freeport – purchased the outstanding shares held by Groves in the GBPA in 1979. Along with Sir Albert Miller, whom they hired as President of the GBPA, Freeport’s growth and development continued at a phenomenal pace.
A decision had been made earlier to focus on tourism simultaneously with Freeport’s industrial development goals to bolster the city’s economy. The availability of casino gambling, which at the time was not as widespread in the United States as it is today, proved to be a magnet for tourists who were habitual gamblers as well as fun-lovers who enjoyed the excitement generated by games of chance.
Flights by Laker Airways, a no-frills low-cost airline founded by British entrepreneur Sir Freddie Laker, and a variety of chartered flights from destinations in the United States used to be filled to capacity with Grand Bahama-bound tourists coming to the island to gamble. Of course, they also enjoyed first-rate entertainment in venues where the casino was located as well as the various nightclubs around the island.
Aside from the fact that there has been a proliferation of casino gambling in the United States over the years, resulting in several failed attempts to successfully operate a casino in Freeport in recent years, Freeport’s lure as a tourist destination declined tremendously in the aftermath of two monster hurricanes, Francis and Jeanne, that devasted Grand Bahama in 2004, resulting in the closure of the Royal Oasis Resort and Casino.
Approximately 1,300 workers became unemployed because of the closure of the Royal Oasis Resort and Casino, and although the Grand Lucayan Resort – then owned by Hutchison Whampoa, a Chinese conglomerate with huge investments in Freeport – remained open, my understanding is that it was only able to so because its operations were heavily subsidized by Hutchison Whampoa.
There were reports that Hutchison Whampoa planned to close the Grand Lucayan after plans by The Wynn Group, a Canadian company, to purchase it were abandoned. Faced with the prospect of hundreds of Bahamians adding to the high level of unemployment in Grand Bahama, Government intervened and purchased the hotel, but the casino nevertheless subsequently closed.
The closing of the near-by casino was the virtual death knell for at Port Lucaya Marketplace and tourism-related businesses in the area.
However, after four-plus years of inept and incompetent governance under Prime Minister Dr. Hubert Minnis and the Free National Movement (FNM), Freeport is back on track to once again being the “magic city” that it once was. Indeed, Deputy Prime Minister Chester Cooper, who is also Minister of Tourism, Investments and Aviation, recently outlined a number of initiatives the PLP government has commenced that will certainly assist in Grand Bahama’s recovery efforts, including having “embarked on an aggressive plan to build a world class airport” with a commitment “to have it completed by 2025.”
Of course, Minister for Grand Bahama Ginger Moxey, almost on a daily basis, provides concrete evidence — as she carries out her ministerial responsibilities — that Grand Bahama is well on the way to complete recovery from the devastation caused by Hurricane Dorian.
With regard to Freeport, however, a great deal of the optimism that its reincarnation as the “magic city” is no longer a pipe dream is due to the sound management policies of Acting GBPA Chairman Sarah St. George and her Executive Management Team.
