By DURRANT PATE
Senior Staff Reporter

After spending over $150 million from taxpayers to purchase 6.5 acres of land at Ferry to save the Hydel Group of Schools, which is owned by Senator Hyacinth Bennett, the Government has decided to lease the property below market value to the school.  The decision coincides with plans by the school to offer tertiary training, which was not part of the original plan when Prime Minister Bruce Golding, who is Senator Bennett’s close buddy, defended the decision last year.

Prime Minister Bruce Golding and his close buddy, Senator Hyacinth Bennett

From all indications Senator Bennett has been offered a sweetheart deal under which the institution is to pay $423,500 monthly — less than one third of the $1.5 million lease recommended by the technical committee of the lessor, the Urban Development Corporation (UDC).

This latest finding is expected to reopen the controversy which surfaced last year after the Sunday Herald first reported the story surrounding the sale of the property.

The five-year lease, which is yet to be signed, is effective January 1 this year, with a 10 per cent increase in year one and a review thereafter of the base rate.

Currently, Hydel pays a monthly lease of $385,000.

The $1.5 million monthly lease recommended to the UDC board in a technical report, dated May 14, 2008, was based on an estimation that the property would appreciate in value each year, earning a minimum real return of 5 per cent on the $168.7 million used to purchase the property from Cowan Amusement Limited.

The recommendation that the lease be for five years was followed but the suggested monthly lease was apparently discarded.

The UDC rationalised the disparity between the recommended monthly cost and what it was leased for on the school’s financial situation.  The latest recorded financial statements for 2007 showed that Hydel made a modest pre-tax profit of $13.5 million.

It was also explained that the lease was not negotiated on a strictly commercial basis given the UDC’s definition that private schools such as Hydel are not deemed as commercial entities.

The Sunday Herald understands that Senator Bennett’s request for a clause to be added to the agreement giving her option to renew the lease is responsible for delays in signing, as the UDC wants to negotiate.  It is understood that the UDC is hesitant in including an option to renew because it is still not finalized on the long-term development for that section of the Caymanas corridor.

The UDC has decided to accommodate Hydel by having the lease payments made per semester in line with its cash flow situation where the bulk of its revenue comes from tuition payments, which are made per semester.

Hydel was served notice to vacate the premises in 2007 by its landlord Cowan Amusement but took the matter to court, which gave the school until June 2009 to relocate.

Things got worse for Hydel when Cowan Amusement put up the property for sale last year.  However, the government stepped in to acquire the land through the UDC to save the school from imminent closure.

In justifying the move in a statement to Parliament on November 11 last year, Prime Minister Golding asserted, “To do so would have meant its inevitable closure; the land would most likely have been used for some other purpose and the Government would have been obliged to find school places for the 1,283 students enrolled at Hydel.”