Tourism, Land, and the Cable Beach Development, 1960
A foreign developer offers to build a 300-room hotel on Cable Beach in 1960, contingent on a 99-year lease of Crown land at a nominal rent, a ten-year exemption from customs duty on building materials, and a guarantee that the government will not permit a competing hotel within three miles for fifteen years. The government is short of revenue and unemployment is high. Small Bahamian hoteliers on the same beach object that the exclusivity clause will ruin them. The Colonial Office warns that the lease may breach the rule against perpetuities and that the duty exemption requires legislation. The developer's lawyers argue that without the guarantees the project will go to Jamaica.
1. Evaluate each of the developer's three demands from the standpoint of the public interest.
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The lease at nominal rent is the least troubling if the land is otherwise idle and the hotel creates employment, but 99 years at a fixed rent transfers the gains from future development to the developer. A shorter term with review, or a rent tied to profits, would serve better. The duty exemption is defensible as a temporary incentive, since the materials are not produced locally and the exemption costs revenue only if the project would not otherwise proceed; but it should be time-limited and legislated openly, and it should be available to local developers on the same terms. The exclusivity clause is the most objectionable: it uses public power to suppress competition and protects the developer from the risk that a better hotel will be built. The government should refuse it, or at most offer a short exclusivity tied to the developer's own performance targets.
2. What legal steps are required, and what happens if they are skipped?
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The duty exemption requires an act of the Assembly; the executive cannot waive customs duties by contract. The lease of Crown land requires the governor's approval and must comply with colonial land law, including the rule against perpetuities and any limits on the term of Crown leases. If the government signs first and legislates later, the agreement may be unenforceable and the developer may sue or walk away, and the Assembly may refuse to ratify, leaving the government embarrassed. The correct sequence is: negotiate a heads of agreement, obtain legal advice on the lease term, introduce the duty legislation, then execute. A strong answer notes that the Colonial Office's warning is a signal that the governor may refuse assent, so the government should resolve the legal issues before announcing the deal.
3. How should the government weigh the threat that the project will go to Jamaica?
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The threat is credible but should not set the terms. Competition between colonies for investment is real, and Jamaica had more infrastructure. But a bad deal is worse than no deal: a fifteen-year exclusivity clause would deter the local investment that builds a durable tourism sector, and a nominal 99-year rent would leave the government with no share of the gains. The government should test the threat: offer the lease and the duty exemption, refuse exclusivity, and see whether the developer walks. If he does, the government has lost a project but kept its bargaining position for the next one. A strong answer also notes that the decision is not purely economic - it distributes land and legal privilege - and that the small hoteliers' objection is evidence of the clause's cost, not mere self-interest.