Rob Sequin | Havana Journal
We thank Nigel Kirkwood, Information Officer of Standing Feather International Inc for his dialog to help me understand the challenges of this unique golf resort development project, explanations of Cuban law and joint venture structure along with the time frame and construction plans for the Estancias de Golf Loma Linda or Loma Linda Golf Estates in Holguin Cuba.
On July 6 and 7 the Canadian company, Standing Feather International Inc and the Cuban state enterprise Grupo Empresarial Extrahotelero Palmares SA met to finalize the terms of the contract between them to form the joint venture, “Cuba-Kanata Golf SA”.
Palmares operates the Tropicana Cabaret, La Bodeguita del Medio, El Floridita and the Varadero Golf Course among other business ventures in Cuba.
Preliminary projections, recently updated, set the value of this Cuban golf course and resort development project at $455million when fully built out.
The final draft versions of the updated feasibility study and contract will be initialized in August. The parties expect to submit those, and other prerequisite documents, plans and projections to the Executive Council of State for review before granting the final approval to incorporate. The signature of the final contract is expected to take place in September or October 2011.
Standing Feather is proud to announce that the title to the luxury properties that home buyers can acquire will not be the standard 99 year leasehold. Instead, residential properties will be sold with the right to own that property in perpetuity.
“Cuba-Kanata Golf SA” will be permitted to offer luxurious Caribbean homes for sale to foreigners in Cuba for the first time in over half a century. “Cuba-Kanata Golf SA” will be building its first residential golf community on a beautiful 520 acre site adjacent to the world famous Guardalavaca Beach in the eastern Province of Holguin Cuba.
The planned five star residential resort called “Estancias de Golf Loma Linda” (Loma Linda Golf Estates) will ultimately offer a mix of up to 1300 fully furnished luxury villas, bungalows, duplexes and apartments for sale.
In addition to state-of-the-art amenities, concierge and many other services the one, two and three bedroom homes at Estancias de Golf Loma Linda will be built along side and near thirty-six holes of championship caliber golf courses designed by renowned Canadian golf course architect Graham Cooke.
The area will be declared a “Special Economic Development Zone” and resident home owners at Estancias de Golf Loma Linda will be permitted to import their cars into Cuba if they so desire.
This new Cuban golf resort will also offer rental services for proprietors and feature a 170-room 5-star boutique hotel for visitors. The Cuba-Kanata Golf SA project will ultimately be an entire community, not simply a hotel and a golf course.
As experienced Cuba watchers know, nothing in Cuba happens fast and nothing happens without the Cuban government.
Here’s how the Cuba-Kanata Golf project came to exist.
1. Initial negotiations began in June 2002.
2. Memorandum of Understanding signed in April 2011 finalizing the contract in draft form and setting the schedule for the final review and approval of that draft by the Executive Committee of the Council of State Ministers.
3. Currently: The draft agreement is being reviewed by the Ministers of Justice and Finance and Prices.
4. August 2011: Standing Feather expects to initialize the draft agreement for the final submission for approval per Chapter VIII Article 21 of Law #77.
5. September 2011: Expected signing of the joint venture contract after Executive Committee of the Council of State Ministers 30 day review window to approve any investment of over $10million.
6. November 2011: The subsequent incorporation process has a 60-day maximum for completion. The Cuba-Kanata Golf SA joint venture will be incorporated by end of November, barring hurricanes according to Mr. Kirkwood.
7. Late 2012 to early 2013: A 12-18 month planning stage will follow the contract signings with sales and operations expected to subsequently begin 2 years into the 6-year construction build-out.
Property Ownership in Perpetuity
Ownership of real estate by foreigners has been legal per Chapter VI of Law # 77 since December 6, 2000 and title to such real estate was further defined (specifically in support of this real estate initiative for foreign home buyers) per Law Decree 273 of August 13, 2010. When this Law Decree was announced, global media immediately picked up on the Cuban government’s endorsement of 99-year leasehold title as per the change to Civil Code Article 222.1 and 222.2 but completely ignored the change to 222.3, which defines the means to acquire property in perpetuity. And that right to property title in perpetuity is what Standing Feather International has been granted… the right to offer property to foreign home buyers in perpetuity.
According to Mr. Kirkwood, “the title to the surface rights per se will be owned - in perpetuity - solely and completely by the joint venture, Cuba-Kanata Golf SA. It will no longer be the legal property of the Cuban state. The duly-incorporated joint venture itself will, in effect, act in the role of a “home-owners’ association” to ensure that the integrity and the ambiance of the entire residential community as a whole are not compromised. Individual home buyers will be given title - in perpetuity - to their residence and its adjoining “appurtenances” such as gardens, pools, driveways etc. The purchase agreements will state quite clearly that, “... these aforementioned rights will not change, be modified or extinguished with any change of ownership of the surface rights.”
“Residente Inmobiliario” or Resident Homeowner Status
A new Cuban tourist visa class called “Residente Inmobiliario” will be created in order to permit long-term residency in Cuba.
Foreign residents at the proposed Estancias de Golf Loma Linda won’t simply be treated as transient “guests”, they will be legal residents in Cuba. The Cuban government has decided that every new foreign homeowner in resort communities such as that of Standing Feather’s will be legally designated as a “Residente Inmobiliario”, not as a tourist.
A “residente inmobiliario” will be a person that has the right to reside in Cuba in a residential tourist resort (golf course or marina resort). For this project’s purposes, Standing Feather is translating the term into English as a “resident homeowner”. The privileges, rights and responsibilities of the resident homeowner are currently being defined by Cuban immigration services and are expected to be in place by the end of 2011.
Special Economic Development Zones
A Special Economic Development Zone will be a zone in Cuba that will permit exceptions to various regulations governing activity in that zone. The zone and its exceptions will be defined on a case-by-case basis specific to each zone and its intended purpose.
As for more clarity on these “Special Economic Development Zones” (Zonas Especiales de Desarrollos), refer to Chapter III, Item No 96, from Page 16 of the “Lineamientos de la politica economica y social”, the 291-item agenda of the Congress of the Communist Party of Cuba that was held in April 2011.
That resolution passed and a working commission was established to develop the parameters, define specific objectives, secure ways and means, etc. The People’s Assembly has recently convened and unanimously passed approval of all of the resolutions as had been approved by the Party in April.
The qualification will be that such zones are deemed to promote and increase Cuban production, exports, the effective substitution of imports, high technology/IT projects and social development, with a heavy weight given those instances where establishing such a zone would provide more and better-paying jobs for Cuban citizens.
Skilled Labor for the Loma Linda Golf Estates
Mr. Kirkwood believes and supports the notion, emphasizing that it is solely in his company’s perception, and not necessarily the position of the government of Cuba, that the tangible realization of the objectives of these hugely-significant policy changes in Cuba’s economic model will dovetail with the convergence of Cuba’s currency. He expects this Cuban currency convergence to happen within the coming 10-20 months.
Depending on the type of skilled labor required, the company will be able to contract privately owned and/or cooperatively owned Cuban enterprises and not be restricted to contracting solely with the Cuban state for provision of labor. Standing Feather believes that many types of skilled labor will be available for direct contract with this and/or any other enterprise in the “new Cuban economy”, providing market and revenue for Cuban-owned and operated enterprises that are owned privately or cooperatively, not only state-owned firms.
Instead of hiring chambermaids, the company intends to contract a housecleaning service company formed and owned by Cuban chambermaids, as can now be established with the full support of the Cuban government.
Proprietary IT and intranet system(s) will be developed, installed and maintained by a Cuban business enterprise formed and owned by Cuban IT experts themselves.
Cuban vendors will be have the ability to lease stalls in one-third of the 500,000sqft shopping and entertainment center that will be an open marketplace.
Cuban-owned car dealerships will be partnered for the provision of the luxury car rentals and leasing services will be offered to Loma Linda Golf Estates residents and guests.
Mr. Kirkwood humbly suggests that much of the world has very much underestimated the profundity of the changes that are happening in Cuba’s social and economic landscape. Among other fundamental changes, the joint ventures such as his company are forming with Cuban partners are keystones in the establishment of a Cuban real estate market that will permit foreign ownership of real estate property more liberal than is possible even in China or Vietnam.
He also stated that the company is planning to do everything possible to eliminate the need for foreign expertise as quickly as possible, within the first five years of operations and to the greatest extent possible. He said “The transfer of skills, expertise and technology to privately-owned and operated Cuban enterprises is fundamental to our objectives and that the Cuba-Kanata Golf SA goal is to be a completely Cuban enterprise, not an imported overlay of a Miami Beach resort with cosmetic Cuban veneer”.