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Tourism, Construction, Government
Fajardos Cayo Largo Resort Hits A Roadblock
Owners stop construction until government guarantees the expropriation of eight acres
By EVELYN GUADALUPE-FAJARDO
February 20, 2003
Construction of the $120 million InterContinental Cayo Largo Resort in Fajardo has come to a screeching halt, CARIBBEAN BUSINESS has learned.
Dan Shelley, majority owner of Cayo Largo, had to stop construction temporarily until the Land Authority finishes with the expropriation of eight acres bordering the resorts main entrance and providing direct access to highway PR-3. There is no opening scheduled for the resort, which is more than 80% completed.
"The government was supposed to have expropriated the land as part of the closing deal," said Cayo Largo spokesman Ramon Del Valle of Miramar Communications. "But there is a lawsuit that has come up by a developer who has a project bordering PR-3 and says the land in question is his property."
The Government Development Bank (GDB) has said Shelley will cover half of the cost overrun (estimated at $15 million to $18 million) to complete the project once he is guaranteed the land. The GDB, which has a $75 million stake in Cayo Largo, is expected to put up the other half. The Tourism Development Fund, a subsidiary of the GDB, provided a $75.3 million Afica bond guarantee for the resort in September 1999.
"The board of the GDB has approved $7.5 million to $9 million to cover half of Cayo Largos cost overrun. "We dont believe this is a big problem; its just a matter of time before we find a solution," said GDB President Hector Mendez.
Expropriating the eight acres could take two months, if all runs smoothly. "We have been meeting with the Puerto Rico Industrial Development Co. and with other the government agencies involved to accelerate the process," Mendez said. "Cayo Largo was inherited from the past administration with problems which we are working vigorously to resolve."
Stephanie Bezner, spokesman for Atlanta-based Six Continents Hotels, parent company of the InterContinental brand and owner of a 35% stake in Cayo Largo, told CARIBBEAN BUSINESS upgrades were made to the construction plan after the hotel changed from an independently operated property to one bearing the InterContinental flag. She said Cayo Largo could open in July, though an October opening, after Puerto Ricos slow (summer) tourism season, is more likely.
Shelley said in a previous CB interview that he was hoping for a December 2002 opening, depending on the contractors and the operator. The opening date was subsequently pushed back to April 2003. Inside industry sources indicate Six Continents has had to lay off most of its 200 employees and to cancel contracts with local suppliers.
Cayo Largo is a 2,000-acre oceanfront resort with 1,000 acres of forest on Puerto Ricos northeast coast. The first phase of Cayo Largo includes a 314-room hotel; a 7,000-yard, 18-hole, Ron Garl-designed golf course, and a 15,000-square-foot, full-service European spa.
This Caribbean Business article appears courtesy of Casiano Communications.