Mon | Mar 30, 2020

Transport Authority mum as Jamintel building wastes away

Published:Sunday | December 8, 2019 | 12:17 AMMcPherse Thompson - Assistant Editor – Business

The Transport Authority has remained silent on what progress it has made, if any, to recoup the millions of dollars it spent to acquire the former Jamintel building in downtown Kingston or alternatively what it intends to do with the property.

The public passenger transport regulator bought the property from the Urban Development Corporation five years ago, but the more than 60,000 square-foot building, which was idle and in disrepair at acquisition, has never been used by the authority.

Managing director of the Transport Authority, Cecil Morgan, has not responded to several enquiries made by the Financial Gleaner since November because he has constantly either been said to be in meetings or out of office and was said to be the only person at the agency who can respond to requests for information.

The authority, which paid $150 million for the building, was just the latest state agency to buy the property, in a constant change of ownership over a decade.

The Jamintel building – named for Jamaica International Telecommunications Limited – a seven storey structure at the corner of Duke and North street in Kingston, was once the hub for telecommunications, the business having been established in 1971 as a limited liability company with the Jamaican Government and the British company Cable & Wireless West Indies Limited as partners.

It was closed in 2004 and the National Housing Trust, NHT, acquired the property from Cable & Wireless in 2005. The NHT had planned to exchange the building for property at Hope Road that is controlled by the Jamaica Constabulary Force and used as headquarters for the Police Commissioner, but which is considered prime real estate for upscale residential development.

NHT had planned to transform the Hope Road property, which is part of the Golden Triangle, into town houses for young professionals. The police, however, rejected the arrangement citing inadequate parking spaces around the Jamintel building as well as security concerns in the downtown Kingston area.

The Jamaica Fire Brigade, which was in search of new headquarters, had expressed an interest in acquiring the building but that plan was also scrapped, as was a proposal to house the Traffic Court and Family Court in the building.

In 2008, the UDC acquired the building and later sold it to the Transport Authority which wanted to relocate its administrative operations from Maxfield Avenue.

In 2015, the Transport Authority received Cabinet approval to spend $370 million to renovate the building. However, it abandoned the plan following a review ordered by then Transport and Mining Minister, Mike Henry, which concluded it would not be the most cost-effective use of the agency’s resources.

Realtors Association of Jamaica president, Andrew James, asked about the estimated value of the building as it now stands, said it would require an assessment.

“We would have to do research to find out what properties in the area are being sold for and then do a comparative analysis or income approach to come up with a figure. So I wouldn’t be able to give any indication at this time until some research has been done,” he said.

The Auditor General’s Department’s most recent report touching on the Jamintel building was a performance audit on the Transport Authority in October 2017.

In that report, the Auditor General noted that the Transport Authority purchased major assets without adequate due diligence, which contributed to losses of $141 million in 2016/17, relative to $3 million in 2014/15.

The transport regulator purchased the building in 2014 to relocate its corporate office. In addition, the Transport Authority purchased five buses in 2016 costing $115 million for transporting inspectors to assigned locations. However, the agency subsequently indicated that those assets were not feasible for the intended purposes and was seeking to dispose of them.

The Auditor General reported that before the decision to purchase the Jamintel building, the Transport Authority estimated it would also need to spend $300 million on its renovation. The board approved the purchase in March 2013 and acquired the building in 2014.

But after the acquisition, the Transport Authority determined that the building was not suitable for the purpose for which it was purchased as it required extensive renovation in excess of the initial estimate. The agency also incurred additional cost of $17.2 million for security as at March 2017, the Auditor General said then.

The Auditor General, with reference to both the buses and the building, noted that Transport Authority may experience difficulty disposing of them in reasonable time without incurring greater losses.

“The lack of operational benefits from these investments underscored TA’s imprudence in its decision-making,” the report said.

mcpherse.thompson@gleanerjm.com