FINANCIAL Secretary Devon Rowe has dismissed the categorisation of the sale of the Oceana building by the Urban Development Corporation (UDC) to the Downing Street Group as a ‘sweetheart deal’.

At the same time, he insisted at yesterday’s meeting of the Public Administration and Appropriations Committee (PAAC) that, after 13 years of searching, the Accountant General’s Department (AGD) had no options left but to lease space at the Oceana.

Both the financial secretary and the UDC pointed out at yesterday’s sitting of the PAAC that the transactions were unrelated.

“The due diligence undertaken by the staff of the ministry gives me comfort that they attempted their best to ensure that we could relocate the Accountant General’s Department [and] put them in a safe place that allowed for the execution of their functions,” Rowe told the committee.

Finance Minister Audley Shaw, in his closing budget presentation, raised questions about the $385-million sale of the beleaguered 22,000-square-foot building at the Kingston waterfront, as well as the AGD’s lease agreement with Downing Street, which will see the Government spending close to $400 million to renovate and retrofit the floor which it will occupy.

“The AGD now sits in about 20,000 square feet [of office space] which is grossly inadequate for their needs. The thing that pushed us is that a 42-million-euro grant would have been affected, the fact that we were centralising the treasury (management system), and the fact that we had gone 13 years seeking somewhere to move. We were at a crossroads where a decision had to be made, and a decision was made. We were negotiating in the public, everybody knew that our backs were against the wall,” Rowe argued.

He stressed that after 13 years of “many failed “attempts to acquire a space this was the best arrangement that could be made under the circumstances. “… We had literally run out of time for the relocation of the Accountant General’s Department,” Rowe told the House committee.

The monthly rental cost for the premises is $7.5 million or $90 million per annum for 10 years. Rowe noted, however, that due to the renewal clause on the lease the AGD could very well be housed at the Oceana for up to 25 years.

According to the financial secretary, several delays related to making the building fit for inhabitance pushed back the occupancy timeline to September 2016.

Some committee members, however, raised concerns about the AGD taking up occupancy of a building which the Ministry of Health was forced to move out of due to an order issued by the Public Health Department.

UDC deputy general manager for finance, Donald Hamilton, explained that the deteriorating building had been valued at between $380 million and $400 million in 2011, and that by 2012, that valuation jumped to $1 billion. But before that he said the UDC had put the property on the market in 2008 and 2009, but got no offers. The National Health Fund agreed to purchase it for $350 million but the negotiations broke down when the entity could not come up with the funds.

The building was put up for sale again and four proposals were made, Hamilton said, explaining that the highest bidder ended up being the Downing Street Group. “We had an asset which the UDC at the time could not afford to renovate, and the board thought it best that we divest ourselves of this building,” he told the committee.

Eyebrows were raised when it emerged at the meeting that the lease of US$14 per square foot was pegged to the United States dollar. Committee members who were livid at the fact that the AGD had leased space which needed such extensive work, including putting in floors and ceiling, argued that the negotiators should have built into the deal an arrangement by which funds spent on renovation would be reimbursed by Downing Street.