The Tourism Ministry has distanced itself from the tendering process for the sale of the Institute of Tourism Studies, insisting the call was handled by Projects Malta.

Projects Malta is a government agency set up after the election to handle public-private partnerships.

Although ITS falls under the Tourism Ministry, a spokeswoman noted that the sale of the campus was entrusted to Projects Malta. She was replying to questions on the sale of the prime site in St George’s Bay, which has raised eyebrows in the tourism industry. The agency previously fell under the remit of former health and energy minister Konrad Mizzi, but since he became minister without portfolio two weeks ago, the agency was incorporated into the Office of the Prime Minister.

The Seabank Group, appearing under the name City Centre, was the only bidder in a call issued by Projects Malta last year for the sale of 25,000 square metres of public land at St George’s Bay. The call was open for five weeks and the tender document cost €10,000. The Sunday Times of Malta quoted sources close to Castille saying the Seabank offer was €6.5 million, a pittance for such a prime location.

Negotiations on the project are underway, to ensure the prices paid for the hotel, real estate and commercial components of the project are in line with market standards

The company is insisting its offer was much higher (see below) but, so far, has not disclosed the amount. Negotiations with the government are still ongoing.

Real estate experts told the newspaper the ITS site could be worth anything between €80 million and €100 million.

Sources close to the government said yesterday the news report last Sunday caused a lot of unease at Castille, which had been receiving reports from industry players of unfair competition as a result of Seabank’s “low” offer for the site.

Projects Malta has handled the privatisation of healthcare facilities at St Luke’s Hospital and the Gozo General Hospital in an arrangement expected to see the government buy beds from the private operator.

Industry sources said they could not understand how the ITS sale could be considered a public-private project when the only possible public aspect, the tourism school, was being shifted out of the site at the government’s expense.

The government is already committed to spending €50 million to build a new ITS campus at Smart City.

The land in St George’s Bay has not been transferred to the Seabank Group, and yet the company has already started accepting deposits from clients interested in apartments in the two high-rise towers forming part of the project.

In its reaction to Sunday’s new story, the government distanced itself from the prospective developer’s decision to start accepting deposits for residential dwellings. “Any such exercise is not sanctioned by the government,” it said.

A spokesman for the Office of the Prime Minister insisted negotiations on the project were under way, to ensure the prices paid for the hotel, real estate and commercial components of the project were in line with market standards.

“If a final agreement on the project is reached, the deal will have to get government approval in line with the request for tender and applicable laws,” the government said in a statement. In a second statement yesterday, the government insisted it was analysing the proposal and the process would be “open and transparent”. It added that the foreshore would remain public property and accessible.

ITS offer higher than €6.5 million, says Seabank Group

The Seabank Group says it offered “well in excess” of €6.5 million for the land where the Institute of Tourism Studies is situated.

In a statement reacting to independent MP Marlene Farrugia’s comments on the matter, the company did not disclose the sum it offered for the prime site but insisted it was “willing to negotiate up” from its offer.

Dr Farrugia was reported in this newspaper yesterday to have warned that the ITS sale was “a scandal in the making”. She said the price offer was a pittance and the sale of apartments even before negotiations with the government were over suggested the deal was predetermined.

But Seabank CEO Arthur Gauci said that Dr Farrugia’s comments were “wrong on many counts”.

“The figure of €6.5 million is blatant misinformation par excellence. More importantly, the terms of the call for tenders specifies that the offer has to be negotiated with the government and that is what we are engaged in,” Mr Gauci said.

He insisted the offer made by the company – which was not specified in the statement – was the going rate in the private sector for land in the vicinity of ITS.

“We are perfectly willing to negotiate up from the offer put in. All we ask is that the rate we pay is the same as that paid by other developers around our [sic] the ITS site. And we mean everyone,” Mr Gauci said.

Mr Gauci insisted the real estate component of the project amounted to only 20 per cent, with the rest being a destination incorporating a unique hotel, shopping and entertainment outlets.

“This could not be otherwise as the call for tenders pointedly specified that bids were to be considered only if they proposed an ‘upmarket mixed tourism and leisure project’. This is what was called for, and it is precisely what we submitted,” Mr Gauci said.

Mr Gauci expressed regret that Dr Farrugia had so far refused to meet the company to be given an explanation of the project.

In a statement yesterday, the Nationalist Party said it favoured development that strengthened the tourism potential of the St George’s Bay area but called on the government to ensure that the public interest was safeguarded.

It said public access to the foreshore should be guaranteed at all times, while the sale price should reflect the “real value of the land”.

“This is a crucial point to ensure the public interest is safeguarded,” the PN said, adding that the government should publish all the information related to the deal.

MDA CONCERN

The Malta Developers' Association in a statement said it was concerned about the process followed for the call for offers for the development of the ITS site in St George’s Bay.

"While the MDA declares that it is not against the project proposed by the Sea Bank Group, the MDA is concerned that there appear to have been shortcomings in the process for the tender call," it said.

"This tender, in fact, effectively resembled more a request for proposals (RFP) than a tender and there appears to have been confusion on this in the same tender document. The MDA expects that, when a tender of this nature is issued, the Government should prepare a Development Brief in advance so that everyone will know clearly what can be built on the specific site.

"The tender system should not be used when there is a call for proposals and ideas, as appears to have been the case."

The MDA also said  that the time allocated for the documents to be prepared and the details of the submissions given should be long enough to ensure that there is a level playing field between all those interested in embarking on a project of this size.

"This is also important so that transparency of the process is ensured. The MDA appeals to the Government to ensure that the process is just."

It said the government should establish a minimum price it is prepared to accept for public land. The MDA insists with the Government that the value of the land should reflect the commercial market price to safeguard the common good.