01042023 BUSINESS

business@tribunemedia.net

THURSDAY JANUARY 4, 2024

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Ex-BREA chief: ‘Middle class are not feeling this prosperity’

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A TWO-TIME Bahamas Real Estate Association (BREA) chief is urging banks to cut the down payment demanded from all home buyers to 5 percent, as he warned: “The middle class aren’t feeling this prosperity.”

Patrick Strachan, while hailing the Central Bank’s decision to eliminate the need for borrowers to take out mortgage indemnity insurance to qualify for a lower equity contribution, told Tribune Business that “something special needs to happen” if The Bahamas is to truly revive the middle class housing market and make it a key economic growth driver once again.

Asserting that much more is required, and that The Bahamas must be “creative and

t 6SHFT CBOLT UP DVU BMM IPNF CVZFS EPXO QBZNFOUT UP t 8BSOT ATPNFUIJOH TQFDJBM OFFEFE UP SFWJWF IPVTJOH NBSLFU t $BO UBML CPPNJOH UPVSJTN AVOUJM DSPXT DPNF UP SPPTU JG OPU GFMU aggressive to get the middle class moving again”, he added that the banking industry’s demand for clients to finance up to 30 percent of a property’s purchase from their own pocket was increasingly placing home ownership beyond the reach of many persons.

Mr Strachan, pointing out that a 15 percent down payment on a $300,000 home would require the purchaser to come up with $45,000

Chamber ‘carefully monitoring’ frustrations over DIR tax portal

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Chamber of Commerce’s chairman last night said it is “carefully monitoring” mounting private sector frustration caused by the struggle to access the Department of Inland Revenue’s online tax portal.

Timothy Ingraham, in a messaged response to Tribune Business inquiries, confirmed the Chamber had contacted the tax authority to find out when the problems will be resolved and is now awaiting a response after multiple businesses were unable to connect to the system yesterday.

“The Chamber is carefully monitoring the issues being experienced by persons attempting to complete their tax reporting on the new online tax system,” he said.

“We have contacted the Department of Inland Revenue to confirm the timeline for resolution of the issues being experienced and are awaiting a response from them.”

Noting that the Department of Inland Revenue is publishing guidance for businesses on social media outlets, the Chamber chairman pledged: “We will continue to monitor the situation and seek answers from the Department of Inland Revenue.”

The inability to log-in to accounts, and make tax payments; file returns and declarations; and conduct other inquiries has struck at a time when the Bahamian private sector is already anxious over the enhanced Business Licence verification reporting and requirement for firms with $5m turnover or greater to provide audited financial statements.

VAT returns and payments for December 2023 are due to be submitted within 14 days for larger companies, and 21 for others, while Business Licence filings and unaudited revenue numbers must be provided to the Department of Inland Revenue by end-January. All this means that the system woes, which appear to

SEE PAGE B5

themselves, told this newspaper that around 65-70 percent of prospective buyers in the middle class market segment he operates in are typically unable to afford this or qualify for mortgage financing.

With growing numbers effectively being excluded from home ownership, the former BREA president argued that despite all the talk surrounding record tourist arrivals numbers “there is no trickle down” and

the impact is not sufficiently impacting enough Bahamians “in their pocket” and standard of living.

And, suggesting that the Davis administration will “have its work cut out in 2024,” Mr Strachan said too many Bahamians will still “feel the pressure” from the high food and energy prices that have raised the cost of living as he warned: “Until the middle class feels it, you ask yourself how good it really is.”

While branding the Central Bank’s mortgage indemnity insurance relaxation as “a positive move” and a step “in the right direction”, he nevertheless added: “I also believe something special needs to happen for the middle class market to get moving again.

“I believe the [home buyer] down payment requirement ought to be relaxed to 5 percent

SEE PAGE B4

Developer ‘not having party yet’ over mortgage easing

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A MAJOR Bahamian residential housing developer yesterday disclosed it is “not having a party yet” over the Central Bank’s decision to relax mortgage lending stipulations.

Franon Wilson, Arawak Homes president, told Tribune Business he is in “wait and see” mode over how the commercial banks, credit unions and other formal lenders respond to the regulator’s move to eliminate the need for borrowers to take out mortgage indemnity insurance to qualify for a down payment of less than 15 percent.

Noting that institutions have to strike “a balance” between growing their assets, profits and loan portfolio, while at the same time securing depositor and shareholder monies,

FRANON WILSON he added that some lenders are “only just getting back into the mortgage space” following the surge in delinquencies in the aftermath of the 2008-2009 financial crisis.

“Anything that reduces the cost of home ownership or the amount of money you need to come up with is a great thing,” Mr Wilson told this newspaper of the Central Bank’s action. “But to be honest with you I’m

MELIA NASSAU BEACH RESORT

Melia middle managers’ dismissal claim survives t A4P KVTUJDF JT EPOF BOE TFFO UP CF EPOF t 5SJCVOBM BMMPXT VOJPO UP KPJO PUIFS QBSUJFT t FY TUBGG 5FSNJOBUJPO AXSPOHGVM VOGBJS

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

waiting to see the position the banks take because it’s their depositors’ money that they’re lending.

“I’m sure there’s a process they have to go through. Boards and credit committees have to meet.

Once those meetings happen, hopefully we’ll some changes. Hopefully there are changes, and hopefully the changes have the intended effect.

“Right now I’m holding back excitement.

Banks and credit unions are responsible for other people’s monies, and they have to ensure people are able to pay back and the bank continues to grow.

It’s a balance. They want to make sure more people own their home but have to be careful they don’t end up with a lot of delinquent loans,” the Arawak Homes chief added.

A WRONGFUL dismissal claim by 50 middle managers at the former Melia Nassau Beach Resort has been permitted to survive “so that justice may not only be done but be seen to be done”.

Rionda Godet, the Industrial Tribunal’s vice-president, in a December 27, 2023, verdict has allowed the Bahamas Hotel and Managerial Association (BHMA) and its attorney, Obie Ferguson KC, to apply to join the correct defendant(s) to their employment dispute.

Disclosing that she was “not so inclined to dismiss the [union’s] claim just yet”, the Tribunal vice-president gave the BHMA and Mr Ferguson, also the Trades Union Congress (TUC) president, until tomorrow to present the necessary application and inform all impacted parties by January 10, 2024.

Ms Godet’s ruling emerged after the Bahamian attorneys for the original defendant named in the BHMA’s action, Perfect Luck Employer (No.1) Ltd, informed the Industrial Tribunal that the firm was struck-off the Companies Registry and dissolved on June 21, 2021.

As a result, representatives from Harry B Sands, Lobosky & Company - while

SEE PAGE B6

SEE PAGE B4

Central Bank ease ‘won’t open mortgage avenue’

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE CENTRAL Bank’s recently-unveiled regulatory easing is unlikely to “open up a new avenue of mortgages” being issued to Bahamian home buyers, a senior banker said yesterday.

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told Tribune Business that eliminating the need for borrowers to take out mortgage indemnity

GOWON BOWE

insurance to qualify for a lower down payment will likely only help a very small market niche.

He added that the Central Bank’s move was “really just linking the commercial realities to their regulatory framework” as mortgage indemnity insurance had not proven to be a valuable tool in protecting the industry against the risk of borrower default.

This, Mr Bowe explained, was because most mortgage holders typically defaulted when the loan-to-value (LTV)

ratio was around 80 percent.

At this point, mortgage indemnity insurance - which is used to “get over the hump” between an 85-95 percent LTV - is effectively “null and void”.

“Candidly speaking, I think the action by the Central Bank is more about aligning the commercial realities with their risk management strategies,” the Fidelity chief told this newspaper. “They had raised the question with their regulated entities as to whether mortgage

SEE PAGE B5

PAGE 2, Thursday, January 4, 2024

THE TRIBUNE

MAKE STAFF HAPPIER FOR 2024 BUSINESS BOOST O

ne year has ended and another is here. This opens up many opportunities to evolve and grow your business. Whatever type of company you are managing, you are probably busy thinking about some exciting objectives. But, while you are thinking about statistics and expected outcomes, do not forget about the most essential goal of any flourishing business: Your employees and

their satisfaction. Are they happy?

Making employees happier in 2024 is the goal. Real action in this area not only helps to combat uncertainty but also introduces stability to a new business year.

Here are a few New Year’s resolution ideas for happier employees, which will contribute to a more productive business.

Streamline Processes

If there is one thing employees dread about their work, it is complex workflows that take up an unnecessary amount of time and effort. It becomes taxing for employees to submit tons of paperwork and hunt down supervisors for signatures simply to get a work trip approved. This process can surely be simplified. For example, if your current training programme is tedious and ineffective, upgrade to an online

platform that will make learning more interactive.

Encourage Autonomy Setting clear goals and objectives definitely helps your staff organise their daily tasks and to be more efficient. However, it is important to remember that employees require a certain degree of freedom to introduce their own ideas. As long as they are aware of their responsibilities and the overarching objectives of the business, they are inclined to make the right decisions. Moreover, steering clear from micromanagement offers more time to manage essential tasks while boosting employee happiness and productivity.

Emphasis on Recognition Studies show that employees who feel valued are more engaged, hardworking, motivated and, most importantly, happy.

Highlight employees who go above and beyond.

Showcase innovative ideas that represent your company values, and let staff know their efforts are noticed. Alternating periodically with bonuses, small gifts or non-work-related activities is a great gesture.

Promote Flexibility In many cases, customised work hours or the ability to work remotely

are even more desirable than a pay rise, as employees feel they can achieve greater productivity and work-life balance. If remote working is not an option in your company, there are other flexible options such as choosing your start and stop times, a four-day week or an increase in paid time off.

Build a Culture Communication

of

Satisfied employees are workers who are supported, valued and heard. Set up weekly or monthly one-onone meetings with staff to create a space where they can voice ideas, concerns and questions, and encourage feedback on office issues that affect them.

Support Professional Development Stagnation is one of the main causes of employee dissatisfaction.

Investing in your employees’ professional development is of utmost importance to avoid high turnover rates. Start by identifying their professional goals and the skills needed to develop and achieve them. Remember to always align employee objectives and training with corporate goals so that your efforts make a positive impact on the company’s success.

A dissatisfied employee will not help your business.

By

DEIDRE

BASTIAN Appreciate their accomplishments, as they are the people who have partnered with you and contributed to your business growth each year. They will love you for it. Until we meet again, fill your life with memories rather than regrets. Enjoy life and stay on top of your game.

UÊ NB: Columnist welcomes feedback at deedee21bastian@gmail.com About the Columnist: Deidre M. Bastian is a professionally-trained graphic designer/brand marketing analyst, international awardwinning author and certified life coach.

Rosewood Baha Mar gains head sommelier BAHA Mar’s Rosewood property yesterday announced the appointment of Brendan Steenhuisen, who has 23 years’ experience in the beverage industry, as head sommelier.

The resort, in a statement, said he will service all Rosewood Baha Mar dining outlets with the goal of building the best wine cellar in the Caribbean. His current role includes curating unique wine selections for each dining venue; training staff to bolster their wine service and knowledge; designing experiences; and serving as a professional guide to guests.

“I hope to be the bridge between the winemakers and grape growers to Rosewood Baha Mar’s guests, and leave them with a deeper understanding that wine is food, and it is alive with flavour and distinction,” Mr Steenhuisen said. “We eat to nourish our bodies, but dining is to feed the soul. My favourite

BRENDAN STEENHUISEN moments in life are when I’m surrounded by the people I love, enjoying great food and drinks.”

“We are delighted to welcome Brendan to our esteemed team here at Rosewood Baha Mar,” said Monica Ortiz, its managing director. “His fervency for fostering connections between individuals and wine is incomparable, as he prioritises delivering exceptional service through continuous learning and an appreciation for the art.

We look forward to bringing his wealth of expertise to guests and are excited to witness his growth within the Bahamian landscape.”

The most formative experience in Mr Steenhuisen’s career was working with a Maitre D named Frenchie at John Fortes Seafood & Chop House in Vancouver.

“People will forget what you said, people will forget what you did, but they will always remember how you made them feel,” added Mr Steenhuisen.

Besides serving as a sommelier, Mr Steenhuisen designed and patented the Aperio Wine Port Tongs, a wine-opening device that provides an obscure way of opening bottles by creating a clean break on the bottle’s neck. “The best is yet to come,” he said of his Rosewood Baha Mar position.

THE TRIBUNE

Thursday, January 4, 2024, PAGE 3

GOV’T TARGETS FIRST QUARTER FOR DOWNTOWN NASSAU BILL

By FAY SIMMONS Tribune Business Reporter jsimmons@tribunemedia.net THE Government is aiming to have legislation governing how downtown Nassau will be managed “fully completed” within the 2024 first quarter, it was revealed yesterday.

Senator Randy Rolle, the Ministry of Tourism, Investments and Aviation’s global relations consultant, and who is spearheading the Government’s efforts to revive Bay Street and the surrounding area, said the first draft of the Downtown City Management Bill has

been sent out by the Attorney General’s Office.

He added that the proposed legislation, which is currently under review by the Ministry of Tourism, Investments and Aviation, will give the Government more teeth in its restoration efforts and speaks to the management, requirements and functionality of Bay Street and wider downtown area.

“We have the first draft of the bill from the Attorney General’s Office, and our stakeholders and executives within the Ministry are reviewing and making our assessments on it. We are going to send it back to the Attorney General. That

is something that we hope to have fully completed within the first quarter,” Mr Rolle said.

“It speaks to a lot of the management aspect of how it will work, and what will be required and how it will function, so it’s a very detailed Bill.” Mr Rolle said downtown Nassau stakeholders are being kept updated on the restoration efforts and will be included in a Town Hall meeting prior to the Bill being finalised.

He added: “We continue to update them on a daily basis on initiatives. We have a very active What’s App group and they will be consulted along the way.

Once we have it to a stage we’re going to have a town meeting and we’re going to get their input, whether it’s done through tourism or it’s done through the Attorney General’s Office, the Government will make sure that they’re relevant.”

Mr Rolle said progress is also being made on the pedestrianisation of Market Slope and Charlotte Street, which will be sent to the Cabinet for approval.

He added: “We are also at the final stages of getting some papers, which the minister will discuss with his Cabinet colleagues as it relates to the pedestrianisation of Market Slope and Charlotte Street.

That’s something else that we have been working on and believe will be of great benefit to the upgrade of downtown.”

Chester Cooper, deputy prime minister, who is also the minister of tourism, investments and aviation, said there are plans to strengthen the tourism product through the Tourism Development Corporation and restoration of Bay Street.

“So for 2024, in addition to our work on Bay Street, in addition to our work on developing our product, we’re going to continue to enhance linkages working through the Tourism

Development Corporation,” Mr Cooper added.

“We’re going to be doing some exciting things.

Through the Tourism Development Corporation, we’ll be working actively with product development.

Our work in revitalising Bay Street, which is the heart and soul of much of our tourism product, will continue.

“We’ve started great work in terms of the demolitions in terms of creating new products, in terms of bringing Goombay back to Bay Street, as well as other festivals. This work is going to continue.”

RESTAURANT HOSTS RESTAURANT PLEDGES TO SHOWCASE LOCAL TALENT MURDER MYSTERYTHEMED DINNER

By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net

By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net AN expanding highend restaurant yesterday unveiled more entertainment with its dining options through the ‘Jazz to Kill’ murder mystery-themed dinner.

Precious FortuneThompson, chairman of the Foreign Xscape Group of Restaurants, owner of Prime One Seafood and Steakhouse, said the latter will offer patrons a murder mystery play during their three-course dinner.

The play, ‘Jazz to Kill’, will begin on January 28 and be offered up to four times a week through to March 2024. Then another themed dinner will be offered. Ms Fortune-Thompson said: “Once the show starts, this team has about 17 sets in their series that are going to run on Sundays, Wednesdays, some Thursdays and some Fridays.

“When we say 3 Course Murder, it’s definitely the best of the best meal you are going to enjoy. There will also be some mini series that includes a lighter food option, which will be just as fun. A lot of times we’re saying that there’s nothing available and Bahamians are not out there showcasing their talents, but here is another opportunity that people can add to their calendar.”

Prime One is a fullyowned Bahamian restaurant, and the entire cast is local, offering a unique dining experience for patrons to enjoy. The series of plays will be open

to Bahamians and tourists, and be marketed to tour operators. Websites that prospective tourists frequent have been engaged leading up to the January 28 opening.

Raquel Rolle, organiser of 3 Course Murder, said: “We came up with this concept last year. We were part of the Royal Caribbean boot camp with the Access Accelerator, and we were awarded an opportunity to pitch this concept to them, this tourism-based business, during that eight weeks boot camp.

“During this boot camp we were given the tools needed to prepare for this business. Along with my cast, we pitched the video concept to them and we were shortlisted to do the in-person pitch. In the in-person pitch, the cast and I were dressed, and we pitched the 3 Course Murder under the theme ‘Jazz to Kill’, and we were successful in winning the third place recipient grants with the Access Accelerator and Royal Caribbean.

“It’s going to be an infusing of three-course dinner with the show. So I’ve always been a playwright in The Bahamas and have been writing plays now for about ten years, so I saw there was an opportunity to do a show with a dinner.

People are always looking for something to do, or always eating. So why not infuse the two.”

The show will be set in the dining area of Prime One, and will allow patrons to become interactive with the play as well by offering them a part in the mystery drama as they dine.

A WESTERN New Providence restaurant is pledging to stage more events for patrons as it gets set to celebrate its first-year anniversary next month.

Precious FortuneThompson, chairman of Foreign Xscape Group of Restaurants, owner of the Prime One Seafood and Steakhouse eatery, told Tribune Business: “We wanted to bring a new edge steakhouse to the western district of New Providence.

We don’t have a lot of Bahamian-owned restaurants and so we are very proud of that.

“One is a milestone and this is just the beginning. We have a lot of new events, shows and a lot of entertainment coming up for this entire year.” These events will be targeted at Bahamian talents who have lacked an outlet to showcase their talents. “We are proud to be able to support a lot of young people, men and women, and just Bahamians in general who need that extra push,” Ms Fortune-Thompson said.

Prime One is a “postpandemic” business and

is said to be growing significantly. Ms FortuneThompson added: “In any business things start off slow, but we’ve really been growing tremendously since last summer now that everybody is getting back into the swing of things.

“We’re seeing a lot of tourists come in because it is in close proximity to the airport. We recently went from being open to dinner to now being open for lunch and also to brunch on Sunday, and that has also increased the uptick of visitors to our restaurant.”

Located on Windsor Field Road, the site has worked out for Prime One

because it has been able to set itself apart from other high-end restaurants that are largely based in the tourist areas. “If everybody is downtown then you need to put some persons out west or east,” she said.

Ms Fortune-Thompson added: “If you look at the Plaza One West you would see there are a lot of developments that are happening right now and, by the end of this year, this is going to be a massive shopping centre.

There will be lots for Bahamians to do and having the restaurant here is perfect.”

BAHAMAS SET TO FOCUS ON CRUISE TOURISM CONVERSION

By FAY SIMMONS Tribune Business Reporter jsimmons@tribunemedia.net THE Bahamas will make “deliberate and intentional” efforts to convert more cruise passengers to higher spending and higheryielding stopover visitors, the deputy prime minster has pledged.

Chester Cooper, also minister of tourism, investments and aviation, said an important step towards achieving this goal will be increasing the amount of available hotel rooms in the country.

CHESTER COOPER

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He added: “We are receiving a large number of our guests by cruise. And therefore we are going to have a deliberate and intentional effort to see how we might convert more of those cruise arrivals to stopover arrivals.

“Stopover visitors spend more than cruise visitors,

and therefore it is important that we put in place many of the pieces to ensure that this growth continues. It is important for us to expand the number of hotel rooms we have available if we are going to expand our stopover arrivals.”

Mr Cooper added that the Government is

launching a guest-hosting initiative to increase the number of available rooms and get more Bahamians involved in the vacation rental industry.

He said: “Sustaining the level of growth that we saw in 2023 is really going to be

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PAGE 4, Thursday, January 4, 2024

THE TRIBUNE

Ex-BREA chief: ‘Middle class are not feeling this prosperity’ $24,000 to $30,000 in closing fees.”

Besides the down payment, the other closing costs include attorney fees, which are typically set at 2.5 percent of the purchase price. Then there is the real estate broker’s 6 percent commission, which is sometimes split equally between buyer and vendor, and the 10 percent VAT on the sale which is also frequently shared 50/50.

When all added together, at best this will see the purchaser of a $300,000 home having to come up with another 10.5 percent or $31,500 in closing costs which, when added to a 15 down payment, totals $76,500 unless they are able to qualify for the firsttime buyers’ exemption and therefore do not have to pay VAT. These costs, when combined with the low savings, job insecurity and high level of consumer loan indebtedness that many Bahamians have, create formidable barriers to home ownership affordability. Matt Sweeting, fellow realtor and chief executive at 1oak Bahamas, told Tribune Business he estimates around a quarter of the residential property deals he lines up

fail to buyer struggles with financing.

“I’d say 25 percent of deals fall through due to financing,” he said. “What quite often happens is that you get pre-approved by the bank, and based on the information provided it says things are looking good but, when you get down to the nitty gritty - providing title search requests, research reports and other requirements for the mortgage, we’re seeing quite a number of deals fall through.

“The percentage is even higher for self-employed persons with the additional requirement of having to provide three years’ worth of audited financial statements. It’s 40 percent for self-employed, 25 percent for the employed.”

Mr Strachan said even professional Bahamians are feeling the pinch. “I was talking to an accountant, and he and his wife are having challenges even though they have two decent salaries,” he told Tribune Business.

“The high-end real estate market is doing very well.

These are folks with cash on hand or don’t have challenges with financing. When it comes to the middle class market that keeps

the economy going, that’s where the challenge comes in.

“The middle class is going to continue to feel the pressure of inflation, high food prices and the cost of gasoline, and hundreds of people will be unable to afford their own home because of high closing fees and high down payments,” the ex-BREA president continued.

“I don’t foresee anything on the horizon changing for the middle class market.

It’s just a fact. I don’t see anything new. I see a lot of announced developments, but how long is it going to take to put blocks in the ground? How long is it going to take for the money to trickle down?

“Are people feeling the activity in the economy and money in their pocket? It was a challenge in 2023, and it will be a challenge in 2024. I see the Government having it’s work cut out for them in 2024. It’s going to be a challenge for them and we’ll see what happens. Having said that, I’m optimistic. If we keep our shoulder to the wheel and keep pushing forward, positive things will happen for the good of all of us.”

Melia middle managers’ dismissal claim survives

present as a ‘friend of the court’ because she had no instructions to act for Perfect Luck.

Mr Rolle alleged that Mr Ferguson, in his capacity as BHMA president, had been ignored by the Melia and its owner when he asked for the date and details on the members’ termination as a result of the 694-room property’s March 1 closure.

“He asserted that all of the affected employees were members of the BHMA who had not received the proper redundancy payments,” Ms Godet said of Mr Rolle’s arguments. “As regards the dissolution of the respondent company, his recall was that the matter was formally raised before the respondent was struck off.

“Therefore, the matter was still ‘live’ and there was some purported agreement or understanding to this effect between the parties.” Mrs Hanna, in response, said the BHMA lacked standing given that it involved persons made redundant in 2021.

She added that the dispute was really between an employer and individual employees, thus bringing it under the remit of the Employment Act, rather than one involving a union and the Industrial Relations Act. “As such this was a class action suit brought by the union and not the employees themselves,” Ms Godet said of her arguments.

“In effect, Mrs Hanna expressed the technical challenge of the Tribunal hearing a matter that the employees themselves did not bring for personal damages and, in any event, given that the respondent was struck off the register it could not appear for itself or give instructions.

“She maintained that as touching as the substantive matter and the claims made

for redundancy pay and fees, all of the employees were, in fact, paid in accordance with the Employment Act and their attorney, Mr Ferguson, received letters to this effect two weeks in advance of the redundancy exercise taking place due to the closure of the hotel, so he would have been fully aware.”

Ms Godet, in her decision, said that even if Perfect Luck was dissolved eight days before the Department of Labour “conciliation” meeting with the BHMA on June 29, 2021, the cause of action arose before this occurred because the “report of a trade dispute” was dated May 27, 2021.

And the BHMA had also alleged Perfect Luck attended the June 29 hearing, although in what capacity was not clear. Ms Godet said this would have represented its acknowledgement of the union’s claim, and she also pointed to the Companies Act’s section 272 which states that a company’s liabilities continue and can be enforced even if it is dissolved.

Given these circumstances, the Industrial Tribunal granted the BHMA’s application to add additional parties as respondents. “That is precisely what we will be doing immediately,” Mr Ferguson told Tribune Business given the January 5, 2024, deadline to file with the Industrial Tribunal. “I think the claim ought to survive because it’s in compliance with the law.

“Where I think the error was made was that Perfect Luck never informed the union, the BHMA, that Perfect Luck was no longer the owner. Perfect Luck went to the Labour Board, conciliated before the Labour Board, but never told the union it did not exist by law.”

FROM PAGE B1 to get the middle class moving again. I think the down payment needs to go to 5 percent. I think 15 percent will be a challenge for a lot of people; even coming up with 10 percent.

“The economy may be in good shape for some people, but the middle class is feeling a lot of pressure.

There is no trickle down that I’ve come across. We are bragging about 8-9m tourists, but how many of them are coming on cruise ships?” Mr Strachan asked.

“The middle class man and woman are not feeling all this prosperity being pronounced. Until they feel it..... I recommend that banks finance mortgages at 5 percent down. In the US, you can get a mortgage with zero percent.

“We need to do something special, creative and aggressive to get the middle class moving again.... We can talk until the crows come back to roost about how good the economy is doing. Until the middle class is feeling it you ask yourself how good it’s really doing.”

Bahamian commercial banks, credit unions and other mortgage lenders will

FROM PAGE B1 not acting for Perfect Luck - subsequently argued that it was no longer “a legal entity”, while also asserting

almost certainly not apply a 5 percent down payment requirement across-theboard, although so-called ‘blue chip’ borrowers may be able to qualify for such a minimal equity contribution if they are perceived as being low default risks.

The Central Bank’s easing of the mortgage indemnity insurance requirement reiterated that its bank licensees have the ability to set down payment and other requirements on a case-by-case basis, based on their assessment of each borrower’s risk, but warned that they should not breach the 50 percent debt-toincome ratio.

Mr Strachan’s comments are likely to resonate given that middle class and lower income Bahamians have increasingly been squeezed in the 15 years following the 2008-2009 financial crisis by relatively stagnant incomes and earnings that have failed to keep pace with an ever-rising cost of living fuelled by food and energy inflation, other commodity and expense hikes, and tax and fee increases.

Chester Cooper, deputy prime minister and minister of tourism, investment and aviation, recently predicted that The Bahamas will have

that the BHMA had no standing to bring what they termed “a class action suit” as the purported dispute was not with the union and instead involved its

attracted “well in excess of nine million visitors” during 2023, but the impact of their $6bn collective spending and where this has been felt - has yet to be broken down amid concerns that this has yet to sufficiently touch all participants in the economy.

Pointing to the obstacles that many Bahamians face in qualifying for mortgage financing, Mr Strachan said: “I’ve spoken to loan officers. I have taken prospects to see properties and, in some cases, banks have asked for 30 percent down. Where in the world are people going to come up with 30 percent down for a $250,000 or $300,000 property?

“I would encourage the banks to go as little as 5 percent down. At 5 percent down, that will enable more persons to qualify and pursue their dreams of owning their own home.

The market I work in, I would say 65-70 percent of buyers are unable to qualify.

“Imagine that you want to purchase a home for $300,000. The bank is telling you you have to come up with 15 percent. That’s $45,000 plus an additional 8-10 percent in closing costs. That’s an additional

members as individual employees.

The battle, a legacy issue stemming from the decision by Baha Mar’s owner, Chow Tai Fook Enterprises

TEMPLE CHRISTIAN SCHOOL

ENTRANCE EXAMINATION 2024-2025 On Saturday, January 13, 2024, Temple Christian School will hold its Entrance Examination for students entering grades 7,8,9 and 10.

TIME: 9:00 a.m. to 12:00 p.m.

LOCATION: High School Campus, Shirley Street Application forms are available at the High School Office and should be completed and returned to the school by Friday, January 12, 2024. The application fee is twenty-five dollars ($25).

For further information, please call telephone number: 394-4481/394-4484.

(Bahamas), to close the Melia on March 1, 2021, was referred to the Industrial Tribunal on July 23 that same year with the BHMA alleging “wrongful and unfair dismissal” on behalf of its members. It is also claiming that the severance pay they received was incorrect.

Perfect Luck Employer (No.1) Ltd, which was a vehicle created to bring Baha Mar out of bankruptcy and facilitate its sale by the China Export-Import Bank to Chow Tai Fook Enterprises (CTFE), was named as the respondent.

However, Harry B Sands, Lobosky & Company, in an October 12, 2021, note to the Industrial Tribunal, said it had informed Tanya Sherman, deputy director at the Department of Labour, that Perfect Luck “had been dissolved and struck off the Register of Companies” on June 21 that year. As a result, it no longer had the authority to represent Perfect Luck as the company had been dissolved.

Eventually, the two sides appeared before the Industrial Tribunal on September 12, 2023. Ednel Rolle appeared for the BHMA, while Lakeisha Hanna of Harry B Sands, Lobosky & Company was

CALL 502-2394 TO ADVERTISE TODAY! LEGAL NOTICE

NOTICE Pursuant to the Provisions of Section 138 (8) of the International Business Companies Act, 2000, (As Amended) NOTICE is hereby given that KRASSALA INCORPORATED has been dissolved and that the name has been struck from the Register of Companies with effect from the 28th of November, 2023.

ENERVO ADMINISTRATION LIMITED Montague Sterling Centre East Bay Street P.O. Box N-3924 Nassau, The Bahamas

THE TRIBUNE

Thursday, January 4, 2024, PAGE 5

Chamber ‘carefully monitoring’ frustrations over DIR tax portal FROM PAGE B1 have stemmed from a recent upgrade, have struck at the worst possible time.

Tribune Business was pointed in the direction of Dexter Fernander, the Department of Inland Revenue’s operations chief, for comment but the number provided for him rang out multiple times and he could not be reached.

Businesses did receive an e-mail from the Department of Inland Revenue yesterday announcing the release of the updated platform, and notifying them that their user accounts and tax information were successfully migrated.

They were provided with a link, and instructed to

activate their user accounts and set a new password.

However, some users complained of not being sent an e-mail or receiving error messages when entering information.

Kendrick Christie, president of the Association of Certified Fraud Examiners Bahamas Chapter and a Crowe (Bahamas) partner, told Tribune Business he was aware of the “growing pains” with the online tax administration portal following the recent upgrade.

“There seems to have been an upgrade to the Department of Inland Revenue site, the tax portal,” Mr Christie said. “I’m in this group of Bahamas Institute of Chartered Accountant (BICA)

members and it seems like with this upgrade there’s growing pains.

“Some persons are not able to get into the portal, some are not able to receive their e-mails. I saw that in some cases the e-mails went to the person’s spam folder.

It’s a mixed result. It’s good that they’re upgrading, but it causes angst for users, clients and accountants. It’s not a normal year.

“We know persons are calling the Department of Inland Revenue, and in some cases it seems like it’s resolved and in some cases it takes some time to resolve. I hope they put sufficient resources behind it, and there may need to be some consideration for timelines” with VAT filing

deadlines for larger companies with turnover in excess of $5m just ten days away.

Mr Christie also suggested that the Department of Inland Revenue’s customer service capabilities needed to be strengthened via the creation of online agents and chat features, with technical teams “on hand for several weeks so they can answer questions for these users.

One accountant, speaking on condition of anonymity, added: “I had a meeting with a prospective client today and they told me they couldn’t get on since the 25th [of December]. I followed up with my team, and was told it is still down and will be up tomorrow. You go to log-in for

CENTRAL BANK EASE ‘WON’T OPEN MORTGAGE AVENUE’ FROM PAGE B1 indemnity insurance was really a valuable instrument to the industry.

“The statistics and empirical evidence demonstrate that most financial institutions will not lend where they expect an instant default... The mortgage indemnity, unfortunate to say, was really a premium generating exercise for the insurers because the level of claims and payouts related to it were almost nil.”

Mr Bowe said mortgage indemnity insurance also “served as a greater barrier than people appreciated as customers had to come up with the premiums.

It’s almost like swapping the down payment for the premium and it would be added on to the loan. In most cases, most institutions wanted the premium paid in advance of the loan”.

Describing it as “a wellmeaning instrument”, he added that ultimately represented little value to commercial banks and other formal lenders. “In the current environment, the greatest driving factor is free cash flow and the ability to meet loan payments,” Mr Bowe said of the key determinants that will decide whether Bahamians qualify for residential mortgages.

Prospects of continued cash flow, and the industry the borrower works in, are also taken into consideration along with the debt-to-income (debt service) ratio given the likelihood borrowers already have existing personal and consumer loans.

Mr Bowe described loan collateral/security as “a credit enhancer” rather than something that will result in “very favourable underwriting decisions” given the difficulties all banks encountered in realising delinquent assets and offloading them quickly in the aftermath of the 20082009 financial crisis.

Without mortgage indemnity insurance, residential home buyers had to come up with 15 percent or more of the total purchase price from their own pocket. The Central Bank has also given the Bahamian commercial banking industry the go-ahead to assess the risk posed by individual mortgage borrowers on a case-by-case basis, thus providing more flexibility on the down payment demanded from home buyers.

The Central Bank, in unveiling the mortgage easing, warned, though, that the 50 percent debtto-income lending ceiling limit still applies for borrowers. “The Central Bank of The Bahamas is relaxing the guidelines for domestic banks and credit unions on the minimum equity injection requirement for residential mortgages,” it said.

“While this is not anticipated to have a significant impact on personal lending, it should reduce the cost burden for suitably qualified borrowers and allow some additional individuals to qualify for credit. With immediate effect, the mortgage indemnity insurance is removed from the Central Bank’s stipulation for borrowers to qualify for a reduced equity or down payment amount on residential mortgages.

“In the absence of the insurance, the minimum down payment for such mortgages was 15 percent.

Moreover, in line with the Central Bank’s relaxed rules for other personal lending, issued in August 2022, financial institutions may also vary or set lower down payment requirements for residential mortgages, in line with their internal frameworks for assessing and managing individual borrower risks.

“However, lending institutions are directed to observe that personal lending is still subject to the borrower’s total debt service ratio remaining within a prudent limit of 50 percent,” the Central Bank added.

“The exceptions are debt restructurings and/or consolidations for borrowers who are already indebted beyond this threshold, and for whom outstanding obligations are not increased as a result of the restructuring and/ or consolidations.

“Lending institutions are also directed to

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NOTICE INTERNATIONAL BUSINESS COMPANIES ACT, 2000

BLUE ALPS FUND LIMITED (IN VOLUNTARY LIQUIDATION)

NOTICE IS HEREBY GIVEN that in accordance with section 138(4) of the International Business Companies Act, 2000, as amended, BLUE ALPS FUND LIMITED is in dissolution.

The dissolution of the said Company commenced on December 21, 2023 when the Articles of Dissolution were submitted to and registered with the Registrar General in Nassau, The Bahamas.

The Sole Liquidator of the said Company is L. Michael Dean of Equity Trust House, Caves Village, West Bay Street, P O Box N 10697, Nassau, Bahamas.

L. Michael Dean Sole Liquidator

exercise continued prudence around the amount of credit extended as a percentage of the appraised

valuation of the real estate, or the resulting loan-tovalue (LTV) ratio. The LTV ratio also determines the

my firm, and all of a sudden our clients are popping up in the file when we should only be seeing our firm.”

A business owner voiced complaints about the timing of the system upgrade, and questioned whether the Department of Inland Revenue could handle the large volume of users that logged on to the platform.

She said: “This is crazy.

I don’t know what’s going on, or if they can handle the crowd or the load. We logged in and changed the password, and tried to put in the user ID, but it kept giving an error. So I decided to call instead of getting locked out of the account, and I had to make multiple calls because the wait was like ten minutes.

“When I finally got through and told them what I needed assistance with, they told me the system was down. I asked when it would be back up and they told me to try again later this afternoon or in the morning.” She added that this is the first time in the 26 years her business has been operating that the process has been so frustrating.

She said: “I’m waiting to pay the Government their money. Y’all don’t want y’all money? Why would they do that now? I’ve never had this issue. This is Business Licence time, its time to renew Business Licences and it’s time to pay VAT. Why change the platform now?”

risk-weighted treatment for mortgages when estimating banks’ capital adequacy.

“In particular, in accordance with The Bahamas capital regulations 2022, residential real estate exposures are weighted at either

25 percent, 50 percent or 100 percent, respectively, according to whether the LTV is less than or equal to 60 percent, between 60 and 80 percent, or exceeds 80 percent.”

PAGE 6, Thursday, January 4, 2024

THE TRIBUNE

DEVELOPER ‘NOT HAVING PARTY YET’ OVER MORTGAGE EASING FROM PAGE B1 “Hopefully we will see some changes sooner rather than later. We’re not having a party yet. Right now this is still wait and see. Coming out of 2008-2009, some banks are just getting bank into the mortgage space.

There’s some serious conversations that no doubt have to take place so that they lend for mortgages but under no circumstances increase their delinquent portfolio.”

Mr Wilson pointed to Bank of The Bahamas’ recent opening of a dedicated mortgage centre as “further proof that it is not only back in this space but going heavily in this space”.

He added that all commercial banks “don’t want to get bitten again” so are taking their time to ease

back into residential home lending and ensure borrowers are minimal risk and fully qualified.

The Central Bank adjustments come after mortgage loan approvals have slumped to their lowest level in four-and-ahalf years, with almost one in four applications rejected because borrowers have a 50 percent debt service ratio.

Its full Lending Conditions Survey for the 2023 first half revealed that less than one third - or fewer than one of every three - out of a total 1,104 applicants were approved for a mortgage loan during the six months to end-June.

And survey data showed that the 32.2 percent approval ratio is the lowest since the 2019 first half,

which represented a period prior to both Hurricane Dorian and the COVID-19 pandemic. The 52.6 percent and 52.7 percent mortgage approvals ratio for the 2019 first and second half, respectively, represent the high points of the past fourand-a-half years.

The approval rate slumped in the 2021 calendar second half, dropping from 51.5 percent for the first six months to 39.4 percent and continuing a steady downward slide ever since. While the economic

fall-out from COVID is likely to be held at least partially responsible, the Central Bank has since relaxed its lending guidelines by allowing its bank licensees to extend credit worth up to 50 percent of a borrower’s income.

Previous guidelines have set this limit at 40-45 percent, but the regulator’s lending survey reveals that the reason more than onethird - or one in every three - of mortgage loan applications was rejected during the 2023 first half was

because potential borrowers were still breaching the more generous 50 percent debt service ratio.

Using the Central Bank’s statistics, just 356 of the total 1,104 mortgage applications submitted during the 2023 first half were approved by its commercial bank licensees. This means that two-thirds, or 748, were rejected. Of that 748, some 33.6 percent or 251 were declined because the applicants’ debt service ratios would breach the 50 percent benchmark.

This would mean more than half their income would be going to servicing debt, placing their finances under stress especially if something went wrong.

That 251 is equivalent to 22.7 percent of all 1,104 mortgage applications, which means close to one in every four submissions was dismissed because the potential borrowers/homeowners are already too heavily indebted.

BAHAMAS SET TO FOCUS ON CRUISE TOURISM CONVERSION FROM PAGE B3 the challenge for 2024. We are limited by our capacity, and therefore we are launching several initiatives including the ‘Host a Guest’ initiative where we are encouraging the vacation rental business.

“We’re calling for Bahamians really to open their homes and get more deeply involved in the tourism business; to benefit

as a result of the arrivals, to create wealth and, at the same time, help us to expand and grow stopover visitors.

“We’ve seen the opening of the British Colonial hotel with 300 magnificent new rooms and 18,000 square feet of meeting space. We are going to continue to work along with our stakeholders in 2024 to ensure that we continue to drive the product of tourism to

a level that will allow us to attract more visitors, but also give us a product that we can be extremely proud of; we can be more proud of.”

Mr Cooper added that in 2024 there will be a greater emphasis placed on industry training, including the Bahama Host programme.

He said: “We’ve done exceedingly well over the last five decades. This business is critical to the

lifeblood of the people of The Bahamas.

“We are going to be doing a lot of work in terms of industry training, Bahama Host expansion and really an aggressive push to get room inventory, working along with Bahamas Investment Authority to get more of the projects out of the pipeline”

watershed moment for cliMcDERMOTT TWO LARGE OFFSHORE WIND mate action in the U.S., and Associated Press a dawn for the American SITES ARE SENDING POWER TO FOR the first time in the offshore wind industry," States, turbines are Azagra said in a statement THE US GRID FOR THE FIRST TIME United sending electricity to the Wednesday.

"We've

By JENNIFER

GIANT wind turbine blades for the Vineyard Winds project are stacked on racks in the harbor, July 11, 2023, in New Bedford, Mass. The joint owners of the Vineyard Wind project, Avangrid and Copenhagen Infrastructure Partners, announced Wednesday, Jan. 3, 2024, the first electricity from one turbine at what will be a 62-turbine wind farm 15 miles (24 kilometers) off the coast of Massachusetts.

Photo:Charles Krupa/AP

grid from the sites of two large offshore wind farms.

The joint owners of the Vineyard Wind project, Avangrid and Copenhagen Infrastructure Partners, announced Wednesday the first electricity from one turbine at what will be a 62-turbine wind farm 15 miles (24 kilometers) off the coast of Massachusetts.

Five turbines are installed there. One turbine delivered about 5 megawatts of power to the Massachusetts grid just before midnight Wednesday. The other four are undergoing testing and should be operating early this year.

Danish wind energy developer Ørsted and the utility Eversource announced last month that their first turbine was sending electricity from what will be a 12-turbine wind farm, South Fork Wind, 35 miles (56 kilometers) east of Montauk Point, New York. Now, a total of five turbines have been installed there too.

Avangrid CEO Pedro Azagra said 2023 was a historic year for offshore wind with "steel in the water and people at work, and today, we begin a new chapter and welcome 2024 by delivering the first clean offshore wind power to the grid in Massachusetts."

Avangrid is an energy company headquartered in Orange, Connecticut. Copenhagen Infrastructure Partners is a large fund manager and global leader in renewable energy investments.

arrived

at

a

Nearly 200 countries agreed last month at COP28 to move away from planetwarming fossil fuels — the first time they've made that crucial pledge in decades of U.N. climate talks. The deal calls for tripling the use of renewable energy, and offshore wind will be crucial to meeting that target.

But the industry has had hard times recently. Developers have canceled several projects along the East Coast, saying they were no longer financially feasible.

On Wednesday, Equinor and BP announced a "reset" for Empire Wind 2, a 1,260-megawatt offshore wind project off the coast of New York, citing changed economic circumstances on an industry-wide scale. The project isn't canceled, but it will take longer to continue the development and participate in a future offshore wind solicitation. They did not change the first phase of the project to develop an 800-megawatt wind farm in the same lease area, Empire Wind 1.

Large offshore wind farms have been making electricity for three decades in Europe, and more recently in Asia. Vineyard Wind was conceived as a way to launch offshore wind in the United States, and prove that the industry wasn't dead in the United States at at time when many people thought it was.

The first U.S. offshore wind farm was supposed to be a project off the coast of Massachusetts known as Cape Wind.

NOTICE NOTICE is hereby given that JACKSON DORGEUS of Forbes Street, Nassau Village, New Providence, The Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/ naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 28th day of December, 2023 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, Bahamas.

NOTICE NOTICE is hereby given that DANEICA MORGAN, #15 Clifton Street, Mount Royal Avenue, Nassau, The Bahamas applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 4rd day of January 2024 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

THE TRIBUNE

Thursday, January 4, 2024, PAGE 7

A JET’S CARBON-COMPOSITE FIBER FUSELAGE BURNED ON A TOKYO RUNWAY. IS THE MATERIAL SAFE?

By DAVID KOENIG AP Airlines Writer THE fuselage of the jetliner involved in a collision on a Tokyo runway was made from carbon-composite fibers, and the incident is renewing concern about the challenges of putting out fires involving the material.

The fire is shaping up as a key test of the safety of composite materials compared with conventional airplane fuselages made of aluminum.

Investigators appear to be focusing immediately on communication between the pilots of both planes and air traffic controllers at Haneda Airport. A transcript released Wednesday indicated that the landing Japan Airlines A350 had permission to use the runway but the Japanese coast guard plane did not.

Safety experts are praising the airline’s crew after everybody was able to escape the burning jetliner.

Five people on the coast guard plane were killed.

Composites have been used for many years inside commercial planes, such as the floorboards and other structures.

Boeing built the first commercial plane with a fuselage and wings made from composites reinforced with carbon fibers, the 787.

The plane went into airline service in 2011, and about 1,100 have been produced.

Airbus followed in 2018 with the A350 — like the two-year-old plane involved in Tuesday’s collision — and has sold about 570 of them.

WHAT IS MATERIAL?

THE

In airplanes, composite materials contain carbon fiber to give more strength to plastic and other materials. According to Boeing, they produce weight savings of about 20% compared with aluminum — a significant amount, considering how much less fuel a lighter plane will burn.

ARE CONCERNS?

THERE

The strength of composites was tested during certification by regulators including the Federal Aviation Administration, and Boeing said it made changes in the 787 as a result, but experts say there are limits to our understanding of the material’s performance.

“There has always been a concern about composites if they catch fire because the fumes are toxic,” said John Goglia, a former member of the National Transportation Safety Board, which investigates accidents in the United States. “That threat continues as long as the airplane burns — actually after, because those little fibers might be floating around in the smoke.”

DID IT MAKE DIFFERENCE?

A

While the Japan Airlines plane caught fire, filling the cabin with smoke, all 379 passengers and crew members were able to escape.

“That fuselage protected them from a really horrific fire — it did not burn through for some period of time and let everybody get out,” said safety consultant John Cox. “That is a positive sign.”

Goglia said there is no real-world evidence on whether composite skins are any better or worse than aluminum at resisting fire and heat long enough to give passengers a chance to escape.

Aircraft manufacturers are supposed to show that their planes can be evacuated in 90 seconds with half the exits blocked, although skeptics question the accuracy of U.S. government-run tests.

On Tuesday night, video captured a fireball on the JAL plane as it continued down the runway after the crash.

“The flammability issue is something they have to look at, but obviously nobody (on the jetliner) burned to death,” said aviation attorney Justin Green.

“It seems the fuselage and the seats (made of fireretardant material) and everything else protected the flight crew and the passengers.”

IS THE SMOKE ESPECIALLY DANGEROUS? Passengers on the Japan Airlines plane said the cabin filled with thick smoke within minutes.

Videos posted by passengers showed people using handkerchiefs to cover their mouths and ducking low as they moved toward the exits.

There has long been concern about toxic smoke released when carbon-reinforced composites burn.

As far back as the 1990s, the Federal Aviation Administration said the main health hazards from composites present in plane crashes and fires were sharp splinters from exposed material, fibrous dust, and toxic gases generated from burning resins.

“From early reports, it appears that there was a significant amount of smoke in the cabin, and it is not yet clear if any of the smoke was from burning composites,” said Todd Curtis, a former Boeing engineer who is now a safety consultant.

Curtis said a key followup for investigators and regulators will be monitoring whether passengers or firefighters were injured by exposure to toxic smoke from the burning composite.

Those injuries could take a long time to show up, said Steven Marks, an aviation attorney. He said passengers involved in accidents are usually in shock and often don’t immediately recognize the severity of their injuries.

WAS THE FIRE HARDER TO PUT OUT? Another concern, experts said, was the amount of time it took firefighters at Haneda to extinguish the blaze, and the risk to the first responders.

Curtis, the former Boeing engineer, said both in the Haneda crash and a 2013 fire on an Ethiopian Airlines Boeing 787 that was parked at London’s Heathrow Airport, “putting out the fire took much more effort than with a typical airliner fire.”

The official report said the fire at Heathrow started with crossed wires in the plane’s emergency locator transmitter, but added, “The resin in the composite material provided fuel for the fire, allowing a slowburning fire to become established in the fuselage crown.”

Curtis said that incident made him worry about fuselage fires on the ground and in the air back in 2013, “and these concerns have not gone away.”

A JAPAN Airlines plane is on fire on the runway of Haneda airport on Tuesday, Jan. 2, 2024 in Tokyo, Japan. The passenger plane collided with a Japanese coast guard aircraft and burst into flames on the runway of Tokyo’s Haneda Airport on Tuesday, officials said. Photo:Kyodo News/AP

PAGE 12, Thursday, January 4, 2024

THE TRIBUNE

US NEW VEHICLE SALES RISE 12% AS BUYERS SHAKE OFF HIGH PRICES, INTEREST RATES, AND AUTO STRIKES

By TOM KRISHER AP Auto Writer UNDETERRED by high prices, rising interest rates, autoworker strikes and a computer-chip shortage that slowed assembly lines, American consumers still bought 15.6 million new vehicles last year, 12% more than in 2022, the biggest increase in more than a decade.

Yet sales still haven’t returned to the 17 million rate in the years before the pandemic, and there are signs of a cooling market as buyers aren’t as willing to pay astronomical prices that dealers and manufacturers were charging just months ago.

“You see the consumer making a concerted effort to ensure that they’re getting the best price possible,” said Jonathan Chariff, CEO of South Automotive Group, a 10-dealership group in the Miami area.

“They basically feel that this is the right time to buy from a perspective of being able to get the discounts.”

Average auto sales prices peaked in December of 2022 just over $47,300, with vehicles in short supply because of the global chip shortage that limited production. Some dealers were able to charge over the

sticker price to buyers who needed a new ride or had the money to get one.

But the chip shortage gradually eased last year to the point where it’s nearly over, and assembly lines are running at near normal speeds. General Motors, Ford and Stellantis endured six-week strikes by the United Auto Workers that ended last fall. As a result, vehicle supplies on dealer lots are strong and growing, and prices are starting to fall as automakers and dealers dangle discounts.

Data from J.D. Power show that average prices in mid-December were down 2.7% from the peak, to around $46,000. But they’re still nowhere near pre-pandemic prices due to a 26% runup from 2020 to 2022 as cash-rich buyers drove up prices mainly by buying loaded-out trucks and SUVs. That was about 10 percentage points higher than the inflation rate for the same period.

Still, Jonathan Smoke, chief economist for Cox Automotive, said he expects the gap between the sticker price and the transaction price that consumers pay to widen this year. “We do think that the tables start to turn in 2024,” he said. “Discounting will be the key difference in

UNSOLD 2023 Charger sedans and Challenger hardtops sit at a Dodge dealership on June 18, 2023, in Littleton, Colo. Undeterred by high prices, rising interest rates, autoworker strikes and a computer chip shortage that slowed assembly lines, American consumers still bought 15.5 million new vehicles last year, 11% more than in 2022.

Photo:David Zalubowski/AP

why transaction prices are declining.”

Discounts, on average, more than doubled year over year in November, Smoke said. “I think we’re starting to see signs that manufacturers are starting to put more into making financing more attractive,” he said, adding that they’re also offering more attractive lease deals.

New vehicle loans averaged around 7% for most

of the year, and those could drop even if the Federal Reserve doesn’t start to cut rates, Smoke said.

He and Chariff also say that dealers have had to discount as well. In South Florida, Chariff said he isn’t seeing customer demand back off. His dealerships had strong December sales without the normal lull during the week before Christmas.

There may be more buyers at the lower, more affordable end of the market, which already was heating up last year as supplies rose. For example, sales of the Chevrolet Trax small SUV, which starts at $21,495 including shipping, grew to more than 109,000 last year, four times the 2022 number.

Electric vehicle sales grew 47% to a record 1.19 million for the full year,

according to Motorintelligence.com. The EV market share grew from 5.8% in 2022 to 7.6% last year. But EV sales growth slowed toward the end of the year.

In December, they rose 34%.

Gas-electric hybrid sales grew 54% to 1.2 million last year, with market share leaping from 5.6% in 2022 to 7.7%.

Among manufacturers, General Motors, the top seller in the U.S., posted a strong 14% sales increase for the year. Toyota sales grew 7%, while Honda was up 33%. Nissan sales grew 23%, with Hyundai up 12%. Stellantis, maker of Jeep, Ram and other vehicles, saw its sales drop about 1% for the year.

Ford’s F-Series pickup trucks are likely to remain the top selling vehicle in the U.S. when the company reports numbers on Thursday. But General Motors said it sold more full-size pickups than Ford — 839,517 — with its Chevrolet Silverado and GMC Sierra combined.

UCLA TO TURN FORMER SHOPPING MALL INTO CENTERS FOR RESEARCH ON IMMUNOLOGY AND QUANTUM SCIENCE LOS ANGELES Associated Press THE University of California, Los Angeles, will turn a sprawling former shopping mall into cutting-edge centers for immunology and quantum science research, Gov. Gavin Newsom and other officials announced Wednesday.

The 700,000-square-foot (65,032-square-meter) former Westside Pavilion, located 2 miles (3.2 kilometers) from the university's Westwood campus, will be called UCLA Research Park.

It will house the California Institute for Immunology and Immunotherapy at UCLA, the UCLA Center for Quantum Science and Engineering, and eventually other programs, the governor said.

He said it will take a little over three years to build out the research center and another two years to attract "the best and the brightest" to work there.

"It will serve as a stateof-the-art hub of research and innovation that will bring together academics, corporate partners, government agencies and startups to explore new areas of inquiry and achieve breakthroughs that could serve the common good," UCLA Chancellor Gene Block told a news conference.

The mall shut down years ago. In 2019, Google leased the property and planned to use part of it for office space, a project that never came about. Google helped enable UCLA's acquisition, the university said in a statement.

PAGE 14, Thursday, January 4, 2024

THE TRIBUNE

Federal Reserve minutes: Officials saw inflation cooling but were cautious about timing of rate cuts FEDERAL Reserve Board Chair Jerome Powell speaks during a news conference at the Federal Reserve, Dec. 13, 2023, in Washington. On Wednesday, the Federal Reserve releases minutes from its mid-December meeting, when it kept its key short-term interest rate unchanged for a third straight time and signaled possible rate cuts in 2024.

Photo:Alex Brandon/AP

By PAUL WISEMAN AP Economics Writer THE Federal Reserve's policymakers concluded last month that inflationary pressures were easing and that the job market was cooling. In response, the officials chose to leave their key interest rate unchanged for the third straight time and signaled that they expected to cut rates three times in 2024.

According to the minutes of their Dec. 12-13 meeting released Wednesday, Fed officials indicated in their own interest-rate forecasts that a lower benchmark rate "would be appropriate by the end of 2024'' given "clear progress'' toward taming inflation.

But they "stressed the importance'' of remaining vigilant and keeping rates high "until inflation was clearly moving down sustainably'' toward their 2% target. And though Chair Jerome Powell indicated at

a news conference after the meeting that the Fed was likely done raising rates, the minutes show that Fed officials felt the economic outlook was uncertain enough that that further hikes were still "possible.''

Powell had also suggested at his news conference that the Fed's policymakers discussed rate cuts during their meeting, a remark that helped ignite a stock market rally. Over the next

few days, though, some other Fed officials tried to steer investors away from expecting any imminent cuts. Wednesday's minutes provided no explicit mention about a discussion of rate cuts.

Still, Paul Ashworth, chief North America economist at Capital Economics said "there is nothing in these minutes to dissuade us that the Fed will start to

cut interest rates from this March onwards.''

In the minutes of their meeting, the policymakers sounded optimistic about the outlook for inflation.

They mentioned the end of supply chain backlogs that had caused shortages and higher prices, a drop in rents that is beginning to move through the economy and an increase in job seekers, which makes it easier for companies to fill vacancies without having to raise pay aggressively.

The central bank began raising rates in March 2022 to combat an unexpected resurgence in consumer prices that had begun nearly a year earlier. The Fed has since raised its benchmark rate 11 times to a 22-year high of about 5.4%.

The anti-inflation campaign has made steady progress, allowing the Fed to leave its benchmark rate unchanged since July. Consumer prices were up 3.1% in November from a year earlier — down from a fourdecade high 9.1% in June 2022.

Higher rates were widely expected to trigger a recession in the United States, the world's largest economy. But the economy and the job market have proved unexpectedly resilient.

The U.S. gross domestic product — the economy's total output of goods and services — grew at a robust 4.9% annual rate from July through September on strong consumer spending and business investment. At their meeting last month,

some Fed officials noted that toward the end of 2023, the economy appeared to have slowed.

American employers added a healthy 232,000 jobs a month through November last year. The December jobs report, which the government will issue Friday, is expected to show that the economy added 155,000 jobs last month and that unemployment rose slightly to 3.8%.

It would mark the 23rd straight month it's come in below 4%, longest such streak since the 1960s.

Hiring has decelerated, and the Labor Department reported Wednesday that job openings had fallen in November to the lowest level since March 2021. The Fed sees a reduction in job openings as a painless way — compared with layoffs — to reduce pressure on companies to raise wages to attract and keep workers, which can lead to higher prices.

THE TRIBUNE

Thursday, January 4, 2024, PAGE 15

STOCK MARKET TODAY

Wall Street slumps as its weak start to 2024 carries into another day

By STAN CHOE AP Business Writer STOCKS fell again Wednesday as Wall Street’s slow start to the year stretched into a second day.

The S&P 500 lost 38.02, or 0.8%, to 4,704.81, though it remains within 2% of its record set exactly two years ago. The Dow Jones Industrial Average dropped 284.85 points, or 0.8%, from its own record to 37,430.19.

The Nasdaq composite led the market lower with a drop of 173.73, or 1.2%, to 14,592.21.

Some of last year’s biggest winners again gave back some of their gains to weigh on the market. Tesla fell 4% after more than doubling last year, for example. It and the other six “Magnificent 7” Big Tech stocks responsible for the majority of Wall Street’s returns last year have regressed some following their tremendous runs.

The question hanging over the market is whether all the enthusiasm that sent stocks broadly rallying for nine straight weeks into the start of this year was warranted. It was built on expectations that inflation has cooled enough for the Federal Reserve to not only halt its hikes to interest rates but to cut them several times this year. Hopes are also high the economy can escape a recession, even after the Fed hiked its main interest rate to the highest level since 2001.

A couple of reports released Wednesday morning indicated the overall economy may indeed be slowing from its strong growth last summer, which the Federal Reserve hopes will keep a lid on inflation. A big danger is if it

slows too much and begins shrinking.

One report showed U.S. employers were advertising nearly 8.8 million job openings at the end of November, down slightly from the month before and the lowest number since early 2021. The report also showed slightly fewer workers quit their jobs during November.

The Fed is looking for exactly such a cooldown, which it hopes will limit upward pressure on inflation without necessitating widespread layoffs across the economy.

“These data will be welcome news for policymakers,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

A second report from the Institute for Supply Management showed the U.S. manufacturing industry is improving by a touch more than economists expected, but it’s still contracting.

Manufacturing has been one of the hardest-hit areas of the economy recently, while the job market and spending by U.S. households have remained resilient.

Treasury yields slumped immediately after the reports and then yo-yoed though the day. The yield on the 10-year Treasury eventually slipped to 3.91% from 3.94% late Tuesday. It’s been generally falling since topping 5% in October, when it was putting strong downward pressure on the stock market.

In the afternoon, yields swung again after the Federal Reserve released the minutes from its latest policy meeting. It was at that meeting in December

that policy makers hinted their dramatic campaign to hike interest rates to get inflation under control may be over. They also released projections showing their median official expects the federal funds rate to fall by 0.75 percentage points through 2024.

The minutes from the meeting revealed “almost all participants” indicated a drop in rates this year would likely be appropriate. But they also said their forecasts were hampered by an “unusually elevated degree of uncertainty.” A reacceleration of inflation, which is still a possibility, could push them to actually raise rates further.

Fed officials also noted in their meeting how stock prices have rallied recently and Treasury yields have eased. Such conditions can rev up the economy and add upward pressure on inflation.

While the Fed doesn’t like that, “the worst they’ll do is push out the date when they first cut,” said Brian Jacobsen, chief economist at Annex Wealth Management.

Traders are largely betting the first cut to rates could happen in March, and they’re putting a high probability on the Fed cutting its main interest rate by least 1.50 percentage points through the year, according to data from CME Group.

The federal funds rate is currently sitting within a range of 5.25% to 5.50%.

Critics say that’s likely too bold a prediction. “The only way the Fed will cut more than four times in 2024 is if the economy is skidding out of control” into a recession, Jacobsen said.