Friday, 8 April 2016

Knowle relocation project: deciding to sell >>>>>>>>>> >>> 'overage' and the dangers of selling Knowle short >>> one year on

'Overage' is defined as "a share of any subsequent uplift in the value of [a seller's] land.":
Overage: getting your fair share - out-law.com
Seller beware - overage clauses - Fieldfisher

This time last year, this blog reported on concerns that the Knowle was being undersold - particularly in the light of any overage:

The SOS site covered this extensively at the time:

Wednesday's Cabinet met to discuss the latest relocation report:

Cllr Cathy Gardener raised the issue of overage at the meeting:
Cathy Gardner « East Devon Alliance

There is considerable background to the notion of 'overage' in East Devon - and there are other telling examples.

To quote an observer:

Seaton Tesco: March 2016: Officer Let-Off

"There is the brand new let-off from EDDC of Bovis and Tesco re any possible affordable housing element and, it seems, any serious prospect of overage in the Seaton development. This document is from last month so presumably it comes before the DMC soon?? I wonder if it offers an indication of what to expect ultimately on the Knowle. We are dealing with the same cast of characters."
13/1583/V106 | Variation of requirement for affordable housing in Section 106 agreement pursuant to application No 09/0022/MOUT to reduce the affordable housing provision from a minimum 25% provision to 0% provision | Land Adjacent Harbour Road Seaton

"The devil is in the detail, which is why I am sharing it with all those interested in the Knowle and Pegasus... lesson one is that there never is any back-end profit share. The accountants make sure of that, and Tesco and Bovis accountants are no different.

"Possession is nine-tenths of the law etc etc, and once Pegasus have paid their money they can "renegotiate" to their heart's content as Tesco/Bovis have here, and there is nothing EDDC will do about it. As a small example of this, if you see this one simple article from a national newspaper re Tesco in 2009 they were proclaiming affordable housing as one of the greatest gains for Seaton."

Tesco invades Seaton – closing the nursery and holiday village | Home News | News | The Independent

"Less than four years later they were shamelessly demanding to build not 25% but 0%, and in a display of supreme weakness the DMC buckled.

"The only winners in all of this are the Jersey-based holding company, Liatris, who owned most of the site. It is thought that £19 million went their way - who the real beneficiaries are who knows. (Perhaps a trip to Panama City might be useful.)

"The losers, among many, were EDDC themselves (us), who had a proposal on the table from Sainsburys to build on EDDC's own land (!!) and build them a Jurassic Centre in the bargain which would have been open three years ago. The Liatris land could still have been bought by Bovis and housing provided anyway, and Seaton would have had a Sainsburys and EDDC a few million in the kitty.

"In all of this there was always, as Adam Smith used to say, an invisible hand at work and, to be very frank, nobody in the most senior executive positions at EDDC did anything other than help it operate." 

See also:
New Homes Seaton, Pebble Beach | Bovis Homes

Every Little Helps: Tesco Building 'Towns'
'This town has been sold to Tesco' | Society | The Guardian
Seaton « East Devon Alliance
Seaton Development Trust | Shaping the future
Futures Forum: Tesco's in Seaton

To quote another observer:

How long is a piece of EDDC new HQ string?

"Anyone remember the good old days, when the new EDDC HQ in Honiton was going to be “cost neutral” and not going to cost us a penny extra because the money from the Knowle sale was going to more than cover the cost of the new HQ? Sums of around £4 million were touted at the time, creeping up bit by bit to around £6 million.

"Then Knowle got sold to Pegasus Life (we think but cannot be certain) for about £7 million for a 50 or so home luxury retirement village at which point the cost of the new HQ had exploded to around £8 million.

"Now we see on the front page of this week’s Midweek Herald that the estimated cost has risen to around £9.7 million, of which £943,000 has been spent already.

"To add insult to injury, Pegasus Life (presumablyt after jumping at the offer of paying £7 million for 50 dwellings = £140,000 cost per dwelling) has announced that – surprise, surprise – it wants no less than 105 homes on the same space = £67,000 cost per dwelling.

"With one-bed Pegasus properties currently selling at £300,000 plus annual service charge you can bet there are some beaming smiles at Pegasus Life! Selling all 105 properties at that MINIMUM figure (some bigger apartments will cost much more) the income for Pegasus would be £31.5 million.

"Development costs are usually considered to be one-third purchase cost, one- third build cost and one-third profit for the developer. On that basis Pegasus would have made a tidy £7 million. But obviously £31.5 million plus profit would be much more acceptable!

"In the meantime, one cannot help but assume that the cost of the new HQ will very safely go over £10 million.

"Somebody’s numbers are definitely not adding up."

See also:
Moving and Improving: all you need to know about the office relocation - East Devon

As schedule for relocation slips, Cabinet asked “Is this project still ‘cost neutral’? “ | Save Our Sidmouth
Gremlins emerging in EDDC relocation plans | East Devon Watch
Knowle Relocation « East Devon Alliance

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