Monday, 12 March 2018

Knowle relocation project: "decision to sell HQ for £7.5m worst deal ever"

Who exactly is PegasusLife?
Futures Forum: Knowle relocation project: of Paradise Papers and specialising in vulture funds

They are clearly in the business of doing business - and the contract to buy the Knowle site was clearly very good business:

Decision process which led to the award of the conditional contract with Pegasus re Knowle - a Freedom of Information request to East Devon District Council 

It is very difficult to guess how much the project will earn the company 
- but some estimates put it at £15m:
Futures Forum: Knowle relocation project: PegasusLife pleading poverty: "specialists in development viability have confirmed that the development cannot afford to meet the council’s policy requirements for affordable housing"

Now the actual value of the site is the subject of a Freedom of Information request - and of comment from the East Devon Alliance - as reported in today's Western Morning News:

"Council decision to sell HQ for £7.5M is worst deal ever," activists

12 MARCH 2018


Activists have branded a council decision to sell its HQ “the worst deal ever” for taxpayers.

East Devon District Council is selling its offices at Knowle in Sidmouth to Pegasus Life Ltd, one of Britain’s largest retirement housing developers, for £7.5 million.

The developable value of the site – divulged in a response to a Freedom of Information request in January 
– has been set at £50 million, with Pegasus Life Ltd set to make a £10 million profit.

Pegasus is owned by an American firm listed in the so-called Paradise Papers, 13.4 million confidential electronic documents relating to offshore investments that were leaked to German reporters last year. Offshore investments enable companies and individuals to shelter their wealth and avoid tax. They are legal.

Paul Arnott, chairman of the East Devon Alliance campaign group, said: “Why were councillors never told that our last great piece of family silver the Knowle – would be worth a massive £50 million after development?

“If any individual person in East Devon was told their prime location property could be developed and sold on for £50 million they’d never accept £7 million.”

In December 2016, the council’s planning committee rejected Pegasus Life’s planning application for 113 extra care units, but following a four-day inquiry into the developer’s appeal in November, a planning inspector gave the firm approval for the scheme which includes a café and swimming pool. Sidmouth has been allocated only 50 extra care homes in the council’s Local Plan.

The Alliance said it was an “exceptionally bad” deal, because, in accordance with the old land buyer’s rule of thumb, the landowner of a site should expect around a third of its developable value – in this case £16.5 million.

A council spokesperson said the deal was based on the site’s land value – in its current state. The site includes the buildings, terraces and top car parks.

Moving council operations to Honiton, with a satellite office at Exmouth Town Hall, has a budget of £10 million and is being funded out of the council’s coffers and a Public Works Loan Board loan.

The council spokesperson said that “from day one”, council running costs would reduce significantly when it leaves the Knowle and during its first full year of operations at Honiton it will save £135,000, with savings increasing year-on-year.

The Alliance pointed out that because the proposed complex is considered to be a residential/care home development, as opposed to a general residential development, the developer is not required to pay Section 106 money towards providing community services. The developer is only contributing £12,000 to improve access/footpaths to the site from adjacent parkland.

However, the developer could have to comply with what is known as an overage clause: If more than a 20% profit is made from the development, the council will be entitled to 50% of any profit made over and above the 20%, to a maximum of £3.5 million.

A council spokesperson, said: “We have carried out due diligence on Pegasus Life Ltd and are satisfied that they are an established and successful company suitably financed, capable of delivering the promised development and able satisfy their contract with the council.

“Selling the Knowle and moving offices is key to continuing to serve our communities. Services to our communities are what matter, not the vanity of paying to stay in an outdated and expensive building.

Pegasus Life Ltd bosses did not comment when asked whether any of the profit of its Sidmouth development could end up in tax havens. However, Howard Phillips, its chief executive, said: “We pride ourselves on the quality of our developments and the sensitivity of our designs to ensure they fit in with the area’s achitectural vernacular.

“The UK is in the middle of housing crisis and local authorities need to make cohesive eve plans that meet the needs their local towns. This includes provision for people over 60.”

Western Morning News (@WMNNews) | Twitter
Devon Live - Latest local news, sport & business from Devon
EDDC “Council decision to sell HQ for £7.5M is worst deal ever, activists” | East Devon Watch

And later in the day, a fresh Freedom of Information request was submitted:

Who knew that The Knowle had a reported developable value of £50 million pounds?

12 MARCH 2018

Today's Western Morning News (12th March 2018) contains a report that EDDC have stated, via a FOI response (to a person whose identity is not given), that the 'developable value' of the site was £50 million. The report also states that The Knowle site was sold for £7.5 million to Pegasus Life. On the face of it this is a matter of great concern.

Under the terms of the Freedom of Information Act, and the Environmental Regulations , I wish to ask what information you hold about this valuation and also as to the persons who were made aware of this valuation of the property.

Will you also kindly provide me with details/copies (digital preferred) of any and all reports that contain any reference to this £50 million figure together with details of any and all councillors, officers and consultants and the like who were made aware. Please include details of when such individuals were so advised and by what means. Copies where available please.

Finally, please provide details of the party who produced the £50 million valuation together with a copy of his or her valuation .

There is no need to give any information about 'developable values' in general or how they may relate to this sale . At this stage I simply wish to know who knew and by what means and when they were told.

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