East Devon Alliance
At a time of serious council cutbacks, East Devon Conservative Councillors – and the council officers who do their bidding – have incurred a massive loss for council tax payers building themselves an unnecessary new vanity project HQ in Honiton.
Those leading the project have been determined to flog off the former Knowle HQ in Sidmouth for years. They came up with feeble and unproven arguments about energy cost-savings – and when asked to prove these they fell foul of the national Information Commissioner for knowingly withholding information from local people.
It’s a long story.
But the upshot is, the Knowle site has been verified as being worth at least £50 million once developed, and East Devon Conservatives have sold it to an offshore registered company, with a presence in Luxembourg, Delaware USA and the Cayman Islands, for a fraction of this, just £7.5 million.
The Conservatives now claim that having sold it cheap, EDDC will be in for a share of profits over £10 million. Good luck with that, East Devon Conservatives!
Tragically, the Knowle site could have done some good. Affordable homes being one. But the deal EDDC has done is for – guess what – yet more retirement properties.
Meanwhile the architecturally horrible looking new Honiton HQ, already known as Colditz for its grey brickwork – will leave us all with a massive debt to the government for a loan to complete it. EDDC promised it was all going to be “cost neutral”. That is untrue, and worse, like a new car driven out of the showroom, the unpopular building is already worth millions of pounds less than it cost to build. Plus there isn’t enough parking.
It was left – as ever – to Independent East Devon Alliance members and councillors to tell East Devon council taxpayers what has gone on. This report was in the Western Morning News last year.
WESTERN MORNING NEWS
12th March 2018
COUNCIL DECISION TO SELL HQ FOR £7.5M IS WORST DEAL EVER, ACTIVISTS
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 architectural 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.”