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Fylde's Worst Ever Financial Decision?

Heeley Road Offer - or not

In 'Corruption in Fylde?' we set out in some detail the background to the Heeley Road land disposal. We complained that taxpayers were being ripped off by a Council that was not only incompetent financially, but one that also is now so emasculated and politically directed that proper scrutiny of decisions is virtually impossible.

Nowhere is this more evident than in the story of Heeley Road.

We watched the last Council meeting where even the well-experienced Saint Paul Hayhurst was tactically out-manoeuvred by the Commissar who stretched the rules of procedure and debate to their limit as he ducked and dived amongst constitutional procedures so labyrinthine that even Theseus would have been lost.

The purpose of this Machiavellian manoeuvring was to stop properly informed debate taking place on the motion proposed by Saint Paul and Queen Elizabeth, which asked the Council to set up an all-party inquiry into the proposed disposal of land at Heeley Road before the completion of any contracts.

The normal process is to refer such 'Notices of Motion' to a committee where officer reports can be prepared to inform the councillors, and more detailed discussion and debate can take place.

But the Commissar wanted none of that. He was determined to squash it.

He succeeded of course, backed by a Conservative block vote that we suspect had insufficient knowledge and little understanding of what they were voting on. We also suspect they might now be wondering about the wisdom of such blind faith - as they survey the particular path up which they have just been led.

The next time this happens they may find they have followed him over an electoral cliff and into deep water.

The Commissar's term of rule has been a disaster for Fylde. Almost as bad as that of the Chief Executive who forged such unwelcome change in a misguided attempt to modernise. But then Mr Lee was Cllr Coombes' civic mentor and tutor.

Fylde has now run out of money and there are still two years to go.

Any sensible administration would be building up the financial war-chest for the election year - to let them deliver sweeteners to electors just before voting time. But this administration has no money left.

The next thing on the horizon is borrowing. They've actually started that already, and Fylde is no longer debt free as it was when they took over. But the greatest danger is that come the election, the Commissar's debts will be so great that whoever takes over will be impoverished and unable to undertake proper governance.

This is why the current Heeley Road lunacy is all the more crucial. The Commissar is driving through (some might even say illogically steam-rollering through) a plan that will give away land for which he has had a private sector offer of £310,000. But it gets worse. He's also going to use up £250,000 of 'affordable housing' money to give Muir Group the £250,000 they will then pay back to him for the site.

This is the sort of rationale that underpins our claim he is financially incompetent.

So what's going on?

Well, readers will remember that early this year, agents acting for the new owner of the Fairways site on Heeley Road (Town Manor Developments Ltd) made an offer for the Council's Heeley Road CVMU site

The offer sat unanswered at the Council's offices until the Hostel opposition group released a statement about it on 13th February, following which officers made enquiries a month later on 12 March.

They noted there had been two previous offers in 2006 (one of £310,000 and another of £310,500), and the officers asked Town Manor's solicitors to confirm the value of the current offer. They asked about the proposed use for the site and how the purchase would be funded.

On 16 March, Town Manor's solicitor replied to say that Town Manor Developments Ltd (the owner of the adjoining Fairways Garage site) was offering £310,500 for the site subject to contract.

In respect of the funding, the solicitors said.

"Our client anticipates it can be in funds within days by way of a re-finance of the Fairways' site, but obviously it does not wish to incur the interest charges/fees associated with that re-finance unless its bid for the depot site is going to be successful. Can you please therefore let us know as soon as possible whether:-
(i) our client's bid is an acceptable offer; and
(ii) the Council will proceed quickly to a completion of the proposed sale."

A week later, (at the Council meeting we referred to in the introduction), Cllr Hayhurst, supported by Cllr Mrs Oades had tabled a notice of motion which said "That in view of the controversial circumstances and budget implications of the proposed disposal of land at Heeley Road, St Annes to the Muir Group, an all party inquiry be set up to consider all aspects of this proposal and report back to Full Council before the completion of any contracts."

At that meeting the Commissar quickly proposed that it was not referred to a committee, but discussed there and then.

Cllr Mrs Nulty said "I do not believe we are ready to debate this tonight. It was put on as a notice of motion and I believe it should be treated as the last notice of motion was treated, and I think it's totally unfair that we are put in this position tonight. I don't believe anybody here knows the full facts of this. I don't believe anybody here could debate this tonight. And I believe that it is in the public interest that this is re-discussed. I do - I certainly believe it is needed, but I do think that in the public interest this should be re-discussed in another place. I do not believe that tonight is the place to decide it"

Councillor Howard Henshaw said "As most of you are aware, I initiated a separate call-in on this, on the Heeley Road application, which was based on the financial implications of this scheme, which in my opinion and in most people's opinion has cost this council, which can ill afford it, over £500,000. This has never been debated despite what John Coombes has said about it being debated over the past two years, they have never debated the financial implications of this and that is what we should be debating tonight, the £500,000 which this - its costing this Council if this scheme goes through."

Councillor Roger Small said "I actually had a look at this offer or potential offer or whatever it turned out to be of £310,500 and that was explored. I'd have been delighted if there had been a firm offer on the table but no such offer is on the table. There's actually no such offer anywhere near the table, quite regrettably, on this. This is something that obviously - we put an officer on to this. We had to do the legroom with Town Manor. They haven't been forthcoming. We've asked them time and time again to put their offer on the table. No such offer has been received. Because believe you me, I would be very happy if one had come in, and the idea of throwing a figure about such as you have done before is frankly irresponsible."

Cllr Mrs Buckley rehearsed her particular take on the history of the issue and criticised what she thought were leaks from other councillors that appeared in the press or on websites (could she mean us, we wonder?) Then she said ".... so where are we now? We have an offer, we are told, of a higher sum than any on the table, £310,000 from a private developer. But we have learned that that offer has not been substantiated. There is no meat behind that offer. The Council has taken that offer seriously, as it should, because I for one would be calling upon our Cabinet and our Portfolio Holder that if we had an offer, and there was money on the table, and there was a mortgage and backing and funding behind that offer, then we should not hesitate in considering selling and disposing of the land and an alternative way as the plans and priorities that the council has put forward to date"

Closing the debate and referring to Cllr Mrs Buckley's comments, Cllr Mrs Oades said ".... I'd be quite happy to get the information that she appears to be getting, but as a lowly back-bencher of course I don't get that information. And therein lies the problem, because not only do the public not get the information, nor do we, and that is why I believe it should be debated. We should all be in possession of the facts as they stand, and I'm afraid we're not. It's not just the public who are kept in the dark on this issue it's the Council, and that is what I totally object to. Councillor Hayhurst has talked about the lack of democracy at this Council. It is being eroded year on year on year, and I think it is deplorable the way many councillors on this council now are kept in the dark, and I personally feel that this should be debated so that the public can see that we are responsible."

Several Councillors asked for the matter to be debated when more detail was available. The lack of information at the Council meeting meant the debate was not adequately informed. But nevertheless a majority-party vote rejected the call for an inquiry.

The following day, (24th March) the Council's press officer issued a statement which included the sentence "More recently, it has been suggested by a group opposing the sale, that there is an alternative buyer waiting with a more generous cash offer for the site. This offer has been explored by council officers but they have not been able to substantiate these claims and the disposal to the Muir Group will now go ahead following last night's decision."

On 25th March, having not received a reply to their letter of 16th, but being surprised by the Council's press release, we know that solicitors acting for Town Manor wrote to the Council and said "The press statement is untrue and misrepresents the correspondence between us, that correspondence rests with your failure to reply to our request in the final paragraph of our letter of 16 March…"

Oh dear! Cllr Mrs Buckley is probably going to be upset with us again for this leak!

The solicitors letter also said "We repeat, Our client does not anticipate a difficulty with funding evidenced by the point that it recently achieved the purchase of the adjoining Fairways Garage site (in January 2009) at a price substantially greater than that proposed for the Council depot site"

The following day 26 March, Mr Curtis (the Council's solicitor) replied for the Council to say the Council did not propose to proceed further with the offer.

His letter says "…The terms of your client's offer have been carefully considered. However, there are a number of aspects of your offer which give rise to serious doubt whether your clients would be ready to proceed within a reasonable period of time. These include the need to raise money for the purchase of the council's site by the refinancing of the Fairways site, which already appears to be subject to a mortgage, and your client company's low credit rating.

The council has also had regard to the possibility that if your client's offer was accepted but did not go on to completion, the funding for the existing offer may no longer be available, leaving the council without a buyer at all.

The Council does not therefore propose to proceed further with the offer set out in your letter of 16 March….."

We think that's rich, given the fact that the 'existing offer' only exists because Fylde are giving Muir the money to buy the site in the first place!

So at this point we are prompted to ask our conundrum

Question: When is an offer not an offer?

Answer: when you don't want it to be an offer.

As you might expect, Town Manor were not best pleased with his (apparently perfunctory and superficial) analysis of their situation especially given that he appears to have spent not more than a day of his time 'investigating' them.

So on 1 April, the Solicitors acting for Town Manor replied to Mr Curtis to express surprise that the sole reason Fylde was are unwilling to accept their client's offer for the Heeley Road site was concern over the funding.

They went on to explain that their client was a partner in a British plc and the proposed company to develop the site was a Special Purpose Vehicle or 'SPV'.

Over the last few years, it has become common practice for a property to be acquired by a purchaser acquiring the shares in the company that owns a property (usually called a Special Purpose Vehicle or 'SPV'), rather than acquiring the property itself.

The most common reason for doing so is that the stamp duty payable on the acquisition of the shares in a company is 0.5% of the consideration in contrast to the stamp duty land tax payable on the acquisition of a property, which can be 4%.

However the letter went on to say their client was expecting a formal offer of funding before weekend, and concluded "Our client therefore does not see an issue regarding your suggested doubt that our client would be "ready to proceed within a reasonable period of time".

The letter concluded "While we note your concern that if our client failed to complete funding for the alternative a lower bid might not be available, the logical approach is not to refuse to deal with our client but to set a deadline for exchange and completion. You are requested to reconsider your authority's position as a matter of urgency. We are instructed to say that our client will let you have proof of funding once it comes through, which is expected in the next few days."

We find it amazing that Fylde Council can afford to be so profligate with taxpayers money as to ignore an offer like this.

We are amazed that some sensible people in the Conservative group continue to support a kamikaze leadership with a death-wish and an incompetent and ill-informed Politburo Cabinet.

These are the Conservatives of the Council who were persuaded to close a perfectly good modern swimming pool for want of money that had been spent elsewhere, who lost £609,000 on the Streetscene debacle, who reported a loss of over £1m last year, who have to make another £1m of cuts in services this year, who have farmed out their Human Resources, Revenues and Benefits services to Blackpool, and their Finance and accounting to Preston, who have thrown in the towel because they can't even run Kirkham baths properly, and who are now asking staff to volunteer for redundancy because they've run out of money to pay them - and they even expect to have to borrow the money to pay the redundancy costs.

Did someone say these are 'Conservatives'? 

That can't be so.

Conservatives have a reputation for good money management and common sense. This administration has more in common with the Banana Republic of Fylde than it does with conservatism.

But even in the middle of all of that, their lunacy over Heeley Road takes the cake (That is if they have cake in a Banana Republic) .

We think Councillor Henshaw was quite right when he said recently that he regarded the proposed sale of Heeley Road to Muir as possibly the worst financial decision the Council had ever taken.

If they don't change their approach they will spend £250,000 they don't need to spend giving a grant to Muir.

And they will miss out on at least £310,000 from Town Manor - a total of over £500,000.

They will also miss out on the affordable homes that Town Manor has said they will build on a combined Fairways / CVMU site - homes that struggling young couples in St Annes need to get a foot on the housing ladder in these difficult times.

Last week, Chairman of the Heeley Road Group, Bob Dagnall, said "This scheme has been a disaster from start to finish. The concept was ill thought out, the way they plan to provide for homeless people is appalling, the financial management is nothing short of a disgrace, and there has been a closing of party political ranks to prevent other councillors and the public from knowing the true facts and the real costs of this incompetence."

As one of our readers from the wilds of Staining would say - "Nothing new there then"

We understand that yesterday, the Heeley Road Group has sent copies of the leaked letters between the Council and Town Manor's solicitors to all the Councillors that have been kept in the dark on this matter, and is calling on Councillors Small and Buckley to honour their words and to join with other concerned Councillors to require a special meeting of all councillors to consider this matter with a view to overturning the Cabinet's decision to give this land away.

Based on what those two councillors said, - with some vehemence - it can only be that either information is being withheld from them, or they are painting an inaccurate picture of the situation in the hope of spreading confusion amongst others, and we can't imagine they would do that.

As usual, we'll keep our readers in the picture.

Dated:  3 April 2009


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