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Council's Cambrian Place scheme fails

Sunday, 08 December 2013 16:14

The Council has issued a response to a joint news statement from the Minister for Infrastructure and the Minister for the Treasury dated 29th November 2013.

 

The Council’s proposed Cambrian Place redevelopment project with developers Time & Tide Commercial Limited and the owners of the site Rural Views Limited will not be going ahead.

 

View 4 MediumAn early artist's impression of how the development might have looked

 

The scheme was to have provided a 447-space car park and new premises for the Henry Bloom Noble Library, Council offices and public conveniences.

Council Leader David Christian MBE JP explained: ‘It is with deep regret and disappointment that the scheme will not be going ahead. For a good number of years the Council had wanted to acquire a new site for its library, offices and premises for Douglas Development Partnership rather than continue paying in the region of £150,000 a year in rent for the current library premises in Victoria Street. This, together with the desperate need to provide more parking in the town centre, led us to enter into discussions with the developers and site owners in 2011 then later draw up a proposal which the Council understood the government welcomed in principle. Indeed the Chief Minister himself gave public support to the principle of the scheme and this was supported by both the Infrastructure and Economic Development Ministers.

 

‘Meetings and consultation did take place prior to the Council submitting its application for acquisition of land and petition for approval of borrowing powers to fund the scheme under Sections 25 and 51 of the Local Government Act 1985.

 

‘After further discussions led to questions over the scheme’s value for money, notably the £2.5 million purchase price for the site, the Council commissioned an independent valuation from a leading UK commercial property consultants which confirmed the entire scheme was, indeed, value for money.

 

‘Time & Tide agreed to extend the contract deadline while discussions continued. Rural Views, however, chose to withdraw its offer to sell the land to the Council, a decision the company was legally within its rights to make.

 

DavidChristian Medium'The Council has been transparent in its dealings': Council leader David Christian‘The Council has been transparent in its dealings with government throughout. With any development of this scale there will always be an element of risk. As a forward-looking local authority with vision, investing in the Cambrian Place scheme was a measured risk the Council was prepared to take in order to provide much needed additional amenities in a development that would kick-start the regeneration of lower Douglas. Regrettably the Council’s role in this is now at an end. The Council will, however, be continuing to seek a new site for the Henry Bloom Noble Library, offices and premises for Douglas Development Partnership.’

 

 

The Council also rejects a number of the statements made as bullet points in the joint news statement from the Minister for Infrastructure and the Minister for the Treasury dated 29th November 2013. These were:

 

 

 

 

 

 

 

 

 

“Lack of Consultation – early advice would have avoided abortive work”.

The proposed developer Time & Tide, had during the latter part of 2011, approached the Council, the Chief Minister’s Office and the Department of Infrastructure over the proposed scheme and it was during this period that the scheme concept progressed. The Council Leader also had discussions with the Chief Minister, the Minister for Economic Development and the Minister for Infrastructure, all of whom supported the progression of the scheme. The result was that the scheme was formally announced as part of the Council’s budget-making process in January 2012. The Chief Minister himself publicly congratulated the Council on this important resolution. Meetings were held between May and September 2012 with government officers at which the Council informed them of the specialised nature of the scheme and the form of the subsequent petitions for approval by the Department of Infrastructure. The approvals were submitted on 5th. October 2012 at a meeting with the Department and Treasury members and officers and there have been further meetings and numerous interchanges of correspondence up to and including October 2013. Therefore to state that here has been lack of consultation and early advice would have avoided abortive work is not accurate. 

 

• “No transparency or competition in procurement process”.

It was made clear that owing to the proposed developer having an agreement with the land owners, Rural Views Limited, that the land would only be sold to the Council for the sole purpose of constructing this specific scheme, it was not possible to carry out an ‘open market’ procurement process. From the Council’s perspective this was not the preferred procedure. The clear economic, cultural and social benefits of the scheme, however, outweighed the Council’s misgivings. The Council decided, on balance, and after satisfying itself that all reasonable challenges to the costs involved were fairly and openly justified, that those benefits combined with the prospect of the development being completed within 14 months of commencing site operations, justified waiving the open procurement process and progressing the scheme for the greater good of the town and the Island.

 

• “Construction costs considered too high”.

This is an opinion of either the Department or the Treasury - or both - and like all opinions requires justification.  The Department of Infrastructure commissioned an off-Island consultant to review the construction costs and concluded that the build costs were excessive. The results of this review were forwarded to the Council and upon subsequent examination by the Council were found to be incomplete and therefore not accurate. While the Council was satisfied that the costs were reasonable, it recognised the figures were open to challenge so commissioned its own independent review from a leading UK consultant. That consultant’s report highlighted flaws in the submission of the consultants appointed by the Department of Infrastructure and provided the Council with sufficient robust information to demonstrate that the construction costs, including land costs, were reasonable.

 

• “Land costs considered too high for area of land to be conveyed; area of land not calculated correctly”

Again this is an opinion. As stated previously the Council’s independent consultants have verified that they have provided sufficient robust information to demonstrate that the land value is reasonable in the context of this scheme. It is correct to say that confusion had arisen over the exact area of the land, which had consistently been accurately stated in the formal Section 51 Petition, and this has been clarified more than once, the latest being in a formal submission to the Department of Infrastructure on 9th October 2013.

 

• “Contract arrangements needed amending and contract had not been structured correctly”

The meaning behind this comment is unclear. It is likely, however, that it refers to the form of Design and Build Contract between the Council and the developer as the scheme is essentially a full ‘turnkey’ approach with the developer providing the entire development including the land. The Council had structured the proposed contract in a manner which mitigated risk to the Council should the developer fail to complete the scheme. The Council did, however, acknowledge concerns in this regard so entered into further discussions with the developer and the Council’s UK consultants to strengthen and clarify some of the conditions of the building contract and procurement route in order to further mitigate risk. The Council therefore firmly believes that the finalised contractual arrangements stand up to any robust and informed scrutiny. The Council has not yet had a response to this matter other than this comment in the joint statement from the Ministers.

 

• “Due diligence not evidenced for a potential developer”

This statement is surprising as the Council has thoroughly investigated the developer and the Single Purpose (Isle of Man registered) company formed to provide the development. The Council is satisfied that the developer was capable of delivering the scheme using a Manx accredited construction contractor as required by the Council contractually. Other than this comment the Council has not previously been asked to provide further evidence in this matter and if the Council had been asked, it would have been willing to do so.

 

• "Developer was unable to provide a bond"

This is correct. The Isle of Man Company formed was a single-purpose vehicle and therefore a bond provision was not possible. This was fully explained and the absence of a bond between the developer and the Council has been addressed by the contractual amendments referred to above, which would act in the absence of a formal bond and, in so doing, perform more effectively.

 

Councillor Christian said: ‘It is a shame that nearly 20 years after the Government acquired the Lord Street bus station site and a number of years after the acquisition of the Steam Packet site there has been no progress with the redevelopment of lower Douglas. The Government has now acquired the Middlemarch site but again nothing has happened. The Council’s proposals demonstrated value for money and represented a real opportunity to redevelop the area within 14 months of commencing on site. It is therefore extremely disappointing that ultimately the Government is not supportive or proactive of the Council’s vision and was unwilling to support its plans for a revitalised lower Douglas.’