The council have now published the
information that SFP Ventures haven’t come back with finance and that the
council is going to start the lengthy and possibly expensive business of extricating
themselves from this particular mess.
Here is the council document
Ramsgate Royal Sands – Options
To:
Extraordinary Cabinet – 29th May 2013
Main Portfolio Area: Operational
Services
By:
Mark Seed – Director of Operational Services
Classification:
Unrestricted
Ward:
Eastcliff
Summary:
To consider options for future action following the end of the four month
period agreed at the 22nd January Cabinet meeting for the developers
of Royal Sands to have demonstrated the financing for the construction of the
development.
For Decision
1.0
Current Situation
1.1 At the Cabinet
meeting on 22nd January it was resolved that
“Cabinet set a review period of 4 months from 22nd
January 2013 and request officers at the end of this period to prepare an
options report to Cabinet if either the finance is not in place for the
completion of the development or no agreement is in place for the construction
and operation of a hotel.”
1.2
As the four month period has now passed without these criteria being met it is
necessary that the options in relation to the future of the current development
agreement and leases for this site are now considered.
1.3
In the meantime a petition was considered at the meeting of Council on 18th
April as set out in Annex 1, and it was agreed that the petition be referred to
the Overview & Scrutiny Panel. As a result of this the Panel agreed the
following at its meeting on 23rd April:
1. To set up a Pleasurama Site Development Task
& Finish Group as a priority scrutiny project for 2013/14;
2. Officers to draft the terms of reference
1.4
At the time of drafting the report the Scrutiny task and finish group has yet
to meet and consider its terms of reference.
2.0 Discussion and Proposals
2.1 The issue of
the development of the Pleasurama/ Royal Sands site has been a matter of
contention since before the decision to take forward the current proposals at
the end of 2002. This has surrounded all aspects of the development including
its form agreed under planning, the choice of the developer, the nature of the
developer, the conditions within the agreements and changes to these, and
retention of the developer despite the site not being moved forward.
2.2 This process
has taken place under three separate administrations, but needs a collective
way forward for the council that represents a political accord. This should
reflect the need for a development to be completed that complements the future
regeneration of Ramsgate, and provides a financial return for the council on a
key water front site.
2.3 In addition,
the future of the agreement and leases with SFP needs to be assessed carefully,
as unilateral decisions on these by the council are almost certain to be
challenged legally by the developer. The bottom line is that such action is
uncertain, potentially costly, and likely to take a long time to resolve.
2.4 It is
important that consideration of this issue is primarily focussed on where we
are going and how to achieve that aim, with the prime elements being:
· An agreed
development for the site
· A
timescale to complete this development
· A
financial return to the council for the site
· An
understanding of the risks involved in any course of action
2.6 The report is
specifically not proposing a legal way forward for the council as this requires
to be considered in a way that does not prejudice any future court action and
the position of the council within this. Such a way forward also needs to be
supported by high level commercial and legal advice that dovetails with the
direction of travel for the council.
2.7 In this
context it would seem to be appropriate for Cabinet to support the setting up
of the task and finish group by Overview and Scrutiny and ask them to consider
and recommend a course of action. In doing this it would be appropriate to
consider the following:
· Encouraging
the task and finish group to focus primarily on the key issues to help guide
the way forward for the council as a whole
· Committing
Cabinet in supporting the work, including the cost of seeking confidential
legal and commercial property advice
· Advising
that consideration of action moving forward that may involve legal processes
needs to be done in a way that does not prejudice the position of the council
· Ensuring
that the legal, financial and time risks associated with any proposed course of
action are considered with care
· Encouraging
an expeditious result so that Cabinet can move forward on this
2.8 Due to the
lack of progress by the developer it is no longer possible to consider the
option of waiting for them to deliver, even though the final deadlines within
the agreement have not been breach. In addition, the need for a cross party
independent consensus on future action supports the role of the Scrutiny task
and finish group, rather than alternative routes.
2.9 The council
has been very supportive in relation to this development, mainly in recognition
of the difficult financial market over the last 5 years. However, the repeated
failure of the developer to make progress is no longer acceptable to the
council. The lack of any substantial progress in resolving the issues that were
discussed in the Cabinet report in January, and failure to reach a conclusion within
the four month period agreed by Cabinet, gives the council no confidence for
the future.
2.10 On this basis, the future
of the development has entered a new phase in which the council is actively
seeking an alternate way forward, with a key focus on the determination of the
current development agreement and leases.
2.11 This has become too much
of a key issue to wait until the current deadline in 2014 and the possible
extension to 2017. The continued failure to deliver gives the council no
confidence that progress will made, and a rapid move to considering and
deciding on alternatives is essential.
3.0 Corporate
Implications
3.1
Financial and VAT
3.1.1 The primary long term impacts
of choosing a specific course of action on the site and the costs of this need
to be assessed as part of the risk analysis work as part of review by the
Scrutiny task and finish group. In relation to this report the proposed support
to seek initial high level commercial and legal advice can be met from existing
budgets.
3.1.2 In addition to the legal risks
involved with ceasing the current arrangements can be added the timescales
involved in seeking an alternative proposal and the financial risks of this in
comparison to the current arrangements and the potential return to the council.
3.2 Legal
3.2.1 It is not proposed to set out
a full legal analysis of the situation at this stage as this will have to be
considered in some detail through the Scrutiny process. However, a clear option
as a course of action would be to seek the cancel the current development
agreement and leases or not provide an extension to any timescales. As
indicated above these courses of action are almost certain to be challenged
legally, so any legal risk assessment through the Scrutiny process must assess
the chances of being successful, the costs that may be involved, and the
timescales to achieve the result in court.
3.3 Corporate
3.3.1
The future of the current development agreement
development agreement and leases is seriously in doubt. There are risks
associated with taking action about this, as set out in this report, but the
repeated failure by the developer to move forward on site, despite the
willingness of the council to assist, is no longer acceptable. As set out
above, the failure to deliver has to change the council’s approach to this site
development and its consideration of options for the future. This represents
Cabinet’s entire dissatisfaction that the four month deadline it gave to the
developer to resolve matters and make progress on site has not been met. Care
needs to be taken in relation to considering options for the future as
indicated above, but now is the time to take this step.
3.4
Equity and Equalities
3.4.1
The proposal in this report does not have any impacts on groups with protected
characteristics.
4.0
Recommendations
4.1
That Cabinet supports the setting up of the Overview and Scrutiny Panel task
and finish group, and advises that the following considerations should be taken
into account in proposing a course of action for the council:
· A focus
primarily on the key issues to help guide the way forward for the council as a
whole
· Cabinet’s
support for the work, including the cost of seeking confidential appropriate
legal and commercial property advice
· Consideration
of action moving forward that may involve legal processes needs to be done in a
way that does not prejudice the position of the council in a court action
· Legal,
financial and time risks associated with any proposed course of action are
considered with care, including those associated with alternative developments
· Seeking
an expeditious result so that Cabinet can move forward on this site
4.2
That Cabinet expresses its strong dissatisfaction with the progress made by the
developer in the last four months to move forward with this development, and
signals a shift into a new phase of the development in which it wishes to see
robust alternatives to the current arrangements being developed and acted upon
by the council.
5.0
Decision Making Process
5.1 The proposed
decision is within the council’s budgetary and policy framework.
Contact Officer:
|
Mark Seed, Director of Operational Services
|
Reporting to:
|
Sue McGonigal, Chief Executive
|
Annex List
Annex 1
|
Petition to Council
18th April 2013
|
Background
Papers
Corporate Consultation Undertaken
Finance
|
Sarah Martin,
Financial Services Manager
|
Update
The council have now published the details
of the Pleasurama Site Development Review Task & Finish Group
Membership
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