Wednesday, 22 July 2009

Displeasurama and Ramsgate Royal Sands Under Development

One of my relations got his 2.1 in economics (it would have been a first but he had student digs at the end of a international airport’s main runway) he went into accountancy and was certified.

He could easily wound up in a bowler hat playing a gorilla in Monty Python, had he been born at the right time, but as it is he seemed the best chap to explain the business aspects of the Pleasurama saga, one is never certain with accountants about very much, apart that at some point their bill will be larger than you expect.

If an accountant can be called respectable, (do such things exist?) he is. I mooted the financial aspects of Pleasurama having just paid for two unreasonably expensive coffees.

Things didn’t get of to a very good start, conversation thus.

I said. “Would there be any special problems associated with dealing with a British Virgin Islands company?”

Rising to leave he replied. “If you intend to have dealings with a BVI I cease to be you accountant forthwith”

After a bout of soothing, a banana may have been involved (Monty Python had a disproportionate effect on my generation as did Terry Pratchett on his) I don’t think he can really differentiate exactly between librarians and secondhand booksellers. He understands the new breed of Waterstones et al, as a marketing operation with over priced snacks and books. But as my accountant he is only too aware that I am somehow involved with the shuffling around of books that have already been read, where any financial gain is incidental.

So in some subconscious way we partly see each other as orang-utan and gorilla.

This conversation about BVIs first occurred all those years ago when I first realised that SFP might cause problems for Ramsgate as a developer.

Now after 11 years of the main council owned leisure site in Ramsgate being trashed with many chances to opt out of the insanity, tomorrow our councillors have another chance.

I am going to stick with the performance bond on this post, and forget the other ludicrous aspects of the last 11 years, so ridiculous is this bondlessness that I find I am unable to write a totally serious post about it.

In the sane world of normal developers the developers bank issues a performance bond, this is an insurance policy to protect the land or property owner if the developer goes bust. A £5,000,000 bond costs about £10,000 of the bond value.

Say your house is worth about £500,000 and take the same ratio house insurance (just building not contents) of £1,000 wouldn’t sound unreasonable this is about the same ratio as I pay here, contents insurance is extra.

The developer is saying that their bank want £500,000 for a £5,000,000 performance bond.

This is equivalent of it costing £50,000 to insure your £500,000 house.

Yes 10% of the of the value, this means that if 9% of the buildings my insurance company insured burn down they would still be making a profit.

Or if 9% of the developments the banks issued performance bonds resulted in the developers going bankrupt the banks would profit. Assuming that the average developer builds at least 10 developments covered by performance bonds that means all developers going bankrupt.

Perhaps my maths is wrong anyone care to correct me?

In view of tomorrows vote perhaps some of you could try and get across to your councillors that if SFPs bank don’t consider SFP safe to insure then perhaps they should consider the implications of this, before TDC take a huge financial risk with them.
If any of you have missed the point the council officers are recommending to the councillors going ahead without a performance bond.

1 comment:

  1. TDC have got it all undercontrol dear its just a commerial (in best Michael Winner voice)


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