Wednesday, 9 May 2012

The Royal Sands Development on the Pleasurama Site in Ramsgate back before cabinet tomorrow


Looking at the cabinet agenda for tomorrow, see http://tdc-mg-dmz.thanet.gov.uk/ieListDocuments.aspx?MId=2238 it looks as though there is going to more secret discussion about The Royal Sands Development.

Quite why this major development which is about three or four times the size of The Turner Contemporary is only ever discussed by the council in secret is a bit of a mystery to me.

Of course there will be aspects of the agreements that may need to be secret, I don’t expect the council to publish the developers mobile phone number or bank account details, but with something the size of this development the information soon leaks out and of course we can all see what is going on, on the building site. I was going to say it is like trying to keep an elephant secret, but with the size of this thing I guess it is nearer to trying to keep 100 elephants secret.

With the ten years of delays and nothing to show for it apart from a few concrete posts and a couple of huge roundabouts, the question “where do we go from here?” is an important one for Ramsgate.  

There is a “just give the developer anything he asks for and hope he finally gets something built” school of thought, and a “stop the thing at any cost” school of thought over this development.  

I think looking at both ideas is the best plan at the moment.

So first going ahead with the developer and trying to get the thing built:

I think the reason the development has stopped and the developer has gone back to the council at the moment is entirely about funding.

When this came before cabinet three years ago the funding to get the thing built £10m was pretty roughly based on promises from the contractor Cardy, who promised to put up £1.5m and the hotel backers Wetmore Investments £5m and that the developer had already spent £3.5m.

I would guess the works done over the last three years, the surface drain and part of the building’s foundations probably cost around £1m give or take.

Anyway one way or another the funding isn’t there anymore, so the developer has come to the council asking for help with the funding, this is essentially asking the council to sell the freehold of the site to him, for around £1.6m now and another £1.6m in overage, which is a proportion of the sale price of each apartment when it is sold.

The overall financing plan seems to be that the developer than gets a loan on the security of the freehold land to build the first block of flats then sells them and uses the money from selling them to finance building the next block and so on.

I think the main stumbling block here is that since the plans were first approved The Environment Agency has designated the site a high risk flood zone. Under normal circumstances this would have made a flood risk assessment mandatory, but because of the timing factors we are instead going down the road of putting a new development on a high risk flood zone without a flood risk assessment, here is the EA letter about the situation http://www.michaelsbookshop.com/ea/id2.htm

Putting aside the obvious safety implications, this situation is probably going to make it more difficult to borrow money against the development and the site. I would guess the developer has some plan for doing this or he wouldn’t have gone down this road, however when people come to buy the flats, getting a mortgage on a new build built on high risk flood zone without any flood risk assessment may not be possible.

The number of apartments reserved fluctuates a bit and is available on the developments website http://www.royalsandsramsgate.co.uk/availability.asp obviously the deposits of £2,000 per apartment could also be taken into account, I think there are eleven apartments reserved at the moment. When contracts are exchanged there would also be further 10% deposit although I couldn’t make out from their website if this has actually happened with any of the apartments. 

So lets say we get a year or so down the line and the first block or two, of flats at the Broadstairs end of the site is finished, the people who don’t need to get a mortgage buy their flats and the rest are unable to, so the developer can’t continue the development.

You understand here, that it is the future banana skins that I am looking out for, as I guess none of us want to see the building site, still a building site in another ten years.  

When it comes to financing the development, so that it is reasonably likely that is ever gets built, I think the key question is:

Do you consider it would be possible to obtain borrowing based on the security of residential building land or new build residential dwellings, on land that is designated as high risk flood zone by The Environment Agency? This is both in respect of the developer obtaining finance using the freehold as security, in the immediate future and at the point when prospective buyers attempt to obtain mortgages to buy apartments and the monies obtained from the sale of apartments is required for further funding of the development.

I have put this question to the council officer in charge of the issue and various local councillors; so far no one has given me a definite answer and many of them seem to have the same reservations as I have.

The other side of this financial coin is the council’s potential liability for maintaining the cliff and sea defence for the life of the development. What I mean by this is over say the next hundred years before the development is demolished, what is it going to cost the Thanet council taxpayer to maintain the cliff façade and sea defence to a suitable standard relative to their proximity to residential development.

Residential developments between unsupported chalk cliffs and unassessed sea defences are not very common, so it is difficult to assess, I would think that the £1m the council has spent over the last ten years is about all we have to on.

There is also the a side issue to going down this road of selling the land to the developer, and that is that the sale would have to go through the asset disposal process. This is a fairly involved process that local authorities have to go through when the sell publicly owned assets. I think the idea here is that it prevents members of the council from selling of public assets for less than they are worth, perhaps to friends or associates. 

I suppose the council could decide to miss out this process altogether, but I guess that this would leave the sale open to legal complications.

Now we come to the alternative of not going along with what the developer would like.

I guess one factor here would be how the site was left, it obviously couldn’t be used for leisure or parking with the concrete posts sticking up.

I guess the cliff safety issues would resolve to the don’t sit under the cliff level that applies to most of the unsupported chalk cliffs in Thanet. The flood risk issue only really relates to anything there in the winter months.

I would say the main potential banana skin relates to the money the developer has already spent and whether he would take the council to court to try and get some sort of compensation.

I will give this some more thought and try and add anything else that occurs to me.


18 comments:

  1. stop the work clear the site build a proper indoor swimming pool/icerink most of thanet would be for this better than posts in the air

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  2. This used to be a play area for visitors and residents in Ramsgate, we have been robbed of our seafront,when are we going to get a £17 million sugar lump like Margate to regenerate our town?.
    Stargazer.

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  3. I think we whould be told who the directors of SFP are. It is a disgrace that our seafront has been sold to anonymous people. It's an even bigger disgrace that TDC has allowed them to flout the contract which was signed by not ensuring that the bond was paid. Does anybody know if the developer has paid TDC one penny yet? If not, why not?

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  4. Why doesn't anyone want outdoor swimming pools anymore? Would be far more fun than an indoors one.

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  5. Peter I don’t know if you ever used the marina pool further along the eastcliff but it was in the shade in the afternoon and extremely cold, if in the unlikely event that we do get some sort of leisure facility there it need to be an all weather alternative to the main sands.

    I think the problem we have is that all the viable commercial leisure facilities revolve round food and drink and pretty much anything else would probably need subsidising, The Turner Contemporary being an example of what I mean.

    I believe there is some funding for a swimming pool at the moment however the joined up thinking that could use this to make Ramsgate an all weather resort by building it on the seafront isn’t likely to happen.

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  6. Donnygate ???

    http://www.guardian.co.uk/society/2002/mar/13/uknew

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  7. Build it and they will come!
    Outdoor pool,ice rink,funfair,just build it!

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  8. has to be indoor pool for max 52week use out door would not be viable most of the year

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  9. it will never happen no brown packages to be had

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  10. Its funny that with the Royal Sands buildings on the site Michael Childs suggest that everyone and everything will be washed away in the 1 in 100 year storm......yet he then suggests thatthe s ite is used for Leisure/Pool etc Wont the floods then come and wash away our children and all the other Pool users.....the answer is no...because the chances of there ever being floods of the magnitude like he suggest is bonkers.....

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    1. I guess the problem Anon is that I really don’t know what would be washed away in a big storm and frankly this isn’t important.

      What is important however is nor does the developer or anyone else because there hasn’t been a flood risk assessment. What you have to appreciate is that if there were new plans for any sort of development, pool flats whatever, then there would have to be a flood risk assessment and we would all know.

      It may well be that the development is OK and there is no risk, it may well be that a small amount of work to the sea defence would make it OK, or it may be that there are serious and expensive problems that need addressing.

      Whatever the situation I don’t think the developer would have to finance any work on the sea defence, I guess it would come out of the national costal protection budget.

      From your comment I am assuming that you want to see the development go ahead and the apartments be sold, to do this people will have to be able to get a mortgage and insurance. Now my guess is that given a high enough insurance premium and a block policy covering the whole development it should be possible to get insurance. That leaves the problem of getting the money to pay for buying the apartments, so one question for you.

      How does anyone get a mortgage for a new build apartment on an EA designated high risk flood zone without a flood risk assessment?

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  11. I doubt if people would be using an outdoor swimming pool in a massive storm anyway...

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  12. People would get mortgages in exactly the same way they get mortgages for properties in other similar situations, or are you assuming every property in say Sandwich is owned outright?

    I`m sure your aware that insurance is a measure of risk against actuality resulting in loss, an example being premises with a high fire risk due to the amount of combustible materials stored, like a book shop are these uninsurable? Petrol stations are these uninsurable? No

    Yet again you and your herd of sheep side step facts with unfounded supposition and twisted reality.

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    1. I’m not really sure where you are coming from here, I had assumed that you wanted to get thing built, perhaps you have some other interest, which begs the question who would benefit if we get another three years up the line and more financing complications?

      As I said I think the insurance problem is surmountable at a price.

      The key problem here though is that there aren’t any new builds on high risk flood zones without flood risk assessments, in Sandwich or anywhere else in the UK, as they are a mandatory part of the planning procedure.

      Of course if you are buying an old property in a high flood zone and need a mortgage, then you would need to get a flood risk assessment and in some cases the results of this means that the property is unmortgageable and only insurable at a premium that is so high as to effectively make it uninsurable for flood damage.

      I think the key here is that this new development ticks the normal boxes for a new development and frankly the flood risk assessment is just a normal box, like the National House Builders Council warranty, which the apartments will have or proper title proving the property’s ownership which they will also have.

      Look at it like this, if you want to tax your car you have to have MOT, insurance and the documents that prove you own it, with this particular car there is no MOT, saying that there is nothing wrong with the car won’t get you road tax and if the brakes on the car don’t work at all, as long as you have the MOT you can still get the tax disc.

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  13. Back and forth like a game of planning and development ping pong...it is a sad fact that Marina Sands seems no nearer completion than it was several years ago. Although some of the more technical information on this blog leaves me piggle-eyed and scratching my head, I for one just wish they'd do something with the site- a swimming pool, ice rink, even a donkey racing track would be preferable to the grey concrete "pit of despair"!
    I have only a passing interest in this really but will be very glad when something more "concrete" is announced....if you may please excuse the pun.

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  14. Michael 1:44

    Yet again you step my point with an incorrect statement.

    Having an MOT is a requirement under law and therefore is not a comparison.

    While the idea of a leisure facility somewhere along Ramsgate seafront is a grand idea there are a number of small issues to consider.

    1. What kind of facility is likely to generate sufficient foot fall to cover costs, not an art gallery although heavily subsidised, that’s been done, Amusements? No otherwise Dreamland would still be operating, A Sealife Centre, no private investors want to be sure of a profit. That leaves a swimming pool, Thanet already has two!
    2. Land – putting the Royal Sands site to one side – where is this new leisure facility to be located? Where there is sufficient foot fall, road infrastructure and parking facilities.
    3. Funding – Local government? the EU? I don’t think so. Private investor? not a chance otherwise Duncan Bannatyne would have already draw up plans.
    4. Planning – 2-3years?

    I’d be pleased to hear any positive answers to the three questions above and maybe Michael we can then draw up a business plan and give Ramsgate a facility to be proud of. Oh nearly forgot, and make a profit,,,,,,,,Simples!

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    1. Anon as I said before I am not really sure what your point is, mine is that if the council is going to help the initial funding by selling the freehold to the developer in instalments so that he can use its security to fund the development, then this funding plan must be workable. The MOT was a simplified example that I thought would be easy for you to understand, however legal requirement or not, if the flats can’t be mortgaged the game of Monopoly stops.

      When SFP first tendered with Whitbread, the other firm to tender was Westcliffe Park estates, the one that built the development opposite the boating pool. I guess the at the time the council thought Whitbread’s were a better bet and accepted that tender, however as you probably know Whitbread pulled out.

      What Westcliffe Park estates offered was a mixed residential and leisure development based on the design of the redbrick arches, the leisure element was to have been a swimming pool on the ground floor to be gifted to the town on completion.

      I don’t know how viable this would be of even if the offer is still open, but it could be worth investigating.

      You somehow seem to have got it into your head that I am suggesting some sort of unviable development, obviously with any development there it will be the residential aspect that funds it.

      I think it unlikely that the commercial units there will be very viable due to how exposed the site is in the winter and the lack of parking and I guess the hotel would face the same difficulties. I think people unfamiliar with Ramsgate in winter are inclined to liken the site with the much more sheltered Harbour Parade.

      If you consider that in the last big storm, 1978 I think, the sea lifted the coping stones that weigh two and half tons each and form the top of the eastern harbour arm and threw them over the wall, photo if you want.

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  15. Michael,

    Thank you for pointing out your MOT analogy was in an effort to compensate for my lack of understanding, yet again another example of an incorrect assumption in that my knowledge of the particular circumstances is less than yours. Simplistic or not your example is incorrect.

    A number of correspondents had suggested, as you have in the past, the site be used as a leisure facility; I posed four simple questions in an effort to highlight the various difficulties surrounding such a proposal, however clearly you have missed my point.

    As for the storm, I’m well aware of the damage caused to the harbour arm, I’m also aware that Margate used to have a pier just opposite where the Turner Centre now stands.

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