Extraordinary Overview & Scrutiny 25/9/2014
Cabinet had considered an officer report regarding Pleasurama on the 11th September 2014. The decision was to allow officers to continue to progress the offer from Cardy to buy out Keegan’s interest in SFP Ventures (UK) Ltd and then to renegotiate the Development Agreement as the current agreement is “not fit for purpose”.
O&S considered this Cabinet decision and decided to call in the decision for the following reasons.
“I (Chairman Cllr Jo Gideon) am not persuaded by the argument and evidence given in the report to postpone implementing the earlier Cabinet decision agreed on the 20th February 2014. I have some doubts about the clarity of aims and desired outcomes arising out of this decision and I would therefore wish for these to be explored further. Given the considerable local interest in the site I would wish the matter to be called in”
FORS has already written to the Chair and other members of O&S as follows
“We have probably been perceived as a protest group and in reality this is what caused us to unite in the first instance however time has moved on and the research we have conducted into the business dealing of Shaun Keegan et al has proved time and time again he is a man with no moral scruples.
We understand at this late hour Thanet Council has been thrown a lifeline by a reputable local building firm however history has proved over and over again that this may be an illusion and Thant Council have always seems to shy away from the difficult answer.
Many of you, and I include officers here, do not know or understand the long history of the site and the engagement of Shaun Keegan in 2002 and I would doubt anyone would know of the late Jimmy Godden's antics with the Council. What is clear from the research is that Shaun Keegan and his backers are playing a very long game here and until the Cabinet meeting the word land bankers hadn't even been acknowledged.
We would urge O&S to ensure a rigorous process of "due diligence" is followed as soon as the purchase of SFP Ventures (UK) ltd is confirmed and we find it extraordinarily difficult to understand why we have been told that this process has already started and is "going well". We would urge the engagement of a forensic accountant and if necessary a private detective to delve into the myriad companies both owned and influence by Keegan to ensure that this deal is open and transparent, because what is apparent TDC has been played for suckers for over 12 years by a very devious businessman. We would also urge those that do not know the history to read the very detailed blog at http://pleasurama.blogspot.co.uk/.
Finally we are ready to play our part in any decision making process however we cannot do that if O&S take the view that they know best and exclude us. We have a vested interest in whatever decision is made as we have to live with that decision and we would urge you not to shy away from a very difficult decision just because you perceive an 11th hour lifeline. As my father told me there is no such thing as a free lunch.”
The Chair wrote back to assure the meeting would be held in public and we then wrote back the following letter.
“Friends is appreciative of your email Mrs Gideon confirming this will be an open meeting and we would hope this continues into the future.
We would hope that many of the objectives of the Task & Finish Group are not neglected in this desire to achieve an acceptable settlement. We would like to take this opportunity to remind, should anyone have forgotten, the recommendations of the TFG set out on the 20th February 2014.
1. That the current development agreement and leases be terminated (yet to happen)
2. That there is no re-negotiation of the current development agreement (yet to happen)
3. That the previous advice from Eversheds solicitors be reviewed to determine why the development agreement did not contain a longstop date entitling the Council to terminate the agreement if the development was not completed by that date (yet to happen)
4. Completed so no issues
5. That the Construction expert be retained to support the officers in the monitoring of the development programme (yet to happen but still a good idea)
6. That the quality and condition of the existing construction work (including the foundations) be checked to confirm that it remains fit for purpose as a basis for further planned construction.(still to happen)
Further, in view of Cardy Construction's further links with SFP in Lowestoft, a rigorous "due diligence" process to be put into place by a forensic accountant after Cardy purchase SFP Ventures (UK) Ltd (and not before) to ensure that Cardy is acting totally independently from any of Shaun Keegan's associates.
Further that the developer's lease removes the obligation for TDC to maintain the cliff face behind the development.
Further any renegotiated lease and /or Development agreement ensures a fair consideration is received for a 7 acre site in a prime position with planning permission already granted.
Further to negotiate with the developer the removal of the Hotel complex and instead create a Piazza which can be used for the community and the holding of events on the seafront.
As it would be unusual for the communities interest to be protected by an independent member of the public sitting in negotiations as a witness we would like all current political parties involved so we would like another TFG given that job of overseeing negotiations.
We would hope to have been involved in these negotiations however we do have some expertise in investigating the issues and we would hope some input into the solutions as well.”
The meeting took place with several members questioning the evidence (or lack of it) being produced to support the Cabinet decision with the meeting seemingly becoming fractious with Cllr Everitt and acting CE Madeleine Homer appearing to be ill prepared for the level of questioning until Cllr Ian Driver proposed that the meeting be postponed until the members of the O&S had been given the opportunity to view the evidence.
This evidence comprises the legal advice from Pinsent Mason, The District Valuer’s re-evaluation of the site and the inspection of the cliff face facade being done on the 15/16th October.
Further they asked that the discussions, currently ongoing with Cardy, be shared with the Committee. They elected to propose this motion and it was narrowly carried causing consternation on the part of the Labour members and officers present.
Having had some conversations with people since the meeting we believe that this Democratic decision is about to be overturned by the Labour Cabinet. We believe this (if it happens) will be a gross dereliction of the Democratic Process and will be met with considerable anger. They have to remember that all that has been requested is for the evidence examined by the Cabinet be made available to the O&S and further evidence of the valuation and the cliff facade be examined as soon as it is available.
Can the Cabinet do this?
Seemingly O&S can do 2 things with the Cabinet decision:-
1. Recommendations can be referred to Cabinet for amendment or Cabinet can ignore.
2. Recommendations can be referred to a full Council meeting.
In this case they have deferred a decision until they have properly examined the evidence and FORS believes that if the Cabinet have nothing to hide then deferment is an appropriate choice.
A detailed Q&A was produced by Cllr Rick Everitt & Officers as follows:
1. Why is the council talking to Cardy Construction Ltd about the Royal Sands Development site?
A default notice was served on the developer, SFP Ventures Ltd. The development agreement provides for a mediation process to be entered into following the service of a default notice. Each party to the mediation process is entitled to bring their team to the discussions. SFP Ventures brought Cardy Construction Ltd to the mediation process and introduced this new offer arising from a company buy out by Cardy Construction.
2. What is Cardy Construction Ltd’s offer?
Cardy Construction Ltd is offering to buy the share capital of SFP Ventures Ltd. Upon completion of their purchase of the company, the firm would be renamed and incorporated into the Cardy group of companies.
The offer includes the opportunity for Thanet District Council to enter into a new contract (Development Agreement) which enables the outstanding money owed to the council to be paid ahead of completing the development. This is subject to a current market valuation to ensure the council gets the best consideration.
3. If SFP Ltd sells their company to Cardy Construction Ltd, will SFP Ltd continue to be involved in the development?
Upon completion of the sale of the company, SFP Ventures Ltd will have no further interest in the site as we understand the company will be taken over and renamed. The council’s due diligence process will confirm the validity of the legal entity of the company to ensure that Cardy Construction Ltd through its new company is the owner. (but will Keegan & Hill still have an interest?)
4. Could the Council advertise for a new Joint Venture partner to develop the site?
The council has no legal rights to do this. The joint party in the development agreement is SFP Ventures Ltd, they can choose whether or not to sell their company and if they sell, who they sell it to. (Of course they could it is called a back to back. have they taken legal advice, if yes what was the answer?)
5. When would the building work begin?
Cardy Construction Ltd would commence works on site immediately upon conclusion of the signed contract (DA) and complete the project within two years (with a long stop date of three years).
6. Who will own the freehold once the site is developed?
The current contractual arrangements with SFP entered into in 2006 mean that the Council has substantially disposed of its freehold interest in the land (with freehold transfer provisions documented in the development agreement); the Council’s only continuing legal interest is the right to receive overage payments in respect of the completed units. (except we are rewriting the DA)
There is no change in this situation, the reason it is necessary for the transfer of the freehold is because the arrangement will enable the developer to grant for sale long leaseholds in the finished property.
7. What due diligence will be undertaken to ensure Cardy Construction Ltd is competent and capable of building out the site in a timely manner?
The due diligence process for a contract (DA) of this type is rigorous and includes obtaining evidence of a viable development appraisal, proof of the company entity and confirmation that funding is available to deliver the scheme.
One of the considerations to take into account is the company track record for delivering projects of this nature. Cardy Construction Ltd has been associated with the successful delivery and restoration of some of the most iconic and important buildings in Kent over the last 70 years including Discovery Park, QEQM Cancer Care, Rocksalt, Kent Cricket Ground, The Sands Hotel, Chilham Castle, Canterbury Cathedral, Kent and Christchurch Universities, Chatham Dockyard, East Kent Hospitals. They have a consistent reputation of delivering quality projects. (Oh dear Alan Poole all over again)
8. Will this support the economic regeneration of Ramsgate?
Yes. There would be direct employment opportunities during the construction project, Cardy Construction Ltd has demonstrated a desire to employ local tradesmen and apprentices to the project. Cardy Construction Ltd has confirmed it would also initiate a project specific apprenticeship training scheme through the Construction Industry Training Board and the local college.
Once constructed, the hotel, leisure and residential units would support on-going employment opportunities in the service and hospitality sectors. (This has been said so many times before yet it will be 12 years in December since we took on Keegan)
9. Is the cliff wall sufficiently monitored to ensure structural stability?
The wall is regularly surveyed by TDC engineers and East Kent Engineering Partnership structure engineers. It was last surveyed in July 2012 and is due again in 2015. However, TDC has decided to bring this survey forward as part of this process and have now instructed a full structural survey to be completed on Thursday 16 and Friday 17 October. (see the previous post only the Facade is monitored)
10. Who will retain control for the maintenance of the cliff wall?
The cliff wall adjacent to the building site remains in the ownership of the council. The cliff wall supports the land above the cliff including the promenade. The council will retain responsibility for inspections and maintenance of the cliff wall. (please separate the Facade and the cliff face they are different. The facade supports nothing but itself)
11. Are there any other monitoring authorities that TDC is consulting with to ensure the project is built in a safe manner and that the property once built will be adequately protected from flood risks?
There are specific construction laws that the council complies with to ensure suitable and sufficient safety systems are in place. A project of this size is notifiable to the Health and Safety Executive (HSE) so that they can monitor progress. The council has contacted the HSE and invited them to review all safety files and they will be invited to project meetings if the project re-commences. (But still no FRA from the Environment Agency)
12. What are the risks of flooding to the units once built?
The likelihood of flood to this area is a 1 in 200 year risk. It is worth noting that the design of the buildings has taken this into account by putting the car parking on the ground floor, there is no residential accommodation at ground level.
Cardy Construction Ltd would ensure that it worked with the Environment Agency and Thanet District Council to have suitable and sufficient measures documented in a flood risk management plan to safeguard future occupants. (Why no Flood Risk Assessment as the EA have requested)
13. The existing construction work has been lying in the ground for some time – is TDC taking steps to ensure the existing construction is adequate?
The foundations have been designed by a professional practice of Chartered Civil and Structural Engineers with many years of experience of engineering design and coastal defence works around the Kent coast, including Thanet. They have been designed in conjunction with specialist Geotechnical Engineers with very detailed reference and due regard to the extensive site investigation documents, including trial holes, trial pits and integrity testing, all of which have proved and verified the final choice that has been taken.
The design of the foundation complies with Building Regulation Requirements and very detailed and extensive calculations have been undertaken to verify this. The foundations have been inspected and approved and signed off at various stages of the works by Building Control and by the surveyor on behalf of the warranty provider. (However they have been in the ground for over 2 years without any protection and have NOT been inspected recently)