Cabinet conundrum

Cabinet meet to discuss Pleasurama on the 11th September
 (Extracts)
2.3 Acting on the recommendations contained in the Cabinet report made on the 20th
February the Council served Notice on the developers legal advisor requiring remedy
of the breach of the agreement.
2.4 Following the service of the Notice the development agreement contractually provides
for parties to enter into mediation when there is a significant dispute and therefore on
10th July, a without prejudice meeting took place at the offices of Pinsent Masons.
2.5 At this meeting the Developer informed officers that they had been approached by
Cardy Construction Ltd to acquire the share capital of SFP (Ventures) Ltd thereby
proposing to take ownership of all SFP contractual obligations (including this
development agreement with the Council) and that in principle, the Developer is keen to accept the offer. This would mean that Cardy Construction Ltd would become
responsible for finishing the construction works in accordance with the planning
permission.
2.6 Furthermore Cardy Construction Ltd would amalgamate this company into the
established parent group of companies which has an long history of successful
performance with such schemes.
2.7 Additionally, Cardy Construction Ltd are, in principle, in a position to enter into an
agreement which, subject to successful negotiations between the parties,*1 would mean
the Council would not only receive the overage payments in advance of completion of
the construction but also provide additional benefits for the Council.
2.8 Cabinet is asked to note at this point that 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.
2.9 Notwithstanding the problems that the developer has outlined which they state have
caused a problem in developing out this construction (see 3.2.3) if the matter
progressed to Court, the Courts would expect the Council to undertake an objective
assessment of all reasonable offers put forward in order to complete this construction
project and by doing so receive the overage payments owed to them.

3.5 Furthermore, SFP (Ventures) Ltd could at any stage decide to contest any attempt to
terminate the development agreement by formal action on the basis of several
arguments. Whilst there are varying degrees of merit to these potential challenges
they might include:-
a) some of the delays to the development were caused by matters outside of their
control and therefore may validate the request by SFP to extensions of time, for
example the problems with the cliff face wall, access and egress restrictions.
b) SFP have also made allegations about the actions of a particular Councillor
trying to undermine its attempts to fund the scheme and promote the
development (including its attempts to identify a suitable hotel operator).
c) Notwithstanding the programme of works agreed at the time of the 2009
variations required the developer to build in an illogical manner because the
hotel could not sensibly be opened with the residential still underway; the
highways issue in 2010 made it practically impossible too for the reasons
documented in (d) below.
d) A review of the programme of works in light of the access/egress restrictions
mentioned means that it would be extremely difficult to follow in a safe and
practicable manner (given that if the hotel was built first in accordance with the
programme, access to the remaining site would be obstructed by the hotel), and
Health & Safety Construction Regulations require adjustments to works
programmes where there is a safer way of delivering the project.

FoRS has a response to the above and has issued the following statement and in view of *1 above would like to see points 1 &2 incorporated into any new agreement.

Re: Pleasurama Site

Following the release of the Cabinet papers today Friends of Ramsgate Seafront would like to make it clear that the proposed deal with the current builders Cardy allowing them to rewrite the Development Agreement with TDC is inappropriate and is the wrong use for the site.

Allowing for the caveat that Planning has been granted in 2004 and “work” had started it is unbelievable that TDC would still be considering allowing housing on this site despite their own call for leisure related activities in their own plan (Ramsgate Renaissance documents) in 1998.

Notwithstanding this we believe that 3 things are made clear in the new Development Agreement that will have to be signed by TDC and Cardy before building can start.

1. The Freehold of the site must remain with Thanet District Council and not be sold to Cardy or any other party
2. That the cliff face maintenance be part of the leaseholders responsibility as it used to be up until the current leases were assigned
3. That proper “due diligence” be done on the new developer to ensure that Shaun Patrick Keegan and his associates cannot benefit in any way from any profits ensuing when the development is sold

FORS want to make it clear that we in no way condone the Council’s actions however we understand the position past actions by previous administrations have placed the Council in a very difficult situation.