Council agree to slash £2.4m off land price in ASDA deal

Council Executive agree to vary the terms of the ASDA lease, but say that if it’s not completed by 1st September they’ll take legal action against ASDA for breach of contract.

Fifty pound notes

At last night’s Isle of Wight council Executive meeting, members voted on recommendations to vary the terms of the Lease with ASDA.

As reported last week, the supermarket chain, owned by American leviathan Walmart, had demanded changes to the Lease before agreeing to purchase the land next to Newport FC’s ground on St George’s Way.

ASDA wanted to knock £2.4m off the price of the Lease, as well as vary parking restrictions and delivery times. The discussion was held in private, but following the meeting, the council tweeted the outcome.

Full details in the paper below. Click on the full screen icon to see larger version.


Image: Images Money under CC BY 2.0

Friday, 15th May, 2015 8:31am

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Filed under: Business, Island-wide, Isle of Wight Council, Isle of Wight News, Newport, Top story

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35 Comments on "Council agree to slash £2.4m off land price in ASDA deal"

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Colin
I think Asda have a point there. Why is it neccessary to have any parking conditions if Asda don’t want them? What’s the problem? As for deliveries at nightime hours; I thought the ferries were used by many commercial operations at off peak times. It’s not as if it’s situated in the middle of a housing estate. Do other supermarkets have such conditions imposed upon them? I… Read more »
billy builder

The Independents on the Council have rolled over again. Absolutely no bottle – Why did we elect them ?

Cicero

….. because the alternative candidates were worse?

billy builder

Yes, I know, Pugh and his mates would have been far far far worse. It would be nice though to have a set of Councillors with weren’t either eunuchs (as opposed to without b****) or selfish self-centred TT’s

phil jordan
BB: we did not “roll over”……. with full information given to me ( some commercially sensitive and not therefore in the public domain) i am of no doubt the authority have achieved the best price for this land at this time and with all aspects of the issue considered. There are public domain recent cases ( Devon is one from memory) where challenges to these practices have… Read more »
Cicero

@PJ “Much of these actions stem from serious changes to the market for large food retailers who are realigning their strategies to adapt to new challenges.”

…… such as Sainsbury going into the hotel business? Maybe Walmart/ASDA is thinking about land banking for future housing/industrial park developments?

phil jordan

cicero:
certainly not housing for a very, very, very long time….

Cicero

How do you know that Phil?

Once the freehold has been transferred IWC loses control other than planning- and we have seen how quickly planning collapses in the face of a legal threat from somebody with deep pockets!

Joe

Because there are still 600 houses to be built on Pan for which there isn’t a demand?

Cicero

@Joe So presumably IWC will refuse planning permission for any large scale applications like Pennyfeathers and East Cowes and revoke the planned expansion of the Arreton site?

If not, why not?

phil jordan

cicero:

we know that because of the land designation.

phil jordan

Joe:

Yes….and that as well…..

billy builder

Phil, the problem is that by not standing up to Asda you are showing weakness. It would have been better to walk away from the deal than cave in.

The Island doesn’t need Asda, but I suspect that Asda needs the Island.

The Independents showed a similar lack of backbone by not challenging the governments Council Tax rate cap.

phil jordan

BB:
‘walking away’ was not a legal option for us. we have contracted to sell this land.

Cicero

PJ Perhaps you could clarify “Contract to sell the land”?

Is not the contract merely “An Agreement for Lease” rather than “sell” the land? Is not this that ASDA is trying to convert into sale of the freehold?

phil jordan

cicero:
certainly not housing for a very, very, very long time….

phil jordan

cicero:
the agreement was always for the freehold…. the variation just changes the date of that freehold transfer….

garageelfiniow

So you entered into a legally binding contract to sell something but where the purchaser can reduce the consideration but where the vendor cannot have any influence. Seems entirely unreasonable terms for the tax payer and typical of the illjudged decisions coming from our Independant/Liberal local council

Cicero

Phil- “the agreement was always for the freehold”

Then I do not understand why the words “Agreement for Lease” are scattered like shrapnel through the Officers’ report above.

phil jordan

cicero:

To try to explain this…. the original agreement saw the Freehold transfer on store build/opening.

Now it is on completion of sale.

Does that help…?

Colin

@ Phil

You are on of the few who do post on here, so thanks for that.

Can you answer why the council were insisting on the two conditions that have caused this potential loss of £2.4m?

phil jordan
colin: one of the complexities in this whole matter is the Council are the land owner and therefore have a vested interest in the sale……but are also the planning authority which has to remain unnconnected with any tampering with the planning ( leading to legal challenge). Some of this is not disclosable but i think i can disclose that the two issues you mention were never brought… Read more »
Colin

@ phil

Ok, thanks. Understood so far.

The Sciolist

Not in the public domain , the excuse we always hear when they can’t explain something that looks obviously wrong.

wighton
Walmart (ASDA) has a predatory reputation for targeting poor and rural areas on purpose. The moral of the story is when a company has an internationally renown reputation for being systematic bullies – never mind their unfair labour practises – don’t even start to do business with them. The only way to have fought this from the beginning is if the Council had a proper corporate strategy… Read more »
phil jordan
sciolist: not an excuse… and neither does this ” look obviously wrong” i have tried to give further breadth to understanding why this decision is pragmatically and commercially correct at this time…… given all available prevailing factors. Agreements already in place prevent some information being disclosed. What also needs highlighting is that due to these agreements, this matter was listed as ” in camera” with press and… Read more »
Colin

We don’t need to be there. We have elected councillors. Sometimes some of us aren’t over happy with some of the decisions though.

davimel
Are we now to assume that the council agreed to release the land PRIOR to ASDA starting to build, in which case is there any proviso to prevent ASDA from simply selling the land (at a profit) and not building anything? I do see a potential disaster looming here.. another costly loss of money and face for the Island! I just hope that this council have protected… Read more »
billy builder

The trouble is the Council no longer has staff suitably skilled in the professions to make objective judgements about anything. Admittedly, they have probably never had legal expertise worth a tap.

In the land of the blind, the one eyed man is king, aren’t you Mr Metcalf.

billy builder

I would be interested to know which officers and members were involved in negotiating this deal that has appear to have lost the Council 2.4m.

phil jordan
Davimel: there is a risk…. we cannot get to a place where there is no risk in everything we do. the land is designated light industrial use only ( not residential) and we know that nearby on Pan we still have a further 600 homes to be built (. …. but are not yet due to problems of housing sales). It will be many, many years before… Read more »
davimel

Thank you for the info Phil. I am somewhat appeased by your response and your honesty. I just hope they stop the game playing and get on with building the damned place, or make their excuses for delaying for a year or two.

bigj

my local toilets, closed, and on the market for £35,000 with many many strings attached. if i threaten to sue can i have a discount and/or convert to much needed living accommodation – thinking of changing my name to Andrew Stuart David Andrews

Bones

Slightly off the point , but if they can’t sell 600 houses on Pan why are the big developments in Ryde and Arreton being waved through ?

Cicero

Why? Fear of having to spend money on legal costs fighting the applicants in their inevitable appeals and courts cases.

The ASDA debacle is just “Arreton” writ big!