Tony Careless, a solicitor who runs the only legal practice in Ventnor, has produced the following document, raising a number of issues of concern about the up-coming delayed Delegated Decision that is due to be made by Cllr George Brown on the future of the Ventnor Winter Gardens.
(VB had a once-over of the contract previously)
When VB spoke to Tony about it, he said, “This is not a strict, authoritative legal opinion, just points raised by a concerned local resident. It’s based on only having seen the documents that have been made publicly available.” Ed
Points of concern
Points of concern re items in appendix D to the Isle of Wight Council delegated decision document regarding Ventnor Winter Gardens issued on 11 August 2011:-
Restrictive Covenant
The limit of 10 years on the period for which community access to the Winter Gardens must be guaranteed is of grave concern, having been said to be required “in perpetuity” by the Council since the Winter Gardens was first advertised for disposal.
This issue is dealt with in detail elsewhere, but the 20 hour a week over 26 weeks provision proposed also gives the bidder great latitude to “cherry pick” the best times and leave the community with scraps.
Option to purchase
Looking at the timings for this, the preferred bidder has two and a half years to get underway, AFTER they have their planning consent (18 months from the anniversary of the planning consent).
The Council can’t act until three years have passed from the planning permission issue date, by then the place will have suffered from further significant decay.
Price
£1 was the consideration appropriate for the building (a liability in the Council’s stated view), to be taken off their hands and in the light of the other restrictive conditions.
As now proposed however the disposal conditions place risk upon the Council that it will have the financial burden of the Winter Gardens for an uncertain and potentially lengthy time still (see below) whilst the restrictive points originally envisaged (see below) have either disappeared or as in the community use aspect been diluted significantly.
Conditions and Completion
First, the matter is state to be “subject” to the bidder obtaining a “satisfactory structural survey”. It had been understood that the whole disposal process was based on the bidder taking the building in its current condition “warts and all”, that is why the Council were letting it go.
It is accepted by all concerned that the venue needs substantial investment and work carried out, so what is meant to be the effect of a surveyor saying it is “not satisfactory”, as any surveyor might?!
If it fails to be classed as “satisfactory” what will be the consequence? Will the bidder want to withdraw, or re-negotiate terms?
Secondly – Planning consent
Secondly, there is reference to a planning consent. It is not clear what the consent is intended to cover, whether this is the initial work, or is to include the proposed Hotel wings too, but it will take considerable time to get through, and in the end must be “satisfactory” to the bidder.
There are no objective criteria to determine whether any condition or other aspect of the permission is satisfactory or not, this is left entirely to the bidder to determine. So, if the buyer decides that any aspect is “unsatisfactory”, the matter will not proceed to completion.
No longstop
Further, there is no longstop or fall back date to set a limit to this part of the process, during which contracts will have been exchanged but the sale will not have been completed.
During this indefinite period, the Council’s position will be that it will not have transferred ownership, so the building will throughout all this process, which the buyer can effectively control, continue to be the Council’s property and the Council’s financial responsibility, which has been stated to be exactly what it is seeking to avoid. Indeed, in the delegated decision report it is stated that it is in the Council’s best interests with this sort of situation that they dispose “as quickly as possible” (para 23).
“This deal poses grave risk to the Council”
As a consequence, the combination of the “conditions” section and the periods in “option to purchase” mean that this deal poses grave risk to the Council in regard to its financial exposure for the Winter Gardens for an uncertain, uncontrollable, and possibly lengthy period. And reading the report (para 47) they have yet to be provided with a statement that the Hambrough do have the funding required in place to be able to spend what has been promised.
Omissions
Quite apart from the contents of the offer the Council wants to accept, there are conditions absent which those who have been engaged in the disposal process had expected to see.
In the suggested Heads of Agreement sent out by Jason Doughty of the Isle of Wight Council to anyone who made an approach, the draft terms for a freehold disposal (embedded below) include not only the community access covenant, but pre emption (for 21 years the buyer would have to offer back to the Council before selling to anyone else) and overage (an obligation to pay to the Council 50% of any enhancement in value arising from planning gain). These have completely disappeared, have been omitted from the appendices to the delegated decision report and are not mentioned at all in the text of the report, even though they were clearly considered to be basic points when the process started.
Summary
These comments are not intended to propound the case of any other bidder, but to analyse the “Best and Final Proposal” currently being considered, and favourably considered from what one reads in the document and sees quoted by representatives of the Council in public media.
Surely the potential consequences of what is about to be authorised should be considered most carefully by all democratically elected representatives, who should at least be given a chance to consider the alternative options set out in para 38 of the report, having had the benefit of an objective appraisal of the contents and combined effect of the current preferred bidders’ proposal.
