Thursday, 7 January 2016

Waterfront: The Tangled Web.

Channel Television reported this:

New plans have been submitted for one of Jersey's Finance Centre buildings, in an effort to stop a rival developer appealing against it. Building five, which is next to the building that is currently being built at the Esplanade, already has planning permission. However, it is being appealed against by a developer who owns land nearby.

The new plans submitted by Jersey Development Company makes superficial changes to the Building Five's plot. This would stop the developer who is currently appealing from being able to appeal.

Save Our Shoreline have issued this press release:

SOJDC Resubmit Plans To Try And Avoid Appeal, Costing The Taxpayer Over £100,000.

Dodgy moves by SoJDC - 06 Jan 2016 - SOS Jersey. In an unprecedented move to avoid the Planning Department’s recently installed Third Party Appeal process, the States of Jersey Development Company (SoJDC) have reapplied for planning permission for the next Building in their ‘series’ (Building 5).

This building has already been approved but is the subject of a third party planning appeal by rival developers Le Masurier & Co, on the grounds that the footprint is less than 50 metres from land that Le Masuriers own.

A top UK Planning Inspector has been awaiting documents from the developers which have not been forthcoming and has expressed his dissatisfaction with the situation as he had been scheduled to hear the case in November and had to re-schedule the hearing for February.

The panic measures shown by SoJDC who have spent another £100,000 to re-apply (plus unknown but very considerable extra costs on architects and legal fees) are evident. Urgent questions should be asked in the States and moves made to halt this peculiar and unprecedented behaviour by this COM approved and out of control Quango.

We can expect more months of legal wrangling and public monies tipped into this seemingly bottomless money pit – Jersey’s prestigious ‘International Finance Centre.’

On the St Helier Waterfront Action Group, a posting says:

By the sleight of hand of moving the building to the south so that it is now magically outside of the 50 metre rule which is part of the basis for the appeal they think that they will bypass the appeal process completely.

In addition to this extra cost they have also announced through their statements within these planning documents for building 5 that they intend to progress with plans for the next Phase - Buildings 3 and 6. The costs for progressing through all the stages required for planning for each of these buildings amount to about £2Million per building so very soon they will have amassed professional/planning costs of nearly £8Million for buildings 3,4,5 and 6 but still have only UBS as a prelet for a mere 25% of ONE building.

Sean Power posted the following on Facebook:

The cynicism displayed by SoJDC in this latest legal and planning stunt is nothing short of breath-taking. Building 5 is already approved. They are now applying to have it approved again. This is a wholly owned subsidiary of the States of Jersey. They are fiddling and playing with the system. They are deliberately engineering a situation whereby they avoid the appeal process. They pay another fee of £100,111.00 on TOP of £90,000 paid last year to step round the planning appeal system. Everyone else that makes a planning application has to embrace the full planning system including the right to appeal. This is not the case with the Shady Development Company. They are the developers on States owned land with few neighbours. What a disgrace. What an utter disgrace. The shenanigans and antics continue.

It may be that the Independent Inspector appointed (from UK) will go ahead and hear the Le Masurier appeal in February. The boundaries have changed on Building 5, NOT the building exact location. They have put the building in a new company. So this application, the 2nd one for Building 5 with a planning fee of over £100,000 may be a fail safe attempt to get another approval if the Independent Inspector finds with Le Masurier and finds fault with the approval or process or breaches in the planning conditions. Watch this space.

Sharon on Facebook said:

Lee Henry has said this debate has been approved 6 times in the states but I think a number of times the states members did not have the full picture. This morning on Radio Jersey I heard the next building will start in the third quarter of this year , I find this amazing as the agreement was for pre lets to be in place first. So far we still only have one signed up for the building that has started, so it would be a great surprise if that was full and a list waiting for the next building in less than 9 months .

Lee Henry has replied on Facebook, and so that his comments can be seen in a more public domain, I am also posting them here:

I just wanted to provide to clarity and correct some of the information in this post.

There are 3 reasons why JDC has submitted a new application for No.5 JIFC:

1. The new Appeal process was said to be a faster, cheaper and that there would be no need for lawyers so that appeals could be determined within 4-months. Not only are lawyers involved with this appeal at substantial cost, it has now been 6-months since the appeal was lodged and JDC has only today received detailed submissions from Le Masurier. 

Further, following the inspector's determination, which may be in March, there is nothing to stop Le Masurier appealing against the inspector's decision, which would delay matters by at least a further 6-months. Due to existing leases, Le Masurier is unable to commence its development until March 2017 and so it's clear that their sole aim is to delay JDC in order to gain a commercial advantage. This is normal developer tactics across the world and JDC has responded to this delay tactic to protect its commercial interests.

My comment: This contradicts the statement by “Save Our Shoreline” that the delay has been caused by Le Masurier. That may be the case, but Lee Henry is being disingenuous in not mentioning the delays caused by the JDC – “A top UK Planning Inspector has been awaiting documents from the developers which have not been forthcoming and has expressed his dissatisfaction with the situation as he had been scheduled to hear the case in November and had to re-schedule the hearing for February”

Given the prevarication and endless delays and haggling by JDC over submission of documents to scrutiny, which are a matter of public record, I find it entirely credible that they are the major ones causing delays. Perhaps the media could contact the Inspector and find the truth. However, it would also be interesting to learn if Le Masurier have been the cause of delays. Some more clarity is needed.

2. JDC is in detailed discussions with and has already issued proposals to tenants that would fill the remaining space in No.4 JIFC twice over. JDC therefore needs a further building with an unchallengeable planning consent ready to begin in order to take forward negotiations with those prospective tenants.

My comment: what we have seen already are relocations of existing businesses to the Waterfront, not new ones coming into the Island. There is no indication that this is not happening here. That’s not necessarily a bad thing: businesses may be retained by being able to combine different offices into one location rather than, for instance, moving to the Isle of Man. 

It would be interesting to know at some point, however, exactly what deals are being done, and what “sweeteners” and discounts may be on offer, and whether they may be deemed to be excessive. Clearly this cannot be done while negotiations are taking place, but at some time in the not to distant future JDC needs to be accountable, if not to the public, at least to Scrutiny and the Auditor-General.

3. JDC is actually saving money by making the new application. The £100,110 is paid to the Planning Department, another States entity. This means that the money is not wasted. Effectively, money is being moved from one States entity to another. However, employing lawyers to make JDCs case to the inspector and defend any further appeals / Judicial Review will cost more than the Planning fee and would be paid to third parties.

My comment: So when the States pays JDC monies to cover the rental of sites such as Tourism or Liberation Station, they are not wasting money because it is just moving money from one entity to another? Somehow, the money never gets returned to the States, as JDC is an economic leech soaking up capital and levying charges on the States for land they transferred, and making – as the accounts show – a pittance in respect of returns by dividends to the States. This argument by Lee Henry simply does not wash. 

With Telecoms, the Treasury Minister can in fact specify a dividend (as Philip Ozouf did). Why can’t he do the same with JDC? Instead there is a promise of future returns, given as a figure which seems to change with the seasons. Please can Lee Henry supply a close estimate of the final return to the States, when it will take place, and the basis for the calculation.

4. What you must understand is that Le Masurier, is a rival developer to JDC. It's interesting that they did not appeal No.4 JIFC, which is within 50m of their property. Building 5 is beyond 50m of the Le Masurier property and will not be seen from the property once No.4 JIFC is completed. The allegations of breaching the planning law are unfounded and are based on Le Masurier's assumptions and not on the facts.

For the avoidance of doubt, the position of the building in the new application is exactly the same as the first application and in fact has not been moved. JDC is simply protecting its commercial interest in the same way that the Le Masurier's appeal of the original permission and delaying the delivery is protecting their own commercial interest on their proposed development.

Each building does not cost £2m to obtain a detailed planning consent and stating this is deliberately misleading the public. In truth, approximately £2m is spent on professional fees to deliver a completed building, but to get to the detailed planning consent stage would incur around 15% to 20% of the total professional fees (including the planning application fee) i.e. between £300k to £400k per building. `

The UBS pre-let is what is in public domain and it's standard practice for any developer to only make public announcements of pre-lets once the pre-let agreement is signed. As stated, we are currently in discussions with potential tenants and we hope to announce further lettings soon.

My comment: reading the criticisms, there is only one mention of £2 million to obtain planning consent. Both Save our Shoreline and Sean Power give a figure of £100,000, as do the St Helier Waterfront Action Group which states the same figure. 

There is just one post which says “The costs for progressing through all the stages required for planning for each of these buildings amount to about £2 Million per building” on the Waterfront Action Group. 

By simply taking that one, and ignoring the criticism about the extra £100,000 stated elsewhere, Lee Henry is both clarifying the situation and ignoring the very real extra costs given. But I do take his point that the £2m figure is not correct for the cost of planning on each building.

Whether the JDC is "protecting its commercial interest" or using a legal subterfuge I leave to my readers to decide. I would say that sharp and clever legal practices are within the letter of the law, but one does have to wonder if the spirit of the law is being sidestepped by this ruse. But why suddenly do it now? Could they be acting on legal advice recently given - and by whom? Who is the clever lawyer?

And on another entirely separate front:

The Vice Chairman of Tranmere Rovers Football Club could be appointed Chairman of the States of Jersey Development Company. UK-based Advocate Nicola Palios is being lined up to replace Mark Boleat, who resigned last summer. She has been recommended for the job by Treasury Minister Senator Alan Maclean. The States will be asked to approve her appointment.. Mrs Palios lived in Jersey for 20 years before moving back to the UK in 2007.

She is currently a non-executive director of the SOJDC, British Rowing and Sanne Plc, as well as being joint-owner of Tranmere Rovers. If appointed, she will be paid £40,000 for 24 days’ work each year. She will have to oversee the building of the controversial Finance Centre development on the Esplanade. In addition, there will be some level of expenses for travelling to the Island where that is appropriate

In fact, she was already appointed in 2011 as a non-executive director, so she is a known quantity. What she did as non-executive director, paid £15,000 for 15 days commitment per annum is unknown as minutes of meetings are not made public. Perhaps we should be told what she did during her previous term of office and what contribution she made to the SOJDC, and throw a little light on the internal work of the Chairman and directors?


John Baker said...
This comment has been removed by the author.
John Baker said...

The cost of Planning the JIFC - Our estimate for the WHOLE planning process for each building including all Architects and Structural Engineers fees is a realistic figure of some 8% of the building costs. In the case of the JIFC the build cost per sq ft for a AA Office space is £300 so for example a 67,000 sq ft building basic cost would be £20,100,000 then add some for the basement parking and contribution for exterior works that would come up to approx £25million total. (Note:- I use figures to show the example in the case of building 4) so 8% of that is in fact just £2.million - The wool is being pulled over everyone's eyes by Lee Henry identifying the £100,000 as a "planning" figure It is not, it is simply the fee for submitting the plans to the Planning and Building Services of the Department of the Environment. In fact the above figures do not allow for other professional fees - Lawyers, Surveys, Consultations, Appeals etc. etc. which would have to be paid prior to work starting on any building. On a project of this scale this would add another 2% minimum to the above so in fact pre-build costs for each building could easily reach £2.5million. So for the 6 buildings that comprise the JIFC this would easily total some £15Million.

We trust that puts the record straight on this.
Thanks and kind regards John Baker, Vice Chairman, St Helier Waterfront Action Group

John Baker said...

UPDATE - On 30th December 2016 Lee Henry put plans in for Building 6 JIFC, which is the plot to the immediate West of Building 5. This despite the fact that Steve Luce, bowing to pressure from us and many States members has finally agreed to REVIEW the Esplanade Quarter Masterplan. Also despite the fact that Lee Henry still has 40% of building 4 and 50% of building 5 still without prelets. Would any normal person think of building yet another huge office block when they have struggled to fill the first 2 and have had to bribe Sanne with (allegedly) £4million worth of incentives to get them to sign the 50% prelet to building 5 to get it started? (see WAGs FB page for details on this)
Note:-It is normal in the private sector to only proceed with such developments when there is at least a 60% to 70% of pre-lets in place as Dandara did with Gaspe House the RBC building next to the Grand Hotel. Building 4 was started with only 25% let to UBS bank.

So Lee Henry has started the process of committing ANOTHER £2.5million of effectively Public funds to a building which possibly either because of a rethink by the States of the Master plan or because of a lack of demand may in fact never be built. The incompetence shown by the current Board is staggering and we were not surprised to hear that non executive director Roger Lewis had managed to quietly resign and has been heard to comment "I'm so pleased to be out of there"
Update concluded
John Baker - Vice Chair - St Helier Waterfront Action Group