A SPECIALIST team of number-crunchers has been called in to scrutinise East Herts District Council’s £7.35m Bishop’s Stortford town centre sell-off after critics claimed the figures simply do not add up.
The local authority stands accused of short-changing residents by disposing of valuable assets – including two car parks – at a knock-down price to a developer who stands to make £18m, in its haste to avoid a £1.7m bill for repairing the Causeway building.
After repeated attempts to prise answers from the Conservative administration failed, Independent councillors Nigel and Deborah Clark were forced to resort to demanding documents under the Freedom of Information Act to uncover what they say is a damning dossier of evidence.
They have revealed that the council sold the developer its Waitrose car park for £1,146,572, despite valuing it at £1,937,096.
The Causeway car park went for £3,703,704, despite a valuation of £5,451,779, and while the council expected £2,505,890 for Charringtons House, Henderson said that it was worth just £1,394,799.
After agreeing the £6,245,075 deal – compared with its own estimate of £9,894,765 – the council then allowed Henderson to deduct £5m from the total to escape the existing Causeway building 90-year lease. The developer then added back £1.1m for its own 999-year lease on the property.
Despite claims about the benefit of a hefty capital receipt, the council will not receive the £2.35m balance from Henderson until 2011-12.
The council has leased back part of the Charringtons building for the next 16 years and the Clarks have established that the Tories used costings for this short-term deal and compared them to the total over 90 years for the Causeway to prove the move was financially prudent.
The council has also flagged up the share of the profits it could expect once the £100m redevelopment of the site goes ahead, yet EHDC’s own documents reveal that even if Henderson built only half of the less profitable social housing the council’s own policy requires, the developer would not make enough to trigger that overage deal.
Nigel and Deborah Clark, the members for Sawbridgeworth and Hunsdon respectively, repeatedly asked the Conservatives to review the figures and reconsider the deal, which they say means the council has given away assets worth more than £7.5m to avoid £1.7m refurbishment costs.
Since the deal was announced last spring, their concerns have been echoed by fellow Independent and Bishop’s Stortford member Keith Barnes and the town’s Liberal Democrats, Mike Wood, Bob Taylor and Mione Goldspink, and persistently dismissed by the Tories, who also refused to reveal many of the details, despite having much of the information since December 2008.
The Clarks told the
Observer: “We are not saying that the council should have remained at the Causeway as is, but better financial options were available, such as refurbishing the Causeway and sub-letting part of the building and retaining the car parks.”
Their key concerns are that:
the car parks were sold at knock-down prices;
there is unlikely to be an overage, but the developer will make over £18m; and
the council has ignored the best financial option.
They have told the district auditor, accountants Grant Thornton, of their fears and partner Paul Dossett has initiated a separate report into the so-called C3W programme, which will see the council quitting the Causeway to centralise services at Wallfields in Hertford, leaving just a skeleton front-line staff at Charringtons House in Stortford at an estimated further cost of £1,815,200.
The report – compiled by accountants with no previous East Herts dealings – will be presented to the council’s corporate business scrutiny committee on February 16.
Cllr Michael Tindale, EHDC’s executive member for resources and internal support, who has played a key role in the centralisation plans and Causeway sell-off, said: “There is no disputing the fact that our new customer service centre at Charringtons House will offer improved services to the people of Bishop’s Stortford.
“Nor is there any dispute that the move to occupying one main office in the district, rather than two, will be hugely beneficial to council tax-payers.
“Reducing costs to the public, while maintaining services – and, in the case of our new customer service centre, improving services – is what drives us forward as a council.
“While there will be other benefits in having the vast majority of our staff under one roof, the financial return from leaving The Causeway is to the long-term benefit of the council. The avoidance of a £1.9m bill for refurbishment and the £100m of inward investment that the move will realise are just two examples.”
He added: “Thinking about the future of Bishop’s Stortford more broadly, the council is also confident that significant investment in the area around The Causeway will have a positive impact on the town.
“At a time when investment is hard to come by and when public services need to take steps to make themselves more cost-effective, we believe moving staff out of an under-occupied, costly rented building that is not fit for our purposes going forward is sensible and prudent.”
The newly refurbished reception centre at Charringtons House opened this week “just 20 steps” from the old offices at the Causeway.
According to the council, improved facilities for residents include face-to-face contact with customer service advisers, more interview rooms to discuss confidential matters such as housing and benefits, planning applications available to check both electronically and on paper, information surgeries with planning officers and automated pay machines for bills.
Housing association South Anglia is also moving into Charringtons House to help make the centre a one-stop venue for many residents who use the services of both organisations.