Formal Response to Questions Posed on the Engine Lane Land Sale
At last months Town Council meeting (24 March, 2021), a number of questions were raised by Councillor Oliver Ellis concerning the sale of the land known as Gaulacre at the southern end of Engine Lane, Nailsea. This is the formal response to those questions.
Sale price and best value
1.1 The council did not put the land out to tender. The council I believe rejected the first offer. Does this not show that there was time to put the land out to tender for a better price or terms?
This chronological report gives a detailed account of discussion on the land Nailsea Town Council purchased in 2007, right through to the sale to Barratt Homes in 2016: CHRONOLOGY re Gaulacre January 2016
1.2 The council states that the district valuer price was met. How can the council prove another company would not have given a better price or terms?
From the report it can be seen that Barratts approached Nailsea Town Council (NTC) to sell their land to them to be a part of a wider development. Barratts had signed lockout agreements with the adjacent landowners so no other developer would be in a position to put together a similar development package.
1.3 With reference to the terms of the deal, what % of the income from the sale of the land is the council paying to help the development along or how much is the council paying towards to development out of its own money? Can the council prove they wouldn’t had achieved a better deal with someone else?
All financial details are confidential as a term of the sale contract and are commercially sensitive.
1.4 What % of the sale price are the council actually making in profit? Can the council prove they wouldn’t had achieved a better with someone else?
Our advice from our advisors was and remains that Barratts’ style of development matches NTC’s housing requirement. No other developers had shown an interest.
1.5 Can the council confirm that there is a no inflation clause in the contract? If so, why not? Only Barratts will gain from this with land value rising considerably from 2016/2017 on a five year contract that could not be started for a considerable period of time.
There are provisions within the contract which may provide for further consideration to be paid if of the gross sale proceeds of the units exceeding a threshold. The terms of the sale negotiated at the time were for a fixed price conditional contract. The Buyer would not agree indexation due to the uncertainties of the market and that is not unreasonable for the fixed period of this contract and the substantial investment required from the buyer in obtaining planning permission.
1.6 In 2018/2019 the council said plans had to change due to National Grid wanting a bigger easement, meaning the number of dwellings would have to decrease from the agreed figure. However, in 2015 Barratts, in a letter to Ian Morrell, stated the 15-metre easement was known. It was stated that the deal would include the layout mix of 183 units, 55 affordable and 128 at open market price. This could not happen because of the easement requirement not being correct in the plans. How much did this cost the council in time spent looking into the new plans, money spent on solicitors and other costs?
NTC challenged National Grid (NG) over a long period about the need for a 15 metre easement. NG did suggest at one point that the easement might be reduced once full designs were completed. NTC also identified within NG’s Development Consent Order (DCO) an inconsistency about the permitted easement width. Ultimately NG were able to insist on the 15m width. There were no costs incurred in challenging NG.
1.7 Given the increases in land value since 2016, how can it be demonstrated that the sale value is the best value for the land? Is there a clause to renegotiate the price and if not why not?
The gross price in the original contract allowed the Buyer to make certain reductions for Abnormal costs and Section 106 costs, which are variable until planning consent is issued. When the Second Supplemental Agreement was entered into in July 2020, this potential allowance was removed so that the risk of Abnormal and Section 106 costs was passed to Barratts and the net price, which is to be paid to the landowners, was fixed.
Best value in respect of how the land is used
2.1 After the purchase of the land, the council looked into various ideas to use it for recreation but none of them came to fruition. It was agreed to review the land’s use yearly. When the offer from Barratts came in to buy the land, did the council look at best value for both housing and open space? For example, did the council approach the National Lottery or Sport England to look at what grants could be available and what could be done with the land for the community with reference to open space for mental and physical wellbeing? This seems to go against the council’s policy to protect open space.
I have contacted both Sport England and The National Lottery to discuss whether there was the possibility grants for a local project to make green space accessible to the public and for example look at some recreational activities could be looked into. The answer was yes, supply details of ideas of what we would like to do with the land and they will contact me. I have not done this but it shows there are lots of avenues that could have been explored to see if best value for the land was open space.
See report here for a full response on the consideration of the land use.
2.2 In 2016, the council stated the need for houses now as a reason to sell to Barratts. This was at a time when the JSP was being pushed through and planning permission had been sought on the field off Netherton Wood Lane. These weren’t in the pipeline when Barratts first approached the council but at the time of the vote, they were, making the premium on open space much higher. It doesn’t look like the land being used for open space and funding for it such as grants and funding was looked into given that the conditions had drastically changed. How can it be proved that development years after the talks with Barratts started was still the best use/value for the land? It doesn’t seem at any stage that the possibility of best value is open space was looked into. It was stated that the JSP was a long way off and that houses are needed now. Planning permission had been submitted for Netherton Wood Lane for a large number of houses.
See item 5(g) of the January 2016 report. NTC supported growth of 450 new homes, subsequently increased to 917 in 2015. Homes over and above the Engine Lane and Youngwood Lane numbers have still to be delivered to meet this requirement.
The need for houses now
3.1 Why was a five year contract with Barratts signed knowing planning permission for the site off Netherton wood Lane was already underway still claiming houses are needed now? Five years on, there is activity there and not on Engine Lane. Why did Barratts ask for a five year contract if it was believed that National Grid would finish soon to give us ‘houses now’?
See response for 2.2 above.
3.2.Also, a contradictory point to we need houses now: in the minutes of 25th January 2017 it states, Tim Walker ‘he reiterated that he does not represent Barratts but a condition obliging them to develop at a certain time would not be acceptable to them nor reasonable’. So Barratts can start building when they want to. How can the council say this deal gives Nailsea houses now? The deal should put the people of Nailsea’s interests first, not Barratts. If it was put out to tender, better terms could have been achieved. I struggle to see how this shows best value has been achieved.
See response for 2.2 above.
3.3 In the 2016 vote, the council knew the work by National Grid was going to be carried out, it was given the go ahead by the government to lay cables, and that houses would not be able to be built straight away. This also invalidates the reason for the sale being to build houses that are needed now. It could not happen on this field.
See response 1.6 above.
3.4 In August 2015 Barratts sent a letter to Ian Morrell stating that National Grid have said there must be a 15-metre easement on the field. Were the council made aware of this? (Nailsea Action Group have a copy of this letter given to them from Ian Morrell through a freedom of information request).
See response 1.6 above.
3.5 In the 2017 plans that were submitted for the 183 houses from Barratts, it showed a 7 metre easement and these were seen by the council. Is there any evidence that National Grid reduced their original 15 metre easement requirement? It appears that the plans submitted and seen could never have worked, causing delays to plans intended for housing that was needed now.
See response 1.6 above.
Lack of transparency
4.1 In the December 2016 council vote to approve the sale, it was put forward that the people of Nailsea should decide. After three votes on the same question, it finally came to 9:9 split in the council with the chairman getting the casting vote. Why was it so important to stop the people having a say on the only green space of its size that Nailsea Town council own and can keep green for the future? Half the council were not convinced. Was it because the information such as the 183 house could not be achieved due to knowing about the 15 metre easement in advance, best value for the land was not investigated with more than one company or whether open space with funding would be best use for the land and that it is the only field of its size that the council can keep green for future generations might prove development is not the best use value for the land.
The minutes of the meeting of 21st December 2016 at which NTC voted on a proposal to enter into the contract for the sale of the land to Barratts show the proposal was carried by 11 for, 8 against and 1 abstention.
4.2 It was raised by a councillor that they were upset about the legal report half of it had been blanked out (December 2016 Town Council meeting minutes). Many members of the public were not happy in the meeting not having their questions answered, many of the questions did not require an answer that did not breach confidentiality and dismayed by needing three votes to get to a point where the council decided not to let the people of Nailsea to decide about the land. This is not convincing that best value has been achieved.
Councillors are elected to act on behalf of all residents. There is no requirement to refer all decisions taken by the Town Council back to the residents. In fact, a public meeting was held at which members of the public were informed of all matters relevant to the sale apart from matters which are confidential because they were and remain commercially sensitive. Members of the public were given full opportunity to express their opinions and the members of the Town Council took their decision in the light of those representations.
4.3 Why were councillors are not allowed to see financial details written in to the contract? Does this not go against openness and transparency? How can councillors vote or reassure ward members? Can the council confirm that no new councillor since the vote in 2017 have been allowed to see the financial details as I was denied?
Councillors were given the financial details in a confidential report presented to them by the Council’s Solicitor.
4.4 In the 2020 vote to waive the planning condition, why were the new councillors from the 2016 vote not given all the information in relation to the deal that the council members in the 2016 vote were given? How could they make an informed decision without the relevant information?
The background to the decision by NTC to sell the land is set out in the Town Council minutes which are available to all councillors.
Planning approved for other nearby sites on open space
5.1 A councillor stated that for best value the ‘Town Council had to justify selling the land for development, they have to prove overwhelming need and demonstrate that no other sites are available (December 2016 Town Council meeting minutes). From what we can see the JSP and Netherton Wood Lane, lots of sites for development were proposed, and Engine Lane was not going to be available to be develop for a considerable period of time. In light of this, how can the council demonstrate that best value was achieved?
See response to item 2.2 above.
The contract was changed, and this was not long before the original deal expired. Shouldn’t this have prompted a review of best value given Netherton Wood Lane planning permission had been granted by this stage and the council knew that North Somerset Council intended to build houses on the Uplands field? Houses being built in Nailsea West End now were not in question. This makes the value for open space even greater for mental and physical wellbeing.
See response to item 2.2 above.
Allowing the contract to expire
6.1 The council could have let the contract expire, avoiding withdrawal penalties. If the council believes allowing the contract to expire would have resulted in the council being sued, please provide evidence that this is a reasonable expectation.
NTC did not believe they would be sued by Barratts if the contract expired.
6.2 Given the increase in land prices, why was the contract expiration not used as an opportunity to renegotiate the sale value?
If the contract had been allowed to expire there is no certainty that a higher price would be achieved. Barratts would not pay a higher price. Barratts would have withdrawn their planning application giving rise to a delay in securing planning permission and a risk that more onerous obligations might be imposed in any future permission thereby reducing the land value.
Best value in respect of overage
7.1 The council could explore ways to achieve grants for open space use, and wait until the overage reduced by 25%. The council would make considerably more if it waited for the overage to drop and when there was the option to allow the contract to expire, they had the knowledge that two sites were proposed for development giving houses that the council stated are needed. The council could have pulled out of the contract in 2020 with no penalties and waited for the overage to drop and pursued ways to make it an open space for the whole community (as it should have done in 2016 to prove best value isn’t open space) and if not look to sell again after 2023 with a much-reduced overage and a greater land value. It appears that the council voted it through without being able to explain proof of best value in the 2016 and 2020 vote.
The current contract is not for the development of NTC’s land alone, there are other landowners If NTC had chosen not to progress with the contract in June 2020 then there is no guarantee that the other landowners and Barratts would have stayed committed to the current development plans. The Rugby Club would also have been deprived of improved facilities which will allow them to attract more players of all ages to use the club. NTC decided to proceed with a defined scheme rather than wait a number of years with uncertainty of how their land might be developed in the future.
Despite the delay in developing the site the need for more housing for Nailsea has not diminished over this time.
8.1 A councillor raised the point that housing associations don’t have the funds to buy affordable houses from developers, the council should wait for new government advice (December 2016 Town Council minutes). What if they can’t sell them to housing association? Will they be left vacant or sold at market price? This could drastically alter the housing mix and so how can the council demonstrate that the sale to Barratts is the best value use of the land?
There is no evidence to suggest that Barratts will not be able to work with a housing association. Barratts regularly work with housing associations to deliver affordable housing in accordance with section 106 requirements and will have to do so in order to meet the obligations in the section 106 agreement for this site which Barratt has entered into.
9.1 What has the council requested in the section 106 agreement?
The Section 106 requirements are drawn up by North Somerset Council which must do so in accordance with statutory requirements.