Thanet District Council facing ‘financial disaster’ as Dream

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Thanet District Council facing ‘financial disaster’ as Dream

Postby kevin » 25 Sep 2016, 11:36

http://www.kentnews.co.uk/business/than ... _1_4710019

Thanet District Council could be facing “a financial disaster” as a row over compensation for Dreamland rumbles on.

The authority acquired the site from the Margate Town Centre Regeneration Company (MTCRC) through a Compulsory Purchase Order (CPO) in September 2014, and its historic amusement park re-opened the following year to great fanfare.

A CPO is a legal function that allows certain bodies which need to obtain land or property to do so without the consent of the owner.

Consequently, MTCRC said it received approximately £750,000 for the site from the council, plus £400,000 of fees and £100,000 statutory compensation.

However, bosses claim they have been grossly underpaid and are in fact owed upwards of £15m from TDC, having spent some £12m when it purchased the land back in 2005 as well as significant further investment in “doing up the site”.

MTCRC has been locked in a legal battle with the authority to secure further payment for more than 12 months.

A council spokesperson told us: “A figure of £15m is purely speculation as the compensation hasn’t been agreed – if the compensation cannot be agreed we anticipate that this will be referred to the Lands Tribunal for settlement.

“MTCRC have been involved in negotiations with TDC as is required as part of the process.

“Our assessment of the value of the land is significantly lower than that suggested by MTCRC.”

Furthermore, MTCRC felt the “risk” of a victory and a potential multi-million pound settlement should have been included in an audit report of the council, published this week.

In the report, auditors Grant Thornton UK LLP highlighted a “significant risk” to the council’s accounts posed by the financial woes of the park’s operator, Sands Heritage Ltd, who fell into administration earlier this year, and notes that TDC had overspent its designated Dreamland budget by some £1.2m.

“It is taking reasonable measures to protect itself against the possibility of operator failure, and has plans and funding in place to see the capital scheme through to completion,” the report continued.

“The long term viability of the theme park may be open to question, however, and the council should ensure this is borne fully in mind when reaching decisions regarding the application of any further public funds to the scheme.”

But there was no mention of the dispute with MTCRC anywhere in the report, much to the frustration of spokesperson Toby Hunter.

“We believe we are owed at least £15m, Thanet think differently, but have not said how much,” he told us.

“But it is proper to make an analysis and put something in the risk register in case the claim goes our way.

“They have to pay our fees, this money is not allocated in the budget.”

Again, the council told us it would be inappropriate to include anything from an ongoing case, with no indication of how much money, if any, would change hands, and the absence of such a possibility in the report was standard practice.

Darren Wells, who produced the audit report on behalf of Grant Thornton, agreed that he didn’t think it was necessary to include such a risk in the report.

He told us: “We have carried out an audit of financial statements and applied practices and judgements.

“We are comfortable with the statements we have been given.”

Yet former councillor Ian Driver said it was his understanding during his time in the chamber that the money initially received by MTCRC was always seen as a down-payment, with more to follow in future.

And he feared the mismanagement of the situation could lead to “a financial disaster” and suggested the sale of the site’s car park for housing development as a last throw of the dice.

“I personally think the report should have mentioned it and the council should have put extra money aside for the compensation,” he told us.

“They have been disputing it for a long time and a decision has got to be made soon.

“I think [MTCRC] are in a very strong position - the council could easily have to pay two or three million more and there’s potential for a financial disaster.

“The only way it could be made to work in terms of attracting a new owner is to sell some of the land for housing - everybody will be eyeing up the car park.”

With general reserves of just £2m according to the council’s accounts for 2015/16, it may appear that the council does not have the resources to tackle such a threat.

However, its accounts statement reads: “In addition to the general reserve, a number of earmarked reserves exist.

“These are sums set aside for specific purposes and essentially allow funds to be saved over a number of years for large and often one-off items of expenditure, thereby smoothing the impact on council tax.

“The need for these reserves is reviewed regularly.”

Mr Hunter told us MTCRC expects to next sit down with the council on Thursday and agree a development appraisal.

He said he anticipated a fee of up to £2m being agreed before the case would then go to a Lands Tribunal where the council could have to pay as much as £900,000 in fees.
kevin
 
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Re: Thanet District Council facing ‘financial disaster’ as D

Postby Bob » 25 Sep 2016, 12:44

£750,000 certainly grossly undervalues the land. How much it is worth depends on the planning permission it might get. Probably a realitic type of valuation would be in the region of £5M . TDC could also possibly face a big tax bill from HMRC if the land was seen to be sold at below market value. It could also be liable to tax due to leasing it at a peppercorn rent as it avoids tax
Bob
 
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