Save Our Sidmouth

How councillors have damaged chance of best price for Knowle sale.

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In another of the questions put to Full Council (25 March 2015), SOS member Jacqueline Green, explained:

‘Mr Chairman,
My question concerns ‘Best Value’, and why I believe Councillors have compromised the relocation team’s bargaining position on the Knowle sale.

An important disclosure made by EDDC last week, is that that it has not agreed Heads of Terms with Pegasus Life Ltd, the preferred buyer for the Knowle site. Councillors were informed about this, only as a result of a question from the public, at the special ‘combined committee meeting’ (Overview & Scrutiny, and Audit & Governance), dedicated to the relocation details.
The disclosure confirms that , although a price for the sale has been agreed, other vital factors have not. For instance, Richard Cohen revealed that ‘overage’ terms have been mentioned, but not fixed. Overage refers to the sums that will be paid by the developer in the event of the site being sold on at a profit, or selling the residential units very successfully. The overage payments and the purchase price are inextricably linked: if you pay more overage, then the purchase price is correspondingly reduced. And vice versa.

So by agreeing to accept the current price, without knowing the overage terms, the members of EDDC have effectively destroyed Richard Cohen’s negotiating position.

Why would Pegasus Life offer any overage, now that members have said they will accept the deal anyway?

Councillors having already approved the sale for “somewhere between £7m and £8m” have created a risky situation, given that they have been told that refurbishment of Exmouth Town Hall will be “in the region of £1m, and the newbuild offices at Honiton “in the region of £7m. Once again, the figures simply do not stack up.’

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