The Long Read: Otterpool Park -update.

So what do you get for £281,230,000 or two hundred and eighty one million two hundred a thirty thousand pounds? Well, according to Kent County Council’s ( KCC) Housing Infrastructure Funding bid for Forward Funding made by KCC for and on behalf of Shepway District Council (SDC),  you can get help towards the following infrastructure for that kind of money, which will be necessary for the building of Otterpool Park:

Road/Highway – Bridge –  Education (School/s) – Rail –  Power Supply –  Health facilities- GP/Health Clinic – Electricity / Gas connections – Flood defence – Public realm works – Land Assembly – Land Re-mediation (to clean contaminated soil) – Water Works – Digital infrastructure – Strategic landscaping and a business innovation centre.

So what are Shepway District Council’s (SDC) delivery milestones they have set for themselves if the bid for Forward Funding from the £2.3 billion available from the Housing Infrastructure Fund (HIF) is successful? Well, they are as follows:

• Infrastructure – development partner identified 30/09/2018

• Infrastructure – development partner appointed 01/12/2018

• Housing – development partner identified 30/09/2018

• Housing – development partner appointed 31/01/2019

• Start of infrastructure works 02/01/2019

• Completion of infrastructure works 31/01/2022

So a lot of the land in the video below (apologies for quality ) known as Otterpool Park, will become one large building site possibly from 2nd January 2019; which is less than a year away, if all goes according to plan.

And how and when will this money be spent on the infrastructure?

2017/2018  –  £250,000
2018/2019  –  £51,040,000
2019/2020  –  £119,215,000
2020/2021  –  £110,725,000
Total £281,230,000

Now how many houses do they intend to deliver and by when? Well, according to their delivery milestone’s KCC have set out in the HIF bid for and on behalf of SDC, are as follows.

• Profile up to 2020 –          25

• Profile 2021 – 2025   –  1,225

• Profile 2026 – 2030 –    2,250

• Profile 2031 – 2035  –   2,250

• Profile future years – 6,250

SDC say they along with Cozumel Estates Ltd (BVI)  will deliver 12,000 homes across the site above, with or without funding and Cllr Monk has publicly stated he’ll cut SDC services to make Otterpool Park a reality.

With the Housing Infrastructure Funding (HIF) the rate of house building is estimated to be three times that of a scenario without HIF funding.

Now of course, this is only a guideline as things could easily change. If interest rates rise thing could become more expensive. There may or maynot be a Judicial Review to factor into all of the above; which could slow down or halt the whole process.

It is anticipated Forward Funding Bid applicants will be informed if they have been short-listed for the next stage – the co-development phase from March 2018. However, as is made clear in the HIF prospectus moving onto the co-development stage does not constitute an offer of HIF Funding. Details of the co-development phase will be provided with notification of short-listing. So SDC might be short-listed but that doesn’t in itself mean they will get any money or the amount they asked for.

Now presently SDC are having archaeological trenches (pictured below) dug on their land near to Otterpool Lane. An desk based assessment Archaeology Report was undertaken on Folkestone Racecourse in 2010, when the then owners wished to build homes on the site. The application was rejected by the Planning Inspectorate. Such reports and investigations can be a necessity of planning law.  When we visited the site, not to long ago, there were literally about 20 – 25 trenches. We have discovered that something has been found in the one or more of the trenches, exactly what we cannot divulge presently. Whether it turns out to be significant we’ll have to wait and see. 😉

 

In the infrastructure list set out above, Water Works is listed, now water in belongs to Affinity Water across Shepway and water out, Southern Water. Despite an operating profit of £258 million, Southern Water in 2016/17 paid no corporation tax in the UK, yes you read that correctly they paid £0 corporation tax.

The Paradise Papers revealed Southern water Services Ltd paid £133.6 million in interest during 2016/17 to its Cayman Island subsidiary, Southern Water Services (Finances) and that Southern Water ended the financial year 16/17 with a tax credit of £84.9 million. Southern Water have already declared your household bills will increase by an average of £6 in 2017–18. So at least something is still flowing freely, just not to HMRC and thus the people of the UK.

Now in our last update about Otterpool we mentioned a Judicial Review case heard at the Royal Courts of Justice on the 25th & 26th of Oct 2017 by Justice Ouseley CO/3713/2017 between Gordon Peters (On behalf of the Stop the Haringey Development Vehicle Campaign Group) Claimant -and- London Borough of Haringey -and Lendlease Europe Holdings Limited – Interested Party.

The first ground of dispute  was:

• Is it lawful for the Council to set up the HDV as an LLP (rather than a company)

The judgment has now been handed down by Justice Ouseley who has found that it is lawful for a Council to set up an Limited Liability Partnership (LLP). It is not clear cut, but there is a route through enabling the use of an LLP which provides options for Council’s up and down the land seeking to find ways to make ends meet and where they are NOT primarily acting for a commercial purpose, but in a commercial manner. The two are vastly different.

 At the Cabinet Meeting on Wednesday 31st Jan 2018, Cabinet members voted to take the option to pursue a corporate joint venture option  and obtain further detailed financial, commercial and legal advice, including state aid, before the council commits itself to entering into such an arrangement.”  They also set out what the terminology for the concept of profit for Otterpool Park; was, that being:

• “the value or profit available after meeting all the requirements of the initial outline planning application and future reserved matter approvals and further planning permissions”

This in our eyes demonstrates that any LLP set up by SDC and their partner, Cozumel Estates Ltd (BVI) will not be primarily set up for a commercial purpose.

A corporate joint venture vehicle – via a a limited liability partnership (“LLP) – SDC’s preferred option – is  now a viable option for SDC and its partner, due to the judgment in the Haringey case.

However, if Cozumel were to pull out at some point in the future which is possible, then setting up an LLP, with just yourself, is not a legal point dealt with in the Judicial Review, but could so easily become one, as the word “Partnership” makes clear you need a partner.

Tenders are currently being sought for the advice which includes legal, financial and commercial advice as SDC have given themselves the powers in a vote of 9 – 0 to spend up to £350,000; which has been delegated to the Head of Strategic Developments – Andy Jarrett (pictured)  . The amounts are broken down as follows:

• Legal advice: to include consideration of alternative forms of entity; governance arrangements; funding mechanisms; procurement; contractual terms of the entity and future Development Agreements an strategic planning legal advice; stamp duty; legality/ powers to act; due diligence; (est up to £180,000)

• Financial advice to include: VAT, Corporation tax and SDLT; borrowing/ treasury; financial legal; financial modelling; independent review; loan agreements (est up to £100,000).

• Commercial and delivery: viability assessment; soft market testing; outline business case preparation (est up to £70,000).

Justice Ouseley’s judgment now makes it easier for SDC to set up an LLP with Cozumel Estates Limited (BVI) and others as Otterpool Park progresses.

Now funnily enough, Private Eye’s article where-there’s-muck there’s brass plates (page 2), consider a fair percentage of LLP’s to be the “international criminal’s corruption vehicle of choice” which has an “ugly pedigree” and for as little as £79.99.

Now of course, there are advantages and disadvantages to any company/corporate body arrangement. For LLP’s the most important document is the agreement between the parties. It needs to be very clearly drafted otherwise there could be serious issues down the line for any party involved as a member of the LLP. Also an LLP must of course keep accounting records. These must contain:

• entries showing all money received and expended by the LLP

• a record of the assets and liabilities of the LLP

An LLP must keep its accounting records at its registered office address or a place that the members think suitable. So our question is, where will this “office” be and will the accounts form part of the public inspection rights we as citizens currently have to inspect SDC’s accounts under the Accounts and Audit Regulations 2015? This position has not been clarified by SDC yet. LLPs must keep accounting records for 3 years only from the date they were made. So in 5 years time, if there is no record of them how can we see SDC’s income and expenditure in the LLP?

So some simple questions are:

• Is the HIF bid for Shepway District Council alone, or will Cozumel Estates Ltd ( BVI) owned by the Reuben Brothers (pictured) – who according to the Sunday Times Rich List 2017 are worth 14 billion,  benefit from the HIF Bid too?

• Have SDC factored in any legal challenge costs?

• Will the accounts of the LLP be open to public inspection, as are SDC’s accounts?

• Should Otterpool Park be renamed as Offshore Park, as possibly more offshore companies may come on board?

It raises many other questions and no doubt you might have plenty too. However, they cannot be answered until we all have the detail, as that is where the devil is, as the saying goes.

You can forward any question you may have to:

jennifer dot hollingsbee at shepway dot gov dot uk – (pictured below left)

david dot monk at shepway dot gov dot uk

alistair dot stewart at shepway dot gov dot uk and;

dick dot pascoe at shepway dot gov dot uk – (pictured far right)

  

The Shepwayvox Team

The information contained in this blogpost is provided for informational purposes only, and should not be construed as legal advice on any subject matter contained herein.

There are legitimate uses for offshore companies and trusts. We do not intend to suggest or imply that any people, companies or other entities included this blogspot have broken the law or otherwise acted improperly.