To hear questions (if any) from councillors of which due notice has been given.
Minutes:
(a) Councillor Ramsey Nagatyasked the Leader of the Council, Councillor Joss Bigmore, the following question:
“Following the press release issued by the Council on 17 May 2021, which stated that ‘We have started to review the Guildford Local Plan and the evidence behind it’, may I please ask the Leader of the Council:
(1) To provide an update on progress with the review, and in particular progress with the appointment of a top level experienced independent Planning Expert or Barrister, who will take a fresh view and approach to this review, and to assist objectively and advise the best ways forward; and
(2) To put in place a working group to progress the review urgently.”
The Leader’s response was as follows:
(2) Councillors Jan Harwood, John Rigg, and Tim Anderson have been providing input to this process. I will take under consideration whether to invite a formal working group to consider the ‘roadmap’ when it is delivered in the week commencing 6 September”.
In response to a supplementary question, asking whether the Council needed a strongly motivated chairman, together with an experienced independent planning expert to plan the route of the “roadmap” without further delay, the Leader of the Council stated that he was confident that the strong leadership required was already in place and that he would be calling on independent experts whenever necessary.
The Leader was also asked to whom the roadmap would be delivered and whether it would include a scope of what the review would look like and the level of priority to be given to the review of the Local Plan, notwithstanding the forthcoming consideration of the Local Plan Development Management Policies (DMP). The Leader confirmed that the DMP would be considered by the Joint EAB in September 2021, and that the timetable allowed the roadmap to be produced and delivered to him in early September. The Leader would take into consideration who then should consider it further, and that until the roadmap was produced, he could not add any further detail about timescales or urgency but gave an assurance that the Council would be updating the Local Plan, to include a Town Centre Masterplan, as soon as possible.
In response to a further question as to what impact, if any, does the review of the Local Plan have on the scheduling and timing of the remainder of the Local Plan, the Leader stated that he could not answer the question until he saw the roadmap.
(b) Councillor Ramsey Nagatyasked the Deputy Leader and Lead Councillor for Climate Change, Councillor Jan Harwood, the question set below. (Councillor Harwood’s response to each element of the question is set out in red type below.)
(1) what actions have been taken to address the air quality issues so far?
“The Council understands the residents’ concerns about air quality within the AQMA in Shalford and wants to work with local residents, ward councillors, Surrey County Council and the Parish Council in achieving compliance with air quality limits. This is a really challenging issue to solve as the predominant source of emissions is domestic cars as they drive along the main road through the village.
The Council has an Air Quality Action Plan for Shalford which details the actions the Council is planning on taking to address the AQMA. A number of measures and initiatives, which will improve air quality, or raise awareness, are already being implemented in the Guildford area. These are not focussed specifically in Shalford but assist in reducing emissions more generally and increasing awareness of air quality, travel choice and choice of vehicle. These include easitGUILDFORD and an Electric Vehicle charging network pilot study.
Officers have started some early discussions on some of the Shalford specific measures such as improvements to cycle paths plus bus and train improvements and hope to make more progress this year. These are really challenging measures and will require support from partners to deliver improvements.”
(2) what impact has this had on the air quality within the AQMA?
“The impact is unknown at this stage particularly as air quality at this time is not representative of normal traffic patterns”.
(3) what actions will be taken going forward in light of the current pollution levels recorded as may be adjusted for the reduced traffic during the Pandemic?
“The reduction in traffic during the height of the pandemic was reflected in our air quality monitoring across the Borough and therefore monitoring data during this period alone will not be used to make any key decisions about air quality. More recent results suggest traffic levels are starting to increase in parallel with the easing of restrictions”.
(4) when will the monitoring information to date, and any plans covering both Shalford and the wider Guildford area, be published for residents to see?”
“Our air quality monitoring results for the whole Borough are published on the Council’s website. Please note that this is the raw data, and a valid bias factor must be applied for interpretation purposes.
https://www.guildford.gov.uk/article/19807/Find-out-how-we-monitor-air-quality-and-pollution
The ‘Annual Status Report’ submitted to DEFRA reviews the previous year’s air quality monitoring and follow up actions. Once approved by DEFRA this year’s report will be available on the Council’s website”.
In response to a supplementary question asking the Lead Councillor to consider urgently the proposal for a park and ride facility at Stonebridge Wharf, which assist greatly in resolving some of the town centre traffic and air quality issues, the Lead Councillor stated that the Council was working with Highways England and Surrey County Council on a range of short and longer-term solutions.
(c) Councillor Paul Spoonerasked the Lead Councillor for Resources, Councillor Tim Anderson, the question set below. (Councillor Anderson’s response to each element of the question is set out in red type below.)
“The Council acquired Liongate in 2013 following the financial crisis and during a period when investment in property still enabled significant return on investment for rental properties, as demonstrated by the significant rental income obtained over the period the Council retained ownership of the property.
However, the Council disposed of this asset in 2020 at a significant loss on the apparent basis that the Executive were informed that a conversion to residential could not be obtained, and the property was sold through private treaty (not public auction as claimed by the Leader) on an unconditional basis, without overage or any other clause to enable best value to be obtained should a new owner be successful in obtaining planning permission from the Local Planning Authority (GBC). In a very short period after disposal the new owners were able to obtain not one but two planning permissions for residential conversion and this has left the Council with a substantial loss to the residents of Guildford and no opportunity to use the site for affordable rent or social rent for the many residents who could have benefitted from retention and investment in the site, and a significant increase in book value for the Council Tax-payers of the Borough.
I ask that the Executive launch an urgent and thorough independent investigation into how this occurred. The decisions made are difficult to understand on so many levels and we need to understand what went wrong that resulted in a £3m loss between purchase and sale value and the lost opportunity for much needed Council housing.
In particular, I would like to ask the Lead Councillor for Resources:
1. Why was this property disposed of and not regenerated by the Council for much needed housing? Permitted Development rights would show that residential use would be readily obtained (as it was)?
“In September 2018, pre-empting the tenant actioning their break, the Council commissioned Lambert Smith Hampton (LSH) to prepare an Options Appraisal for Liongate on the potential future uses of the site.
The report reviewed the relative merits of each option and provided a high-level range values for each and their view on demand/risk factors. To inform this a site survey, Flood Risk assessment and pre-planning advice were also commissioned.
· Refurbishment by GBC for continued office use - £4.0 - £5.0 million
· Sale for residential with prior approval for PD - £8.5 - £9.5 million
· Sale for residential use - £7.0 - £8.0 million
· Sale for retirement living/care home – Extra Care: £8.5- £9.5 million, Retirement: £7.5- £8.5 million
· Sale/pre-let as a hotel - £5.0 - £5.5 million
· Sale for retail use - £5.0 - £5.5 million
· Sale for self-storage use - £4.0 - £5.0 million
The option to redevelop the site for housing internally was discussed with the Director of Community Services but dismissed due to the complexities of the site and the lack of in-house expertise.”
2. On what basis was the property considered for use by the Council (if at all)?
“See above. In addition, the Council did consider relocating its operations to the site and releasing Millmead, but it was agreed that the site was unsuitable”.
3. Why wasn’t a Permitted Development Planning Certificate put in place before the property was offered in the market, with the clear added value if that had happened?
“In September 2018, pre-empting the tenant actioning their break, the Council commissioned LSH to prepare an Options Appraisal for Liongate on the potential future uses of the site.
The report reviewed the relative merits of each option and provided a high-level range values for each and their view on demand/risk factors. To inform this a site survey, Flood Risk assessment and pre-planning advice were commissioned. The flood risk assessor was in dialogue with the EA to produce their report. However, the EA was not very forthcoming with information.
The pre-planning advice stated:
“Sale for residential with prior approval for Permitted Development. The building is located within flood zone 3b. Residential uses fall within 'more vulnerable' as identified in the Flood Risk Vulnerability Classification of the NPPG. In Flood Zone 3b residential development should not be permitted. As such there is an in-principle objection. Any prior approval application would need to be accompanied by a site-specific flood risk assessment. We would consult the Environment Agency on any prior approval application. However, I must advise it is unlikely that prior approval would be granted, given the identified flood risk and 'more vulnerable' use.”
After commissioning a new and more involved flood risk assessment (using a different Accessor who had had success at Stoke Mill and a good dialogue with the EA) we received further advice from planning including the following statement from Planning dated 17 October 2019:
“As discussed, I’m not aware the LPA has considered any office to resi PD prior approvals in flood zone 3 so we don’t have a lot of precedents to draw on. What I can say is that we have strongly resisted resi and student schemes in flood zone 3 where these have been subject to applications for planning permission. I think it would be hard for a scheme to pass the sequential and exception tests for resi on this site if planning permission was sought, but this will be something that needs to be considered and demonstrated by the applicant.”
Given the issues around planning and to take advantage of any interest, it was decided not to try to obtain prior approval but perform a full marketing campaign on an ‘any offer’ basis and asked potential purchaser to rely on the advice given in the new FRA (attached as Appendix 1 to this Order Paper) which stated that:
“Based on the modelling the site is concluded to be outside the Functional Floodplain (i.e. the 1 in 20-year event). As such the policy within Guildford Borough Council’s Local Plan that states that development within Flood Zone 3b should not increase the existing vulnerability classification does not apply. A proposed change of use application in this location can therefore be considered acceptable provided suitable flood resilience and resistant approaches be included within the scheme.”
This enabled the Council to obtain the full value for the site without the risk and cost of applying for PD approval and it being rejected which would have significantly reduced the value of the site”.
4. Who authorised the property being sold at a £3m loss? I am not aware of any similar property that was valued in 2013 and then again in 2020 that ‘achieved’ such a loss in property value?
“The matter was approved by the Executive on 29 November 2019 - minute EX65.
The property was recorded in accounts as being sold for £10,820,000 (£10,170,000 + £700,000- £50,000 deposit). £108,463 of costs (legal, marketing, security, dilaps surveys) was deducted. This made a total capital receipt in accounts of £10,711,536.93. £850k was written out to I&E on disposal – investment properties hit I&E each year - both upward and downward.
For information, valuation history is:
2013-14 purchase £13m
2014-15 £13.865m
2015-16 £14m
2016-17 £14.35m
2017-18 £14.42m
2018-19 £13m
2019-20 £12.15m
The void also led to a loss of rental of £980,000pa. Whilst the property remained vacant there was empty premises business rates liability of £125,000, meaning that the budgeted income shortfall was £1.105m per annum. There were also escalating costs around utilities and security.
Please also see best consideration letter from agent (attached as Appendix 2 to this Order Paper).”
5. Why was the Council apparently so concerned by EA speculation that flood risk would make Residential conversion impossible given residential permission was so readily given by the same Council as LPA?
“Pre-application advice highlighted that the site is located within Flood Zone 3b which carries significant constraints in terms of planning policies and flood risk concern. Consent was sought through the Prior Approval route and therefore only specific matters could be considered. The first two Prior Approval applications (19/W/00109 and 19/W/00110) were both refused on these grounds carrying objections from the Environment Agency. Therefore, this would highlight that the initial concerns were valid.
The following application, 20/W/00021, included a significant amount of additional information in respect of this matter and changes to the scheme as result the Environment Agency raised no objection to this application and as a result the Prior Approval application was approved.”
6. Why didn’t the Council write in an overage clause?
“The purchaser was buying the site for residential conversion and was, in their view, paying a price based on the assumption they would obtain prior approval for that use. The next highest (i.e. lower) residential bid was in fact conditional on getting prior approval.
An overage clause is generally included in a commercial property/land sale contract and is used by the selling party for them to receive additional funds after the sale has been completed and an agreed 'trigger event' has taken place. The Council did request an overage payment but as the price already was a full price based on the assumption that they would obtain planning, an overage clause was unacceptable to the bidder”.
Given this Council’s decision to hold independent enquiries on small matters such as Burchatts Farm Barn, this certainly justifies a formal and extensive investigation and report to the Council Tax payers in Guildford.”
“In this case, I believe an independent investigation is unnecessary. Previous investigations were seen to be necessary to uncover information to better understand the circumstances which led to a particular situation and the decision-making process. This time we are in possession of many committee meeting papers which were presented and minutes documenting conclusions. Additionally, we have reports from consultants on a wide range of options which were analysed and considered before decisions were made. The response to the six parts of the question above is comprehensive and has provided an opportunity to present an accurate picture which corrects assertions made in a political leaflet. Lastly, I do not question the original decision to acquire Liongate, but others may well do.”
In a supplementary question, the Lead Councillor was asked whether he would reconsider the request for an investigation, even if it was an investigation that involved an internal working group or the Executive, in order to understand this process and how the Council ended up in the current situation. The Lead Councillor’s response was that a great deal of information on this matter had already been made public, including two supplementary reports from consultants, to provide extensive answers to the original question.
In response to a further question as to:
(a) whether or not, once rent was taken into account, a net loss was made to the tax payer as a result of this property investment and
(b) whether at the time of the sale the Overview and Scrutiny Committee expressed any interest in exercising its right to call in the decision to sell the property and whether that Committee could, if it wished, look at this further if it felt that further scrutiny was appropriate
the Lead Councillor responded by stating that there had been ten bidders for the property and the highest bid was taken which was a little over £10 million, which removed the building from our books. If it had stayed on our books, the Council would have had an empty property incurring substantial costs such as rates and security and would have had to forgo a loss of nearly £1 million in rent. The decision to sell at the time had been the right decision. The Lead Councillor did not know whether it was in his power to agree to further scrutiny of the decision but stated that he could not see any merit in doing this.
In response to a question on whether the Lead Councillor would organise a meeting for the Lead Councillor for Regeneration to meet with interested councillors to explain to them how investment property worked, the Lead Councillor stated that if Lead Councillor for Regeneration was willing to do this, then he would like to join that meeting.
Finally, in response to a further question which asked why, bearing in mind the expert report which stated that permitted development rights could be secured for the building for residential use, the Council did not pursue that course of action, the Lead Councillor responded by stating that permitted development had been applied for twice and refused and the third time it was obtained so getting permitted development was never going to be easy because the building was in a flood plain. The property was in an extremely poor position and buying it to refurbish it into residential would have been an extremely risky and speculative proposition.