Friday, February 5, 2010

Ashwells Going Bust: What did the Council know?

The City Council is facing increasing criticism over what it knew about the financial health of Ashwell's, the now-bust developer of the CB1 Station Area redevelopment project, amid concerns that the vital transport infrastructure that the must be delivered as part of planning permission for the project is at serious risk.

The Council worked closely with the developer prior to the application being approved by the planning committee, and also will have had extensive discussions after the initial outline planning permission was granted.

Conservatives have raised concerns from early on in the process about the financial ability of Ashwells to deliver, and asked the Council what it was doing to look into the financial circumstances of Ashwells in view of how key it was to delivering transport improvements.

Now GTARA, the Glisson Road and Tenison Road Area Residents Association has submitted a formal complaint to the Council about its handling of the issue - alleging that the Council didn't properly take into account the financial status of the development when renegotiating the section 106 agreement (that specifies the transport improvements, and when they need to be provided) in Nov 2009. This could be relevant, as the original planning application and s106 agreement was approved taking into account a confidential commercial viability report, that does not appear to have been updated to reflect the new circumstances. GTARA points to a similar Ashwells development in Chelmsford, where planning officials were clearly aware of Ashwell's perilous financial state. The chair of GTARA, Frank Gawthrop ends his complaint:

"In my view the actions of the Planning Dept are of a poor standard as it has failed to give Councillors sufficient information to make informed decisions.  I do not believe that your department has exercised due diligence in this matter and that this is likely to cause substantial loss to the public purse."

I understand that separately a freedom of information request has also been submitted to the Council asking about the Council's relationships with Ashwells, and what financial appraisals of Ashwells were undertaken.

To date the planning department and the chair of the planning committee have insisted it is business as usual, nothing to worry about, and the developer going bust and being taken over makes no difference. In reality, the scheme is a set of related developments, with trigger points for the key transport infrastructure to be built.

I do get the impression of considerable complacency in the planning department about this issue, and a very poor level of scrutiny of what is effectively a large - to the point of unaffordable - level of taxation being levied on a developer, on which the Council is then placing huge reliance in order to provide some pretty vital transport infrastructure - not least the cycle parking in the planned new multi-storey car park.

East Area committee has summoned the Director of Environment and Planning to its next meeting on 18th February, and hopefully Councillors will have more opportunity then to get to the bottom of the problems.

1 comment:

NickW said...

Im surprised any firm goes bust these days.

Above a certain size all one needs to do is get on the phone to Whitehall and whisper those magic words;

Too Big to Fail
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