States Meeting Transcript - 28/03/2007

STATES OF JERSEY

OFFICIAL REPORT

WEDNESDAY, 28th MARCH 2007

PUBLIC BUSINESS – (Resumption)..........................................................5

1. Former Jersey College for Girls: proposed sale (P.30/07)...............................5

The Deputy Bailiff :............................................................................5 Deputy A.J.H. Maclean of St. Helier:..........................................................5 Deputy P.N. Troy of St. Brelade:..............................................................5 Deputy R.G. Le Hérissier of St. Saviour : ......................................................5 The Deputy Bailiff :............................................................................6

1. Deputy R.C. Duhamel of St. Saviour:....................................................6 Senator F.H. Walker :..........................................................................8
2. Senator F.E. Cohen:....................................................................11
3. Deputy J.A.N. Le Fondré of St. Lawrence : .............................................13 Deputy R.C. Duhamel:........................................................................14 Deputy D.W. Mezbourian of St. Lawrence : ..................................................17 Connétable D.J. Murphy of Grouville :........................................................19
4. Deputy S.C. Ferguson of St. Helier:....................................................19
5. Deputy J.J. Huet of St. Helier : ..........................................................20 Senator S. Syvret:............................................................................21
6. Deputy C.J. Scott Warr en of St. Saviour:...............................................21
7. The Connétable of Grouville :...........................................................21 Deputy J.A.N. Le Fondré:....................................................................22
8. Senator L. Norman: ....................................................................23
9. Senator J.L. Perchard:..................................................................23 Deputy I.J. Gorst of St. Clement:.............................................................26
10. Deputy C.F. Labey of Grouville :........................................................26
11. Senator F.H. Walker :...................................................................27 Senator F.E. Cohen:..........................................................................28 Senator J.L. Perchard:........................................................................30 The Connétable of Grouville :.................................................................34 Senator J.L. Perchard:........................................................................34 Deputy D.W. Mezbourian :....................................................................34 Miss S.C. Nicolle, Q.C., H.M. Solicitor General:.............................................34 Deputy F.J. Hill of St. Martin : ................................................................35 Deputy P.J.D. Ryan of St. Helier : ............................................................35 The Deputy Bailiff :...........................................................................35 Senator B.E. Shenton:........................................................................36
12. Senator B.E. Shenton:..................................................................36 Senator F.E. Cohen:..........................................................................37 Senator F.H. Walker :.........................................................................37
13. Deputy P.V.F. Le Claire: ...............................................................39

LUNCHEON ADJOURNMENT PROPOSED..................................................39 The Deputy Bailiff :...........................................................................40

LUNCHEON ADJOURNMENT................................................................40

PUBLIC BUSINESS - (Resumption)..........................................................40 Former Jersey College for Girls Proposed Sale (P.30/07) (Continued)......................40

The Deputy Bailiff :...........................................................................40

14. Senator M.E. Vibert :....................................................................40
15. Deputy D.W. Mezbourian :..............................................................40 The Solicitor General:........................................................................41

16. Deputy J.B. Fox of St. Helier:..........................................................41
17. Deputy A.E. Pryke of Trinity :..........................................................42
18. Deputy S. Power of St. Brelade : ........................................................42 Deputy G.W.J. de Faye of St. Helier:.........................................................43 Senator F.E. Cohen:..........................................................................43
19. The Deputy of St. Martin:..............................................................44 Senator F.E. Cohen:..........................................................................44
20. Connétable T.J. du Feu of St. Peter:....................................................45 Senator F.H Walker :..........................................................................45
21. Deputy G.C.L. Baudains of St. Clement : ...............................................46
22. Senator P.F. Routier: ...................................................................46
23. Deputy G.W.J. de Faye:................................................................47
24. Senator P.F.C. Ozouf :..................................................................48
25. Deputy G.P. Southern of St. Helier:....................................................50 Senator P.F.C. Ozouf :........................................................................51
26. Deputy R.C. Duhamel: .................................................................51 The Deputy Bailiff :...........................................................................54 The Deputy Bailiff :...........................................................................55 Deputy P.J.D. Ryan: ..........................................................................56 Senator F.H. Walker :.........................................................................57

The Deputy Bailiff :...........................................................................57 The Connétable of Grouville :.................................................................57

APPOINTMENT OF MINISTERS, COMMITTEES AND PANELS.........................57

2. The Deputy Bailiff :.....................................................................57

1. Deputy A. Breckon of St. Saviour:......................................................57
2. Deputy D.W. Mezbourian :..............................................................57 The Deputy Bailiff :...........................................................................58
3. Deputy S.C. Ferguson:..................................................................58 The Greffier of the States (in the Chair):......................................................59

1. Deputy R.G. Le Hérissier: ..............................................................59
2. The Deputy of St. Martin:..............................................................60
3. Deputy J. Gallichan of St. Mary:........................................................60
4. Senator P.F.C. Ozouf :..................................................................61

5. Deputy D.W. Mezbourian :..............................................................61
6. Deputy S.Power:.......................................................................61
7. Deputy G.P. Southern :..................................................................62
8. Senator P.F. Routier: ...................................................................62 Deputy I.J. Gorst : ............................................................................62
9. Deputy C.J. Scott Warr en: ..............................................................62

10. Deputy P.V.F. Le Claire:............................................................63
11. Deputy R.C. Duhamel:..............................................................63 Senator P.F. Routier:..........................................................................63 The Greffier of the States (in the Chair):......................................................63

4. Deputy P.J.D. Ryan:....................................................................63

1. Senator P.F. Routier: ...................................................................65
2. Deputy P.V.F. Le Claire: ...............................................................65
3. The Deputy of St. Martin:..............................................................66
4. Deputy D.W. Mezbourian :..............................................................66
5. Connétable G.F. Butcher of St. John:...................................................66
6. Deputy G.P. Southern :..................................................................67
7. Deputy R.G. Le Hérissier: ..............................................................67
8. Senator M.E. Vibert :....................................................................67
9. The Deputy of St. Mary:................................................................68
10. Senator T.J. Le Main:................................................................68
11. Deputy C.J. Scott Warr en:...........................................................69
12. Deputy J.G. Reed of St. Ouen : ......................................................69
13. Deputy K.C. Lewis of St. Saviour:..................................................69
14. Senator P.F.C. Ozouf : ...............................................................69 The Greffier of the States (in the Chair):......................................................70

PUBLIC BUSINESS - (Resumption)..........................................................70

3. Draft Road Traffic (No. 57) (Jersey) Regulations 200- (P.161/2006): amendment....70

The Bailiff :...................................................................................70

1. Deputy G.W.J. de Faye:................................................................70 The Greffier of the States (in the Chair):......................................................71
2. The Connétable of Grouville :...........................................................71
3. Deputy D.W. Mezbourian :..............................................................71
4. Deputy J.B. Fox:........................................................................71
5. Deputy R.G. Le Hérissier: ..............................................................72
6. Deputy R.C. Duhamel: .................................................................72
7. Senator F.E. Cohen:....................................................................72
8. The Deputy of St. Martin:..............................................................72
9. Senator T.J. Le Main: ..................................................................72
10. Senator P.F.C. Ozouf :..................................................................72
11. Deputy S.Power:.......................................................................73
12. Deputy G.W.J. de Faye:................................................................73 Deputy D.W. Mezbourian :....................................................................74 Connétable A.S. Crowcroft of St. Helier:.....................................................75 The Connétable of Grouville :.................................................................75 Deputy R.C. Duhamel:........................................................................75 The Greffier of the States (in the Chair):......................................................77 Deputy R.C. Duhamel (Chairman of the Environment Scrutiny Panel): ......................77 Deputy G.C.L. Baudains:.....................................................................77

13. Deputy G.W.J. de Faye:................................................................77

1. Senator M.E. Vibert :................................................................78
2. Deputy G.C.L. Baudains: ............................................................79
3. Deputy D.W. Mezbourian : ..........................................................79
4. The Deputy of St. Mary:.............................................................79
5. Deputy K.C. Lewis : .................................................................79
6. Deputy R.C. Duhamel:..............................................................79

14. Deputy G.W.J. de Faye:................................................................79 Miss S.C. Nicolle, Q.C., H.M. Solicitor General:.............................................80 Deputy G.C.L. Baudains:.....................................................................80 Deputy G.W.J. de Faye:......................................................................80 The Deputy of St. Mary:......................................................................81 The Greffier of the States (in the Chair):......................................................81 Deputy G.P. Southern :........................................................................83 Deputy G.W.J. de Faye:......................................................................83

APPOINTMENT OF MINISTERS, COMMITTEES AND PANELS - RESULT OF BALLOT ..............................................................................................83

4. The Greffier of the States (in the Chair):................................................83

CONSIDERATION OF ADJOURNMENT.....................................................83

5. The Greffier of the States (in the Chair):................................................83

1. Deputy G.P. Southern :..................................................................83
2. Senator L. Norman: ....................................................................84
3. The Connétable of St. Lawrence:.......................................................84

PUBLIC BUSINESS - (Resumption)..........................................................84

6. Draft Centeniers (Terms of Office) (Jersey) Law 200- (P.20/2007)....................84

The Greffier of the States (in the Chair):......................................................84

1. The Connétable of St. Lawrence:.......................................................85
2. The Deputy of St. Martin:..............................................................85
3. Senator P.F.C. Ozouf :..................................................................86
4. Deputy G.C.L. Baudains:...............................................................86
5. The Connétable of St. Peter:............................................................86
6. The Connétable of St. Lawrence:.......................................................86 The Greffier of the States (in the Chair):......................................................88 Deputy F.J. Hill of St. Martin (Chairman of the Education and Home Affairs Scrutiny Panel)88 The Connétable of St. Lawrence:.............................................................88

ADJOURNMENT................................................................................88 The Greffier of the States (in the Chair):......................................................89

ARRANGEMENT OF PUBLIC BUSINESS FOR FUTURE MEETINGS ....................89

7. Connétable D.F. Gray ofSt. Clement (Chairman of the Privileges and Procedures Committee): ............................................................................89

7.1 Deputy A. Breckon:....................................................................89

ADJOURNMENT................................................................................89

The Roll was called and the Dean led the Assembly in Prayer.

PUBLIC BUSINESS – (Resumption)

1. Former Jersey College for Girls: proposed sale (P.30/07) The Deputy Bailiff :

Just before we return to public business, following yesterday's proceedings, there is of course a need to appoint a new President of the Chairmen's Committee. It is suggested that that should take place immediately after the luncheon adjournment, so I advise Members of that. Very well, we now come to P.30 - Former Jersey College for Girls: proposed sale, lodged by Deputy Duhamel, and I ask the Greffier to read the proposition.

The Greffier of the States:

The States are asked to decide whether they are of opinion; (a) to request the Minister for Treasury and Resources to take no steps to conclude the sale of the former Jersey College for Girls as reported to the States on 20th February 2007 until the documentation relied upon by the Minister to establish the value of the property, land and buildings has been presented to the States Assembly; and (b) to agree that the sale of the property and the terms proposed by the Minister for Treasury and Resources does not represent good value for the public of Jersey.

Deputy A.J.H. Maclean of St. Helier :

Unfortunately, I am conflicted in this, Sir, and I wondered if I could ask for your permission to withdraw from the Chamber. I know the owner of the business who is interested in this property personally and, from a business point of view, my company also does work with the same company.

The Deputy Bailiff : Very well, yes.

Deputy A.J.H. Maclean: Thank you, Sir.

Deputy P.N. Troy of St. Brelade :

I should say, Sir, that as someone involved in the construction industry, I do know the director of this company, not on a personal basis, but I have had dealings with him in the past when he was working at another company. But I feel, Sir, that I have no direct pecuniary interest in this and I would like to stay in the debate and see the debate through, but I may contemplate abstaining at the end of the debate.

The Deputy Bailiff :

Very well. Yes, Deputy Duhamel?

Deputy R.G. Le Hérissier of St. Saviour :

Sorry, Sir, before the Deputy starts, can I raise an issue in reference to Deputy Troy 's participation? I find it very odd, Sir, that he will stay and make his mind up when the vote comes. Surely, Sir, the principle should be established under which he is going to act from the very beginning. Either he has got a stake in development germane to this particular development or he has not. And if he has, he should withdraw, I would have thought. Thank you, Sir.

Deputy P.N. Troy :

I have no particular stake in this development or in the company that belongs, I believe, to Mr. Whalley and perhaps others; I do not know, but I have no connection with them apart from the fact that I know Mr. Whalley from the past. But if Members feel that I should withdraw but I do not have a direct pecuniary interest so I do not think there is any requirement.

The Deputy Bailiff :

The test is whether you have an interest which requires you to withdraw and, from what you say, you do not. In other words, you have no financial interest, direct or indirect, in this matter, is that right?

Deputy P.N. Troy : That is correct.

The Deputy Bailiff :

You simply know the developer concerned?

Deputy P.N. Troy : Yes.

The Deputy Bailiff :

Well, then, it is a matter for you, it seems to me, as to whether you stay or whether you go, but I can see the point made by the Deputy . You must make that decision now. It cannot depend on how the debate goes. Either you now feel comfortable to stay and vote or you do not, so you must make your mind up.

Deputy P.N. Troy :

I feel comfortable. I thought that I might be able to make some contribution during the debate perhaps.

The Deputy Bailiff :

It is a matter for you, Deputy .

1. Deputy R.C. Duhamel of St. Saviour :

The disposal of any States asset is an extremely serious issue. In particular, the disposal of any States assets at a value which does not satisfactorily represent its true value is an even more serious issue. It is with this in mind, Sir, why I am bringing this proposition today to allow States Members the opportunity to request that the Minister for Treasury and Resources takes no steps to conclude the sale of the former Jersey College for Girls as reported on 20th February 2007 until the documentation relied upon by the Minister - Senator Le Sueur - to establish the value of the property, the land and the buildings, has been presented to the States Assembly. That is the first part of my proposition, Sir. The reason that I am asking for this is that we have a property schedule which does not consist of just one property. It consists of many properties. The States are strapped for cash - without putting too fine a point on it - and this is one of the reasons why we are seeking to have a disposal of some of our assets in order to put some short-term capital monies back into our coffers. Every States' Member has a duty to the public purse and that duty to the public purse must necessarily override any other political affiliations or other political issues. It is about value for money. I do not see, Sir, how we can be party to consenting, as we are not being asked to do indirectly, to any asset disposals unless we know the rules of the game and by which the valuers involved have arrived at the suggestion for the value of whatever property we are talking about. Sir, I think most Members, particularly those involved in Scrutiny, would be interested in knowing the underlying assumptions that are being brought to bear to value this particular piece of real estate. The second part of the proposition is to agree with what I am putting forward I should have said, that the sale of this particular property, in the terms proposed by the Minister for Treasury and Resources does not represent good value for the public of Jersey. And in arriving at that conclusion, Sir, I have to mention to the House what happened earlier on. My interest in this

matter did not arise earlier this year. It arose last year when the suggestion was that this particular property was going to be sold. I contacted the department and had a meeting with the Treasury Minister and indeed the other valuation officers from the Property Services Department to suggest at that time that I felt that the valuation figure that was being put on the particular property was not sufficient. At that time, Sir, I had the Treasury Minister tell me that he did have some reservations about the figure and, in his view, he encouraged me to go out and to look into the private market to see to what extent betterment could be found. That, Sir, is what I did. I wrote to the departments again on 6th January and the letters are appended as part of the report. Having taken soundings on the valuation of the site, I used figures for the average house prices from the Statistics Department for the third quarter of 2006 and using an assigned value of some 40 per cent - which I was told was a sensible figure to be using - arrived at the following valuations which would suggest that the site value for the new-build properties which, as everybody can see from the plans, are the buildings to be built at the rear of the Girls' College and to the side of the Girls' College, should be valued at something of the order of £3.8 million. Since that time, Sir, one developer has suggested - although you do not have this particular valuation or offer as part of your brief - that indeed that is the same opinion in terms of valuation that he would have arrived at and he has assessed the rear building at some £1.8 million and the side buildings - the 9 townhouses - again assigned value at some £1.8 million which equates to £3.6 million without touching the front which would be an additional sum. That, Sir, was pretty much in line with my feelings and I went on in my report to suggest to the Treasury Minister that indeed if you applied similar valuation exercises according to the published statistics, then if you applied those similar figures to the front part of the building, then in essence, the site value would come out at something like £5.3 million. Now, it is interesting, Sir, to note that in the supporting documents - some of which are the documents from the developers who have suggested alternatives which I was asked to come up with - we have been given a schedule which states that we should be notionally adjusting the figures in the schedule by some £100,000 per unit. That £100,000 per unit was for a one or 2-bedroom unit. If you apply a crude rule of

thumb and say: "Well, if you can knock off £100,000 per unit, whether it be one-bedroom or 2- bedroom, in order to make an adjustment to these figures, then how many units are we talking about as part of the whole development?" Well, we are talking 56, and 56 times £100,000 is £5.6 million for those who do not have a calculator. And that is pretty much of the order that I was coming to when I suggested that the total site should be valued at some £5.3 million. I went on, Sir, to say: "Well, okay, let us not be greedy about things", albeit that people do pay around about 40 per cent of selling prices' full-site valuations these days, and sometimes in excess if the site is particularly worthy for development in a particular way. I say, well, let us reduce it a little bit and come down to 30 per cent. And, in doing that, that produces a site value in excess of £4 million. Sir, I am still of the opinion that those figures are the right figures or closer to the right figures. Indeed, the exercise, as I have told the House, was for me to see whether or not there was interest because the Treasury Minister was not particularly satisfied that the deal that was being put forward was the best. Now, it is unfortunate, Sir, that the Treasury Minister is not here today to speak on the issue and I wish he had been. But I was not told that he was going to be away when we asked for a different date and, as I say, if he is on holiday, he is on holiday; that is fine. But it would have been nice to have had him here to get his point of view. Now, one of the things that were said by the department at the time when I went out to a number of people was that they thought that no other people were interested in bidding for this particular property. And we have appended to the schedule the adverts that were placed in the local newspaper. I have a letter also from a U.K. developer and I would like to read a part of his letter to me over this issue. He goes on and he says: "I have spent the last 15 years redeveloping listed buildings across the U.K. from schools to hospitals, from 50,000 square feet to over 500,000 square feet, and in May 2005 [note the date: May 2005] wrote to Mr. Tucker at the Department of Property Services to express my interest in the Girls' College building should it ever come to the market. Sadly, I did not see the property marketed in any of the national press, nor did any of my contacts in the Island let me know that it had eventually come on to the market. No one's fault but my own, I hasten to add." Further: "I

have been buying buildings such as the Jersey College for Girls for many years now in a very competitive market in the U.K., and as such I would welcome the opportunity to maximise the capital receipts for the States while, at the same time, getting the opportunity to work on a building I know well from the many aunts, cousins and sisters who were all at school there. Is there anything I can do? I would love to have had the chance to have bid for the property and am prepared to make an offer should you feel that it is both in the interest of the Island and the building itself." That is one particular company, and he has subsequently sent some further documentation offering of the order of £3.5 million with the suggestions that his particular expertise in the development of listed buildings would be of interest and perhaps benefit to the Island in order to perhaps retain an element of public access to the buildings which are afforded an S.S.I. (Site of Special Interest) status. My point here, Sir, is that we have 2 adverts appearing in the newspaper. It was only advertised in the Evening Post and I think perhaps that we missed a bit of a trick, bearing in mind that our overarching kind of duty hacks on to the public purse. I think we should have been advertising a little bit further afield, but we did not do it and I think perhaps we should have done. Now, not having done it and knowing that there is at least one developer in the specialist refurbishment of listed buildings and indeed other developers who are interested in bidding for this property, I think the way forward must be - even at this late stage - to go and reopen the tender process. And these were the discussions that I was entering into with the Treasury Minister with his encouragement. The first offer - if you turn to your schedules - by Developer A, was made to myself and forwarded to the Minister and the department. The basis on which that offer was made was that any money upfront is better than a profit share agreement which is dubious and retains an element of probability about it. We are told that the deal that is being proposed to the Minister is that there should be a profit share. It has subsequently been described by the Deputy of St. Lawrence as not a profit share but a proportion of the sales. The proportions that are being spoken about is 40 per cent to the States and 60 per cent to the developer. Now, as mentioned by Senator Shenton on the radio the other day, £1 in your pocket is probably

preferable to £10 promised by somebody who is going bankrupt. The issue, Sir, is that the £3 million that was offered was a firm offer and, as a starting offer to the Treasury Minister, the Treasury Minister was very interested and suggested to me that this was sensible to be looking at because it did take away the uncertainty of whatever the element of the profit share was going to be. So £3 million up front is definitely better than £1.8 million plus 40 per cent of profits which are going to be organised or delivered by the developer himself. Now, I thought that was sufficient at the time, having had a handshake from the Minister, to put the whole process back into the public domain and to go out for a further tendering process. However, the Minister advised me that he would be telling me at a later stage, and I received an email a couple of days later suggesting that I should tell him who the developers were, which I duly did, and they should be in a position to put up or shut up. And they are, because we have the letter here subject to contract and he was satisfied that they were bona fide offers. At that meeting, Sir, a number of days later, he did suggest that he had had second thoughts and that £3 million up front, although better - because it was a fixed deal - than £1.8 million plus a profit share, was not really enough to excite him. Luckily, Sir, I had had another development proposal up my sleeve and I gave him a second one, as in your bundle of records, for Developer B suggesting that £4.2 million upfront plus a profit share to be agreed, plus the opportunity, should the States so wish, to achieve a public interest activity within the building was something that this particular developer would be keen to bid for. At that stage, the Minister said that that was a particularly interesting offer and he thought that we would be in a win-win situation as he suggested because £4.2 million is better than £1.8 million; £4.2 million plus profits is much better than £1.8 million plus profits. And if you take one away from the other, that is £2.4 million difference. I thought again at that time that that was sufficient to put the matter on hold, but, Sir, I am told that

Senator F.H. Walker :

Can I just request clarification, if I may?

Deputy R.C. Duhamel: Yes.

Senator F.H. Walker :

Could the Deputy tell me where the £4.2 million plus profit comes from and which particular letter he is referring to?

Deputy R.C. Duhamel:

Yes, I am referring to Developer B and it says at the bottom: "First of all, we did not tender for the scheme originally as it was not sold as a residential opportunity." So that goes back to my first point about the lack of advertising appeal to bidders in the market. "I can confirm that the current proposal is definitely of interest to me. As regard valuation of the current proposal, I would value as follows and be prepared to pay as much." He goes on to suggest that £4.2 million is the amount of money that will be paid: "I agree that a car park deck in front of the historic building, retaining gardens on top, will only enhance the value of the properties." And, at that time, the further discussions were about the potential to have an element of the building open to the public if indeed the States wanted to do that. Then he goes on to say at the end: "I understand that the site will be put out to public tender and we will bid if an agreed profit uplift can be included." Now, I was there at the discussion.

Senator F.H. Walker :

A profit uplift for whom, Sir?

Deputy R.C. Duhamel:

A profit uplift for the States, right? That is what it says. I have just read it out, Sir. It says: "We will bid if an agreed profit uplift can be included." It is pretty clear, black and white, Sir. I spoke to the developer and he said that he was offering £4.2 million plus profits. Subsequently, Senator Perchard received an offer. Again, a suggestion was that due to the historic nature of the existing buildings and the close ties it has with many members of the public, this particular developer, Developer C, would also be amenable to retaining part of the existing building for use by the public, as indeed was discussed with Developer B, or as commercial office suites: "This would not prevent us from completing the cash offer outlined above" which was for the order of £3.6 million plus an overage (that means profit) calculated as a percentage of sales value achieved in excess of a pre-agreed amount. So quite clearly, it is a fixed sum plus a share of the profits. It is there in black and white, Sir, for everybody to read. So where does that leave us? That leaves us with the schedule and it looks as if the Council of Ministers is struggling with this one in particular because we have got, at a very late stage, a schedule which produces a bending of the branches or whatever in order to try to meet the figure that I have suggested is available. That is not to say that any betterment of that figure is not available because at the meeting I had with the Treasury Minister where I revealed to him the name of the developer who wanted to bid £4.2 million plus a share of the profits, I said to the Minister that I did not wish to go out and publicly embarrass him or the department in what appeared to be the inability of the department to come forward with better deals than the one that was being suggested to go with at the time but that if I had to, I would go and ask other developers whether or not better deals were available. And I have felt sure, from the figures that I have been given in the discussions that I have had with people, that betterment, even of the £4.2 million is possible. Now, I refer Members to my letter, and Members will know that I have a particular interest in planning, particularly long-term planning, and I did ask the Minister for a reply but he has not given me one on this. I said: "Finally and generally, I wonder whether any thought has been given to the future synergistic use of the land in public ownership which lies to the north of the site", i.e. the area that is used for Centre Point at the moment and a car park, and then further up the hill we have a primary school which may not be there in the long-term future. In particular, the new build will impact on the light available to the buildings currently occupied by Centre Point

and perhaps facing consideration of their demise and replacement. Now, in looking at the sites and how they link together, if you think a little bit outside of the box - as I was told I do yesterday - it is pretty obvious that we are sitting on a very large site that could be developed further up the hill. That has not escaped the interest of developers and one would think that bearing in mind the car park and the Centre Point facilities are not going to be there in the future, that those facilities should be considered perhaps as part of an even bigger package which would release an even bigger sum of money to the Treasury Minister in order to fill his coffers. As I said, Sir, I have not had anything back on that particular suggestion, but I think it is something that we should be considering in addition. Going back to the schedule - the last gasp of the dying man - we have, I think, an embarrassing schedule here where figures are trying to be made to fit a particular solution. We are told that the Grange Developments offer is £1.8 million. There is an expected overage - profits, call it what you like - of £1.4 million.

Senator J.L. Perchard:

Could the Deputy refer Members to the exact page, Sir?

Deputy R.C. Duhamel:

I beg your pardon. This is the supporting documents. The pages are not numbered. That is the third page in. It is called "Former J.C.G. (Jersey College for Girls) Comparison of Offers". So it is time, Sir, to do a few sums. Sir, if you look at the deal that is being offered to the States at the moment, it is £1.8 million guaranteed minimum price, a proportion of the profits, call it what you like, of £1.4 million. It was suggested earlier to me by the department themselves that it was £1.2 million, but that has gone up to £1.4 million and we are told that perhaps there is an uplift because we are not getting the money immediately; we are getting it in a couple of years' time when the development has been sold. Then we have planning enhancements and benefits to the public realm which has suddenly appeared. There is another £500,000 - not an insignificant sum - in order to arrive at a value of scheme to the public of £3.7 million which sounds quite good. Developer A was the staying offer, saying that £3 million now is a better offer than the expectation, with no risk attachment attached, of £1.4 million in 2 years' time. We do not know that there is going to be any profit. We are being told there will be a big profit and that will be our share of it. But if the properties are not marketed in the correct way or there is a whole host of things that could go wrong or if the costs of the site get out of hand, then the expected overage might not amount to the figures that we are being told. Surprisingly, at the bottom, we are told that there are repayment costs minimum of £150,000 assuming that if the existing offer does not go ahead, then those monies will be payable to the existing developer. In valuing anything, I think is biasing the figures. The figures we should be comparing are what is on offer now and what is the profit attributable. Now, I would argue, Sir, if there are planning enhancements and benefits to the public realm - and you have heard me tell you that they could be even bigger planning enhancements and benefits to the public realm if indeed an element of the old Girls' College building were used for some kind of public activity which indeed a number of other developers would like to achieve - then that might arrive at £500,000 worth. Now, why are those planning enhancements not attributable to the other developers? They should be. So I would argue that that £500,000 should be across the row and that starts to paint a different picture. The £4.2 million, as I said, and indeed the £3.6 million from Developer B and C, both of those options suggest that there will be profit shares on top. But we have the department or the Council of Ministers, I am not sure who prepared the schedule, telling us that there are no profit figures to be included, so we have an empty element in that row suggesting that there is no profit share at all. That obviously decreases the overall costs, the overall price to the House in order to try and get the spending to try and say that £3.7 million is the same as £4.2 million minus whatever you can knock off it. I think we are bending the truth a little bit here, Sir. There is also the suggestion that because one of the units within the 58 units that were spoken about was number 13 - and for some reason I did not notice it when I looked at the plans of the department - apparently, in big developments, number 13 is not normally allowed to be developed,

so although it was put down as the thirteenth unit, there is not a unit 13 in the numbers. The second thing that has happened, Sir, is that there has been a change in the development application by the developer number one, Grange, themselves suggesting that instead of going for the number of one- bed units that they thought they would go for, they have reduced the number of units overall and gone for 2-bedroom units. Furthermore, one of the units has gone from, I think, a one or 2- bedroom up to a 3-bedroom unit which will increase the value rather than decrease it. As we all know, a 3-bedroom flat is obviously worth a lot more than a 2-bedroom. So we have not lost 2 units. We have only lost one unit, and 2 units have been amalgamated to give that bigger unit. So I would argue very strongly, Sir, that any adjustment that is being attempted to be made to the overall £4.2 million - which, as I say, is Developer B's starting point in negotiations - is being unfairly taken off. Take off £100,000 if you want, but it is a marginal difference, and the other point is do not take out the £150,000 because you are not comparing like with like. Part of the reason why I am here, Sir, is to suggest to the States that we should have really been in a better position than we are and for whatever reason and that is what I am asking for, that the reasons for the valuation be exposed to Members of the House, we should have been told or we should be told just how the deal is being arrived at in terms of the valuation assumptions underlining those figures. So at the end of the day, Sir, what is the deal on the table that Members should be looking at? Well, I think it is go for whatever you like but bear in mind that we are trying to maximise the potential of this particular site in monetary terms. That is the remit of the department. That is the remit of the Minister trying to fill his coffers. What deals are possible? Well, at the moment, the best is £4.2 million fixed, money in your hand, put it in the bank, leave it there for 2 years, do what you like, plus a percentage of the profits. From my calculations, Sir, I think that will always be better than £1.8 million plus profits by at least if not £2.4 million. So Members have a clear choice. Long- term, what I would like to happen - as I said - is for us to be certain that the valuation exercises that are going to be undertaken by the Property Services Department and upon which the Minister will rely, are as robust as possible and capable of meeting the demands that this House is placing on the Minister to raise the maximum funds that he is able to raise in any deal. I am not sure we are in that position to do it as yet. So to finish off, Sir, I do not think that the sale of the property in the terms being proposed by the Minister is sufficiently good. I think better deals - and I have made the case, Sir - are available, even better perhaps that the ones that we have. As such, I think the whole situation should be that there is a re-tendering process that takes place. But we are not here to force the Minister to go for a re-tendering. All we can do, because the Minister will be the one to decide, is to agree that perhaps he needs a bit of a nudge or a pointer to suggest that the deal that he is being advised is the best is not necessarily the best. He should maybe try again at this late stage in order to maximise the monies that are coming back to the States Chamber which we all have a duty to acquire. I think a number of other Members will no doubt wish to speak and I think I will

leave it at that, Sir, thank you.

The Deputy Bailiff :

Thank you. Is the proposition seconded? [Seconded]

2. Senator F.E. Cohen:

I wish to explain to Members my involvement with the application for the former Ladies' College. Shortly after my appointment as Minister for Planning and Environment, the then current proposals were brought to my attention. I looked at the proposals carefully and concluded that the proposals were unsatisfactory for a number of reasons, including the proposals did not adequately respect the historic building. The proposals included, in my view, unnecessarily the loss of many of the architectural features of the building. As one example, the proposals included altering the floors and ceiling heights, resulting in the loss of many architraves and cornices. As another, the proposals included moving the library. Moreover, the design of the proposed new houses to the east of the historic building, were not in keeping with the architecture of the old school building. I therefore decided to ask for the assistance of Mr. Marcus Binney, C.B.E. of Save Jersey's Heritage and Mr. Kip Martin, known to many as the father of country-house conversions in the U.K. Mr. Martin is a former council member of Historical Buildings of Scotland. Mr. Martin subsequently visited the Island to inspect the building, and together with Mr. Binney worked out revised proposals ensuring that the historic building would be better protected. The existing floors and ceilings would be preserved. The internal and external architectural details would be preserved. The library would be retained in its present position, forming a natural part of a quite superb apartment. The external treatment was improved by moving parking away from the historic building. The roof structure of the historic building is to be retained and largely preserved. Perhaps more significantly, the Binney/Martin proposals identified the potential for this development to act as a springboard to regenerate the area. The concept of creating larger and more elegant apartments in the historic building could have the effect of encouraging refurbishment of the many villas that abound in the area. The preferred developer most enthusiastically embraced the Binney/Martin proposals and even visited Mr. Martin at his estate in England. They have taken on board virtually all of the proposals. The planning process I insisted upon in order to adequately preserve the historic building has been long and, I am sure for the developer, rather tortuous. The developer could have taken an alternative approach and accepted a refusal of their original plans and taken this to appeal. It may be considered somewhat unreasonable therefore to penalise the developer for taking a positive approach to the Binney/Martin proposals. It should also be clear that the planning conditions attached to the consent are particularly onerous as I am determined that the historic building will be properly and painstakingly restored. The scheme must not be able to be dumbed-down during development. This is not the usual case of the developer agreeing to anything to get the approval and then removing the difficult elements of the scheme as the development progresses. The conditions will be retained and highest standards will be insisted upon throughout. The improvements have a clear and identifiable public value. However, despite these stringent conditions, the scheme has so significantly been improved by the revised proposal that Mr. Martin feels that the revised scheme not only better preserves the historic building but also

provides a more profitable and more easily saleable range of elegant apartments on the site. Furthermore, the construction work can now be better phased. The Binney/Martin revisions may therefore be responsible for all or part of any increase in the land value. Obviously, any extra value would only have been quantifiable after I approved the revised plans at the end of 2006. It is important to point out that this was an application I dealt with personally and it did not go through the Planning Applications Panel. This is a case demonstrating that properly respecting our historic buildings can, with the advice of appropriate experts, result in a win-win for both the developer and the historic building. The building is more appropriately refurbished and greater value is generated. I would like to take this opportunity of noting my thanks to Mr. Binney and Mr. Martin who, other than refunding Mr. Martin's direct expenses, did not charge for their expert advice. In my view, their efforts have been a great service to the Island and I hope to use this approach again in the future, particularly if it is free. I would also advise Members that as issues of value were to be discussed at the recent meeting of the Council of Ministers, I left the room after having outlined the history of the application and did not participate in the main discussion. On another matter, I was very surprised that Senator Shenton circulated an email to Members on Monday questioning whether I had any connection with Grange Developments, the current developers. I can assure Members that I have no connection whatsoever with the company or in fact any other development company in Jersey. In fact, I had never met the principal of the company before I was appointed as Minister. I have made it very clear in the past the importance I place on having no conflict of interest, either real or perceived, in my role as Planning Minister. To ensure that I met this stringent test, I have, since my appointment, sold my Jersey investment property and I have no conflict of business interest that would in any way compromise my decision making ability as Minister for Planning and Environment. In fact, my only remaining Jersey property is my home. Consequently, I sincerely hope that Senator Shenton will withdraw his extraordinary insinuation.

Senator B.E. Shenton:

It was just a question. I just asked a question. I did not make any insinuation. I asked a question.

Senator F.E. Cohen:

I think any reasonable person reading the email would come to a rather different conclusion. Finally, as depending on the decision of the States that this site could be the subject of a revised or new application, I intend to abstain in the vote. Thank you.

The Deputy Bailiff :

Does any Member wish to speak?

3. Deputy J.A.N. Le Fondré of St. Lawrence :

As we have heard today, this proposition requests 2 things: firstly, to defer the proposed sale and development of J.C.G. until the Minister has given certain information to the House and secondly, to agree that the sale does not represent good value. Reference has been made to various offers recently received from potential developers purporting to offer more money than it is perceived we will be obtaining from the present proposal. Members will see these reproduced in the information pack that was given to them yesterday, and I will later be challenging a number of the assertions that are starting to go round. Firstly, please appreciate the difference between profit and sales prices. I would have quite strong reservations about any arrangement to do with profit, as that would be far less transparent. This process is based upon the actual sales prices of houses, not the profit arising from the overall sale. I think it is very important to appreciate that difference. To that extent, it is the old story of a bird in the hand and 2 in the bush. Do we go for the best that we can get at the time, now, or do we wait on the off-chance that something better might come along? Let us go through these matters quite carefully. Deputy Duhamel lodged his proposition, I think about 3 weeks ago. With the exception of him, a brief request from my fellow Deputy and a request for information from Senator Perchard which I received on Saturday, I have not really had any queries or comments from other Members on this matter. That does obviously exclude Senator Shenton's comment just before midnight on Monday which I shall also address later. The report accompanying the decision was not put into the public domain because the information included in it was considered to be commercially sensitive and therefore, as does happen in a number of these things, it was not really deemed appropriate to give it to the world at large. However, I do accept with the wonderful benefit of hindsight, the decision signed by the Minister could perhaps have been better worded. That is one of the issues: communication. But I would also make the point that we tend not to try and have debates through the media, especially on the basis of some of the information that has been passed over the front pages of the JEP (Jersey Evening Post) has not been as accurate as it might purport to be. However, Members always have the right - and do not forget this - to request the department for information, and have had ample time to do so. The public perception is that we are selling something for £1.8 million when we could get over £3 million for it. Now, I do have to say I am getting rather fed up with hearing that we are selling the J.C.G., as I shall refer to it, for only £1.8 million. It is really not as simple as that. It is only if everything goes absolutely wrong that we get £1.8 million. For that to happen, house prices must have stayed absolutely frozen between November of last year and 2009. Now, obviously, they have not. I can say that even now. So if everything goes as we expect, the department anticipates receiving around or just over £3.2 million. That is in addition to various works being done by the developer for the benefit of the public which I shall explain a little later. To explain the deal in simple terms, the minimum we will get is £1.8 million. As house prices increase over and above a set of values from November of last year, which have been subject to review, we will initially get 40 per cent of the change in prices. Now, that is not the same as profit. That is revenue. Once we get above a certain threshold, which basically allows the developer a fair but not an excessive return, we will get 50 per cent of the change in prices that the units are sold for. And that is

unlimited. I hope that assists matters in outlining the terms of the deal, or the arrangement perhaps. I would also comment on certain aspects of the proposal from Deputy Duhamel, particularly those contained within the letter forming the majority of his report. For example, the Deputy talks about preserving the public use of the existing old building. Well, to be blunt, we do not really want it any more. I am not saying I am entirely convinced about the past history of how the building had been treated, but where we are here and now is we have an old building which is a designated S.S.I. which is costing us at least £25,000 a year to keep in a deteriorating state. Do we want to sell off part of the site and then just spend that money on restoring the old fabric for some unclear purpose? If we are worried about wasting public money, that would be one of the first places to start. It is not only just the façade that is protected. It even goes as far as some of the metalwork in the atrium behind the building. That is why it is not feasible, for example, to separate the old building from the back. If we could demolish it, the site would be far, far more valuable. Can you imagine the outcry that would have arisen if that had been suggested? I do not really want to take on the accumulated history of the old Girls' School for demolition. Consider the process of how we have got here today. Approximately one and a half years ago - which is certainly before my time in the States - the then Environment and Public Services Committee sought expressions of interest for the redevelopment of the site. Now, I have been informed that at least 20 interested parties took information packs away as a result of the advertising. So, it was not not advertised and judging by the level of initial interest it was not hidden away either and the adverts are included in the pack that had been given to Members. Members will also see an article in their pack from the J.E.P. of 17th August 2005, reporting on a proposed sale. It was an open process, as far as we are concerned. Now, out of those displaying interest 5 parties applied, but only 4 made proper submissions. As we have heard one of those was the current proposed developer. As far as I am aware none of them included any of the developers that have recently expressed interest. Now, because of the potential complexities, and I have kind of touched on them already, it was agreed at the time that the developer's costs in obtaining planning permission would be underwritten to £100,000, which was then increased to £150,000. Now, that is only in the event that we, as the States, walk away from the arrangement, having caused the developer to run up significant costs. I will come to this point later, but this was also referred to in the recent Ministerial decision. Let us have a little look at the offers that have been received very recently which are in the pack in front of Members. It may be helpful to turn to those pages. Let us take Developer B first. The letter first refers to the Deputy 's ideas for a much improved scheme. So, immediately we are talking about a scheme which does not have planning permission and we do not know how long it will take to get

that planning permission, or even if such permission will be forthcoming.

Deputy R.C. Duhamel:

A point of clarification. That is the wrong interpretation and I shall refer to that in my summing- up.

Deputy J.A.N. Le Fondré:

Sorry, I could not hear what the Deputy said.

The Deputy Bailiff :

Could you repeat yourself, Deputy ?

Deputy R.C. Duhamel:

The implication, Sir, that is being made by the Deputy is that this is for a new planning application. The actual deal is for the existing one. That is what it says. Discussions did take place as to any betterment that might be able to be achieved in terms of the retention of the front lawn space then some aspect of public use being retained in terms of access.

Deputy J.A.N. Le Fondré:

I am sorry, Sir, I would have to say it says: "A much improved development on the above site." It says later down: "I agree a park car park deck in front of the historic building, retaining gardens on top will only enhance the value of the properties." That implies to me that we are talking significant amendments to what we already have planning permission for. To me that has a huge bearing upon how we deal with matters. The letter then says the site was not sold as a residential opportunity. Well, let us compare that claim to the adverts in the Gazette, which is at the front of the pack. In there it says: "The community is looking for an imaginative but sensitive scheme and a use or uses which reflect the architectural importance etc. of the building." There was no restriction of what the proposals could encompass at all. Thirdly, and most importantly, specifically for this developer, they were contacted informally by an officer from Property Services at the time to see whether they were interested and they declined. So, my view, their claims are simply wrong. Let us have a look briefly of an analysis of their valuation and I will move on to them again in a little more detail. I think the starting point is, as we vaguely touched on already, the numbers do not match what the permission has been granted for, so they are overstated. As I said, the rest of the letter talks about matters which again require planning permission. It does refer to a profit uplift which again is relatively unclear but it is not a percentage based upon the sales price and it is a little bit sketchy about any other offers. Essentially, because of the review we have done of that, we are not prepared to walk away from what we consider to be a good deal on the basis of this letter. Now, Developer C - over the page - offers a lump sum plus an overage calculated as a percentage of sales value achieved in excess of a pre-agreed amount. That is exactly the principle of the agreement we have. There is obviously a difference in the value of the lump sum, but again, the number of units is too high and in addition they make reference to retaining part of the existing building for use by the public. The question that raises in my mind is, surely that will reduce the number of units still further. Again, it does not commit to anything, it is subject to contract and crucially it is subject to due diligence. In my mind this is enough to raise doubt, which it is very easy to do, but does not offer anything different to what we are already receiving. Finally, in reverse order, as it were, let us go to Developer A. They offer a straight £3 million. We are aiming to get more than that. We have no idea of the number of units they are basing their proposal upon, but the other letters are inaccurate and there is no mention of any of the planning enhancements that we will be receiving. Let us go to the schedule in front of those offers and let us talk about average values per unit. The £100,000 per unit that the department has adjusted the valuations by, relates to specific changes to the top end of the range which basically consists of

converting 2 large units into 4 smaller units. It cannot be rolled-out as an average across the site. To put that into English, broadly speaking, if you do the maths on the valuations that have been presented to Members, you will find that on average Developer B at 58 units comes out at £72,000 a unit and Developer C on 59 units comes out at £61,000. What we have tried to adjust for is specifically where we know the number of units are wrong. As an example, if we go back to Developer B, if you look at the analysis they have of 31 apartments, 9 townhouses and 18 refurbished units, the average price per unit there ranges, by my figures, from £41,900 per unit up to £144,000 but predominantly it is £41,000 and £88,000. So, one has to be very careful - and it applies to all of us - on how we deal with averages. It is not as clear-cut as the Deputy is making out. The enhancements which, as I said I will outline shortly; the reason we have not included them against Developers A, B and C is because obviously they are not aware of the actual details of what has been provisionally agreed with the developer on this scheme and which have been basically brought in together over a period of time and negotiation with the developer that we have grown to developments. Therefore it is not appropriate to apply them across A, B and C. It is appropriate to include in the valuation for Grange. The current proposals have been drawn up to take account of future development and potential for the site to the north. Centre Point is being permitted - and we have to take great account of the activities of Centre Point - they will be permitted to operate from the current site for at least 5 years. The other point to mention, which again I will refer to later, about time value of money, the figures offered by others cannot be payable immediately. They do not have planning permission. Now, I am aware of the comment from Deputy Duhamel in respect of the U.K. developer and I have raised it with the department in the past. The officer's recollection is that the developer had accepted although he had missed that

particular tender process he had also expressed interest in a number of other sites that may or may not be coming up in the future and they are not in this year's property plan and he does continue to remain in contact with the department. We are retaining contact with that developer as and when that comes up, but he had accepted, as far as we were aware, that he had missed the tender - the advertising process - for this site. To reiterate the point, none of the so-called offers have planning permission, none of these offers are unconditional. They will all take time to sort out and therefore payment will not be immediate. Now, the difficulty we have had here is our ability to talk to these other parties. Basically, what is the position, having signed the Ministerial Decision, of suddenly going out and speaking to other potential purchasers? At the very least we are going to seriously upset our relationship with someone who has been designated preferred developer since 2005 and at worst it is a breach of contract. It is certainly the case that if we walk away from the present deal it will cost us at least £150,000. Now, does that matter if we could get an extra £1 million for the site? Or are we? The letters we have received are great headline-grabbing items. In fact specifically in one case a headline-grabbing item. They are however subject to contract and subject to various other stipulations. The developers are also presumably unaware of the various planning conditions and the various additional gains that have been stipulated in the negotiations with the proposed developer. Within the information pack well, we have been through the analysis but I accept it is difficult to be precisely accurate because of the lack of information in these purported offers and the discrepancies in the number of units. Let us take for example the small road to the east of J.C.G. which is called Drury Lane. That is going to be resurfaced. There are also going to be traffic calming measures introduced. Centre Point will have the rooms it presently uses in J.C.G. replaced at the developer's cost. Now, in total, all of these extra measures and the other planning enhancements have been estimated to be worth in the order of £500,000. I do not mean estimated like that, they have been reviewed by professionals. At the very least on this basis the £4.2 million so-called offer from Developer B appears to equate quite well with the expectations of

the value to the States from the present scheme. If you like we have the bird in our hand now. Now, for example, the Deputy infers from his report in the proposition that the townhouses could be a higher number of stories. It is my understanding that the reason these have been capped at their height is due to the objections received from the residents of Drury Lane, i.e. it is a planning stipulation applied to the present scheme. So, this immediately in my mind casts an element of doubt upon the accuracy of these offers. We have said Developer B talks about a much-improved development site and therefore as far as I am concerned it is not this scheme for which we have planning permission. This scheme for which there has been quite considerable planning involvement by the Planning Department, as we have heard from the Planning Minister. How long would it take to get any significantly different permission on this site which, to reiterate, does incorporate an S.S.I? Yes, a different scheme might be treated differently, but given a panel that selected the developer in the first place, partially comprised representatives from Planning, it would seem difficult to believe that a different scheme would be significantly different than the one on offer. A more acceptable scheme was certainly not on offer at the time of the selection process. Are we being misled, for example, by the developer? Well, firstly, I think we have gone into this with our eyes open and watching for potential pitfalls. Advice has been sought from a variety of private sector organisations and a private sector lawyer was in the process of pawing over the detailed proposals in respect of an agreement at the time this proposal was lodged. As inferred in the Ministerial Decision we are still considering the details of the scheme and how it could be structured. For example, the department is considering the creation of an S.P.V. (Special Purpose Vehicle) possibly to own the land over which we would still maintain control during the development. That has not yet been finalised. The base values are as at November 2006, i.e. 4 months ago. House prices have moved since then and as previously stated we believe we have a reasonable expectation of receiving a decent amount from the scheme. The return is based on a comparison between the final sales amount and the base November 2006 figure. That is a reasonably transparent computation. So, in short, we believe that the potential for discrepancies has been covered. Now, as one would expect the developer is aiming to make as much money as possible from the scheme and this is in our own interests, under the proposed agreement, as if he makes more money from sales then so do we. So, in short, I do not at this stage have any additional information that would warrant reopening the whole process which would certainly cost us the minimum £150,000 and would potentially cost us more than that. That is the monetary angle. What about the ethical side? Firstly, this is an S.S.I. This is a scheme that has been managed and designed, quite significantly, by the Planning Department and more recently by the Minister. In other words, as the seller of the property, do we just want to sell to the highest bidder and walk away, or do we, as the public, have an interest in ensuring that the building is re-used and restored appropriately. More importantly, this developer is the one that has taken the risk. These plans have cost the developer significantly more than the £150,000 to produce. They have been at least one and a half year's in the making. Thus far they have been backed by various departments. To me, it does seem a bit rich that having missed the tender process, having avoided the risk of putting in plans in relation to the conversion of an old historic building, which is never an easy process, but having seen that permission has been forthcoming the sharks are suddenly circling to cut out the present individual involved. Ethically, are we just encouraging gazumping? I would say that we appear to have selected the best deal that was available at the time. The tender process was advertised and the best scheme of those proposed at the time has been selected that is appropriate to the site. It is the current developer that has planning permission. Do we really want to wait another year or more while permission is sought in some new scheme? I would say not. If the States pull out of this deal then there is also a credibility issue. Who will want to tender with us again if we are never going to stick to the arrangement if all we are going to do is horse trade their offer against someone else's? I would say, Sir, that different sites required different approaches and this has been a partnership-driven method but partially because of the difficult nature of the site. By way of example we are looking at another site in St. Helier. That is a clear site. We do have to negotiate with the neighbours on certain matters but what we have done there, Sir, is we have had drawn up some professional plans for which planning permission will be sought. That should be a much

cleaner process, as we can then market a site with planning permission looking for a straight sale. The old J.C.G. site is not a straightforward site and it was felt at the time that the approach needed to be different. So, different sites do warrant different approaches. Now, I appreciate I have spoken for a long time, Sir, but I would like to address the rather long email of late Monday night by Senator Shenton. His late night response, if you like. In my view it makes a number of comments which need to be addressed and answered. Senator Shenton begins: "The public may receive a low market value for taking developers risks." You do not use the word "will" in arrangements of this type. The public is not taking any developer's risks. All the cost risks lie with the developer. The developer agreement is linked to sales price and not profit. If the market conditions are as stated in that first bullet point that Senator Shenton is responding to, the public will receive this sum. He continues: "The process of advertising used by Property Holdings was neither professional nor likely to entice bids. The advertising process lacked creativity and did not encourage the bidding process." I think we covered the process of advertising. The fact that Property Services received over 20 inquiries from the advertising process; that seemed to be a fairly reasonable result to me: "Property Holdings have a reputation for favouring certain developers." Well, I think Senator Shenton had better back up that statement with some facts. I am sure he will do. I would certainly strongly refute any suggestions that Property Holdings favours certain developers. Property Holdings is impartial in all its dealings. Neither Grange Developments, nor its principal, have ever been involved in any previous deals with Property Services or Property Holdings. I understand that many of the other offers were at much higher levels. None of the others were unconditional and they ranged between £2 million and £2.6 million, excluding the Housing Trust bid which was at zero land value.

Deputy D.W. Mezbourian of St. Lawrence :

If the Deputy would give way, I would seek a point of clarification. I may have misunderstood but I thought the Deputy told us early on that 5 parties had expressed interest following the advertising process and he has just told us that there were 20 inquiries.

Deputy J.A.N. Le Fondré:

Twenty packs of information were given out to individuals as a result of the advertising process, 5 people then started making formal applications effectively, of which one dropped out. Is that sufficient clarification? So, what my argument is, is that if 20 people came along and had received notice that this site was on offer, that does not imply it was a closed process. The offers were assessed on both likely returns to the States and on the basis of satisfying the planning brief. Senator Shenton could have identified that by speaking to the officers before making that comment. He says: "Please also advise the shareholders and beneficial owners of Grange Developments." We are delighted to. Grange Developments is wholly owned by local resident David Whalley, the company was set up in 2002 and pays tax in Jersey. We will be carrying out formal due diligence in the course of finalising the development agreement with Grange Developments and that will be performed by our legal adviser. In response to the next bullet point: "You make it appear as if Grange is doing the States a favour." I think he is missing the point. The main point we were trying to make is that it is the present developer who has done the work and who has obtained the planning permission and most importantly, who owns that planning permission. He asks: "When is the £1.8 million going to paid? If you adjust this amount for lost interest or inflation over a 4-year period" it carries on. Then he says: "Similarly £3.2 million on deposit grows to £3.9 over 4 years." I hate to say it, but I am not too sure where 4 years has come from. It seems to have been plucked out of the air. I do thank the Senator for his comment in there as well concerning the time value of money; £1.8 million received today is worth more than £1.8 million received tomorrow. Oddly enough, I was already aware of that. That is one of the points: to go out to tender again on the basis of inaccurate information when we have a deal that does offer value to the public will just delay matters longer. That will cost us. That is certain. To answer the question eventually posed by the Senator, payments are to be made during the development process as units are sold. The development period is 30 months and not 4 years. A new developer starting from scratch will take months, if not more than a year, to achieve planning permission. The land, floor and overage offer were negotiated between December 2006 and the Minister's decision in February of this year. So, when was the price agreed? 2005 with no adjustments. Heads of term are agreed when the Minister signs a Ministerial Decision based on an independent November 2006 valuation which has since been updated in March 2007 by a local commercial estate agent. The Planning Minister was involved here. I think the Minister for Planning has already addressed those comments. He alleges: "The reason no further offers were made was probably because the site was not advertised in the most commercial way. If the acceptable offer is below expectations you re-advertise." I am sorry, I do disagree with the insinuations here. Expressions of interest were sought in the normal manner through advertisement in the Jersey Gazette, backed by media coverage. As a result of this over 20 information packs containing full details of the site including planning brief, S.S.I. designation requirements, existing plans and photographs were requested and distributed to interested parties. We have covered the process to quite some detail. The offer is not below our realistic expectations. We try to deal in reality not in dreams on something which balances the achievement of the planning brief and what was required from the scheme against the value of which we are going to receive. He talks about reopening the bidding and he also talks about investigations into Mont Mado, Sunshine Hotel and Howard Davis Farm. If the bidding is reopened now there is no definite prospect of a greater yield being achieved. None of the so-called offers are unconditional and they relate to schemes that have no planning permission. Indeed it is possible they will not come to fruition at all and then the current proposal could collapse, leaving the States with a decaying building which we will have to continue to maintain and we have examples of that in the past. As far as we are aware there are no investigations into the Mont

Mado, Sunshine or Howard Davis Farm sites. Mont Mado is still out to tender and if the Senator wishes to challenge the accumulated costs in relation to the Sunshine site, that is not the responsibility of this department and should not be used to muddy the waters. Ultimately the matter of Howard Davis Farm has been resolved and I would say successfully resolved. The Senator again makes reference to the tendering process but he has never looked into the matter in any detail. I trust Members will now appreciate that the tendering process was commercially sound and was open to any bidder and surely, Sir, while the developer is fully aware that he operates at risk he would not expect an ethical commercial partner to hawk his proposals around all and sundry. He talks about a return of an extra £1 million. We do not believe we have the prospect of an extra £1 million, that any new tender process will not produce a total package that is significantly greater or significantly better compared to what we have on the table in front of us today. He continues: "Integrity in my book does not mean giving the heads-up to preferred developers, as has been alleged." Now, while I am sure that Senator Shenton will not be too worried about the result, I would say that the officers within Property Holdings are extremely angry at the scurrilous accusations that have been made. The main person making the allegations is Senator Shenton. If he has proof, then give it to me. If he does not, do not deal in rumours. The matter of the P.A.C. (Public Accounts Committee) report recommendation was addressed yesterday in question time. We do bring in expertise as and when we need it and Senator Walker will provide further details on that matter. Deputy Duhamel raised concerns with the Minister in November 2006, as we have heard, and the Minister met with the Deputy and invited him to come forward with detailed alternative proposals which fully satisfied the planning brief by the end of December 2006. No detailed proposals, which could be properly compared to the Grange Developments' scheme had been received by that deadline. Senator Shenton concludes, in red capitals: "Revoke, re-advertise, re-tender result and Senator Le Sueur repent." I would reply, realism and not rumour please, accuracy and not allegations or innuendo. I am nearly finished, Members will be delighted to hear. To summarise and to get back to the proposition, I am convinced that this was the best deal on offer when the process was started. For all of the reasons laid out above I continue to be comfortable that this transaction represents good value for the public of Jersey. I do not believe that the supposed offers that have recently been received are of sufficient basis to throw out the whole process out the window. They contain inaccuracies and wrong assumptions and it would certainly be the case that to reopen the whole process it would cause significant delay and would threaten the integrity of the States in dealing with individuals; individuals who will never trust us

again if we walk away from this matter on the basis of the poor information that has been supplied. We have a deal in front of us. It has taken a long time to get to this point. Let us show our support for it. Let us get on and make that deal. Time is important on this matter. If there is too much delay it will end up costing us money and much more beside. Accordingly, Sir, I do ask Members to reject this proposition.

Connétable D.J. Murphy of Grouville :

Sir, point of clarification please. The figure of £1.8 million has been mentioned several times. Can I ask the Minister how this is being paid? Is it being paid in one hit, or is it in graduated payments?

Deputy J.A.N. Le Fondré:

Can I take a couple of minutes just to confirm the information? I do know what I think it is and I will come back to the Constable in 2 or 3 minutes, if that is all right, Sir.

4. Deputy S.C. Ferguson of St. Helier :

There has been a lot of quotation of the Public Accounts Committee so I thought I had better comment on it myself. It is absolutely correct. The Public Accounts Committee report on the Property Plan recommended strongly that commercial experience should be acquired by Jersey Property Holdings and no large disposals should be brought under Rule 163. As far as the

Committee is concerned Property Holdings are getting there but there is obviously still some way to go, but we will be revisiting the operations of Jersey Property Holdings later in the year. I also agree with Deputy Duhamel that the marketing could have been better but perhaps once they get the in-built commercial expertise these things will be sharpened-up. On the other hand there were 20 respondents to the advertisement out of interest so that perhaps it was not as bad as it looks in the documents. Some of the Members in the House have more experience of property development and I would welcome their comments. The original plans for the site, before Senator Cohen was working on them, had one-bedroom units of about 500 square feet, which is a mousetrap. So that I would submit that the revision of the plans by Senator Cohen to his specification is an improvement in the quality of life there. There is a considerable risk in abandoning a definite position in order to investigate the other offers which may or may not materialise. I might be being cynical but I do wonder if the offers perhaps are inflated for business advantage and of course if we do not get them until 2 or 3 years down the line then again the time value of money comes into play because the money, as I understand, will not be paid until after planning permission and due diligence and everything sorted out and frankly £X million in 3 years' time is worth considerably less than £X million today. It is also very easy to have 20/20 hindsight. This Assembly is incredibly good at revisiting decisions and looking at it with 20/20 hindsight and you cannot do that. You must make a decision on the basis of the information that is available to you at the time and this is what we did. Now we are trying to revisit it again. I do wonder if any of these offers will materialise with increased interest rates; and the trend, I understand, is up. Also, the best value is not necessarily the highest price. Now, I believe quite a lot of people heard the Comptroller and Auditor General talking about this at the Institute of Directors' meeting. Senator Cohen has underlined the rationale behind this development; the fact that the historical aspects are cherished rather than built over. This makes me wonder whether by bailing-out of this with our 20/20 hindsight, and trying to go for a higher price if we do that we may as well be selling our heritage for a mess of potage. This revisiting a decision, which was  correct  at the time, was  one  of the reasons  we  changed  to Ministerial government and why we have a Scrutiny set-up. I am sorry, I cannot support this