Knowle relocation project: more uncertainty and more questions

When the District Council abandoned its Sidmouth home of over forty years for an industrial estate on the edge of Honiton, it left quite a mess behind…

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Firstly, a few bits of furniture were handed out to worthy local charities; and two fireplaces will be going the SVA:

Futures Forum: Knowle relocation project: SAVE Britain’s Heritage >>> “Loss of the Knowle and development of the park would represent a devastating blow to the history and character of Sidmouth.”

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Secondly, the confusion and obfuscation over ‘costs’ of the move have continued to provoke yet more Freedom of Information requests; in September, when doubts were growing about the deal to sell the site and when the developer had still not moved in, two new FOIs were created, one about the delays, the other about the costs:

Costs of EDDC relocation and Delays to selling of the Knowle

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Further complications happened when the developer PegasusLife became Lifestory, when it merged with others in the larger holding company:

Knowle relocation project: BREAKING: PegasusLife merger

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Despite this new configuration, things are far from straightforward. See the twists and turns when it comes to other contracts – for example, at Portishead:

Anger as developer changes Portishead retirement complex proposal to sell flats on open market | North Somerset Times and Hundreds object to developer’s ‘blackmail attempt’ to change use of Portishead retirement complex | North Somerset Times

and at Brockenhurst:

PegasusLife wins battle to convert former Watersplash Hotel in Brockenhurst into retirement flats | Southern Daily Echo and Third time lucky? Fresh plans being drawn up for Lyndhurst Park Hotel | Advertiser & Times

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And now at Knowle, the developer is currently in breach of its obligation to pay the completion funds of over £9 million:

Knowle relocation project: BREAKING: developer fails to pay

As featured on the front page of the latest Herald:

Knowle sale delayed as purchaser fails to complete by agreed date

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Finally, the Deputy CEO, who took some responsibility for negotiating the contract with PegasusLife, is now leaving the District Council:

EDDC Deputy CEO made redundant … | East Devon Watch

See also:

eastdevonwatch.org/?s=cohen

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Questions about the contract remain, however:

  1. What deposits were paid? Normally this can be expected to be 5%, in which case, the District Council will retain those payments when Pegasus are in breach of contract – and 5% of £9m is £450k.
  2. In what name was the Knowle purchased? It is possible that Pegasus used a Special Purpose Vehicle (SPV) to buy the site. This is commonplace but if it happened in the case of the Knowle it would mean that the company (SPV) buying the site had no, or minimal, assets. If this were so, the implication is that whilst the District Council would keep the deposit, they would be unable to recover costs or seek specific performance to force the company to complete the purchase. Moreover. if the Council then sold the site for less money, they would be unable to recover the difference. An SPV could simply be wound up.
  3. What pre-contract enquiries were made into the financial status of the prospective purchasers?

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The final question is whether there will be a proper inquiry into the whole sorry saga:

Knowle relocation project: ‘questions hang in the air’

Knowle relocation project: calling for a councillor-led working party ‘to look into these matters in the public interest’

   
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