The compensation value of the land at the heart of the Manston airport site development consent order process has created a “wide divergence of opinion,” an examination hearing was told today (June 4).
The Planning Inspectorate examining panel, led by Kelvin McDonald, is examining the bid being made by firm RiverOak Strategic Partners (RSP) to acquire the site and create a cargo hub and associated aviation business.
However, the land is owned by Stone Hill Park which has submitted a planning application to create up to 3,700 homes, business and leisure and associated infrastructure.
RSP says compensation payable for the compulsory take over of the Manston airport site would be “no more than £7.5 million.”
However Stone Hill Park told examiners their valuation was nearer to a level of £20 million and, with relevant consent in place for development a benchmark figure of £38 million had been identified.
SHP own 742 acres of the site which totals around 770 acres with plots belonging to other interested parties.
Under provision?
The examining panel asked if the emerging Thanet Local Plan may have an impact on the valuation, whether the £2.4million paid for the 4.5 acre Jentex site gave a truer indication of the land value and whether £7.5 million was an under provision in compensation payment.
Michael Humphries, QC for RSP, told the examination that the figure still stood and was reached on the basis of ‘no scheme’ values.
He said: “(You would) assume our project is not coming forward and look at what someone would then pay for the land on the open market.
“You would look at the existing use value, in this case that is expected to be low, take account of the planning permissions, but there is no such planning permission in this case, take account of assumed planning permission (and arrive at) hope value.”
Mr Humphries outlined how the hope value would then discount money due to risk because no planning permission is in place and then discount for deferment of time before receiving such permissions.
He confirmed the Jentex payment did not form part of the compensation pot and claimed that a total of £13.1million had been set aside for costs, including noise mitigation. He added that the £7.5million was for the entire site and not just the holdings belonging to SHP.
Colin Smith, for RSP land valuers CBRE, said the baseline for the valuation was the sale by Infratil to Ann Gloag for £1 – and associated debt of around £350,000 – and the condition of the site when it was then bought by SHP.
He said: “My starting position was to examine what has changed since then for potential development value. Ms Gloag bought it with the stated aim to run it as an operational airport. That quickly changed, the airport closed and assets were stripped out and sold.”
He added that uncertainties over planning permission, and whether in the event a development did get the green light whether the owners could agree compulsory acquisition in order to take control of site drainage, contributed to the £7.5million figure.
‘Significant dispute’
However John Rhodes, for SHP, said valuation carried out by Avison Young had priced the site in the order of £20 million using three methodologies
He said No scheme values still had to recognise the existing use as an airport.
He said: “If we were to set aside this specific scheme there’s nevertheless existing use.”
The second basis was ‘hybrid’ recognising the site has a substantial area of brownfield with hard-standing and buildings which a buyer could put to different uses, adding there is “significant potential for range of different uses.”
The third basis was alternative development. He said: “In the absence of this scheme (RSP’s), which has sterilised our application and made it impossible for the district council to determine because the DCO prevents its examination, planning officers consistently recommended allocation of this land for residential, mixed use development, in the local plan.”
He said a financial valuation undertaken “identified a benchmark value of £38 million in association with that development. On that basis at least there is significant dispute.”
SHP say if the value per acre that was paid for Jentex was applied to their land they are again looking at a valuation of more than £20million.
Lease?
Reference was also made to previously submitted documents showing letters that outlined an offer from SHP to lease the land in a 125 year deal which included restrictions on night flights, development and a buy back option. SHP claim it was indicated RSP would deliver in the region of £25 million but then this was withdrawn.
RSP say the terms on which the lease was proposed were not commercially viable and were rejected on that basis.
Other owners of the land include the Ministry of Defence and the Met Office.
Funding
The issue of funding, and funders, was also covered – in part – in today’s hearing.
Lead examiner Mr MacDonald stated: “We have no evidence directly available to us that these funders have the resources to enable us to recommend that adequate funding is likely to be available to enable the compulsory acquisition, “ adding “We cannot ourselves as an examining authority verify this”
Mr MacDonald also made pointed reference to “3 gentlemen with xxxx in their name” due to RSP not naming investors on a ‘confidentiality’ basis.
Niall Lawlor, RSP, said that the shell companies and holding companies were kept in that structure so there were “no contingent liabilities.” He said investors wanted “clean Special Purpose Vehicles” for funding. It was stated that Belize-based MIO Investments was still the lender for the project but the company structure of RiverOak Operations was now a UK entity.
Nick Rothwell, for RSP, said the restructure of the company had taken time due to needing tax advice and that funding coming from abroad qualified for business investment relief and added there was no stipulation for revealing investor identities.
RSP say in submitted documents: “Business Investment Relief is an HMRC-approved scheme introduced to encourage non-domiciled UK residents to invest in the UK and does not require those using it to be disclosed. For the ExA to insist on full disclosure of those individual investors has the potential to undermine this type of investment in the UK.”
However, SHP said the investors should be made known and questioned where their compensation would come from if the DCO was successful
Mr McNamara, for SHP, said: “If the application is upheld who, or what, would be the party funding the costs due to us? The applicant has no money, the shareholders have no funding and MIO are providing nothing to give any comfort.”
Mr Rothwell responded: “So far all costs have been met through RiverOak Operations….we have provided sufficient funding for all our liabilities to date.”
A question was also raised over the BVI status of HLX Nominees Ltd which owns 60% of shares in the new structure.
RSP said HLX Nominees were regulated in Switzerland. This was disputed in a submission by Five10twelve Ltd. RSP said they would provide evidence. They also told examiners they would provide RiverOak accounts for the period from September 2017 to May 2019 by Friday week but the identity of funders is still at issue.
Hearings resume tomorrow with a examination of socio-economic issues.
Hearings for the Development Consent Order are being held at Laurence Suite, Building 500, Discovery Park, Sandwich.
