When Actual Reality moved out of Castle Toward in the autumn of 2013 the council moved to put it on the market. The agents were Baird Lumsden. Curiously, Baird Lumsden was the only company to respond to the procurement tender to sell the property. It should be noted that they were also the valuers, ie the valuers who said it was worth £1.8m.
To ensure that the property was kept secure and to stop it deteriorating further, the council installed a CCTV system (c £30k) and appointed a security company to look after the premises. The costs of keeping the property empty vary from month to month, as would be expected, but it is clear that the costs are a minimum of £20k per month on average. When I asked what had been spent between 23 August 2013 and the end of August 2014, the total came to an average of £22.5k per month.
In 25 November 2013 South Cowal Community Development Company (SCCDC) notified the council of its intent to purchase the estate under the provisions of the Land Reform Act 2003. From that point the council could not sell it to any other party or negotiate with any other party. The downside to this, from the council’s point of view, was that they would have to continue to incur the maintenance and security costs until the Right to Buy process was completed, one way or another. Having said that, there is therefore a large £20k per month reason for making sure the process is concluded as quickly as possible. That turned out not to be the case. It took 13 months before the proposal collapsed.
The Scottish Government appointed the District Valuer to value the estate and, to everyone’s surprise, it was valued close to the Baird Lumsden figure, at £1.75m. Savilles, who were working for SCCDC, provided an opinion to the effect that the value was around £1m less than the DV’s valuation. They were in a position to know because they had immediate access to the work being done by other professionals who knew, for example, that close to £3m needed to be spent on the building’s services alone.
SCCDC appealed against this valuation. In August 2014 SCCDC agreed to withdraw the appeal after a meeting with council officers. What happened at that meeting is a matter of dispute and is referred to in the documents to be found at the links below. This was a pivotal decision for SCCDC and, given the way things have turned out, it might have been better to have seen the appeal through. They believed, though, that there was a deal to be done with the council if they withdrew their appeal, so they did.
Highlands & Islands Enterprise provided much financial and technical support to SCCDC because their plans would have allowed a major company to work with SCCDC and there were an estimated 100 jobs to be created plus a huge economic impact for the whole of Cowal. HIE’s work was extensive, including providing professional support to SCCDC in the preparation of a business plan. The council duplicated some of the work carried out by HIE, a point referred to in the subsequent complaint submitted to Audit Scotland.
There is little point in spending time here going over all of that happened in the period between November 2013 and December 2014 but as time went on, SCCDC became increasingly of the view that the council did not want the sale to SCCDC to take place. In December 2014, the council’s Policy and Resources Committee refused to sell the estate to SCCDC for £750k but agreed to sell for £1.75m and offered a commercial loan of £1m, with payments deferred for the first 3 years, despite saying the whole project was high risk.
It is remarkable that a public body can offer public money to a project that they themselves consider high risk. It is astonishing that the council also said they would enter into a separate legal agreement with SCCDC whereby the property would revert to the council before repayments were to start. This seems to show clearly that the council knew SCCDC could not afford to take on a loan of £1m, something SCCDC had made very clear to the council.
With the collapse of the buyout due to the council insisting on getting £1.75m for the estate, the aftermath started. SCCDC and its many supporters decided to issue a complaint to Audit Scotland about 7 aspects of the way the council had dealt with the buyout. That complaint, and the subsequent correspondence with Audit Scotland, can be found at the links below. Remarkably, Audit Scotland decided not to investigate the complaint at all. Their reasons why can be found in the correspondence below. This isn’t over yet by any means.
After the meeting I attended with Audit Scotland referred to in the preceding link, I felt the need to press the points about the loan that had been offered. The email below was sent to Fiona Mitchell-Knight of Audit Scotland on 28 April, copied to Michael Russell MSP and Alan Stewart of SCCDC.