Sunday, June 23, 2013

Thursday decision for Highland Council - Common Good debt on Sandown- Colin's view plus other comment

Note: this article is best read in conjunction with these earlier ones posted this weekend: here, here and here and the more serious students of this matter may wish to read the Highland Council's Director of Finance's report listing five options for Thursday's meeting. 

Now, a comment from Colin as he prepares for the debate over the Sandown debt options on Thursday at Glenurquhart Road:

“What is clear is that every Nairn Councillor is working collaboratively for the people of the town on this complex and historic issue. Although the Director of Finance has a clear recommendation that we believe is not best for Nairn, we will focus hard on winning the best possible "Option 5" solution for our folk of the Royal Burgh. We hope to persuade as many of our fellow Highland Councillors to vote for the Common Good of Nairn on Thursday. I believe that is their fiduciary duty as Trustees of "our" assets.

I note that there is some questioning of why it has come to a head now. As the Director of Finance makes clear the Highland Council are being steered by Audit Scotland to bring things to an appropriate legal / fiscal settlement. In other words the Council cannot simply leave the "debt" of £700K+ lying around in the books long term.
We all think Option 5 is the best one for us locally. We have to accept that the Director Finance doesn't think so. So we have a big task on to persuade a majority of our Council colleagues to see things our ways on Thursday. Every vote may count at the end of the debate.”

Thanks to Colin for that. The poisoned chalice of Sandown will once again be exhibited in the Highland Council chamber next Thursday and perhaps a few more Nairn residents than usual will be tuning in to the webcast.
Elsewhere in Gurnshire the five options outlined in the report have been exercising minds.

One of our regular correspondents contacted us earlier tonight with his observation that: “Sandown (Common Good) just reads as 'Nairn is f*****' to me no matter what suggestion gets voted in.”

Another of our regular readers has read the Director of Finance’s report and writes to us with the following points:

“I find the vagueness of the references in the Highland Council  paper to taking a "pro rata share" of the Sandown lands (in lieu of, or to "pay off" the so-called debt) very worrying.  Nowhere is it explained how this pro rata share would be calculated, or what it might translate to on the ground.

There are two very worrying phrases in the paper's references to this:  para 2.5.4 "the Common Good Fund loses absolute control over the land...." (how can the Highland Council as Trustee possibly acquiesce in this?);  and para 2.5.5 "the Common Good Fund would lose control over potential future uses for any land transferred  to the Council".

So does that mean that in today's sluggish market the Highland Council could claim a larger share in terms of acreage because the value of the land is depressed?”

Yet another observer points to comments made by Bill Young, a member of West Community Council back in January of 2012 and reported on the Gurn, he said:

“I think there’s a huge conflict of interest between the Highland Council’s duties as Highland Councillors and their trusteeship of the Common Good Fund and the two are getting hopelessly intermixed and hopelessly conflicted.” 

Sandown issues have had a toxicity for some years now. Will the alarm and even outrage that is being felt by some across Nairn this weekend translate once again into a widespread feeling that Nairn is still being given a bad deal by Highland Council? Will the decision to be made on Thursday once again leave a bad taste in the collective community mouth and impact on the reputations of this current batch of elected Highland Council members that represent us, or has the boil finally been lanced and will most people not give a toss this time round?  


APTSec said...

Is anyone else having a problem understanding what the report


Look at the recommendations:


The Highland Council is asked to:-

1. Consider the five options outlined in paragraph 2.2 and detailed in Section 2 of this report;

2. Note an Officer recommendation that Option 3 should be pursued;

3. Determine the preferred option to allow the current situation to be resolved.

4. If Option 3 is approved then agree the two conditions set out in paragraph 3.5.

5. If Option 5 is approved then consider whether the conditions outlined in paragraph 3.7 should apply."

Now if you, as I did, went searching for paras 3.5 and 3.7 to see what conditions applied you would have come across some very confusing things in paras 3.4 to 3.7, like this:

"3.4 Officers would wish to advise Council that the first two options, which involve the Council either writing-off the debt, or proceeding with a land sale, are not
appropriate. Either option 3 or 4 is viable, but only option 3 provides a way forward in resolving all the outstanding legal and financial issues and addresses audit concerns.

3.5 Option 5 represents a compromise position, proposed by local members, that requires the Council to write-off part of the debt. This option would mean that
there would be a greater benefit to the Common Good Fund as it would benefit
financially to a greater extent in the event of a future sale of the land. It would also require the Council to meet the one-off cost that would have to be met
from balances.

3.6 If Council is minded to support Option 5 as a compromise position then consideration should be given to whether the two conditions outlined in Paragraph 3.7 (previously 3.5) should apply. If the Council does decide to write-off part of the debt at present, then it could seek reimbursement through a future increase in land value that would precipitate a sale of the land.

3.7 Option 3 will require the Council to transfer a pro rata share of land equivalent to the value of the debt from the Common Good Fund account. If the Council
is in agreement then it is proposed that the following conditions should apply:-

(a) any gain in land value is returned to the Nairn Common Good Fund
(b) Highland Council does not gain financially from any future sale of the land"

So, where is the 'new' paragraph 3.7 - if 3.7 was previously 3.5?

APTSec said...

I am off to look at this in more detail:

2.7.10 Whilst the current issue results from decisions taken some considerable time ago and can be viewed with the benefit of hindsight, officers are of the view that there is no evidence to suggest that the original decisions
taken by Nairn District Council were flawed.

2.7.11The opportunity to sell the land to a developer at the time of a significant increase in land value could not have been foreseen by the predecessor authority. It was accepted by the Highland Council that a payment would have to be made to acquire vacant possession to the land."

From a personal perspective I find this very interesting indeed. When did Nairn District Council take that decision to create an agricultural tenancy and on the basis of what information? What was shown in the Nairnshire Local Plan?

APTSec said...

Can anyone explain what the use of the term, 'pro indiviso', as per the extract from the Council's Committee Report below, will mean in terms of control of the uses and future development and any potential sale of the Sandown lands in the future?

"4.2 In terms of option 3 and option 5, the correct legal term for a pro rata share should read pro indiviso. This is to clarify that the proposal transfers control of a share of the ownership of all the lands."

According to this link:

Pro indiviso ownership (otherwise known as common property) occurs where each of two or more proprietors has an absolute, unrestricted right to a fractional share of a unit of property. The extent of each proprietor’s share is assumed to be equal, unless the titles specify the amount of the fraction. Each proprietor may possess the whole property, subject to the rights of the other proprietors to share possession. Equally, each proprietor may transact with his share without consulting his co-owners – e.g. he may dispose of it, or burden it with debt – and on his death his share passes to his heirs or executors. Where it is not practical to transact with just one share in the property, any pro indiviso proprietor may apply to the court, either for the property to be physically divided (action of division), or more commonly for the whole property to be sold and the proceeds shared (action of division and sale)...etc see linked pages for rest of explanation

James Logan Ralph said...

I know that the data in is of the older variety but I believe it may shed some light on the importance that Councils hold Common Good Land and in their attempts to keep these assets off our collective radars. HC led the way in failing to sell Sandown and now want NCG to pay for that management failure. The debt should be wiped off Nairns books as it clearly shows a failure in HC's processes and procedures. Council directors clearly had a duty of care that they appear to have failed to live up to.

Graisg said...

@APT Sec "From a personal perspective I find this very interesting indeed. When did Nairn District Council take that decision to create an agricultural tenancy and on the basis of what information?"

I believe that that came about simply because of the period of time that the farmer was on the land. More knowledgeable students of Sandown matters could probably correct this observer however.

Anonymous said...

The part of the debt that equals the cock up with getting out of the agricultural lease should certainly be written off

Whatever happens still better than 550 homes being built on it

smash 'n' grab said...

@graisg, and regarding APT Sec question "I believe that that came about simply because of the period of time that the farmer was on the land. More knowledgeable students of Sandown matters could probably correct this observer however.".

It's a little more complicated than that. It wasn't just the passage of time. Even this attempt to explain may not be the full story. Records are patchy, and it needs authoritative legal expertise. But the essentials are very roughly as follows:

- there is in principle no reason not to set up arrangements to generate an income from Common Good land. This is not unusual. Much of the Longman Estate, for example, is owned by Inverness CG and produces massive rental revenue;

- in the case of Sandown, years ago the then District Council as custodian/administrator of the Nairn CG land, granted a "grazing let" to a local farmer. Under the law this is time-limited (364 days?) and confers no security of tenure. It is capable of renewal. But there is a very precise process to be followed by both parties (apparently the lessee has to, for example, remove the stock and then reapply or reoccupy and pay rent under a new agreement);

- at some point however the then Council officials, perhaps through ignorance, neglect or inefficiency, failed to go through the proper steps for re-signature or renewal of the grazing let. This may have coincided with the shift from the old District Council to the Highland Council. By default, or inadvertently, the lease somehow rolled over and was as a result automatically transformed into a protected agricultural tenancy, which then conferred some security of tenure (a form of "squatters' rights"?) on the farmer concerned.

- this was discovered, or became an obstacle, when the Council decided to sell off the Sandown land. It emerged that the only way to get the farmer to relinquish the rights he had acquired under the tenancy and to free up the land, was to negotiate a pay-off... which was the £390,000. This was in effect the direct financial cost of the Council's error.

- there were then other costs and overheads in fees, commission etc associated with legal and other work to clarify title and to value and market the Sandown land for sale.

- This cost and work in the event proved to be wasted because the Highland Council misjudged the prospects and the risks of sale, as eventually demonstrated by the outcome of the planning appeal.

Hence the total of some £734,000, some arising (originally) from the incompetence of the local authority in failing properly to administer the leasing arrangements, and some from the abortive attempt at a sale.

The Council is now attempting to get Nairn's Common Good to cover the costs arising from these errors by seizing a part of the capital assets (the land) at Sandown.

Is it surprising that those in Nairn who take an interest in the subject are outraged? There is neither logic nor justice in expecting the community of Nairn to pay for the cost of past mistakes or misjudgments of Council officials.

APTSec said...

Thanks to 'smash 'n' grab'.

I am looking from a planning perspective as there seems to me to have been plans to develop the site at Sandown Farm Lands since the Nairnshire Local Plan. (Of course, I can only use info that I can access through web searches at the moment.)

I have come across this 2006 item in the Courier
Quoting from that ARticle:

"...Development of Sandown and Nairn town centre's regeneration scheme have been on the stocks for several years. A major hurdle to progress has been an agreement signed in 1998 between the council and Mr Matheson, who farms at Flemington, Gollanfield, which guaranteed him 10 per cent of the land value..." I'll leave readers to get the rest of the info from the article.

I have been looking through archived copies of the Nairn Committee minutes on THC web site but they only go back to 2000. I am still going through the archive for the Highland Council minutes as these go back further - to 1997 I think. Anyway quoting from the minutes of one meeting of the Nairn Comm from 23 01 2001, it says:

"The Area Manager reported the progress to date in relation to the proposed development of Nairn town Centre / Sandown Farm Lands...With the approval of the Nairn Local Plan in December 2000 the planning framework to the proposals forward was now in place..."

Later in 2001, on 18/12/2001,under agenda item 7, a council officers advised members that:

"Initial proposals for SFL entailed a joint initiative with Cawdor Estate. Unfortunately these proposals have not come to fruition. The trustees of NCGF and Highland Prospect Ltd (the wholly owned development company of the HC) are however dedicated to the promotion of development at Sandown Farm Lands in partnership with the private sector. Development consultants will be appointed in the immediate future to prepare a Development Capacity study for mixed use in compliance with the local plan.

I have come across an Archaeology Report that Glasgow Uni did dated 2002 - work undertaken late 2001? (Sandown Nairn Project 1317)

The Council brought forward their own planning application for the SFL on Wed 20 Aug 2003

Then according to Wikipedia:

"In 1996, under the Local Government etc (Scotland) Act 1994, the local government council district was merged into the unitary Highland council area.

The new unitary Highland Council adopted the areas of the former council districts as management areas. Each management area was represented, initially, by area committees consisting of councillors elected from areas (groups of local government wards) corresponding to the management areas, but changes to ward boundaries in 1999 created a mismatch between committee areas and management areas."

It would seem to me, at this moment with this small amount of info that development plans for the area were envisaged pre 2000 given that the local plan needed to be consulted on.

There are still a lot of questions remaining and potentially the time frame to be looked at is between 1996 and 2000? If the first agreement, 'grazing let' was entered into in 1998, why were the development plans for the area not made known?

It confuses the heck out of me.

smash 'n' grab said...

@APTSec That quote from the Inverness Courier of 27 June 06 is intriguing: ".... A major hurdle to progress has been an agreement signed in 1998 between the council and Mr Matheson, who farms at Flemington, Gollanfield, which guaranteed him 10 per cent of the land value...".

It's history now, but it still seems important to be clear what that agreement was. Is the Courier in fact referring, in somewhat imprecise terms, to what has usually elsewhere been described as an "agricultural tenancy", and which came into being almost by accident? Or was there some other kind of agreement?

The timelines seem to correspond with other local recollections and evidence - that the "grazing let" had been in existence for many years and had been correctly administered and renewed by the then Nairn District Council (and gave the farmer no claim over the title or value of the land). But then in 1998 - which is roughly around the time when the Highland Council would have assumed responsibility for such matters - the arrangement with the farmer became (as a result probably of an error or lack of knowledge on the Highland Council's part) an agricultural tenancy... wich is presumably what the Courier refers to.

All of which reinforces the view that the problem - of having to buy out the farmer - arose as a result of Highland Council failure properly to administer the original, earlier, grazing let.

APTSec said...

It seems to me that it is important to be clear. The full council is being informed via the Committee Report (in paras 2.7.10 and 2.7.11 - quote above)that Nairn District Council was responsible and that the '...opportunity to sell the land to a developer at the time of a significant increase in land value could not have been foreseen by the predecessor authority...' But I would like to know for how long and under the auspices of which Council(s)were, "The trustees of NCGF and Highland Prospect Ltd (the wholly owned development company of the HC)", "...dedicated to the promotion of development at Sandown Farm Lands in partnership with the private sector..."?

What was signed? When? By whom? Which Council(s) was in charge? What were the plans for the site at all stages?

I just hate it when the details are as clear as mud.

Graisg said...

@Anon: re lack of clarity etc, it would be unfair to publish that comment without further details.