Problems Are Stacking Up For The City Garden Project

 Aberdeen City, Articles, Community, Environment, Featured, Information, Opinion  No Responses »
Nov 172011
 

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 By Mike Shepherd.

On Tuesday a Council committee voted to defer a decision on a referendum for the City Garden Project to the full Council meeting on the 14th December.

Although an amendment was introduced to propose an opinion poll as an alternative, a vote for a referendum looks more likely.

If such a referendum was to happen it would be held either two months before or two months after the local council elections on May 3rd.

This is one of many setbacks to have affected the City Garden Project (CGP). Here is a summary of the problems facing the scheme:

The City Garden Project is way behind schedule:  It is almost exactly three years since Sir Ian Wood announced his Civic Square proposal at His Majesty’s Theatre on the 11th November 2008. Although we are close to seeing a final design, the project is nowhere near planning submission and funding is very uncertain.

The vote on Tuesday looks to introduce further delays. It also probably shunts the planning decision well into the next Council, when at least one of the proponents of the scheme, John Stewart, will not be on the Council any more, having announced that he will stand down.

The City Garden Project is unpopular: This statement gets vigorously challenged by supporters of the CGP, yet it is clearly the case. The consultation held two years ago saw a ‘no’ vote for the CGP, and various online polls have shown a consistent numerical advantage to those wanting to keep the existing Gardens. The probability is that a referendum would reject the CGP.

The Design Exhibition failed to create any buzz in the city: The Friends of Union Terrace Gardens canvassed opinion outside the exhibition while it lasted. About half of those we talked to were unhappy about the designs. Many spoiled their votes.( by attempting to vote for the non-existent ‘option 7’.) Of those that voted, a common vote was for a design that appeared to preserve the Gardens (it doesn’t), although they reported they did this without much enthusiasm.

The land issue is a headache for the Council lawyers: Union Terrace Gardens lies on Common Good land and any land transaction, i.e. assigning a long term lease to a limited company or trust, would probably require an application to a court of session to apply for a change in status of the property.

The Council lawyers are well aware of the legal pitfalls that could ensue over the details of a property transaction (as witness the pending court case between Aberdeen Council and the Stewart Milne Group).

it involves the allocation of scarce public money using non-economic criteria

Currently,Union Terrace Gardens has negligible value as it is zoned as public open green space in the local plan.  However, should this status change at a later date and the property is re-zoned as commercial space, the land value will be in the tens of millions as prime down-town real estate.

The lawyers will have to be especially careful on this issue, particularly where a long term free-hold lease could potentially be assigned to a limited company.

Funding the City Garden Project is a big problem:  To date only £55M of private money has been pledged for a project nominally costing £140M. The CGP are pushing the Council to underwrite a loan of £70M through Tax Incremental Financing (TIF) to help part fund the scheme.

Aberdeen Council’s business case was so feeble it didn’t even rank in the top six schemes assessed for recommendation by the Scottish Futures Trust. Even so, the Scottish Government Cabinet Secretary for Infrastructure and Capital Investment, Alex Neil, has told Aberdeen Council that their TIF application may still be considered. However, the TIF would be awarded on a ‘geographical’ basis rather than an ostensibly ‘economic’ basis.

This can be criticised as very poor Government practice; it involves the allocation of scarce public money using non-economic criteria. It also begs the question that if the business case doesn’t stack up, why is the debt-ridden Aberdeen Council under consideration to be allowed to borrow money for it?

Questions are being asked in Holyrood about Aberdeen’s TIF funding. This is from an article by Steven Vass in last weekend’s Sunday Herald:

“First Minister Alex Salmond’s decision to permit Aberdeen’s £70M borrowing plan for redesigning the city centre will come under renewed fire when he is forced to answer questions in the Scottish Parliament this week.

“Lewis MacDonald, the Aberdeen MSP and long-time opponent of the scheme, said there was a “scandal lurking under the surface” around the permission. He has tabled a series of parliamentary questions demanding answers to speculation the Government’s approval overruled the economic advice of specialists at the Scottish Futures Trust, who were supposed to decide which projects would go ahead.”

Another potential show-stopper is that last year the Council decreed that borrowing money through a TIF scheme must present ‘zero risk’ to the Councils finances.  The only realistic way this could happen is if an organisation or individual was prepared to underwrite the Council loan.

This would be a major commitment to say the least, as it would involve underwriting £70M for a 25 to 30 year period. Perhaps Sir Ian Wood is willing to do this, but even for him or his family trust, it would involve a significant allocation of capital resources over a long term period.

Add to this the question of cost over-run. One architect told me this week that with the massive rock excavation operation involved and the difficulties of building over the railway line, there was no way of this project coming in on budget. Yet, very little has been said about what would happen if the costs do over-run massively.

The problems are stacking up for the City Garden Project and even three years later they are not much closer to being resolved. The patient is looking sickly and the prognosis is not good.

City Garden Project Bogged Down In A Procedural Mess

 Aberdeen City, Articles, Community, Environment, Featured, Information, News  No Responses »
Nov 102011
 

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By Mike Shepherd.

The next big event in the Union Terrace Gardens saga is the meeting of a Council sub-committee on Tuesday 15 November to discuss the holding of a public referendum on whether or not the City Garden Project should proceed.
Given events to date, it is not surprising that the  report for this meeting is proving highly controversial.

An eye-catching statement in the report  is that the referendum should be non-binding on Councillors. The report itself identifies an obvious problem here:

“Since the referendum has been proposed as a mechanism for advising Councillors, it should be non-binding. However, it must be recognised that this runs the risk of compromising the credibility of the referendum exercise.”

This was put more forcibly by Ron Campbell in a letter to The Press and Journal on Wednesday 9 November. Suggesting that this left open the
possibility that the project could go ahead even if voted against by the majority, he wrote,

“So, it’s just a re-run of the previous ‘poll’. Heads you lose, Tails you lose. Brilliant. What’s the point of  a referendum if you ignore it?”

The report suggests that the reason for the non-binding clause is that there could be conflict with the planning process. What this conflict could be is not clear.

Councillor Kate Dean had a go at explaining this on Facebook,

“It’s not appropriate for me to go into detailed discussion of a Committee report before it is considered by the Committee. However, the problems would arise if the referendum says yes and the resultant Planning Application doesn’t meet the appropriate criteria to be approved.

“Or, if the referendum says yes, would there be a public expectation that the application would be approved regardless of its planning merits? Or would there be a perception among those who would be aggrieved at a “yes” vote that this would happen?

“Please note, I’m not giving any opinion on the answers to any of the above, simply a flavour if the advice which has led to that  recommendation.

“Obviously, if the result of the referendum is a “no”, none of these scenarios applies, but surely it would be unwise of the Council to go into anything without exploring the implications of all possible outcomes.”

Somebody on Facebook suggested that you could get round this by making a Keep UTG ‘yes’ vote binding, but the build the City Garden ‘yes’ vote, non-binding.

The credibility of the referendum is clearly an issue. Another concern is that the question asked could be rigged to create a psychological bias. The suggested question in the report is,

“Please indicate whether or not you support redevelopment of  Union Terrace Gardens, in accordance with the Aberdeen City Garden Trust Ltd’s preferred design proposal, by ticking one of the following boxes:

YES, I support the proposed City Garden Project

NO, I want to retain the existing Union  Terrace Gardens”

There is definite bias in this question. The City Garden Project is the positive option, retaining the existing Gardens is the negative option. It should also be mentioned that neither side actually wants to maintain the status quo. The Friends of Union Terrace Gardens would like to see a sympathetically-restored park.

The report mentions that the wording will be up for public discussion; however the Council has the final choice on wording.

“The proposed wording for any ballot paper be placed on the Council’s website for a period of at least two weeks, so the public have a chance to comment on this, or propose alternatives. The Council would take account of these comments before determining the final question.”

There are good reasons for the Council not to oversee the referendum. The Council report itself indicates clear support for the City Garden Project describing it as “a vital piece of social, cultural and leisure infrastructure”. This is not impartial. The alternative is that the referendum should be run or overseen by the Electoral Commission.

One of the reasons for holding a referendum, probably in late February, is that the Scottish Government has made it clear that TIF funding will not be progressed unless public support has been demonstrated for the City Garden Project.

In a further development, the criteria by which Aberdeen‘s TIF case has been assessed is also under question. An article in last week’s Sunday Herald (6 November 2011) questioned the criteria for including Aberdeen as an additional case, after awarding the three remaining TIF schemes.

“In an interview with the Sunday Herald, the Cabinet Secretary declined to say whether it scored fourth on the SFTs list, stoking speculation that it was moved ahead of other projects for political reasons. If Aberdeen did not come fourth on the list, the council that did is likely to be disappointed to have been turned down.” 

Alex Neil said,

“We are not disclosing the ranking because the SFT’s advice was based on the narrower economic conditions, whereas we then applied other criteria, primarily a geographic spread because it would be unfair to concentrate the TIFs in one part of the country.   We are not getting into publishing ranking tables at this stage.”

The idea of a geographic spread for the TIF cases is inconsistent with previous statements. The Government web page makes the position on TIF clear:

“The Scottish Government tasked the Scottish Futures Trust (SFT) with developing appropriate criteria for the potential application of TIF in Scotland and to work with local authorities in developing their proposals. SFT will need to be convinced, on behalf of Ministers, that the economic case for a particular TIF is clear.”

One other problem for TIF is that Councillors have stated that any loan through TIF should involve no financial risk to the Council. The problem with this was highlighted in a Holyrood Magazine report on TIF:

“Councillors have also insisted that the project must pose “zero risk” to the city’s finances. That is an additional hurdle, admits Brough, but it also acts as a litmus test for the viability of the scheme.

“If we can get someone to provide that guarantee, our business case is solid; if we can’t convince someone to underwrite the risk, then it’s too big a risk,” he says.”

One can’t help feeling that the City Garden Project has turned into a murky, political and economic quagmire. If it’s bogged down in a procedural mess, it’s arguably a consequence of ignoring the vote on the public consultation two years ago.