Council denies underselling headquarters by £40million
PUBLISHED: 15:27 18 September 2019
East Devon council has hit back at the suggestion that it undersold its headquarters by more than £40million.
The authority said any suggestion it should have got more money from the sale of the property at the Knowle, in Sidmouth, was 'misguided'.
Private Eye magazine ran a report following a freedom of information request which revealed an estimated value of £50million for the site following redevelopment.
Private Eye wrote: "£50million - some £42.5million more than the council got for it. Smart work!".
In a statement, EDDC said it was wrong to compare these figures and that 'the land value of the Sidmouth site is not £50million'.
The council said the £50million figure was the gross development value (GDV) figure estimated in a planning viability appraisal submitted by Pegasus Life.
The GDV represented the estimated potential sales following development. It did not take into account any of the costs associated with developing the site - demolition and construction costs, professional fees, technical survey work, marketing and financing costs.
An EDDC spokesman said: "While Pegasus Life's planning viability appraisal was not prepared as a formal land valuation, in that it was a completely separate exercise, the council secured a receipt of £7.505m - significantly above the sum calculated using the residualised land value approach (£1.7m) - which was tested against independent professional valuation - known as a 'red book' valuation - and through an open market tender exercise, both of which demonstrate that the council has secured best value.
"A recent Private Eye article alleged that the difference between the GDV of the Sidmouth site (£50m) and the sale price of the site (£7.5m) is somehow a loss to the council of £42.5m. Any suggestion that the council should be securing a higher sales receipt, whether on the basis of 'old rules of thumb' - ie a third of the £50m GDV - or any other basis is misguided. It bears repeating that land value and GDV are not comparable, the latter only being achievable after significant investment by the developer."