Council denies underselling headquarters by £40million
The Knowle council chambers at Sidmouth. Picture by Terry Ife. Ref mhv 2232-10-07TI - Credit: Archant
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.
EDDC sold its Sidmouth headquarters at the Knowle to Pegasus Life for £7.5million and moved to its new Blackdown House offices in Honiton earlier this year.
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.
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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.
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"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."
