West Ken developer at risk of insolvency

Our Council know that the developer they want to sell the homes of people living on the West Ken & Gibbs Green Estates to is at real risk of going belly-up, even before the work on rebuilding the estate is complete. But they are pressing ahead with a deal that will ensure they get the £100 million reward they stand to reap in payments from the developer, EC Properties, regardless, according to campaigners against the scheme.

Worse, the deal may not ever result in any improvements to the estate at all according to legal documents seen by a resident formerly supportive of the deal.That resident, Mr Osband, posted a lengthy account of meetings with senior Council officials and others, which you can read below.

Such is the latest development in what must now be the largest of the many planning wars to engulf Hammersmith & Fulham, after the Council was forced to concede defeat in its fight against residents of Hammersmith King Street.

While the Agreement would grant the developer the right, for at least 20 years, to buy up parcels of the estates for demolition, it would not require the developer to deliver any new homes, and would not protect against the developer going bust or selling on. Worse still, ECO properties, owned by CapCo, is revealed as ‘Matterhorn’, which, according to its accounts, is saddled with a third of a billion pounds of debt against assets worth a quarter of a billion, and makes £10 million a year loss.

Having previously failed to perform due diligence on this company, the Council has scrambled Price Waterhouse Coopers to investigate whether ‘Matterhorn’ could remain solvent for the first five years of the Agreement. This would give the Council enough time to force people out and rake in £100 million, but would not be long enough to ensure anything is actually built. It means the developer can do what it likes with the estates, including nothing, as long as it pays the Council to get rid of the existing residents.

Sally Taylor and Diana Belshaw, Chairs of the Tenants and Residents Associations, said:

“It can’t be right that the Council refuses to disclose to residents the Agreement it’s consulting on. Now we’ve been told the Agreement does not honour its repeated ‘guarantees’ and ‘assurances’ that residents would get new homes in the scheme, it’s clear those promises were empty. The Council just wants to force us out, sell off our homes and pocket the cash. It doesn’t care about our welfare or ensuring the area is improved. The consultation is a fraud. The Council should withdraw it immediately.”

Jonathan Rosenberg, Community Organiser for the estates, added: “The Earl’s Court scheme is shaping up to be the next Battersea power station: decades of over-ambitious schemes busting successive developers with the site left to rack and ruin. ‘Regeneration’ is a scam to obscure the Council’s gerrymandering agenda, and for the Council and the developer to profiteer from social engineering. Thankfully, most regeneration professionals are properly motivated: they would abhor the discredit caused to their sector by the Council’s dishonesty.”


The beans were spilt by a member of the Council's own Residents Steering Committee (they set an alternative one up with your cash so that they would have someone to agree with them) on a very long posting on the W14 site which you can read here

You can also read a Word doc of the posting below if you are not subscribed to the W14 site (they insist on collecting personal data before they let you join) 

The crux of this very long posting, warts n’ all, is as follows:

• The six week period for consultation is not long enough for people to consider the Council’s key decision on whether to sign the sell-off agreement 
• The Council is hiding the Conditional Land Sale Agreement (CLSA), even though that is what it’s consulting on. 
• The Council failed to carry out due diligence on EC Properties Ltd. PWC is now reviewing the firm to assess its solvency for the next five years, enough time for the Council to get its £100 million but not enough to ensure the development actually happens. There is a beak clause for the Council if the scheme fails to obtain planning permission within five years. After that, and otherwise, the developer can do what it likes, including selling EC Properties. 
• The scale and complex nature of the scheme presents a material risk that EC properties might become insolvent after five years, but there is no means to protect the Council against this or ensure the development happens. 
• The CLSA does not provide the Council with the ability to terminate the agreement should the developer fail to perform. It could, for example, buy up the estates but not develop them for 15 or 20 years, or even take 20 years to buy up all of the estates and still not develop them. Alternatively, it could go bust or sell on to another developer, who in turn could decide to do something else entirely.

I first reported here back in March 2010 on the West Ken fightback which is led by residents who have been implacably opposed to our Council’s plans from day one. In response to their campaign our Council has used £38,000 of your cash to set up an alternative residents group, with a fraction of the number of members, and spent even more on publicity extolling the benefits of the scheme. Council Leader Stephen Greenhalgh was reduced to pleading with the Government not to let the residents take advantage of Big Society legislation intended to hand power to residents, because they wanted to evict the Council as a "rogue landlord".

Boris Johnson was collared by one angry lady on his way into a PR event sponsored jointly by the Council and the Fulham Chronicle and was left in no doubt that all the residents are asking for is a straight vote over the future of their homes.

Too much to ask? You betcha – this is Hammersmith & Fulham. Below is the full blog post by the whistleblowing Mr Osband.



1130 UPDATE TUESDAY - The Council has responded to this article. An H&F Council spokesman said:

“The council would only enter a conditional land sale agreement with a property company if we were completely confident of its ability to potentially deliver thousands of new homes, jobs and neighbourhood improvements, including new homes for people currently living on West Kensington and Gibbs Green estates. It is the norm for a large public limited company to set up a subsidiary company to oversee a potential development of this nature. In the event that the council decides to enter into a conditional land sale agreement it will ensure the developer has the sufficient funding in place. The council will ensure that there is robust independent assessment and checking for the entire redevelopment period.”


UPDATE SUNDAY - Well, Richard Osband has answered the Council's view of things emphatically. He's resigned from the Steering Group that the Council spent £38,000 of your money setting up so they had someone to agree with them. Now they don't.

Osband Post 19 January 2012