Alan Clawley just wants clarity. But can he get it?
It’s the time of year when Birmingham’s property professionals are led off to Cannes by the Leader of the Council to mix with other property professionals to talk property.
Like all professions, they speak to each other in code leaving outsiders like myself with no clear idea what they are talking about. No doubt they will say that I don’t understand because I don’t know enough, but reports in the press do nothing to unravel the mystery and offer no critical analysis even in lengthy MIPIM supplements, to help the lay person through the fog of jargon and spin.
So here are some questions that I would like answered.
When Mike Whitby says that he is inviting Sovereign Wealth Funds, or SWFs, in Abu Dhabi, China, Norway and Saudi Arabia to ‘invest’ £1 billion in the Council’s Property Portfolio, including £100 million in the redevelopment of Paradise Circus, what exactly does he mean? Why does he not ask the British Government for the money or borrow it in the way he borrowed £200 million for a new library, so-called Prudential Borrowing?
Who gets the money, the City Council or Argent plc, and how will it be spent?
Can business language really be applied to ‘Birmingham’ because it is not a legal entity or a private company that one can ‘invest’ in?
Perhaps Cllr Whitby is thinking about the Council selling ‘Brummie Bonds’ which could fund a specific project of public interest, such as an underground railway. Then the people of Birmingham would know what the money is being raised for and could even buy bonds themselves. There would be a guaranteed return because the type of projects that are funded will be used by the people and will produce a reliable income stream over a long period.
Argent plc, however, will only proceed within the redevelopment of Paradise Circus if and when it has firm commitments from future tenants, but even that is not risk-free. It is a commercial venture not a public project that has widespread public support. To make it seem more like a public project Argent plc has had to overlay its private property interest with an overt concern for the public realm, pedestrian access and traffic improvements. But why cannot the Council borrow the money to carry out these improvements to the public realm now, rather than rely on private finance? When asked they say, somewhat unconvincingly, that they can’t afford it.
SWFs are not philanthropists in the mould of Carnegie, or Louisa Ryland, wealthy individuals who expected no return from their gifts to society. Sadly, some of the Victorian legacies left to the people of Birmingham have been badly neglected by the Council and philanthropy is no longer fashionable today.
So will it be the City Council, Argent plc, or a combination of both who will be responsible from ensuring that the SWFs get their financial reward? Will the SWFs get an agreed share of Argent’s annual rental income, or will they have to wait until the buildings and land are sold in the market to get their money back?
Will they buy and sell shares in Argent plc to make their money? With a Joint Venture Agreement existing between Argent plc and the Council the answer is unclear to say the least. The Council will certainly not be selling any of its freehold interests in Paradise Circus to Argent plc. This can only mean that Argent plc will be leasing cleared development land from the Council in return for an annual rental and investors will have to wait until either Argent plc disposes of its leases to another developer or the property market recovers to the point when the Council can sell its freeholds on the open market.
Could someone in the Council answer my questions, in plain English please?
