The Victoria Keys development raises serious financial, planning, environmental and accountability issues.
As is usual with the GSLP spin machine in overdrive we have been treated to glossy pictures and video impressions but only partial information that raises more questions than answers. The media spin also seeks to paper over the obvious questions of accountability, use of taxpayer monies, conflicts of interests and environmental issues that arise.
GSD Leader Keith Azopardi said: “And why are we using taxpayer monies for this project? Why don’t the developerstake that economic risk allowing the Government to use the £300 Million for other purposes? The obvious irony of the Government using money secured from housing estates to fund a luxury development will not be lost on people.
“It is like Robin Hood in reverse by taking from the poorer to give to the rich. This deal is opaque and unaccountable. What about affordable housing or attracting real and new inward investment? This is a testament to the fact that new inward investment is not being attracted” added Mr Azopardi.
Distilling the simple mathematics of the size of the reclamation and the plots of land that will be produced it is unclear what the reclamation will cost, how much of the £300 Million borrowed against Government housing estates will be used and who will get some of the plots of land.
Shadow Finance Minister Roy Clinton said: “There are major public finance questions here both in terms of getting to grips with what is happening as well as whether and how taxpayers monies are being used.”
“From an analysis of the announcement, it appears that the Government owned company that funds the reclamation will retain a plot of 11,500 sq m (approximately 20% of the entire land mass created). That means that 80% of the land is going to developers. The developer company is Harbour Development Limited (“HDL”) in which Government will have a 20% stake. HDL will retain approximately 30% of the remaining total land mass given that the announcement states that “the developer will be granted a lease of 50% of the northernmost side”. In other words presumably approximately 18,000 sq m. Where is the other 50% of the total land mass amounting to approximately 30,000 sq m going and to whom? Additionally it is not clear what the nature of the security to repay the financing will be” said Mr Clinton.
Additionally this is only being made possible because taxpayers monies is paying for the reclamation. In doing so the Government has eliminated any economic risk to the developers who will profit from the land. Why has the Government decided to do that with this privileged group of developers?
Land is going to be reclaimed at the risk of the taxpayer resulting in private developers making a lot of money. Government should be clear about who is going to make it at the risk of taxpayers monies and on what terms.
The Government should publish the terms of the financing deal in detail. Additionally the Government has decided to take a stake of 20% in HDL. If the Government had taken a policy decision to be prepared to underwrite reclamation and in effect take a stake in a property joint venture why did it not put this proposal out to tender to allow a competitive process which would have delivered a better deal to the taxpayer. And why these developers? The Government should publish the terms of its deal with the developers and when this was reached and why this massive land reclamation project was done by direct allocation avoiding any competitive tendering.
The actual precise identity of the developers are unclear. And to the extent certain names are clear it raises serious potential conflict of interest issues which should have prevented this reclamation financing deal being done in this way. HDL is said to be “a consortium made up of entirely locally based developers.” The shareholders of HDL are GD9 Land Limited of which in turn Paul Butler and Elizabeth Byrne are directors and shareholders.
In an interview on Viewpoint the Chief Minister mentioned the names of some developers although this is not reflected in the shareholding of HDL or the shareholding of GD9 Land Limited. He also made clear that the developers behind this new scheme are not the same as those who held any development rights over Coaling Island before 2011 because he explained that new investors had come into the consortium. Who are those new investors? HDL itself was not incorporated before 2017 and the shareholder company not before 2016. Additionally it is obvious that this project is very different to any development rights that may have existed before 2011 as it is this Government that is seeking to reclaim this massive area from the sea. This dramatically changes the development and the value of the project.
In the interests of transparency and given that HDL is a new entity the Government should clarify who the new investors are that have joined any existing developers with pre-existing rights over Coaling Island and how this new deal came about to assuage any serious potential conflict of interests concerns.
If the Government in principle had decided to reduce the economic risk to a developer by using taxpayers money to do the reclamation people are entitled to know why this new reclamation project was not put out to competitive tender.
The project also raises environmental and planning issues of both density, aesthetics and sustainability.
Shadow Environment Minister Trevor Hammond Said: “The GSD is in favour of the principle of development as long as this is done in a sensitive and sustainable way. From the size and density of the development it is obvious there will be serious environmental and planning issues that will need to be considered.”
There is the additional and peculiar inclusion in the Government statement of a reference that there will not be reclamation outside Port Waters ahead of the end of the transitional period negotiated with the EU. In effect this is a reference to the Eastside. Why is that reference there? Has the Government in its discussions with Spain made a concession that it will not reclaim in Gibraltar waters for a specific period and if so why?