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Council to get €2.6m for site once valued at €28m

Wicklow County Council flogs central Bray site once worth €28m, now with restrictive conditions, to McKillen for €2.6m when Councillor says it is worth €7m

Yet another controversy over its land disposals has hit Wicklow County Council following a decision by Councillors to hand over a valuable town-centre site in Bray to developer, Paddy McKillen junior.

On Monday 15 January, Councillors voted to dispose of the 0.9 hectare Florentine site in Bray to Navybrook Ltd for €2.6m. The site has planning permission for two anchor stores, a cinema complex, retail and business units and a 256-space car-park.

A number of Councillors objected to what they considered to be the poor outcome for the Council, claiming that the site was worth more than the agreed sale figure. Council management had accepted the offer from Navybrook, a company controlled by McKillen junior and Matt Ryan, and finalised a development agreement with the property company which sets out the parameters of the project and its completion by August 2019.

Last December, Bannon Property Consultants valued the site at €750,000 and said this figure was based on “a single assumption that the subject property is subject to the contractual obligations contained within the Draft Development Agreement”.

Under the terms of the agreement the developer “will be required to carry out the development in accordance with the plans, planning consent, developer’s agreement and developer’s timetable as required by Wicklow County Council and only thereafter acquire title to the property upon practical completion of the scheme”.

Navybrook only becomes liable to pay the €2.6m price following completion, according to the disposal documents presented to Councillors before their vote in mid-January.

At the meeting, some Councillors questioned the Bannon valuation on the basis that the land for sale includes a number of listed houses, at 6-8 Eglinton Road, which are worth more than the figure estimated by the property consultants for the entire site. An adjoining property, at 9 Eglinton Road, was sold in April 2015 for €620,000 while other houses on the street are valued at more than €700,000.

The controversy over the disposal deepened when a potential conflict-of-interest issue emerged in the days before the vote. It transpired that there was an error in the valuation document presented by Bannon to the Council last December.

In the terms of engagement which are included in the valuation report submitted to the Council, Bannon states that: “We can confirm that we have had no previous involvement with the subject property. We are satisfied that no conflict of interest arises in undertaking this instruction”. This statement under the heading of disclosures and conflicts of interest is repeated in a later section of the, 78-page, Bannon report.

Documents seen by Village confirm that Bannon provided a valuation report to a previous owner of the site, Florentine Properties Ltd. (FPL), in 2005 in which it also provided a detailed assessment of projected costs, rental income and profits that could be achieved on completion of a town-centre project on the lands.

Wicklow County Council Director of Services, Des O’Brien, told councillors before the vote on 15 January that:

“The Council sees this as a simple error. It was a different department of Bannon (retail services rather than property valuations), most of those involved no longer work there, and in any case other than it being so long ago in a completely different market, Florentine Properties Ltd no longer exists to our knowledge. The main shareholders of Florentine Properties, the Ballymore Group, have no interest in the site, nor did they show any interest at any stage in participating in this competition. We believe this was a simple error that has no effect on the process; there is absolutely no conflict of interest, and this in no way affects the basis of their valuation”.

The proposed development

Councillor Tom Fortune insisted that questions remained over the contradictions in the Bannon correspondence and said that he had unsuccessfully sought a copy of the Development Agreement made with Navybrook. Council management had refused to circulate the agreement, on legal advice that it contained commercially sensitive information.

Councillor Brendan Thornhill was not convinced that the €2.6m agreed with Navybrook was a good deal for the Council given the value of the properties included in the sale package, including five houses, two shops on Main Street and a car park. He claimed that the site was worth closer to €7m than €2.6m.

“I say here the people’s best interest is not being served by selling the site at this price, €2.6m”, Councillor Thornhill said.

O’Brien disagreed and insisted that the restrictive terms of the development agreement, including a stipulation that the new town centre would be completed by August 2019, represented a good opportunity for the people of Bray.

However, he opened up another potential controversy as he sought to explain why it required the valuation from Bannon, after Navybrook had submitted its €2.6m offer.

Further uncomfortable questions for the Council arose when O’Brien explained to Councillors how the valuation and tendering process for the Florentine site was carried out. He said that, in 2013, the Council had hired Savills to advise on the potential rental income and value of the site. In 2017, Savills, he said were also commissioned by Navybrook to advise on its intended purchase of the site.

Savills, according to O’Brien, continued to work for the Council during this period. After the Council received the €2.6m offer from Navybrook, it sought a fresh tender from Bannon which came in at the €750,000 estimate in the valuation report provided in December 2017.

O’Brien said that it could not release the Development Agreement to councillors as it contained confidential valuation information. He did not disclose the original valuation of Florentine provided by Savills to the Council. Neither did he explain, nor was he asked, whether there was a potential conflict of interest arising from the fact that Savills was advising both Navybrook and the Council at the same time. He insisted that as Bannon had no involvement with Navybrook there was no conflict of interest on the part of the property consultants.

O’Brien said: “We went and sought a valuation before the final tenders came in and we engaged Bannons, who are the other big retail property house in Dublin. Savills would be the other one but we already had them on board….I happen to know that Navybrook are using Savills to look for tenants for their site which I understand, they wouldn’t divulge who they’ve got but they said they made great headway on that. But Bannons have not been involved with Navybrook. I see no conflict of interest whatsoever”.

He explained why the Council sought an ‘extra’ valuation from Bannon, which suggested that an earlier one had been provided by Savills.

“That’s the reason why we got the other valuation because if we had got a number of tenders that were all around the same sort of figure, we would have been actually quite happy about it. So we got, that’s why we got the extra valuation done. The valuers themselves put in big – they made very, very clear in the valuation it is based on the fact that they have to build out the centre within a short time. That was the underlying value of that at all stages”.

The motion for disposal of the Florentine site to Navybrook was passed by a comfortable majority of 29 votes to 0, with 4 abstentions.