Money down the drain

As regular readers will know, Old Grumpy takes a keen interest in grant-related matters.

So in January last year when the cabinet approved a grant of £328,553 to Uzmaston Projects Ltd for an office block at Hayston Road Johnston, my antennae gave more than a minor twitch.

My first reaction was to wonder why the taxpayer was funding this development when the council has acres of empty office space dotted across the county, including the huge white elephant at Cherry Grove, Haverfordwest, which has already cost over £2 million and counting.

When I read the report to cabinet my curiosity was further aroused:

Land West of Hayston Road, Johnston

5,700 sq ft Two Storey Office Development

Stage 2 Total Project Cost (exc Developers Profit) £790,118

Completed Project Value £318,350

Development Gap £471,768

PDF Assistance Requested £330,375.60

PDF Assistance Recommended £328,553.10 (45% Eligible Costs)

Note: Eligible Costs – Net Development Cost excluding ineligible expenditure and Developer Profit.

As can be seen, while this building was costing £790,000, the finished article was valued at only £318,350, leaving a “development gap” of £471,768.

So, even with the £328,553 grant, the developer was £140,000 out of pocket which hardly seems like a dazzling proposition.

All this seems to have passed over the heads of cabinet members (total SRAs £150,000 approx) who waved the grant through – no questions asked – in order to, as the report put it: “facilitate the development of speculative commercial and industrial buildings at strategic employment sites within Pembrokeshire.”

The offices went up during the summer of 2015, and one day when driving past the thought occurred to me that it didn’t look like £790,000-worth of construction effort, though compared to the other tenders received, which were £170,000-£250,000 (25-30%) higher, it was a bargain.

The report to cabinet included the following assurances:

The application was supported by the following independent reports:

 Due Diligence: Welsh Government – “Proposed development at Hayston Road” Memorandum dated 24-11-2014

 Valuation: Rowland Jones Chartered Surveyors – “Brief Report and Valuation in respect of Proposed Office Site, Hayston Road, Johnston” dated 28-10-2014 plus addendum dated 13-11-2014

 Tender Report: Banks Wood & partners (Wales) – “Proposed Office Development Hayston Road, Johnston, Initial Tender Report” dated 13-112014

 PDF Officer report: SWWPDF – “Stage 2 Officer Report” dated 14-11-2014.

On 10 November 2015, I contacted the council’s director of development asking to see copies of these documents.

Almost by return, I had an email telling me they would be left behind the reception desk for collection.

However, when I arrived at county hall, I was met by the European Officer waving what he claimed was a “confidentiality agreement” between Carmarthenshire County Council (the lead authority for the Property Development Grant scheme), Wales European Funding Office (WEFO) and PCC which meant that PCC were unable to to let me inspect the documents.

Having passed this way before, I was quick to point out that the documents I had requested were listed in the cabinet report and, as the matter had been discussed in open session, they were background papers as defined in S100D(5) Local Government Act 1972.

Although the council eventually accepted this argument, my problems were still not over because when I returned to collect the documents I was told I couldn’t have them unless I signed a confidentiality agreement.

After I explained that denying access to documents that someone had the right to inspect was a criminal offence under Section 100F(4) LG Act 1972, the council finally coughed them up.

I also asked to see a copy of the Bills of Quantities for this project and six months later I’m still waiting, though I think the council may be running out of excuses for withholding them.

I’m not sure how all this foot-dragging ties in with the culture of openness and accountability we were promised following the departure of Mr Parry-Jones.

However, among the documents provided was a quantity surveyor’s tender report from which the following is extracted:

Banks Wood

I’m not sure if it has any bearing on the subject, but it might be worth noting that the successful tenderer is Uzmaston Residential Ltd and the grant recipient is its sister company Uzmaston Projects.

For those not familiar with building contracts a provisional sum is an amount included in a tender by the architect/QS to cover an item for which accurate data is not available.

For instance, in a contract to reslate a roof, there may be be a need to replace defective rafters, the extent of which will not be known until the roof is stripped off.

So, in order to ensure a level playing field for all bidders, a provisional sum is included and the contract is then remeasured based on the amount of work actually done.

In this case, the drawing for the storm water drainage hadn’t been completed so a provisional sum of £35,000 was included.

Uzmaston Developments Ltd agreed to stand by this sum which would mean he would lose money if the actual cost was greater than the provisional sum, and vice versa.

In the meantime the drawing was issued and the QS did a calculation to ascertain whether £35,000 was a fair price.

As can be seen, the contractors were taking a small hit (£1,510) and, in addition, they were carrying the risk that they might encounter adverse ground conditions such as rock or underground obstructions.

It occurred to Old Grumpy that 25 road gullies was a bit excessive for 20 car parking spaces and that a soakaway 12m x 10m x 2m deep (large enough to swallow a three bedroom bungalow up to the top of the windows) might be rather larger than that required for this modest 253 sq m building and its surroundings.

I also noticed on PCC’s planning website that the same developer was intending to build 14 houses on another part of the site.

So I asked for a copy of the engineer’s drainage drawing No 795/100A.

And lo and behold, just as I suspected, the cost of the drainage for the housing estate had been shuffled across to the grant-aided office block.

Hayston Road plan

In fact there are only seven, not nine, brick manholes (blue circles) in the storm water system and 18 road gullies, not 25.

Furthermore, most of the storm water drainage shown on the drawing concerns either the housing development, or the section of road to the top of the plan which is designed to give access to future development in an adjoining field.

Even the section of road connecting to the main Johnston to Neyland road cannot all be allocated to the office block.

And the section to the left of the plan concerns a new access to the church next door, so is not, strictly speaking, part of the office development.

In addition, the soakaway would only need to be half the size if it was for the office development alone.

It is difficult to see how the quantity surveyor missed this because in the bottom left hand corner of the plan is a box containing the “drainage strategy” which makes it abundantly clear that the soakaway is designed to cater for the run-off from the “estate access road”.

So, rather than the developers taking a £1,510 hit, they are trousering a 45% grant for work that had nothing to do with the office development.

Drainage strategy

I am now looking forward to receiving the BoQs so that I can see if there are any other errors of a similar nature.

Predictably, I’m being given the run-around by the council who say that, as Carmarthenshire County Council is the lead authority for this Property Development Fund, I will have to ask them for the documentation.

I am arguing that it was PCC’s cabinet that approved the grant and that PCC has a duty to provide copies of the paperwork.

The issue has been referred to m’learned friends in the council’s legal department and I await their decision with interest.