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Glasgow City Council

Specific clarification points

A number of erroneous comments have been made in relation to this transaction which, when taken out of context, allege that the Council had not secured market value for Westthorn or had ignored professional guidance.  In response, this section sets out to clarify the actual situation in relation to the four main inaccurate comments which have been made.

1.       Inaccurate suggestion that "The site at Westthorn was worth £7,500,000"

Not correct.  The DV produced an initial high level valuation of £7,500,000 which was expressly stated as being before deductions for abnormal ground condition costs i.e. gross.  The developable area was also reduced significantly due to the presence of blast and buffer zones around the bonded warehouse.  The actual sale price agreed and reported to the Councils Executive Committee on 2007 was £675,000, with the retrospective market value being £200,000.

2.       Inaccurate suggestion that "The Council approached the negotiations with Celtic knowing the amount that Celtic had available and ultimately reaching that amount." 

Not correct.  The £675,000 acquisition actually relates to the larger set of transactions under which the Club were able to consolidate their land holdings in the immediate vicinity of Celtic Park (known as the "Celtic Triangle"), and the Council was able to acquire sites required for the East End Regeneration Route, as well as the acquisition by the Club of Westthorn (see the DV letter of August 2006 for details of this).  The supposed £675,000 budget included the value of Strathy Park which the Council wished to acquire (initially assessed by the DV as representing some £250,000), meaning that the Club were only meant to have a cash budget for all acquisitions of £425,000.  In reality, as set out below, the Club paid £739,500 for Westthorn, £300,000 for London Road School and £514,000 for the other Celtic Triangle sites for a total gross outlay of £1,553,500.  Deducting £100,000 paid by the Council for the EERR site and £497,000 for the acquisition of Strathy Park (this value having been independently set at £500,000 following an arbitration and reduced slightly due to title discrepancies) means the Club had a net cash outlay of £956,500 for all sites.  It is therefore incorrect to say the Council entered into any of the negotiations with the intention of reaching a particular budget allowance.

The Executive Committee at its meetings on 19 January and 30 November 2007 confirmed the sale of Westthorn to the Club for £675,000.  Previously an Executive Committee report of 19 January 2007 and a Development and Regeneration Services (Property) Sub-Committee report of 15 June 2005 approved the sale of ground amounting to some 4.75 acres within the "Celtic Triangle" for £375,000.  A rate per acre of £100,000 was adopted in the valuation, the DV was consulted on and agreed this value.  The overall figure of £375,000 was based on the disposal of the land to the Club for £475,000 and the acquisition from the Club of land at Barrowfield Street, (extending to 1 acre), in connection with the East End Regeneration Route (EERR) for £100,000, (as agreed by the DV), resulting in a net figure of £375,000.  In addition the reports also approved the disposal of the former London Road Primary School to the Club for £300,000.  The total payable by for the ground known as the Celtic Triangle was £675,000, net of the £100,000 the Club paid to the Council for the ground for the EERR.  This is summarised in the table headed "Summary Valuation Table".

Subsequently following further negotiations between the Council and the Club it was discovered that the actual area of the plots within the Celtic Triangle was found to extend to some 2.08 hectares/5.14 acres, using the agreed rate of £100,000 per acre the actual disposal price for the areas within the Celtic Triangle was £514,000.  Adding in the £300,000 for the London Road School, this gives a total for land consolidation around Celtic Park of £814,000 which is clearly more than the figure of £675,000 it is alleged that the Club had to purchase the lands.

 

3.       Inaccurate suggestion that "The District Valuer suggested a value for the Celtic Triangle which was ignored by the Council."

As noted above, this is not correct.  The DV initially suggested that these sites be valued at £125,000 per acre but subsequently agreed to a figure of £100,000 per acre.  This is the price that the Celtic Triangle sites were sold at.  The DV did not produce a final valuation report for the sites that were sold to the Club. 

The District Valuer was instructed on 24th November 2004 to provide initial high level desktop valuations for the various sites that the Council owned.  The DV provided a preliminary report dated 19th January 2005.  The preliminary report does not cover exactly the sites that were eventually sold to the Club, was incomplete on the basis that it did not take into account for abnormal ground conditions which exist on the sites and was based only on visual examinations of the properties.  The DV was not instructed to provide any further valuation reports.  The negotiation of the sale of the various parcels of land was carried out on behalf of the Council by one of its own in-house Chartered Surveyors in accordance with the internationally recognised valuation standards contained within the RICS Red Book. 

The Council's Chartered Surveyor negotiated the market value of the various parcels of land with the Club's appointed Charter Surveyor.  All negotiations were undertaken in conformity with the RICS Red Book Guidance, and the market value arrived at was one which was between a willing vendor and an arms' length purchaser. The sale prices agreed for the sites were reported to and approved by the Council's Executive Committee.

The Council's Executive Committee reports from January and November 2007 confirm that the Committee "approved" the disposal of Westthorn to the Club, subject to the terms and conditions negotiated by the Executive Director of Development and Regeneration Services. The report, stated that the Council and the agents of the Club had agreed that the open market value of this site was £675,000 based on the number of units that could be built on the site and the level of abnormal ground works associated with the site. Other terms were agreed as follows:

  • If the site is to be sold on by the Club within 5 years from the date of entry, the Council will be entitled to 50% of any uplift in value;
  • The Council will retain the servitude right of access to its existing land holdings (allotments) in terms of the original missives of lease
  • An inflationary uplift  calculated form the date of the agreement to sell to the date when the Club exercised its option to buy.
  • The Club will pay to the Council £10,000 as a contribution to its expenses;
  • The date of entry will be mutually agreed between the parties

Ultimately, the Council achieved everything that the DV recommended (including non-price related issues such as including inflationary uplifts and overage provisions).

4.            Inaccurate suggestion that "The Council expanded the blast zones affecting the site".

Council planners were aware of the proximity of the site to the Allied Distillers site at London Road and sought clarification from HSE regarding this.  In their response, HSE pointed out that the site was in fact affected by a larger zone as a result of Allied Distillers having other high risk properties in the vicinity.  It was HSE, not the Council, who extended the zones with consequent reduction of the developable area.  It should be noted that while the term "blast zone" is not used by HSE, the expression is well understood by property professionals and is, for instance, used in the Savills valuation report.  The full text of the correspondence between HSE and the Council is included on our website.

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