THE JOHN MERRY TAPES: Part 2
Despite opposition from Salford Shopping City's new owners, Salford Estates, and an 8000 name petition opposing an application for planning permission for a new giant Tesco store, last October Salford Council passed the Tesco plans (see here and here and here).
It later transpired that, firstly, Tesco had already paid Salford Council £4million, out of £16million, for the land a few years before the planning meeting. And, secondly, there was an allegation in December by Salford Estates that the land bought by Tesco had been undervalued by `at least £10million' (see here).
To say that Salford Estates and Salford Council are at each others' throats would be something of an understatement. John Merry, in his interview with Salford Star editor Stephen Kingston, said nothing to disprove the theory…
Again, the interview has been kept as unedited as possible…
Stephen Kingston (SK): These problems have all come about because no-one has been transparent with the figures…
John Merry (JM): Alright, let's start at the very beginning with Salford Estates, or Praxis, which bought the Precinct. This company bought the Precinct on the understanding and knowledge that there was a site reserved for a supermarket for Tesco. And clearly that must have been taken into account in the actual price they paid for it.
Yet Salford Estates adopted a very aggressive approach in terms of the Tesco situation. We have letters we'll release in the new year which will put a somewhat different light on the claim they've made about the value of the site. But the fact remains that they have allegedly obtained an independent valuation which valued the site in excess of what we got from Tesco. So they've threatened us, and are in the process of taking us to court to judicially revue the Tesco decision – which, incidentally, far from being a secret decision as was claimed, was actually published as a decision and wasn't called in by anybody in the city council or any political party.
We were very clear that we weren't going to draw attention to it while the planning application was on, even though we'd actually formally approved it, because if we'd mentioned it in the context of the planning decision there was a danger that it would have swayed the planning panel one way or the other.
SK: Sorry I can't accept that.
SK: …because if I knew that Tesco were paying for the school then I'm sure that everyone in the planning panel knew too.
JM: I'm not denying that. What I'm saying is that we didn't specifically draw attention to it on the planning panel, which is one of the things they're arguing we should have done. I think that was Councillor Owen's contention wasn't it? Councillor Garrido wanted an assurance that we didn't mention it to the planning panel, so the two parties have contradicted themselves. But I was very clear that we didn't specifically want to draw the attention of the planning panel to that.
The question when we got this £4million was, well what happens if the planning decision doesn't go through? And the answer is `Well that's no problem, we'll pay them the £4m back and we'll borrow the money on the open market to cover that'. But it wouldn't have made sense to borrow the money up front on the open market and paid interest when we had the offer of £4m from Tesco. So we saved the council the interest on the money that would have been paid had we not accepted the money from Tescos. Are you with me so far?
SK: Don't you think that Tesco were a bit too comfortable with the council during that process?
JM: No I don't because…
SK: They were on the Pendleton Steering Group which oversaw the whole regeneration of the area…(see here)
JM: It's been earmarked for a Tesco site for years that is perfectly true, but the issue was `Did we get the right value for the site?'. We obtained a valuation which said that's what the site was worth.
Now they [Salford Estates] claim to have two other valuations which say the site was worth another £10million. We think they're rather confused about what is actually in the site – I don't think they've realised that part of the site isn't in the council's ownership and has never been in the council's ownership***. There is part of the site that is not in our ownership, so that is not what we've sold to Tesco, so we're going to be fighting this in court. And I suppose my annoyance is with the particular press release that they put out (see here) because it says `There is a revelation that this site is worth another £10m'.
That's a whole dispute - we don't accept their valuations. In order to strengthen our case we are obtaining our own independent valuation and all we have said to them is `No we are not completing the contract with Tesco – we've undertaken not to do that until we receive the valuation from our own independent valuers'. Now that seems to me to be a perfectly sensible way to proceed, given that the contract isn't due to be completed until the summer anyway.
SK: My contention is that we've talked to people on the Precinct and the stall holders and they don't want such a huge store. The actual planning guidance stated that the store must be integrated which it isn't.
JM: Can we deal with that – I too want to see it integrated
SK: But it's not is it?
JM: It can be if that road [Pendleton Way] is closed
SK: There's no plans…
JM: There are – I'm prepared to chair a group, and I've made this clear, that's going to seek to close that particular road.
SK: Even if it did it will take 3-4 years, and the store is still facing away from the Precinct and it's surrounded by car parking.
JM: I think we can integrate it, that's the point I'm making
SK: What do you think of the game plan then – why are they doing it?
JM: They want the site to themselves or they don't want the competition; you'd have to ask Salford Estates that. Now the fact remains that Salford Estates wanted to acquire that site for themselves.
SK: So if they offered the same as Tesco you'd be quite open to selling it to them?
JM: Well no, now that we're into a contractual relationship with Tesco. You'll have to ask them whether they've made an offer for that site. That might be an interesting question to ask them***. We'll be providing details early in the new year of where we're up to on that. But the fact remains that we think we got a good value for that particular site. It will be for them to try and demonstrate otherwise in a court case.
The reason they rushed into print with that press release is because, having provided them with an undertaking that we're not going to sell this site in the next few months to Tesco, we were happy to give that undertaking, and also happy to say we're getting a valuation to strengthen our case. And then, of course, they rush into press, which rather surprised me. saying our case was in tatters. That's not why we're doing it.
JM: If you're saying `Do I think that Salford Shopping City needs drastic surgery?', then yes I do think it needs drastic surgery - because it's not very good is it.
SK: I like it – cheap computer ink and cheap rizlas and filters. What more do you want?
JM: I think we want a bit more than that – I agree the cheap ink should stay there. The fact is that it provides cheap ink and does some things good, but it isn't a patch on what it used to be. Something needs to happen on there and I wish that Salford Estates would be prepared to invest some money into it…
*** We asked Salford Estates…
1. Whether the valuations of the land are wrong because part of the land was not in Salford Council's ownership?
Salford Estates replied: John Merry's comments seem misleading as he appears to be attempting to divert attention away from the substantive issue - a secret and catastrophically incompetent land deal that stands to cost the people of Salford many millions of pounds. The decision making process adopted by Salford Council and its decision makers in that deal will be exposed in due course via the legal process.
2. Whether Salford Estates had made an offer for the site?
Salford Estates replied: We have openly and actively confirmed our offer to acquire the site on matching terms so as to safeguard the future of Shopping City and deliver a better redevelopment for the whole area. That is our sole motivation in taking the action we have to date.
See The John Merry Tapes: Part 1 here