I feel in only fair that this response to your Manx Development Corporation article in the Examiner is published.
I do not agree that the simple explanation in reference to the ‘Pink Book’ [the budget document] by the unnamed Treasury officer in any way addressed the headline it received.
There are no specific amounts allocated in the 2023-2024 ‘Pink Book’ for MDC.
There is no reference in the ‘Pink Book’ where the treasury minister is given authority to approve or underwrite a £100m overdraft facility to the MDC.
There is no reference whatsoever that the MDC can operate as a construction company or speculative builder working from an overdraft facility where the debt is underwritten by the Treasury.
The ‘Pink Book’ is quite specific in that; feasibility studies on sites can be funded by equity Treasury capital; specific projects would require specific commercial loans from the Treasury or external sources. It is clearly defined that each specific MDC development would require specific loans.
Nowhere, but nowhere is it recommend, or authorised that a development corporation should acquire a £100m overdraft facility, develop scatter gun ideas, become a construction company or a speculative builder.
There is no authority that MDC can create loans internally fed from an overdraft facility simply manipulating debt.
The PWC Report – Urban Development Agency Models was published (November 20, 2019) and subsequently accepted by Tynwald.
It must therefore be the case that Tynwald Members were, and can now, correctly rely on the material advice contained in the report.
The starting point being; re-invigorate the central Douglas master plan, establish a holistic master plan including housing, commercial, transport links and environmental issues.
The MDC has failed to carry out this fundamental study to underpin any development proposals in Douglas.
The report further recites - identify strategic redevelopment areas and provide the framework to deliver cost neutral development outcome.
The MDC has failed to carry out such studies or reports identifying opportunities.
The report further cites approaches to car parking in Douglas must be addressed.
Low availability deters businesses from being based in the town. No such study has been carried out.
These are the type of studies which would attract Treasury equity finance, but none appears to have been commissioned.
There has been no publication of a financial feasibility study for the re-construction work being carried out on
The old nurses’ home, there is no publication of a study which gave a comparison to the financial advantages of a new build for 37 apartments on the site.
There has been no publication of details of the contract price or details of the loan agreement which would allow the old nurses’ home project to commence.
There does not appear a financial feasibility study for the Westmoreland Road Village project, bearing in mind that most of this project is not on a designated brownfield site.
Private properties and businesses would have to be acquired.
There appears no financial feasibility study for these acquisitions so that there can be an assessment of the feasibility of a holistic site value.
Yet the MDC has spent considerable money on design and progressed a detailed planning application.
The application includes proposals to build offices and retail units adjoining the commercial area of Douglas when there is already a saturation of these premises within the town centre.
It is difficult that any feasibility study could logically justify developing into a saturated market.
It appears the activities of the MDC are erroneously driven by ideologies, and not the financial controls it should have been restricted by.
It is now in the public interest that the activities of the MDC be suspended until such times as a robust and simplified financial structure is re-set by Tynwald, and that the financial activities of the MDC quango are investigated by the Public Accounts Committee.
If government is going to be the purchaser of the re constructed old nurses’ home (as any such capital purchase would have to come from reserves) then contracts need to be agreed without delay to ensure the purchase price offers value for money and offer taxpayers an investment that includes a reasonable financial return.
Government must not be left in the position to simply pick up a debt ran up from a construction overdraft facility underwritten by Treasury.
A competent development corporation would first identify its market target; design properties to fit the market; work to an affordable specification; build units within the available market scope. Any other ad-hock approach is financially reckless.
It is difficult to extract exactly where the treasury minister took his powers from to authorise a potential £100m construction debt through an overdraft for the MDC quango.
It is possible the Treasury Minister has made a serious error in approving and underwriting a £100m overdraft debt facility.
Henry Kennaugh
Hillberry Green
Douglas
This letter was first published in the Isle of Man Examiner of August 15.
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