I apologise for the dull title. But I have a feeling this is going to be a recurring theme over the coming weeks and months. I'll also apologise for the length of this post in advance. But there have been so many developments in the last week and a half, and there's so much conflicting information floating around. What I want to do here is report the facts. Yes, I'll give my view on matters and there will be something of a political angle. But I'll keep all of that to the end.
So, here we go...
On Thursday afternoon I had a meeting at Hitchin Town Hall with John Robinson, Strategic Director of Customer Sercive at NHDC. It was terribly depressing seeing the sorry state of the museum entrance. The cabinets fixed to the wall of the entrance in 14-15 Brand Street have all been taken down. The data points, sockets, fire and security alarm systems have all been isolated. This work alone is estimated to have cost in the region of £7,000. But I must stress this figure is in no way confirmed, and the real cost could be much higher. The cafe has shrunk from a large, airy and welcoming sprawl with potential to spill out into the street, to a cramped, limited space. It's going to need a minimum of 30 covers a day to generate sufficient revenue and will now mainly have to be used for catering in the Town Hall to remain viable. The lift shaft doesn't belong to NHDC, but the lift does and is futilely demarcated as NHDC's property by a few stickers, already starting to peel off. The boundary of 14-15 Brand street is taped out and we've lost the Local Studies Room and Learning Room. Museum staff have lost their office and staff room too.
It's all dreadfully sad, and costs are going to spiral for taxpayers. But how have we ended up being lumbered with this additional burden?
Hitchin Town Hall Limited (HTH Ltd) purchased 14-15 Brand Street from the Hitchin Property Trust (of which John Ray is a director - more on him later). HTH Ltd had funding from the Social Investment Business (SIB). But it defaulted on its obligations. So SIB appointed a Law of Property Act (LPA) receiver. The property was put out to tender in early summer 2016 so SIB could recover its debts. SIB was not obligated to accept the highest bid. It also had a duty to ensure any bid would deliver on its community benefit objectives. NHDC placed a bid based on the value of the property and certain uplifts (made up of the receiver's fees, conversion of use costs and broad "work around" costs). This has been reported on social media as being £217,000, but neither SIB or NHDC have confirmed the actual figure. Cabinet had authorised officers to submit a bid of up to £1million.
It's been reported on social media that NHDC was the under bidder, or second highest bid. But this hasn't been confirmed. Nor has SIB confirmed how many bids it received, or from whom.
But in any event, the process was rendered null and void. Why?
On 28 May 2016 a new company, HTH Finance Limited (HTHF Ltd) was formed. Its directors are former Conservative Councillor David Leal-Bennett and John Ray. HTHF Ltd paid off HTH Ltd's debts to SIB and in the process acquired SIB's charge over 14-15 Brand Street. This is a classic loan-to-own-flip manoeuvre, as anyone involved in corporate investments and debt refinancing will tell you.
HTH Ltd has taken great pains to convince the public that it has no connection to HTHF Ltd. But this simply isn't true. Mr Leal-Bennett was a director of HTH Ltd until late 2014. And he delivered a letter from Stephen Pike, director of HTH Ltd, to NHDC's offices by hand last week. A quick glance at page three of HTH Ltd's press release on 03 August 2016 also makes this clear. Page three is a screen print of a Safari browser page displaying NHDC's press release of 16 May 2016. Look at the favourites bar. Tab four is "Catherine & Seb". Mr Leal-Bennett's son is Sebastian. His wife is Catherine. If HTH Ltd and HTHF Ltd aren't connected, why is Mr Leal-Bennett acting as post boy and supplying content to its press releases?
On a separate, somewhat more speculative note, I've also been told that Mr Leal-Bennett has a connection with Caroline Forster, Director of Investments and Deputy Chief Executive of SIB.
in any event, on 28 July 2016 HTH Ltd served a defective (according to NHDC) notice to quit 14-15 Brand Street on NHDC. HTH Lto then served a second notice terminating the licence granted by the LPA receiver on 05 August 2016. This notice gave NHDC one week to quit the premises. So until 12 August 2016. But on 08 August HTH Ltd called demanding NHDC surrender the keys to 14-15 Brand Street. Then on 09 August 2016 HTH Ltd called John Robinson at 09:10 stating that if NHDC didn't hand over the keys HTH Ltd would attend with locksmiths to change the locks. I was contacted by distressed museum staff at 10:07 to say that Brent Smith from HTH Ltd was at the building with a locksmith saying if the keys weren't handed over the locks would be changed.
HTH Ltd is at pains to say it wants to work collaboratively with NHDC. But its actions over the last two weeks demo stat a different story. It is bullying and intimidating, both to NHDC and museum staff. To quote museum staff on Tuesday, "It's very frightening". And that's not just in terms of security for artefacts. There's a real sense of personal insecurity.
The options for opening the museum are being considered. Clearly given the level of animosity between the parties, mediation is likely to be a non-starter. And officers are reluctant to recommend a contractual arrangement, such as an easement or long lease, given past issues with contracts failing. A significant portion of HTH Ltd's debt is to NHDC. HTH Ltd has a liability under the development agreement (DA) to pay NHDC £494,000. This hasn't been paid because SIB cut its funding to HTH Ltd. When HTH Ltd purchased 14-15 Brand Street NHDC gave it a loan of £20,000 for legal fees. And there's a further £134,000 relating to fit out costs which HTH Ltd was liable for under the DA, but NHDC has had to pay as these were incurred after SIB cut funding.
As it stands, councillors are likely to be asked to consider:
1. A work around where the museum operates without 14-15 Brand Street. The museum can be accessed via the town hall. entry from the from of the building will be tight and requires reconfiguration and installation of a ramp or wheelchair lift. The lift shaft in the Town Hall will need a lift installing. This option may exceed the purchase costs of 14-15 Brand Street.
2. Purchasing 14-15 Brand Street. But the property is not worth the value quoted by HTH Ltd of £600,000. NHDC's valuation is confidential and commercially sensitive so I can't disclose it yet. But I can say it is significantly lower than what HTH Ltd claims. Looking at the figures, HTH Ltd has debts to HTHF Ltd in the region of at least £650,000. And that's just the portion owed to NHDC. So purchasing the property effectively means taxpayers doubling up on a debt they are already owed.
John Robinson was very assertive that 14-15 Brabd Street is not a ransom strip and the museum can operate without it. Councils can't pay over the odds for property, that's not an effective use of public money. And NHDC could face legal action if it did purchase 14-15 Brand Street at the price being asked.
In terms of timescales, it'll take eight weeks for the fit out to be completed, plus extra time for fire compliance. But this also depends how long it takes Council to reach a decision.
Looking at the history of this utterly shambolic affair, it's clear there have been significant failings, on both sides. They're well documented elsewhere, and this post is long enough. But a dispute between personalities within the Conservatives on Council has created a torrid situation which could, and should, have been avoided. And who loses out in all this? Taxpayers and the people of North Herts.