Deferment of final payment if respect of the sale of Caledonia Close

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A decision made (26.06.06) to defer the final payment in respect of the sale of Caledonia Close.

Subject:	Deferment of Final Payment in Respect of the Sale of Caledonia Close
Decision Reference:	MD-TR-2006-0080	Exempt clause(s):		n/a
Type of Report: (oral or written)	Written	Person Giving Report (if oral):		n/a
Telephone or e-mail Meeting?	n/a	Report File ref:		RF/01/26/06/06
Written Report – Title	Deferment of final payment due in respect of the sale Of Caledonia Close, St Helier, to The Royal Yacht Group Limited	Written report - author		Ray. Foster – Head of Corporate Capital
Decision(s): The Minister for Treasury and Resources supports the deferment of the final payment due from the Royal Yacht Group Limited on the approved terms.
Reason(s) for decision: The extension is for a short period and the proposed interest charge adequately recompenses for the delay in the final payment.
Action required: Inform Housing Department of decision.
Signature: (Minister/ Assistant Minister)			Date of Decision:

Deferment of final payment if respect of the sale of Caledonia Close

TREASURY AND RESOURCES MINISTER

DEFERMENT OF FINAL PAYMENT DUE IN RESPECT OF THE SALE

OF CALEDONIA CLOSE, ST HELIER , TO THE ROYAL YACHT GROUP LIMITED

1. Purpose of Report

1.1. The Minister is asked to consider proposals and terms for a three month deferment of the final payment of £585,000 due by 30 June 2006 from The Royal Yacht Group Limited in respect of Caledonia Close, Pier Road, St. Helier.

2. Background

2.1. On 10 May 2005, the States, adopting a proposition P74/2005 of the Housing Committee, authorised the sale with vacant possession on behalf of the public, of Caledonia Close, Pier Road, St. Helier, to the Royal Yacht Group Limited for £650,000.

2.2. It was agreed that the £650,000 be received in two payments, to be £65,000 on passing of Contract of Sale and the balance of £585,000 on or before 30th June 2006.

2.3. The Royal Yacht Group Limited has now requested that payment of the balance of £585,000 be deferred for a period of no longer than 3 months.

2.4. The Minister for Housing is minded to agree to the deferment, subject to an appropriate interest charge (Ministerial Decision MD-H-2006-0039 refers).

3. Comments

3.1. The deferment of three months is sought to enable the works to extend the hotel to be brought to a conclusion.

3.2. The Minister for Housing proposes that an interest charge of 2% above Bank of England base rate be applied for the period beyond the agreed due date of 30 June 2006.

3.3. The Treasury has established that current rates used for developers on long and short loans are between 1.5% and 2.5% over the base rate (currently 4.5%). The average mortgage rate is currently 2.5% over base.

3.4. As such, the Treasury considers that a rate of 2% over base represents a fair reflection of the commercial position.

3.5. In proposing the terms of the deferment, the Minister for Housing will require that no further deferment will be entertained and payment in full, of the balance of £585,000 plus the interest accrued, will be made on or before 30 September 2006.

4. Recommendation

4.1. That the Minister for Treasury and Resources supports the deferment of the final payment due fro the Royal Yacht Group Limited on the above terms.

5. Reason for Decision

5.1. The extension is for a short period and the proposed interest charge adequately recompenses for the delay in the final payment.

States Treasury Corporate Finance

27 June, 2006 for Decision Meeting 26/06/2006