1 & 2 La Mabonnerie, La Rue de la Monnaie, Trinity, & 12 Clos de la Ville, St Helier

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A decision made (14/05/2007) regarding: 1 & 2 La Mabonnerie, La Rue de la Monnaie, Trinity, & 12 Clos de la Ville, St Helier – Proposed Sale.

Subject:	1 & 2 La Mabonnerie, La Rue de la Monnaie, Trinity & 12 Clos de la Ville, St Helier – Proposed Sale
Decision Reference:	MD-PH-2007-0042	Exempt clause(s):		None
Type of Report: (oral or written)	Written	Person Giving Report (if oral):		N/A
Telephone or e-mail Meeting?	N/A	Report File ref:		845/10-11 & 1385
Written Report – Title	1 & 2 La Mabonnerie, La Rue de la Monnaie, Trinity & 12 Clos de la Ville, St Helier – Proposed Sale	Written report - author		R. Foster
Decision(s): 1. The Minister approved, as recommended by Property Holdings, the sale by The Public of the Island of 1 & 2 La Mabonnerie and 12 Clos de la Ville to Les Vaux Housing Trust and authorised the necessary documentation, including a letter of comfort in the terms set out in this report, to be produced. 2. Under Standing Order 168 (1) (a) and 168 (3) the Minister hereby notifies the States that he has accepted the recommendation of Property Holdings to agree to the above land transaction. 3. Under Standing Order 168 (5) the Minister hereby authorises the Attorney General and the Greffier to pass any contract which is required to be passed on behalf of the Public. After the expiry of 15 working days following presentation to the States the transaction may be concluded.
Reason(s) for decision: The States approved the disposal of these properties when approving the 2007 Property Plan (P34/2007 - as amended). The units are considered appropriate for group homes to provide assisted living through the Les Amis organisation. The proposed sale price of £610,000 is considered appropriate to enable the Trust to provide assisted living accommodation, as identified in the 2007 Property Plan (P34/2007). Under Standing Order 168 (1) (a) and 168 (3) the Minister is required to notify the States of his acceptance of recommendations to dispose, acquire, let or rent land on behalf of the Public of Jersey.
Action required: 1. Property Holdings to write a letter of comfort to Les Vaux Housing Trust. 2. In accordance with Standing Order 168 (3) this decision must be presented to the States at least 15 working days before the contract is passed. After the expiry of 15 working days following presentation to the States the transaction may be concluded. 3. The Director of Property Holdings is to instruct the Attorney General and the Greffier to pass the necessary contract, and to copy this decision to the Minister, Treasurer and Assistant Treasurer.
Signature: (Minister for Treasury & Resources) Senator T Le Sueur			Date of Decision: MD-PH-2007-0042 14 May 2007

1 & 2 La Mabonnerie, La Rue de la Monnaie, Trinity, & 12 Clos de la Ville, St Helier – Proposed Sale.

TREASURY AND RESOURCES DEPARTMENT

PROPERTY HOLDINGS

Property Transaction for Ministerial Decision - Minister for Treasury and Resources

1 & 2 La Mabonnerie, La Rue de la Monnaie, Trinity & 12 Clos de la Ville, St Helier – Proposed Sale

RF 845 10-11 & 1385

1. Purpose of Report

1.1. The Minister is asked to consider the proposed sale of 1 & 2 La Mabonnerie and 12 Clos de la Ville to the Les Vaux Housing Trust.

1.2. The proposed total sale price of £610,000 reflects the work required to modernise 1 & 2 La Mabonnerie and convert it into a group home.

1.3. The converted property and 12 Clos de la Ville will be rented by the Trust to Les Amis, a Jersey based Charity associated with Jersey Mencap that offers care and support in residential settings to adults with learning difficulties.

1.4. The Trust will obtain a commercial loan to fund the purchase and undertake the necessary works. It is intended that the loan will be supported by a letter of comfort that commits the States to capping the Trusts interest charges to a maximum of 6% per annum.

2. Background

2.1. 1 & 2 La Mabonnerie, La Rue D’Asplet, Trinity, comprise a pair of three bedroom houses formerly used as staff accommodation. The houses are currently vacant and were identified in the 2007 Property Plan (P34/2007 - extract attached as Appendix A) as being suited to meeting special needs.

2.2. 12 Clos de la Ville is a detached house that has been converted into a 6 bedroom group home property, operated by Les Amis to house adults with learning difficulties. The States receives no rent from Les Amis for this property.

3. Comments

3.1. The States, at their meeting of 17 April 2007, agreed that the properties should be disposed of by way of sale to the Les Vaux Housing Trust.

3.2. At a recent meeting with Trust representatives, in principle agreement was reached to transfer the properties on the following terms:

· 1 & 2 La Mabonnerie to be sold at a price of £310,000

· 12 Clos de la Ville to be sold at a price of £300,000

· the Trust to undertake remedial and conversion work on 1 & 2 La Mabonnerie at an estimated cost of £200,000 including financing costs and fees

· the Trust to fund the purchase and development by commercial loan over a 25 year repayment period, to be serviced by net rents received from Les Amis

· Treasury to support the loan through a letter of comfort that caps the Trust’s effective interest rate to 6% per annum. Interest subsidy above this level to be met from the Housing Development Fund (financial model attached as Appendix B)

3.3. The financial model assumes an average rental increase of 3% per annum and that an agreed rent is received from Les Amis that is not based on occupation levels, thus obviating the risk of void units to the Trust.

3.4. Property Management surveyors have estimated the value of the two La Mabonnerie properties as between £275,000 and £300,000 each in their current condition. If permission were obtained to demolish the existing buildings and develop the site, the potential value may be enhanced.

3.5. 12 Clos de la Ville would require minimal works to be converted to two 3 bed family sized semi-detached houses. Property Management surveyors estimate the market value for these properties at £325,000 each. The valuation of these units as assisted living accommodation would be substantially lower and commensurate with the attached financial model.

3.6. The States is, therefore, potentially forgoing an estimated capital receipt of up to £640,000 to retain these units for assisted living, calculated as follows:

Property Estimated Maximum Market Value

1 &2 La Mabonnerie £ 600,000

Less remedial work (£ 200,000)

12 Clos de la Ville £ 650,000

£1,050,000

Less Proposed sale price £ 610,000

Potential ‘opportunity cost’ £ 440,000

3.7. The Trust will not be able to dispose of these properties by onward sale without first offering them back to the States.

4. Recommendation

4.1. That the Minister agrees to the sale of the units to Les Vaux Housing Trust and authorises the necessary documentation, including a letter of comfort in the terms set out in this report, to be produced.

5. Reason for Decision

5.1. The States approved the disposal of these units when approving the 2007 Property Plan (P34/2007 - as amended).

5.2. The units are considered appropriate for group homes to provide assisted living through Les Amis.

5.3. The proposed sale price of £610,000 is considered appropriate to enable the Trust to provide assisted living accommodation, as identified in the 2007 Property Plan (P34/2007). The sale price reflects the level of works to be undertaken on 1 & 2 La Mabonnerie by the Trust.

Written By: Ray Foster

Signature …………………………

Authorised By: Eric Le Ruez

Signature ………………………… 14 May 2007

Treasury & Resources Property Holdings

21 May, 2007 for Decision Meeting 14/05/2007