DEVELOPERS of the Silver Hill development in Winchester are poised to make a profit of more than £15 million.
The Chronicle has been leaked a confidential appendix to a city council report into the £150m scheme to revamp part of the city centre with homes, parking and shops.
The scheme was granted permission in 2009 but the council’s partner, developer Henderson, wants to now drop the requirement for 100 affordable homes, a bus station, live-work units and offices and increase shop space and flats for sale.
The confidential report said the net development value was £165m with a development cost of £150.3m giving an estimated profit of £15.3m, and a profit on cost of 10.1 per cent.
The site acquisition costs were £33.8m and £80.7m for building.
The last-minute changes by Henderson have sparked strong public opposition, with the council accused of not standing up to Henderson, a charge denied by council chief executive Simon Eden.
The report said: “If the Council insists on affordable housing provision being included the minimum 10 per cent viability condition will not be met, and the scheme will simply not proceed.”
It added that insisting on affordable housing would make Henderson unable to secure funding, leaving the council with no scheme and deteriorating buildings such as the Friarsgate multi-storey car park.
The report said Henderson was unhappy that a sharing of the profits would have seen 75 per cent of profits over 115 per cent of development costs going to the city council, 25 per cent of which would be for affordable housing. The report said: "In negotiations with Henderson, it became clear that such a perceived imbalance was unacceptable to Henderson's funder."
A new formula is for the profits to be split 50:50 and the council to find the money for affordable housing.
One issue highlighted by the report is that the development agreement, first agreed in 2004, was generous to the council, offering terms that would be unavailable in today’s marketplace.
Mr Eden denied the council was being outmanoeuvred by Henderson. He said: “This is not about taking things on trust (from Henderson). We have experienced staff such the head of estates who can challenge the figures. There is always scrutiny by our officers and our advisors.”
Mr Eden said that at the moment the council was unaware of who Henderson’s funders are and are not due to be told until Henderson confirms it is in place.
For Henderson, Martin Perry, director of retail property development, declined to answer questions: “I cannot comment on information which is confidential.”
Patrick Davies, a former city councillor and critic of changes to the scheme, said: “There should be a proper explanation to the public about what is going on. The public documents available to the Cabinet was so obscure.
“The vital financial information has been tucked away in exempt appendices. Much of this material should have been public.”