Wednesday, February 23, 2005

Government shoots back at Garcia Mid-Town claims

The Gibraltar Government said yesterday that it totally rejects Opposition member Dr Joseph Garcia's statement on the Mid Town Developmentas displaying "an extraordinary degree of ignorance about how development land is valued".

"Dr Garcia asserts that the Mid Town site must be worth £20 - £25 million because another site, he claims, has been sold for £1,250 per square metre. He argues that since Government obtained 'only' £10 million of value for Mid Town, it must have undersold it. This is complete nonsense," said No 6 adding that Dr Garcia appears not to know or understand that development land is not valued on the basis of its area, but rather on the basis of the density (square metres) of construction that can be built on the land.

"On this basis, the premium payable for the Mid Town site is almost certainly one of the highest, if not the highest ever paid in Gibraltar. This should be contrasted with Dr Garcia's misconceived assertion that the land has been undersold," they said.

Dr Garcia was accuse of even getting "his simplistic arithmetic wrong". "He appears to have overlooked the fact that the majority of this land will be kept in public ownership for the school, the leisure centre and the park. It is not being sold to the developer at all. Save for the semi-basement car park, which is a requirement for the project, only 7500m2 of land are available to the developer for his own development. 12,995 square metres will remain in Government ownership with public amenities on it," said No 6.

The Government argues that using Dr Garcia's formula of £1,250 per square metre for the area of 7,600 square metres produces a premium of £9.5 million.

"Since Government is to receive at least £10 million of value from the Mid Town Developers, Dr Garcia's charge of underselling is unjustified even by his mistaken method of valuation."

The Government said that "unlike the previous GSLP (Gibraltar Socialist Labour Party) Government which awarded all land by direct allocation and put nothing out to tender", this it is putting everything out to tender with the exceptions of land exchanges and projects which are in Gibraltar's particular economic or social interests.

"In this case this is the building of a new school, park and leisure centre by the developer for the Government. Contrary to what Dr Garcia says it would not have been better for the Government to take the £10 million in cash and do these facilities itself. Firstly, that would have exposed Government and not the developer to the risk of cost overruns. Secondly, private developers secure better prices from contractors than Governments; and thirdly Government cannot operate a park and a school underneath a building site with overhead cranes, building works etc. The building of the school and the park can therefore only take place as part of the overall development."

"The GSLP/Libs obsession with criticising and undermining everything that is done by the Government leads it to make absurd public statements. That is the generous interpretation of Dr Garcia's statement. The other possible interpretation is that he genuinely has little understanding and/or knowledge about the issues that he comments on."


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