Select Committee Report

Manston: one last diversion

One of the few pieces of advice I’ve ever paid attention to is: ask yourself “What’s really going on here?” So… what was the Select Committee about, and why did it spend so much time looking at Manston?

The publicly stated remit for the Committee was to inquire on the “role of smaller airports, and the steps the Government and EU are taking to support them”. In practice, there was little exploration of their role, and much more emphasis on how to support them. In aviation, support usually means tax breaks - in this case the tax is Air Passenger Duty (APD).

The aviation industry has complained about APD ever since it was invented, and regional devolution has made things worse. Northern Ireland’s Belfast airport clearly illustrates the disadvantage of APD in the business it loses to neighbouring Dublin airport. Scotland has the power to drop APD, which would jeopardize Newcastle airport. If Wales does likewise, Bristol airport would be threatened. All the smaller airports in England are getting twitchy, complaining it’s not a level playing field.

The Select Committee provided the aviation industry with a forum to air its grievances about APD. The Committee’s report provides the Department for Transport and the (English) smaller airports with a stick with which to beat the Treasury. In that respect, it’s served its purpose.

So what about Manston?

Manston airport had already closed before the inquiry started. The Select Committee considered Manston as a case study "both to inform our wider recommendations and because the Kent public are concerned". In fact, the amount of "concern" in Kent had been exaggerated by aviation lobby groups, and then magnified by Sir Roger Gale’s access to Ministers and media. Manston turned out to be little more than a diversion.

Inexplicably, the Select Committee failed to take the opportunity to be “informed” by the people they questioned. Alastair Welch had been General Manager at Stansted, and then bucked the national trend in making Southend Airport a success. In contrast, Tony Freudmann (part of the team that wants to grab the site) has been closely involved with more aviation failures than anyone else I know.

It was a perfect opportunity for the Select Committee to find out what makes a small airport succeed, what makes it fail, and what role APD might play. And they fluffed it. Instead, they spent a large portion of their precious time delving into the share-holdings and ownership of the companies that own the ex-airport site.

I got the impression that the Committee Chair, Louise Ellman, didn’t fully understand the questions she was asking on this subject, let alone the answers. I suspect she had been fed the questions by Sir Roger, who in turn had been fed by the “pro-Manston” groups. The Select Committee learnt nothing from their case study of Manston that could usefully be applied to other smaller airports, or to their consideration of the impact of APD.

The Committee’s remit covered 40 or so airports across the country - open, active airports. Why did they spend so much time asking Sir Roger’s questions about a closed airport? For the same reason Minister Hayes came to Kent to re-announce a DfT inquiry while standing next to a parliamentary candidate - electioneering.

Anyway, on with the report…

* * * SPOILER ALERT * *  *

There’s a lengthy rehash of the time wasted on the 2nd and 23rd Feb - Manston’s history and irrelevant questions about ownership. Ann Gloag is invited to publish her commercial arrangements, TDC is dissed for being small fry, KCC and DfT are rebuked for not having been more helpful, DfT is encouraged to play the sensible grown-up, and the Government confirms it has no interest in buying Manston.

In TDC’s place, I would be peeved - central Government has no “right of oversight”, the Council has followed due process, and that should be the end of it. The Committee haven’t considered the possibility that it didn’t take long, and didn’t cost much, for TDC to reach their decision simply because it was so obvious. (Is this 6 month old company, based in a foreign tax haven, with no accounts, and no up-front cash a prudent choice? No.)

In KCC’s place, I would be peeved - yes, KCC did change their minds… because the facts changed. For years assorted owners had been telling KCC that the airport was a sure-fire winner. Then the owner tells them it’s a dead duck. And it’s not central Government’s place to tell KCC how to spend its budget, just as it's not KCC's place to prop up a failed business. KCC's job is to focus on what's best for Kent, and KCC has clearly decided that regeneration is the best available option.

In Ann Gloag’s place, I would tell them to take a running jump.

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Click on the little boxy symbol next to the magnifying glasses to make it go full screen. Click on any item in the Contents list to jump to that page.

SC Report by NoNightFlights

Have your say in Manston's future

This Is YOUR BIG CHANCE To Say What You Think Should Happen To The Ex-Airport Site At Manston.

This is what you'll see on the left of the screen when you're being heroic...

Thanet District Council are consulting on their "preferred options" in the Draft Local Plan. This consultation runs from 9th January to 6th March 2015. To be honest, it's rather tedious, and leaves you thinking "have they deliberately tried to make this awkward?".

BUT (and it's a big "but") this is your only chance to influence the Plan that will shape the next 15 years. Please note - you don't have to be a  Thanet resident to comment on the Plan. So grab yourself a gallon of tea or a pint of gin, and knuckle down for a brief spell of "dull but useful"...

Click HERE to go to the bit of the TDC website that tells you what you need to know. You'll need to register before you can make comments (just like the Canterbury Local Plan, if you did that). There's a helpful step-by-step guide, and they do point out that you don't have to do it all in one go - your comments are saved as you go, and you can come back to it as often as you like.

I've been through the 263 page document (!), identified the bits that refer directly to the ex-airport at Manston, and listed them below. All of these refer to the menu-type thing that you'll see at the left of your screen on the TDC consultation site (shown in the picture on the left here). This should make it easier for you to home in on the relevant bits.

(If you're allergic to their online consultation site, you can send your comments directly to local.plans@thanet.gov.uk)

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If you only do one of these, do the first.

• Strategic Proposals | Economic Strategy | Manston Airport [SP05]
• Thanet Preferred Option Draft Local Plan | Strategic Priorities and Objectives | Strategic Priority 1 [SP01]
• Strategic Proposals | Economic Strategy | Employment Growth | 1.7 [SP02]
• Strategic Proposals | Economic Strategy | Manston Business Park | (3) [SP04]
• Strategic Proposals | Town Centre Strategy | Ramsgate | 2.54 [SP09]
• Strategic Proposals | Housing Strategy | Strategic Housing Allocations | Manston Green | (4), (5) [SP13]
• Strategic Proposals | Transport Strategy | Safe and Sustainable Travel | 6.3,  6.4 [SP34]
• Strategic Proposals | Transport Strategy | Connectivity | 6.12 [SP37]
• Development Management Policies | Safe and Healthy Environment | Groundwater Protection | 16.16 [SE04]
• Development Management Policies | Safe and Healthy Environment | Aircraft Noise and Noise Sensitive Development [SE08]

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I think the single most important fact to try to get across is that the airport has closed, it has been shut for months, and the owners have no intention of re-opening it as an airport. Everything that assumes an operational airport is, in my opinion, a deliberate mistake which needs correcting.

TDC have gone "rabbit in headlights" in response to a gobby minority demanding that they risk bankruptcy by CPO-ing the site on behalf of an American firm who can't afford to pay its full market value themselves. So they've come up with a peculiar fence-sitting strategy that means they keep assuming it is (and will be) an operational airport, AND are setting up an Area Action Plan which assumes it isn't.

Personally, I think they'll get a kicking from the Planning Inspector for asking people to consult on a Plan that talks about the operational needs and growth potential of an airport that's shut, but that's their lookout.

The plane fans who want to see a 24 hour cargo hub and the UK's biggest aviation knackers yard will be writing in. Don't let theirs be the only voice.

Letter to Discovery Park

Discovery Park (Trevor Cartner and Chris Musgrave) now own 80% of the Manston site, and Ann Gloag is a minority shareholder. In a better world, TDC would now be talking to Discovery Park about their plans, in the hope of conjuring the best possible deal for Thanet. In practice, TDC are still fixated on the idea of CPO-ing the site on behalf of RiverOak so that they can run it as a freight hub.

Unfortunately, the only attention that Discovery Park seem to have received so far is a rather presumptuous letter from the Save Manston Gang, telling them what they can and should do with their property. In the interests of them having a more balanced view, we thought we would drop them a line, and copy it to some TDC bigwigs (Mr Boyle is their legal beagle).

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Dear Ms Homer and Mr Boyle,

Please find attached a letter to Messrs Cartner and Musgrave about future development at their brownfield site at Manston. We thought you might find it useful as a counterbalance to the letter sent by Dr Beau Webber on behalf of the various groups who want to see an airport developed at Manston.

We are very surprised by the enthusiastic and one-sided support that many Councillors have shown for a cargo hub to be developed at Manston by an untested and inexperienced (in airport operating terms) business partner. Could you let me know when talks will begin with the site's owners about their plans for the site? You will know that, without "exhaustive" talks with the owners about their plans for the site, the Council is not in a position to progress a CPO.

We look forward to hearing from you.

Cartner Musgrave Letter 11 Oct 2014 - MP by NoNightFlights

RiverOak's proposed CPO deal with TDC

I would be most grateful for any of you who are legally or contractually minded to have a quick look at this document. It's the Heads of Terms for CPO Indemnity Agreement between Thanet District Council and the newly formed RiverOak Aviation Associates LLC.

I am not legally or contractually minded, but it appears to me at first glance that (1) RiverOak are in a tearing hurry, and (2) the risk is loaded on to TDC. Do let me know if I'm right or wrong.

Riveroak's Terms for CPO Agreement with TDC by NoNightFlights

Why is RiverOak an LLC? And what is an LLC anyway?

The organisation that TDC is so keen on handing the Manston site to is not RiverOak Investment Corp LLC, but a subsidiary outfit registered in Delaware on 3rd July 2014 called RiverOak Aviation Associates LLC.

I wondered why a company based in Connecticut would want to be registered some 300 miles away in Delaware. And I wondered what an LLC might be, in US law.

The fine people at about.com produce helpful advice on just about every topic under the sun. Here is their guide to LLCs for novice investors - do read it carefully. All comments welcome.

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The Beginner's Guide to Delaware LLCs

An Overview of the Benefits of Forming a Delaware LLC - Summary of Delaware LLC Benefits

Here are just a few of the major benefits of forming a Delaware LLC for a family business, investment pool, or other asset:

• Delaware is the leading incorporation state in part because it has a separate Court of Chancery, which handles corporate law cases quickly and with more expertise than the general courts in most states. This means that disputes are easier to handle because there is more than a century of established case law that is relatively friendly to businesses.

• Delaware has no sales tax, income tax, or intangible personal property tax.

• A Delaware LLC allows the members and managers to remain anonymous, making it easier to hide assets. By naming a local Delaware attorney as the registered agent, you can remove all reference to you and the other investors. In fact, the only people who have to know about the income and assets of your Delaware LLC are the folks at the IRS. That makes it incredibly difficult for a potential creditor to identify where you have money invested or parked.

• You don’t have to actually do business in Delaware to form a Delaware LLC because the state permits so-called foreign investors (meaning someone from out-of-state).

• A single person or investor can form a Delaware LLC without anyone else. He or she can serve as President, Vice President, Secretary, and Treasurer!

• There are very low costs involved in forming most standard Delaware LLCs. The actual filings fees with the Secretary of State are roughly $250 plus an on-going annual fees are less than $150 per year for a small company.

• There are no minimum capital requirements for forming a Delaware LLC. You could establish one with only a few hundred dollars if you wanted. This makes it an attractive choice for many start-ups that don’t have a lot of money to invest.

http://beginnersinvest.about.com/od/holdingmethods/a/Delaware-LLCs-for-Beginners.htm

How to do a CPO, properly.

Following a shameful scam by our government back in 1954 (The Crichel Down Affair) a set of rules were drawn up to prevent any repetition of this kind of institutional theft - The Crichel Down Rules. Of particular interest, given the proposed CPO-ing of the brownfield site at Manston by Thanet District Council, are paragraphs 16-23, starting on Page 6.

Crichel Down Rules by NoNightFlights

How to do Due Diligence, properly.

Courtesy of Glovers, "a leading firm of solicitors based in Central London", here is Due Diligence for Dummies. This is the rigmarole that Thanet District Council (and indeed, any public body) should go through before entering into a commercial contractual relationship with any organisation.

Specimen Due Diligence Checklist

1. CORPORATE DATA AND GROUP STRUCTURE

• Copies of all board minutes and shareholders resolutions
• Memorandum and Articles of Association
• Annual Returns
• Shareholder or director 1oans to the Company
• Details of subsidiary companies
• Details of branches, agencies or places of business
• Copies of statutory books
• Details of any insolvency-related events (e.g. an outstanding winding up petition)

2. FINANCE

• Loan agreements with third parties
• Intra-group loans
• Audited Accounts for the previous 5 years
• Material changes in accounting policy
• Material changes in the business or prospects (e.g. an unusual change in stock levels or a material reduction in orders from a major customer)
• Latest Management Accounts
• Details of any foreign exchange exposure
• Aged debtors list

3. CORPORATE AND COMMERCIAL AGREEMENTS

• Details of all material contracts
• Standard terms and conditions of business
• Details of all credit arrangements with customers
• Details of any material negotiations, quotations or tenders currently in progress

4. BUSINESS ASSETS

• Asset Register
• Details of current stock
• Details of leased assets

5. REAL PROPERTY

• Details of all real property owned or leased
• Details of any mortgages or other charges over property

6. EMPLOYEES AND WORKERS

• Details of all employees, including age, date of commencement, salary and other benefits
• Directors’ Service Agreements
• Employee handbook and/or policies
• Employee share schemes
• Health and safety at work policy
• Bribery Act Policy
• Details of any ongoing, pending or potential claims by current or former employees
• Details of any pension scheme operated

7. INTELLECTUAL PROPERTY

• Details of all trade marks (already obtained) and any other intellectual property owned or created
• Licences granted to third parties in relation intellectual property
• Licensed rights from third parties

8. COMPUTER SYSTEMS

• Details of all hardware and software used by the Company
• Copies of all licences for the use of software
• Copies of maintenance agreements

9. LITIGATION

• Ongoing or potential litigation
• Existing or pending judgements against the Company
• Details of any investigation into or proceedings against the Company by any governmental, administrative or regulatory body

10. INSURANCE

• Copies of all insurance policies
• Details of actual or potential insurance claims by the Company

11. CONSENTS

• Details of any consents, licences, approvals or registrations required to carry on the business
• Details of any change of control clauses in relation to such licences, approvals or registrations

12. TAX

• Copies of tax computations for the previous 6 years
• Details of any PAYE or VAT inspections carried out in relation to the Company
• Copies of all material correspondence with HM Revenue & Customs

Thanet council seek funders for Manston airport buy-out

Thanet council is asking to hear expressions of interest from suitable indemnity partners for the potential compulsory purchase and future operation of Manston airport. The search forms part of the local authority’s considerations as to whether the compulsory purchase of the airport would be a viable option.

The council has now issued a ‘Prior Information Notice’ (PIN), used to prepare and give notice for a procurement process before it officially begins. Parties have until Wednesday August 20 to register interest.

Following registration, applicants will then have to complete a questionnaire to identify their interest, capacity and capability in the market. A third and final stage will then involve face to face sessions set to take place in mid-September, depending on the level of response to the earlier phases.

The council received an independent report into the viability of a compulsory purchase of the airport on July 31. The report found any acquisition of the site would rely on an identified indemnity partner making significant investment with a minimum 20 year business plan.

Thanet Gazette 13th Aug 2014

RiverOak pledges to stop auction of airport assets

The American firm which has pledged to underwrite a compulsory purchase of Manston airport says it will take out an injunction to halt the further sale of assets at the site. RiverOak Investment Corp, of Stamford, Connecticut, says it will make the move to stop the "scorched earth" auction of vital airport goods, such as the control tower, off field lighting and communication systems, in September if Thanet council agrees to a commercial partnership.

RiverOak technical advisor, and Kent County Councillor for Sturry and Herne, Alan Marsh said it is vital Thanet council agrees to move forward with a CPO on Manston and announces the US firm as its preferred partner on Thursday. He added:

"As soon as TDC announce their commitment to working with RiverOak then RiverOak has, in this country, a legal position through which it can then go to the Inns of Court for an injunction, or whatever legal means needed, to prevent the September auction. But, if TDC keep talking about it but do not go forward, RiverOak will have no legal position because that position can only start when TDC go ahead with the CPO with RiverOak as preferred partner."

The firm sent a letter last week outlining its proposal to indemnify TDC against any costs of the CPO and the sale price of the airport. A Heads of Terms document, outlining a full agreement, was also sent after legal advice.

Mr Marsh, a trained pilot who has taken 3,000 flights out of Manston and was previously a test pilot for the and European Commission, said time is now of the essence with one asset auction taking place this week and the second, of major equipment, just weeks away. Another spokesman for RiverOak said if the main assets are sold it could cost £5 million to replace them.

The company says it believes Manston could be viable for air freight, aviation services including maintenance, recycling, private charter and commercial passenger services. It claims the experience of one of its senior team members in refinancing Alliance Fort Worth Airport in Texas had proved the case. The firm says it can turn Manston around from the annual £3 million losses before closure to breaking even in 16 months.

But an agreement to go forward with the CPO and partner RiverOak at last night's Cabinet meeting did not look likely. The council has received an initial consultant's report on the future of Manston airport and its possible compulsory purchase. The review, by Falcon Consultancy Limited, says Manston is unlikely to be successful unless it changes the way it is operated, although it "could be viable on the basis of a 20-year business plan that sets out a phased development of the airport".

At the meeting, cabinet members were due to be asked to decide whether they accepted the recommendations in the report and to share this with the airport's current owners. A further stage of developing a business plan and market testing would then follow. A CPO decision would involve a procurement process to identify an indemnity partner, says TDC.

Deputy leader Richard Nicholson said that process could "take quite a while", citing the Dreamland CPO as an example, and said the council was duty bound to approach airport owner Ann Gloag to see if there was any way to avoid the CPO.

A spokesman for Kent Facilities Ltd said:

"The auction is all part of the ongoing process of the decommissioning of the former airport site. The decision to pursue a CPO is a matter for the council and any potential partners to consider."

RiverOak sent the letter to Thanet council leader Iris Johnston, deputy leader Richard Nicholson and senior officers pledging to underwrite a Compulsory Purchase Order for Manston airport. The firm, which offered the full £7 million asking price for Manston prior to closure in May, but had its offer rejected by the current owner, pledged to take on the costs in a "back to back" agreement with TDC.

The online auction for Manston airport assets took place on Wednesday and yesterday (Thursday). More than 700 lots, including vehicles, duty-free goods, fire equipment, forklift trucks and container loaders, generators and furniture and equipment from the passenger terminal and security areas, went under the hammer.

Peaker Pattinson auctioneers plan to hold the second sale, by tenders only, in September.

Thanet Gazette 6th Aug 2014

Iris Johnston hasn't heard from you, doesn't think you exist...

Dear All,

As you may be aware, there has been a vigorous campaign by the Save Manston group to buy the Manston Site. Not with their own money, obviously.

Many of us believe that plans for a compulsory purchase order (CPO) of the site will be costly in the short term - £80K already just to explore the legality of a CPO, and the cost of a viability study into the airport. Worse still, the whole process would be long and complex, and in the long-term could prove costlier and more dangerous.

Things are moving rapidly and with the American company River Oak throwing their hat into the ring as a prospective partner (in a back to back CPO agreement), it is looking like there will be a great deal of pressure put on councillors to go for some kind of initial deal with them. This could mean that River Oak, already offering their lawyers in lieu of the council seeking legal advice (dodgy?), could involve themselves in the proceedings. Potentially, we could see TDC simply rubber-stamping plans decided by others. At the very least, we need to act in order to slow down proceedings and ensure that it is our elected representatives who are making these decisions, and on the basis of independent and expert advice.

TDC are going to be making decisions - on 31st July - based on a viability study which firmly rejects the potential for Manston to be viable as a passenger operation and which opts instead for a cargo hub and 'airport city' model. This would inevitably bring back the whole issue of night flights and a huge amount of pressure will be brought to bear on councillors to offer open-ended guarantees about flying through the night. This is why the No Night Flights group still has an active interest in the Manston Site.

The viability study, of course, is more in the vein of 'what can we do, at any cost, to keep Manston open as an airport' rather than 'is it worth keeping it open'. Councillors again need to be supported in ensuring that discussions in TDC recognise the difference.

What's on the cards is 'an airport city' with associated factories, plants, parking etc in the heart of Thanet with old, noisy cargo planes overhead at all hours of the day and night. To date, the Labour Group have reiterated their anti-night flights stance but Sir Roger Gale, the local Conservative group, River Oak and, of course, the Save Manston Airport group are putting on huge amount of pressure to get them to back down from this and support ANY save Manston plans at whatever cost.

Cllr Iris Johnston believes that there are only a couple of dozen people that are against the plans for a CPO and/or saving Manston at any cost. We need to set the record straight on that score. This is the time to make your voices heard. Again.

1. Write to ALL Ramsgate councillors expressing your concerns and to Iris Johnston, as Leader of the Council, and to Madeline Homer, acting CEO.

2. Turn up to either/both important meetings this week:

• Ramsgate Town Council at the Custom House on Wednesday 30th July at 7pm; and
• Thanet District Council in Cecil Square on Thursday 31st July at 7pm.

Please speak to your friends and neighbours and get them to help.

It's time to be generous with your common sense!

madeline.homer@thanet.gov.uk - Madeline Homer (acting CEO of Thanet District Council)

cllr-iris.johnston@thanet.gov.uk - Cllr Iris Johnston (Leader of Thanet District Council, Labour)

democracy.thanet.gov.uk/mgCommitteeMailingList.aspx?ID=151 - the rest of the TDC Cabinet

www.WriteToThem.com - All your elected representatives, from here to Brussels.

No Night Flights Committee