Lee Henry's response to JEP letter by Roger Bale

I feel compelled to correct the misunderstanding and misstatement of Roger Bale’s letter in the JEP published on 20 July. You can see the Mr Bale’s letter and my response below.

Letter by Roger Bale, 20th July

On 19 March 2014, 31 States Members, persuaded by Senator Ozouf, voted for the construction of the finance centre without sight of the financials behind the scheme. The stated reason for the urgency was that there were companies wishing to establish in the Island, for which suitable office accommodation was not available and, seemingly, could not be made available by the private sector. The initial finance centre building is well on the way to completion, and so far, the only two tenants signed up are locally established companies blocking space from the incoming companies who, we were told, could not come because of want of suitable space.

If it was the intention of Senator Ozouf to create a States’ taxpayer-resourced development company to compete with the private sector, this was never made clear in the debate. If this was not the undeclared intention, Lee Henry, of the Jersey development Company, is, by signing up already resident entities, blocking space in the finance centre, frustrating the wishes of the 31 States Members who supported the construction. To put the project back on its intended rails, the Chief Minister could remind Mr Henry as to the intention of the States – ie that the buildings are intended for incoming businesses and that only tenants who are new to the Island may be signed up. 

No action by the No action by the Chief Minister may well be seen as confirmation that the undeclared object of the vote on 19 March was to put public resources in competition with the private sector at a time of financial stringency. It would be prudent of the Chief Minister also to stop any construction of the second finance centre building (building five) until the balance of the first building has been fully let to incoming firms wishing to establish in Jersey.

Lee Henry’s Response:  

Mr. Bale incorrectly states that the buildings of the IFC Jersey are intended solely for incoming businesses. This is simply untrue. I have reviewed the Hansard extract from Senator Ozouf’s speech that he gave in the States debate on Senator Breckon’s proposition on the 18 March 2014. You can see this in full here. To summarise, other than a passing reference that tech businesses and financial services companies would require the best office accommodation if they did relocate to Jersey and the lack of available Grade A office accommodation, I can find no reference to Senator Ozouf making such claims. However, i’ve provided below a couple of extracts from Senator Ozouf’s speech that clearly sets out the position:

“So contrary to what local opponents say, there is still demand for on-Island financial services companies and their requirements for modern purpose-built office accommodation and there is demand for new entrants wanting to bring business to Jersey.”

“Jersey is back at the forefront of innovative financial services. The great news is that there are tenants that want space; new space and replacement for existing space to meet their requirements.  One tenant has a requirement for an entire office building totalling 80,000 square feet of internal space. That is a requirement that needs to be completed by the end of March 2016.”

As a footnote, an 80,000 sq. ft. requirement based on a standard occupancy of 1 person per 8 square meters translates into a business with in-excess of 900 employees. I am not aware of any new business to the Island ever having that sort of requirement on day 1. It is logical to assume that the requirement referred to by Senator Ozouf was clearly for existing businesses.

To be absolutely clear, the IFC Jersey is being created to provide for both existing and new business. JDC is in dialogue with 20 prospective on-island tenants that have a cumulative requirement for new office space in excess of 325,000 sq. ft. over the next 5 years. These businesses have leases that will expire on their current premises that will provide the opportunity for those businesses to relocate into more suitable premises. The majority of these businesses are operating in out-of-date offices that are no longer suitable to modern, open plan office layouts. In addition, some of these businesses may be operating out of multiple buildings as a result of growth / acquisitions, which is inefficient and adds to their cost base. Bringing a business under one-roof reduces costs, improves efficiencies and improves communications. 

Jersey is one of the world’s leading financial services centres and locally based financial services companies require new, modern and efficient office space from which to deliver their services. IFC Jersey provides the only blank canvas opportunity in the Central Business District. As a result, we are able to provide standalone buildings that will have four sides of glazed façade, delivering excellent levels of natural light (which coincidentally is directly correlated to productivity).  JDC’s delivery of IFC Jersey also, importantly, introduces competition into the new build office market.

Mr. Bale has also confused the debate of Senator Breckon’s proposition to delay the development of IFC Jersey with the debate on establishing Jersey Development Company as a property developer. The latter debate had taken place over 3 years previously under proposition P73/2010. The States agreed in October 2010 to establish Jersey Development Company and for it to undertake property development directly. 

Senator Ozouf’s speech of 18 March 2014, clarifies the reasoning behind this:

“This Assembly established S.o.J.D.C. for its prime purpose to act as a delivery vehicle for property development for the States of Jersey. The company’s remit is to complete the development of the St. Helier Waterfront and to undertake regeneration of surplus States of Jersey assets no longer needed and that is also, at the same time as they are doing Esplanade Square, they are progressing Jersey College for Girls. The States own, either directly or through J.D.C., considerable land and property assets. There is an exciting opportunity of maximising some of those values of land that the public own for the benefit of the public. The J.D.C. will maximise in the way that they are now planning to do, unlike previously, those returns to the public purse. We need those resources.” 

JDC is carrying out the direct delivery of IFC Jersey and College Gardens, and will be assessing its delivery options on future developments – these include selling the site(s) to a third party developer, entering into a Joint Venture(s) or directly developing. The Board of JDC will assess which option is in the best interests of the Company in terms of risk and reward. Undertaking the direct development of these projects results in 100% of the development profits being repatriated to the States Treasury via a dividend. The States will therefore receive both the land value and the developers profit, thereby maximising its returns via JDC. 

TAGS: IFC Jersey