Caltongate's collapse sees city chiefs miss out on £2.5 million

Published on Tuesday 9 June 2009 10:06

CITY leaders have missed out on a multi-million-pound windfall with the collapse of the Caltongate scheme, new documents have revealed.

The papers – released under the Freedom of Information Act – show that the council was expecting to net around 5 million in total from the sale of council-owned buildings and land for the controversial Old Town development.

Half of the money was banked as a deposit, but the rest of the cash never arrived from developer Mountgrange Capital before its 300m Caltongate project collapsed in March after the firm went into administration. Among the buildings that made up the deal are nine one-bedroom flats on the Canongate and the Canongate Venture office block.

An old garage opposite the council's headquarters on East Market Street, along with a series of archways and waste land further up the street were also council-owned land needed for the scheme.

The huge gap site on New Street, a former bus depot, and Old Sailors' Ark homeless hostel were already owned by Mountgrange.

The council's documents, which were prepared by consultants Cushman and Wakefield, also reveal how the city's professional services industry has missed out an estimated 14.5m in fees as a result of the project being halted.

In January, city leaders revealed they were already facing a 13m shortfall in the amount of money expected to be raised by selling council land over the next few years as a result of the economic slowdown.

Although city leaders today said they would pursue the outstanding cash, campaigners have hit out at the terms of the deal, which was struck by council chiefs back in 2007.

Sally Richardson, spokeswoman for the Save Our Old Town campaign, said: "The reason that this document was kept out of the public domain for so long is that if a financial expert not in the pay of the developers or council had seen it, they would have seriously questioned its claims."

A council spokesman said: "To date, we have received 2.4m in respect of the sale of these sites, which will remain in council ownership as long as the balance of 2m remains outstanding."