1.28 As part of the Private Finance deal, NEP guaranteed the Department total proceeds of £9.375 million from the disposal of freehold land and buildings on four sites. These proceeds are not paid over in lump sums but are used to reduce the Department's continuing service charge. The level of guaranteed disposal proceeds were lower than the valuations obtained by the Agency, which assumed the most beneficial redevelopment potential. The Agency have negotiated a clawback arrangement whereby they will receive 50 per cent of the additional development proceeds above base values. At Kenton Bar, Broadway West, Emerson and Longbenton the Department and AMEC Developments Ltd will share in 50 per cent of any additional return if AMEC are able to obtain more valuable planning consents and commercially redevelop the site. This would be paid as a one-off payment.
1.29 The Agency undertook their own valuation of the sites based on best value for each site and, as part of the bid evaluation process, considered the bidders' valuation of the site as an overall package. As a result there is some disparity between some valuations obtained by the Agency and those offered by AMEC. At Emerson House, AMEC bid only £1 million based on the redevelopment value of the site. The Agency's land value only valuation was £950,000 and their best valuation, assuming continued use of the building, was £6.7 million. This best value may not be achievable in practice. In practice the building may not find a user because it has structural and functional shortcomings, and in AMEC's view is not in a recognised office location.