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Public Risk for Private Development

"State aid can occur whenever state resources are used to provide assistance that gives organisations an advantage over others."[1]

11.1 State Aid regulations provide that a public body cannot accept the financial risk for a private company to profit2. How did ACC ensure these regulations do not apply to the Project?

ACC have taken external and internal legal advice throughout the project. The decision to appoint Muse was taken after a full and comprehensive marketing exercise.

11.2 Do Muse/Aviva investors have any financial risk in unlet units at the Project? If not, why do ACC bear all the risk for only 50% of profits?

The Council has never stated how much development profit is in the capital sum or how this is split between the parties. This is considered to be commercially sensitive. If released it could adversely affect the council or indeed any of the parties in negotiating future transactions.

Various budgets are in place to manage risks, many of which incentivise the Council's development partners.

11.3 Please provide examples of other local authority developments where the council takes the risk in such an arrangement.

This should be confirmed with other local authorities. The Council's decision was taken based on offers received for the site and specific conditions within the Aberdeen area.



[1] State Aid: The Basics, Department for Business Innovation and Skills, November 2013.