Housing developer demands multi-million pound refund over 'unspent' educational enhancement fund
South Ayrshire Council is facing a multi-million pound claim from a housing developer over money the local authority set aside for educational facilities.
Mactaggart & Mickel Homes Limited say they've given the local authority around £9m in the last 15 years towards the delivery of school 'enhancements.'
But the firm claims that around £6m from the fund hasn't been spent - and they want the cash returned.
South Ayrshire bosses say the money provided through the developer contributions process is ringfenced and therefore has no impact on the council's budgets.
The financial wrangle stems from a 'substantial residential development' which was given the go-ahead at Greenan's Dunure Road back in 2010.
At the time, Mactaggart and Mickel was required to enter into an agreement under Section 75 of the Town and Country Planning (Scotland) Act 1997.
They had to pay South Ayrshire Council financial contributions towards the delivery of school enhancements. This was required 'to meet the educational needs of children residing in the Development,' as it was predicted the influx of families would place an additional burden on school rolls and infrastructure.
Then, a separate Section 75 Agreement was entered into in 2021, when the council granted a second planning permission to allow the continuation of the Greenan development.
That agreement contained 'equivalent provisions' to those in the 2010 agreement in relation to education payments. It also related to education infrastructure to 'mitigate' the impact of the development.
Central to the housing developer's multi-million pound claim is expansion and improvement work over the years to Doonfoot Primary School and St John's Primary School. And proposed works at Kyle Academy is a bone of contention with the developers too.
Mactaggart and Mickel say they have paid 'all education contributions' due under the agreements to the council and the total contributions over a period of nearly 15 years amounts to around £9m.
Agents acting on behalf of Mactaggart & Mickel are Shepherd and Wedderburn LLP.
They said in a supporting statement: 'The council has used some of those contributions to expand and improve the local Doonfoot Primary School. The exact amount is unclear.
'It is unclear to what extent the council has used other contributions to improve any other school attended by children from the development.
'In August 2024, the council still held £5.9m which, at that stage, had not been allocated to any identified future capital expenditure. In September 2024 Mactaggart & Mickel made a final payment to the council of £259,778.'
Their statement continues: 'The available evidence strongly suggests there is no ongoing requirement to carry out any further school improvements as a result of the Greenan development.
'It illustrates that, each of the schools which could be improved using contributions from the development, has available teaching capacity and that children from the development are not causing capacity constraints that would require the schools to be expanded further.
'The agreement provides that, any contributions that have not been contractually committed, or spent, are to be repaid within five years of completion of the development.
'However, in view of the available evidence there does not appear to be any lawful basis on which the council could justify further expenditure on education infrastructure arising from the development.
'In these circumstances the council is requested to agree to modify the Section 75 Agreements to provide for the repayment to Mactaggart & Mickel of unspent education contributions together with accrued interest (by 30th July 2025).'
The supporting statement goes on: 'In August 2024, the council held around £5.9 million worth of contributions received in connection with the Greenan development.
'None of the schools on which the council is entitled to spend those contributions is more than 80 per cent full because of the Greenan Development (either individually or in cumulation with other developments within the relevant catchment areas).
'There is no ongoing justification for the council's retention of funds to deliver an expansion of St John's Primary School since its most recently published occupancy level is less than 65 per cent of its capacity.
'And we have seen no evidence that any alternative facilities are required to meet the denominational primary educational needs of children from the Greenan development.'
They also state that there was 'never any justification' for using any of the Greenan developer contributions towards the expansion of Kyle Academy - since the Greenan development is NOT within its catchment area.
The statement adds: 'The request from the council's service lead for planning and building standards that funds held by the council could be 'utilised to reconfigure the layout of the school' is unreasonable, given the lack of any linkage between the development and the school. It is not clear whether the council has ever used funds from Greenan to make improvements to Kyle Academy.'
The firm has engaged the services of James Findlay KC as they seek to recover 'any or all' of the circa £9m they have paid to South Ayrshire Council.
Mr Findlay said in correspondence to council chiefs: 'It would appear that the council retains £5.9m of the total paid. I suggest that, as a first step, the council be asked to identify all sums ostensibly spent pursuant to the agreement and the basis of so doing in each instance.
'A more informed view can be taken as to the merits of seeking to recover all or any part of the relevant monies.
'At present, I suggest that the arbitration route provided by the agreement would appear to offer the most suitable avenue for determination of any disputed issues as to the propriety of any expenditure.'
A spokesperson for South Ayrshire Council said: "South Ayrshire Council has received an application to vary an existing Legal agreement relating to the Greenan development in Ayr.
"The developer Mactaggart & Mickel have requested the return of the unused Developer Contributions originally provided to reduce the impact of the development on Educational facilities in the area.
"The developer purports that the Greenan development has not created the impact on educational facilities, predicted at the time of the original planning application and therefore the council no longer requires the developer's finance to upgrade school facilities.
"The money provided through the developer contributions process is ringfenced and therefore has no impact on the council's budgets.
"The application to amend the legal agreement will be considered by the Planning Authority in due course. "
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Mactaggart & Mickel Homes Limited say they've given the local authority around £9m in the last 15 years towards the delivery of school enhancements. South Ayrshire Council is facing a multi-million pound claim from a housing developer over money the local authority set aside for educational facilities. Mactaggart & Mickel Homes Limited say they've given the local authority around £9m in the last 15 years towards the delivery of school 'enhancements.' But the firm claims that around £6m from the fund hasn't been spent - and they want the cash returned. South Ayrshire bosses say the money provided through the developer contributions process is ringfenced and therefore has no impact on the council's budgets. The financial wrangle stems from a 'substantial residential development' which was given the go-ahead at Greenan's Dunure Road back in 2010. At the time, Mactaggart and Mickel was required to enter into an agreement under Section 75 of the Town and Country Planning (Scotland) Act 1997. They had to pay South Ayrshire Council financial contributions towards the delivery of school enhancements. This was required 'to meet the educational needs of children residing in the Development,' as it was predicted the influx of families would place an additional burden on school rolls and infrastructure. Then, a separate Section 75 Agreement was entered into in 2021, when the council granted a second planning permission to allow the continuation of the Greenan development. That agreement contained 'equivalent provisions' to those in the 2010 agreement in relation to education payments. It also related to education infrastructure to 'mitigate' the impact of the development. Central to the housing developer's multi-million pound claim is expansion and improvement work over the years to Doonfoot Primary School and St John's Primary School. And proposed works at Kyle Academy is a bone of contention with the developers too. Mactaggart and Mickel say they have paid 'all education contributions' due under the agreements to the council and the total contributions over a period of nearly 15 years amounts to around £9m. Agents acting on behalf of Mactaggart & Mickel are Shepherd and Wedderburn LLP. They said in a supporting statement: 'The council has used some of those contributions to expand and improve the local Doonfoot Primary School. The exact amount is unclear. 'It is unclear to what extent the council has used other contributions to improve any other school attended by children from the development. 'In August 2024, the council still held £5.9m which, at that stage, had not been allocated to any identified future capital expenditure. In September 2024 Mactaggart & Mickel made a final payment to the council of £259,778.' Their statement continues: 'The available evidence strongly suggests there is no ongoing requirement to carry out any further school improvements as a result of the Greenan development. 'It illustrates that, each of the schools which could be improved using contributions from the development, has available teaching capacity and that children from the development are not causing capacity constraints that would require the schools to be expanded further. 'The agreement provides that, any contributions that have not been contractually committed, or spent, are to be repaid within five years of completion of the development. 'However, in view of the available evidence there does not appear to be any lawful basis on which the council could justify further expenditure on education infrastructure arising from the development. 'In these circumstances the council is requested to agree to modify the Section 75 Agreements to provide for the repayment to Mactaggart & Mickel of unspent education contributions together with accrued interest (by 30th July 2025).' The supporting statement goes on: 'In August 2024, the council held around £5.9 million worth of contributions received in connection with the Greenan development. 'None of the schools on which the council is entitled to spend those contributions is more than 80 per cent full because of the Greenan Development (either individually or in cumulation with other developments within the relevant catchment areas). 'There is no ongoing justification for the council's retention of funds to deliver an expansion of St John's Primary School since its most recently published occupancy level is less than 65 per cent of its capacity. 'And we have seen no evidence that any alternative facilities are required to meet the denominational primary educational needs of children from the Greenan development.' They also state that there was 'never any justification' for using any of the Greenan developer contributions towards the expansion of Kyle Academy - since the Greenan development is NOT within its catchment area. The statement adds: 'The request from the council's service lead for planning and building standards that funds held by the council could be 'utilised to reconfigure the layout of the school' is unreasonable, given the lack of any linkage between the development and the school. It is not clear whether the council has ever used funds from Greenan to make improvements to Kyle Academy.' The firm has engaged the services of James Findlay KC as they seek to recover 'any or all' of the circa £9m they have paid to South Ayrshire Council. Mr Findlay said in correspondence to council chiefs: 'It would appear that the council retains £5.9m of the total paid. I suggest that, as a first step, the council be asked to identify all sums ostensibly spent pursuant to the agreement and the basis of so doing in each instance. 'A more informed view can be taken as to the merits of seeking to recover all or any part of the relevant monies. 'At present, I suggest that the arbitration route provided by the agreement would appear to offer the most suitable avenue for determination of any disputed issues as to the propriety of any expenditure.' A spokesperson for South Ayrshire Council said: "South Ayrshire Council has received an application to vary an existing Legal agreement relating to the Greenan development in Ayr. "The developer Mactaggart & Mickel have requested the return of the unused Developer Contributions originally provided to reduce the impact of the development on Educational facilities in the area. "The developer purports that the Greenan development has not created the impact on educational facilities, predicted at the time of the original planning application and therefore the council no longer requires the developer's finance to upgrade school facilities. "The money provided through the developer contributions process is ringfenced and therefore has no impact on the council's budgets. "The application to amend the legal agreement will be considered by the Planning Authority in due course. "
