September 23, 2009 / 11:10 AM / in 8 years

New showdown threatens Trump's Scottish golf plan

BALMEDIE, Scotland (Reuters Life!) - A few paces from Moira Milne’s front door, the gorse-covered hillside descends sharply toward heather beds that give way to sand dunes topped with sparse whiskers of grass.

<p>Donald Trump attends the Aberdeenshire Council inquiry into his plans for a golf resort, Aberdeen, northeast Scotland on June 10, 2008. REUTERS/David Moir</p>

As Milne approaches the edge of the bank, a young deer darts through the heather below. Beyond the 10-meter high dunes, part of a protected nature reserve, the North Sea is calm and blue.

“You can see why we don’t want Donald Trump pushing us out,” she says, admiring the view.

A year ago, against the wishes of the local council, the Scottish government gave Trump permission to build a 1 billion pound ($1.63 billion) luxury housing and golf development on the Menie estate, which includes the dunes, 10 km north of Aberdeen.

Now the New York-based real estate mogul has changed his plans and says he needs five adjoining properties, including Milne’s home, and has threatened to pull out if the local council doesn’t compel the owners to sell.

Some locals think the land grab is aimed at providing Trump with a face-saving way to exit a project that, after the global financial crisis, no longer makes economic sense.

“He’s looking for a way out and he’ll blame me,” said Michael Forbes, standing in front of his barn which is daubed with large red and orange letters proclaiming “No Golf Course” and “No more Trump lies.” Forbes’ 23-acre farm is one of the properties targeted.

STARK CHOICE

After receiving outline permission, on the basis that he had all the land he needed, Trump had a rethink.

“We’ve made significant changes,” said George Sorial, Managing Director for International Development with the Trump Organization, in a telephone interview.

“These additional acquisitions are necessary to deliver the quality project that we have spoken about in the past.”

Sorial said Trump is committed to the project and hopes owners will agree to sell, but accepts a showdown may arise.

“Aberdeenshire council will have to make a decision whether they want a scrapyard ... or a five-star development,” he said, referring to the collection of rusting tractors, trailers and an old Shell fuel tanker which litter Forbes’ farmyard.

The move has outraged even some supporters of the project.

“I was very keen but my views have changed completely,” said Member of the Scottish Parliament (MSP) Mike Rumbles.

“My mail bag is full of letters from constituents who believe, as I do, that this is morally unjustified” Rumbles said, adding he expected councilors to reject Trump’s request.

However, Lewis MacDonald, another local MSP said he thought the council would back compulsory purchase orders.

With North Sea oil production declining rapidly, Aberdeen is eager to diversify into tourism. Trump’s golf course, which he said would be the best in the world, is key to attracting high-spending visitors, said Robert Collier, Chief Executive of the Aberdeen and Grampian Chamber of Commerce.

DELAYS

Even if the council does issue compulsory purchase orders, it could take three years to get access to the land, said Karen Hamilton, partner with Glasgow law firm Brodies.

Sorial hopes to begin work on the golf course, planting grass to stabilize the sand dunes, on November 1, a year later than planned. This will cost around $1 million according to Trump plans lodged with the council.

There is no date for major building work to start. When it does, it will not be to the schedule the former star of top-rated U.S. reality TV show “The Apprentice” had envisaged.

The golf course and hotel will not be viable on a stand-alone basis so Trump convinced the Scottish government to award planning permission to construct 500 private residences and 950 timeshare homes.

Trump had hoped to build the private homes -- the most lucrative element of the development -- toward the beginning of the project, to help finance the work.

However, to ensure the course could not be abandoned and the project become a housing development, the Scottish National Party-led government said the residences should be built last.

The economic crisis will have added to the funding task.

The cost of capital to the real estate sector has risen sharply since Trump bought Menie, while the project’s value is sensitive to small changes in discount rates, plans lodged with the council say.

Councilor Martin Ford, who voted against Trump’s planning application, said many now suspect the tycoon wants to sell up.

After having his land re-zoned, Trump could net a big profit with a sale, although his exit may look like a defeat.

Opponents say the developer could seek to limit any embarrassment by blaming Scottish bureaucracy.

This would be damaging for a government which is keen to prove Scotland’s viability as an independent state by highlighting its ability to attract inward investment.

However, Ford said if it wasn’t for Trump’s brinkmanship, golfers would already be playing on his course.

“If Mr Trump pulls out, it is because he has made life difficult for himself,” he added.

Editing by Steve Addison

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