We will ensure that regeneration activity is not limited
to housing, but includes the local environment, and local
infrastructure such as commercial and community services. Also, we
will have the ability through financial control and cross-subsidy
to address sites which require a different approach. These sites
would normally be regarded as nonprofitable, or developable to a
standard not acceptable to the borough.
The development vehicle selected to deliver the project will play a
significant role in building communities by:
- Strategic management of investment and development
portfolios
- Achieving public realm objectives
- Sponsoring non-core developments
- Control of buy-to-let market
- Acquire, hold, market and dispose of assets
- Being a vehicle for commuted sums for the provision of
affordable housing
Project Objectives
The council's objectives are to:
- Assist in the delivery of the council's town centre strategies
(e.g. Forest Gate, Manor Park, East Ham) through the assets it
controls
- Develop managed space for the small business sector
- Provide financial and development opportunities for elements of
the council's commercial portfolio, managing the existing tenants
on a commercial basis
- Provide community benefits in relation to open/recreational
space, health provision, child care services, and education.
- Delivery of affordable and market housing in line with local
development framework
- Enable commercial or other developments
The benefits to the council are expected to be:
- Retaining control and interest in ownership
- Participating in value uplift
- Mitigating risk
- Enjoying flexibility
- Benefiting from off balance sheet treatment
- Utilising private sector skills and resources
Financial benefits to be considered:
- Gearing major private sector investment
- Achieving a significant premium over book value
- Sharing in prospective growth
- Avoiding complex overage payments
- Use resources to cross-subsidise other development
- Manoeuvring best value requirements
Selecting a Development Vehicle
The project team considered development vehicles options as part of
the original tendering exercise. Available current models
include:
- Development Agreement
- Partnership Agreement
- Long-term PPP
- Public/ Private Equity Model
- Strategic SPV Model
The model the council adopts would need to achieve the following
principles:
- Appropriate Joint Venture Vehicle - such as a Limited Liability
Partnership. This enables investment from third parties and
provides transparency for tax purposes
- Adequate controlling structure (to be determined) - to ensure
the trust retain a decisive management influence in the development
process through 50/50 deadlock
- Able to utilise debt financing - any Joint Venture Vehicle will
be able to raise debt finance
- Flexible duration and membership - with the trust retaining the
ability to add projects under a main partnership framework,
allowing it to procure at will, rather than through a predetermined
legal agreement. This gives significant fluidity and responsiveness
to change. Also, the Joint Venture Vehicle can enter into sub-joint
ventures by contracting with developers and other landowners
beneath a main partnership. This allows the most appropriate
developer/contractor to be selected for each specific project and
ensures best value is always achieved
- Clear reporting mechanisms
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