The successful delivery of a regeneration scheme depends on good preparation - whether land assembly, enabling and infrastructure works, funding, partnership structures or collaboration between land owners. This workshop brings together experts from across the public and private sectors to pool knowledge and experience and highlights the key issues that influence how best to bring a scheme to market. This is a challenging but exciting time for local government and developers, not least in the role of housing enabler. We are working on a number of highly innovative partnerships between councils and housing associations, arms-length housing companies, and infrastructure delivery schemes. Many of these involve new and exciting funding models to promote regeneration. https://www.brownejacobson.com/sectors-and-services/services/real-estate/regeneration

1. Creating a place
February 2016, Nottingham

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Development ConsultancyDevelopment Consultancy
CREATING A PLACE
THE CHANGING FACE OF DELIVERY
Simon Hope

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INTRODUCTION
 Construction is the tip of the regeneration iceberg
 The formative stages are crucial to setting the
direction
 Public/Partnership lies is at the heart of delivery but..
 The public sector is playing a broader delivery role to
unlock complex projects

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IT’S A CHALLENGING AND CHANGING PICTURE
 Local Government finance under pressure
 Housing Bill and housing delivery pressures
 But there’s still a need to stimulate economic activity
 Changing corporate objectives - greater self sufficiency
 Council’s need to generate investment returns
 Greater freedom and access to low cost funding

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“With government grants dwindling every year councils must find other ways to
keep the money coming in to sustain quality public services. We are determined
to maintain our services to a high standard and keep council tax low. To do that
we must make the most of our resources.”
East Hants DC’s Deputy Leader, Cllr Richard Millard
A Familiar Message!

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A CHANGING WORLD AS…….
COUNCILS BECOME THE DEVELOPER/INVESTOR
 Buying assets
 Strategic land acquisition
 Establishing Local Housing Companies
 PRS investment – promoting and direct development
 Infrastructure investment – inc energy providers

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Approaches to Delivery
INFLUENCEANDINTERVENTION
As Planning Authority
Land Assembly Facilitator
Market Site / Select Developer
As Master Developer
Undertake Direct Development

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Examples of the Public Sector’s changing role
To help shape a place there are an increasing number of tools at public
sectors disposal

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Council’s as Investors
 Buying strategic town centre
assets – shopping centres
 Investment income
 Employment land
 Energy generation

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Council as Enabler
 City centre and town centre retail and leisure development increasingly has required
a helping hand
 Council’s taking a pre-development role to place making – working with specialist
development managers, examples inc
- Chester
- Newport
- Barnsley
- Sheffield
- Swansea

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Using Council Covenant
CASE STUDY – BRACKNELL
 £200m town centre ‘stalled’ scheme being
delivered by L&G/Schroders. Council played a
key enabling role
 Council took lead on finding a deliverable
solution – use of lease wrapper
 Future rates income important
 Other schemes being unlocked using “rent
guarantees”

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Local Housing Companies
 Council’s becoming housing
developers/investors
 Objectives: meeting housing need, filling gaps
in the market and creating new source of
revenue
 Development management and long term asset
management creating new public/private
opportunities

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DELIVERY RELIES ON A POTENT COCKTAIL
Political will …..and
sometimes courage
to stay the course!
Appropriate
resourcing - both
staff and funding
Effective
public/private
partnership
Clear objectives
and a robust
business plan
…..and good preparation!

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Early Stage Considerations

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PREPARATION - VIABILITY TESTING
 Understand the project risk profile
 Viability “tools”
 Consider Partner(s)’ risk appetite - de-risk if you can!
 Meet the market with clarity on commitments & deliverability
 Use soft market testing to “shape” the proposition

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POTENTIAL PITFALLS
 Procurement
 Resources constraints
 Marginal viability
 Political uncertainty

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POTENTIAL PITFALLS
AVOIDANCE MEASURES
 Create “Unstoppable Momentum”
 The right partner for the right scheme
 Share ideas and referrals

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WHAT ARE PARTNERS LOOKING FOR IN A COUNCIL?
WHAT ARE COUNCILS LOOKING FOR IN A PARTNER?

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CASE STUDIES – PREPERATON STAGE
HEREFORD & NEWTON ABBOT

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CASE STUDY – HEREFORD
 Award winning retail/leisure scheme
 Innovate forward funding needed
 Economic downturn forced review
 Extensive pre development work

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CASE STUDY – NEWTON ABBOT
 Council pro-active, direct investor
 Twin benefits
 Masterplan/infrastructure planning attracts
occupiers and enables investment
 Phased delivery planning

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23. Regeneration projects
Stephen Matthew

24. The landscape is changing?

25. • financial pressures - cuts, service delivery pressure, reduced grants
• stimulating economic activity – enabling investment, sustainable
environments
• generating investment returns - financial innovation, new income
sources
• corporate objectives- greater self sufficiency?
Drivers

26. Councils as enabler / investor
• buying assets e.g. shopping centres
• strategic land acquisition
• establishing local housing companies
• PRS investment – promoting and direct development
• infrastructure investment
• energy providers

27. 0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
220,000
240,000
260,000
Housingcompletions,England
Private enterprise Housing associations Local authorities Housing need
House building
Source: DCLG, Savills 31 December 2014. Department for Communities and Local Government.

29. At the start (legal)
• land assembly – who owns what? CPO?
• market appetite
• procurement route – or not, frameworks, procedure, timings
• planning context
• risk appetite of LA
• enabling works?
• finding – inc’ loans and grants. State aid?
• other statutory steps – highways, railway, allotments, etc.

30. Direct delivery
LA
Funder(s)
ContractorsDevCo
Occupier, etc – or sale out to an investor?
Wholly owned, CLS? Construction

31. Corporate JV
LA Developer
JV Co (or LLP)
Bank Other Finance
50% shares (nominal)
Investment of cash
for loan stock
50% shares (nominal)
Investment of land
for loan stock

32. Development
Subsidiary #2
Development
Subsidiary #1
Housing to
Rent
Subsidiary
Commercial
Investment
Subsidiary
Programme
Management
Subsidiary
SUB-
DEVELOPER
[TBC]
BUILDER
[TBC]
BUILDER
[TBC]
Strategic Funding
Agreement
FUNDER
[TBC]
Development & Sale
Agreement(s)
Option Agreement(s)
LLP
LA PSP
Management
Services Agreement
Housing Asset
Management
Commercial
Asset
Management
Development
Management
PARTNERPARTNER
Partnership
Agreement
Members Agreement

33. Pros and cons
Development Agreement Direct Delivery JV
• Well developed
• Contractual control
• Risk allocation is clear
• Overage terms
• Profits retained
• Control over delivery
• Control over timing
• Accountability
• Governance – shared
• Risks and rewards shared
• Flexible
• Lack of transparency
• No true involvement in
decision-making
• Difficult to vary
• Rewards shared
• Development risk is retained
• Expertise required?
• Blurred accountability?
• Set-up costs
• Operating costs (inc’
management of JV)
• Complexity
• Blurred accountability?

34. Procurement – to OJEU or not

35. Procurement issues
• land sale – or not?
• market appetite – time and money
• which route – RP, CD, CPN?
• documentation (HoTs?)
• framing the selection and evaluation criteria
• dialogue – on what?
• timing – factors
• soft market testing

36. Powers

37. Typical legal ‘issues’
CPs Land Value
PhasingInfrastructure

38. Typical legal ‘issues’ 2
Viability
Overage
State Aid
Works
obligations
Variations

39. • councils as investors
• councils as enablers
• councils doing delivery, ownership, and management
• traditional sales and/or development agreements
• joint ventures with private sector partners
• or all of the above!
Conclusion

40. Thank you
Contact us…
Stephen Matthew
+44 (0)20 7871 8505
Stephen.matthew@brownejacobson.com