Agenda item

[Report  of the Interim Strategic Director for Planning, Regeneration and Development. To be introduced by the Cabinet Member for  Corporate Resources.] Disposal of site on Bernard Road in order to bring forward a workspace led development.

The Cabinet Member for Corporate Resources introduced the report, which sought authority to declare the Council owned site at Bernard Road N17 (outlined on the plan in Appendix 1) as surplus to requirements. It also sought authority to appropriate the site for planning purposes (subject to planning permission being granted) and to dispose of the freehold of the site to GCAP Investments Limited, a developer who owns the neighbouring land parcel. The disposal will facilitate a workspace-led scheme across the combined sites.

The Cabinet Member further advised that the Local Plan had highlighted the need for more workspace in the borough and this report enabled progress to this quota. The site at Bernard Road currently housed five low quality business units, and the new development would accommodate 40 new businesses and 240 jobs.

In response to questions from Cllr Vanier and Cllr Engert:

• The land valuation was arrived at by a property specialist commissioned by the   Council who had undertaken evaluation of the site and confirmed that the price represented best consideration to the Council in terms of value.

• The green space currently available would be relocated to the same site. There was currently 630 square metre of green space, which would increase to 1000 square metres when relocated to the south of the site. This green space would have soft landscaping and be available for public use.

• The planning application is due to be considered by Planning Committee next Monday. As part of that application, officers are proposing that the lands will be designated as public open space through the section 106 agreement. . The purpose of this is to ensure that the land is held as public open space now and in the future.  It was reiterated that existing business can move back to the site and the smallest unit was expected to cost £365 a month, so there was genuine affordable workspace to help existing businesses and house additional businesses.

Further  to considering exempt information at item 27,

RESOLVED

1. To confirm that the piece of land held for Housing purposes (vertical hatching in the plan attached as Appendix 1a) and the piece of land held in the General Fund (grey shading in the plan attached as Appendix 1a) are no longer required for the purposes for which they are held and declare them surplus to requirements.
2. To agree, subject to the approval of the submitted planning application (planning reference HGY/2017/3584), to the appropriation of both pieces of land (as shown edged black in the plan attached as Appendix 1a) for planning purposes under section 122 of the Local Government Act 1972, so that such land shall have the benefit of section 203 of the Housing and Planning Act 2016.
3. To agree the disposal of the Council’s freehold interest in the land (as set out in the plan edged black in Appendix 1a) to GCAP Investments Limited for a sum set out in Part B of this report and set out in the Heads of Terms attached in Appendix 2 of this report.
4. To agree to place the sum set out in Part B of this report of the capital receipt into a reserve to cover the eventuality of the Council’s guarantee being called upon.
5. To delegate to the Council’s section 151 officer authority to review and amend the amount so reserved at the rent review period to ensure that it is in line with the potential liability under the guarantee.

Reasons for Decision

The limited supply of workspace in the borough gives significant strategic rationale for the Council to consider means of accelerating the delivery of affordable workspace.

The disposal of the site will enable an innovative workspace-led, mixed use scheme across two interconnected land ownerships. Both plots of land are too small to independently deliver viable schemes, which provide high quality workspace and positively contribute to the surrounding community. 

Without Council intervention, the proposed scheme would not be delivered. Valuations and residual appraisals undertaken by both sides show the proposed development scheme as being marginal and less than the combined existing use value for both sites. 

The Tottenham Area Action Plan (AAP) sets out a number of site designations, which are designed to see the area thrive and intensify as a location for businesses and jobs. The AAP identifies this site as being appropriate for such development and encourages a joint approach.

The Tottenham AAP recognises that the site, in its current configuration, does not positively contribute to the local environment. The current workspace is in poor condition, causes noise pollution and fails to meet the demand of local businesses. The Council’s site also incorporates a small green space, which is to be provided for.   Furthermore, there are clashes between movements in the existing road network, where industrial traffic is directed through residential streets. These factors will be addressed through the proposed development scheme. 

Alternative options considered

As the Council is part landowner within this site, a number of delivery scenarios were considered:

Option 1: Do nothing

A‘do nothing’ option, whereby the Council does not facilitate the development of the site, would fail to meet the Council’s policy and strategic objectives for workspace, predominantly set out in the Tottenham AAP. Without Council intervention, the site would continue to provide underused and inadequate workspace, and would not positively contribute to the local environment.

Option 2: Disposal of LBH Interest on the open market, or placing the site into the Haringey Development Vehicle

Alternative options of disposing of the Council’s site on the open market or putting it into the Haringey Development Vehicle were considered. These were discounted on the basis that there was clear value to be achieved through working with the neighbouring land owner, and unlocking the potential of both sites.

Option 3: Entering into a Joint Venture with GCAP Investments Limited

Consideration was given as to whether the Council might enter into a Joint Venture, or similar partnership with GCAP Investments Limited. This would have given the Council greater control over the outcome of the development and a potential share of the profits involved. This route was discounted on the basis that the volume of legal and other professional costs of setting up a Joint Venture are significant and were viewed as disproportionate for a development of this scale where the Council’s interests could be protected via other means.

Option 4: Acquisition of freehold and disposal of long leasehold

The Council explored acquiring the freehold interest in GCAP Investments Limited land holding, and the Council then granting a 250-year lease to GCAP Investments Limited for the combined site on the basis of it being redeveloped. This option was discounted, as it was agreed that the overarching lease would not provide the Council with sufficiently more robust control than a freehold disposal, which was subject to S106 obligations. This option would also give rise to additional Stamp Duty Land Tax (SDLT), and a lower capital receipt than existing use value representing less than best consideration.

Option 5: Direct Disposal of LBH freehold to GCAP Investments Limited

The option outlined in this report sees the Council interest being disposed of directly to GCAP Investments Limited. This approach is the simplest disposal option, gives rise to a lower Stamp Duty Land Tax (SDLT) and a significant capital receipt.  The Council are also able to sufficiently control the management and pricing of the workspace for a minimum period of 50 years through the planning system, and the initial conditions of the disposal.