Difficulties of delivering major development

Delivering major development is difficult. One of the deterrents is often the need to assemble fragmented land ownerships. The availability of compulsory purchase powers is critically important to give developers some certainty that they will be able to deliver. The powers should be available and should be used more widely.

However, CPOs should only be used as a last resort. In some recent cases there appears to have been a move to treat negotiations and voluntary deals as an irritant rather than a requirement.  For example:

  • some CPOs are being made before any real approach to significant affected landowners by either the Council and/or the developer. Even if a CPO is inevitable, an early approach to those affected should be a pre-condition of the Order being made;
  • if negotiations have been started they have been pro-forma and tick box -designed mainly to ensure that there is a paper record of contact rather than because there has been a genuine effort to agree terms;
  • where efforts have been made to deal with landowners there is no real negotiation.  Too often sham terms are offered to landowners. They give, effectively, an option to the developer to acquire at a point in the future if the CPO is confirmed and they decide to proceed. That should never be acceptable. If a CPO is being sought, then the acquiring authority/developer should be willing to acquire the land now. After all, the land affected by the CPO is effectively blighted;
  • even worse, in some cases the “negotiations” have been limited to offering a present day fixed price for the land, to be paid only as and when the development commences.  No-one would accept that in a normal commercial arrangement so why is it thought to be acceptable in the context of a CPO?
  • sometimes the lack of negotiation may have, or may be seen to have, equalities complications.  Too often the evidence seems to suggest that some minority groups are not being dealt with properly.  All parties affected by CPOs should be dealt with equally.

These emerging practices are dangerous. If continued they risk undermining future support for CPOs. That would then undermine development. Everyone involved in a CPO process should treat it as imposing serious public law duties. Land should, if at all possible, be acquired privately; CPOs should, genuinely, be a last resort. Where it is needed those affected should be dealt with fairly and equally and on terms that are commercially sensible.

The Magic section 237 Wand – or is it not quite that simple?

After the Heaney judgment in 2010 developers have had a clear need to address rights and restrictions at the outset.  Can they turn to the local authority for help in cleansing the development site of any right to an injunction?  What does s237 actually say?

…the erection, construction or carrying out or maintenance of any building or work on land which has been acquired or appropriated by a local authority for planning purposes (whether done by the local authority or by a person deriving title under them) is authorised by virtue of this section if it is done in accordance with planning permission, notwithstanding that it involves—

(a) interference with an interest or right to which this section applies, or

(b) a breach of a restriction as to the user of land arising by virtue of a contract.

Section 237(1A) applies this power to the use of the development.

magicwandSo, the authority acquires or appropriates for a planning purpose.  Magic, the consented development can proceed and any previous right to seek an injunction is reduced to a right to compensation on a favourable basis for the developer.  Not quite.

The effect of s237 is akin to compulsory purchase.  Compulsory purchase guidance emphasises the importance of seeking to acquire land by negotiation and provides that a CPO should only be made where there is a compelling case in the public interest.  In either case human rights implications are likely.

The Human Rights Act 1998 prohibits public authorities from acting in a way which is incompatible with the European Convention on Human Rights.  The use of s237 will often result in interference with rights such as the right to peaceful enjoyment.

Therefore, before invoking s237 a local authority must consider whether the interference is justified. Knowing whose rights will be interfered with and whether they are prepared to give them up, without the need for statutory powers, is important.  Unless the scale and complexity of the affected rights makes it infeasible to do so, attempts to extinguish the rights through private treaty negotiations will normally be needed.  The public interest must outweigh the interest of the private individuals whose rights are to be interfered with the interference with, rights must be necessary and proportionate.  A town centre redevelopment may well be in the public interest and justify interference with rights.  A new office block may not.

If an authority is satisfied that use of s237 is appropriate, it is an extremely useful delivery tool.  The development site is acquired or appropriated for planning purposes, ideally with a specific resolution explaining the intention that the rights will be subject to s237.  The site is then transferred to the developer, perhaps with a confirmatory resolution to make it clear, on the public record, that the authority is intending that s237 applies, maybe even tied to a specific planning permission or type/scale of development, and requirements about giving notice to and negotiating with those whose rights are affected.  Done properly, the listed bank next door (as in the case of Heaney) will not be able to obtain an injunction.

Where the developer owns the site, the land must pass through the local authority’s ownership. Considering how the transaction can be structured to reflect SDLT and to allow works to commence whilst the authority holds the freehold interest is crucial.  Where a site is being assembled by CPO it is prudent to acquire any necessary rights, avoiding, or at least minimising, the need to use s237.

With thanks to Janine Shaw for assistance with this blog.

DCO regime faces a real test

Better known as the super-sewer, the Thames Tideway Tunnel (“TTT”) Development Consent Order, granted on 12 September 2014, was a super-sized DCO application.  The scheme covers 25km from Acton to Abbey Mills and with 43 hearing sessions and 1246 representations is by far the largest application to go through the Planning Act 2008 process to date.  Based on recent news reports, it is also now set to be the most contentious DCO so far, with two judicial review challenges lodged.

The first challenger is, unsurprisingly, the London Borough of Southwark.  Thames Water may have been expecting a claim after the Leader of Southwark publicly branded the decision “ludicrous and evil“.

tunnelNothing has emerged yet on the grounds of their challenge but it is a safe assumption that it will focus on the use of Chambers Wharf as a site to drive the main tunnel to the Abbey Mills pumping station, and the impact of the drive site on residential amenity.  The Examining Authority concluded that the use of Chambers Wharf was not justified and weighed against the making of the Order.  The Examining Authority considered that if the option of driving from Abbey Mills (i.e. a reversal of the drive direction) were fully explored there was a good prospect that it would be found to be preferable in terms of overall environmental and community impacts.  While the Secretaries of State noted that the intensity and duration of impact on nearby residential occupiers during the 6 year construction period (including 33 months of night time working) weighed against the making of the Order, they considered that the mitigation package would substantially mitigate those adverse impacts and the selection of Chambers Wharf as a drive site was justified.

The crux of Southwark’s challenge is likely to be the extent to which the Secretaries of State are required to consider alternatives to the applicant’s proposals in the course of their decision making.  This is a fundamental question given that the National Policy Statement for Waste Water (NPS) approves the principle of a tunnel but leaves the specific route, design, layout and construction programme of that tunnel to be determined as part of the DCO application.  The answer will influence the future approach of applicants and objectors.

The second challenger is the Blue-Green Independent Expert Group (“BGIEG”) – an interest group formed by a broad coalition of independent experts.  News reports indicate that their challenge relates to the failure to comply with the public participation requirements of the EIA Directive and EIA Regulations.  BGIEG’s challenge is likely to focus on the precautionary principle (Article 191 of the Treaty on the Functioning on the European Union), obligations arising under the UN Aarhus Convention and the EU Public Participation Directive and criticisms of the robustness and adequacy of the Environmental Statement.

Whether BGIEG continues its argument that the case for progressing the scheme by way of a tunnel has not been proven remains to be seen. During the course of the examination, BGIEG argued that the NPS decision in principle to use a tunnel was made without proper testing of alternatives, including blue-green infrastructure solutions.  The starting point of the inquiry was that contained in the NPS, namely the Examining Authority and the decision maker in undertaking any assessment of the TTT application should do so on the basis that the national need had been demonstrated.  The NPS states that in reaching that conclusion the strategic alternatives have been considered and strategic alternatives did not need to be assessed by the Examining Authority or the decision maker.  If a court were to hear a challenge, let alone allow a challenge, on this ground it would deal a heavy blow to the sanctity of NPSs.

Despite being a long-standing objector, Hammersmith & Fulham has notably not challenged the decision.  They may be sitting back to watch the Southwark showdown first.

Muscular Action

The Bank of England is concerned that Britain is building half as many homes a year as Canada, despite having twice the population.  Planners are concerned about unplanned growth.  David Cameron’s support in early 2012 for a new Abercrombie Plan to protect the green belt and meet housing needs led to an RTPI/ Land Securities report.  But a Garden Cities Prospectus promised for high growth areas has not materialised.  Nick Boles’ confirmation in June this year that no resources would be allocated seemed to seal its fate.  But new towns are back on the agenda.  The Labour Party proposes to use five of them to double annual housing delivery until 2022 and the man they have appointed to come up with a blue print for 220,000 homes a year is calling for ‘muscular action’, including the compulsory acquisition of land subject to unimplemented consents.  The Policy Exchange, courtesy of Lord Wolfson, are also keeping the original commitment alive  – offering a £250,000 prize for a workable Garden City model. Now David Cameron’s key planning advisor has jumped ship to oversee it. Here is a short entry for the Prize.

Geographies

Where should new settlements go? In the absence of the RSS ‘Areas of Search’, LEPs should be empowered and incentivised to identify their own Garden Cities and Suburbs, where needs indicate they are required.  Business Rates, CIL and other fiscal tools can be used to make it worthwhile. An assumption that they will be built within range of London or on the line of HS2 needs care – the original Garden Cities were as much about where employment, not just houses, should go. ‘Muscular action’ is certainly needed, if only to make clear choices about the location and scale of major new settlements and their accompanying infrastructure.

Land powers and costs

‘Housing estate’ is a sullied phrase.  If there is going to be social licence to build, genuine placemaking is required.  Excellent masterplanning and design require land budgets and values that allow space for schools, parks and the like as a starting point, not an extra, ‘subject to viability’.  Compulsory purchase will be needed to achieve this, as the draft London Housing Strategy recognises.  The real question is how is it valued and who holds the land once assembled – LEPs, community trusts, Community Interest Companies or an arm of the Treasury?

Prime the pump

CPO valuation will reflect the public cost (or balance sheet risk) of forward funding significant new infrastructure. The TIF approach that has catalysed the Vauxhall Nine Elms Battersea Opportunity Area is a good starting point.  It needs a strategic body – such as the Mayor – to invest in infrastructure before planning payments, CIL and land receipts can catch up.  Labour envisage market borrowing backed by a UK plc guarantee.

City governance

garden city

Letchworth and Welwyn are characterised by communal ownerships and structures, which has allowed investment to be repaid and reused.   Milton Keynes had a different but effective model.  The lessons from these experiences – good and bad – need to be reflected in models of community ownership and reinvestment that provide an asset lock for crucial facilities and a base for social enterprises, releasing local authorities from management and revenue burdens associated with new infrastructure.  The Neighbourhood Share of CIL is a good model for endowing these vehicles.

The Prize winner should address these issues and more, not just design.