A BETTER BOURNEMOUTH

CABINET KEY DECISION

Subject: Winter Gardens and Priory Road Car Park

Cabinet Portfolio: Resources  

Corporate Lead: Tony Williams

Service Director: Roger Ball

Meeting Date:  13th October 2010

Status:   Public

Contact:  Gary Platt  01202 451477    gary.platt@bournemouth.gov.uk

1.0 Summary:

1.1 The Council has received an offer of a substantial premium from an adjoining owner for the grant of a long-leasehold interest in the Winter Gardens/ Priory Road Car Park/ Keystone House Car Park site, which is identified on the plan annexed to this report.  This special purchaser is undertaking a site assembly that will allow the construction of a 66,000 m2 (700,000 ft2) mixed-use scheme.  This would include two new hotels, an all-weather family attraction, commercial space, and residential units, with associated car parking and landscaping.

1.2 The adjoining owner has agreed terms for the acquisition of all but one of the interests needed to complete the land assembly for this development.  Although negotiations are on-going, the Council is requested to resolve to seek a Compulsory Purchase Order on behalf of the developer if these negotiations prove abortive. This land is required for a later phase of the scheme and will not prevent the early phases of the scheme from proceeding.

1.3 Although this is one of the sites identified for possible transfer to the Town Centre Vision Local Asset-Backed Vehicle (LABV), after careful consideration it is felt that the needs of the town are best-served by proceeding with the grant of a long-lease to the adjoining owner.

1.4 Therefore, this report recommends that the Council enters into a conditional contract that will give the adjoining owner 15 months to secure a planning consent and enter into a long lease.  If successful it will help kick-start the regeneration of the Town Centre and generate a significant capital receipt.  If the adjoining owner is unsuccessful in securing a planning consent, then the Council will retain the deposit, along with the copyright on any plans produced during the planning process, and the site will again be considered for inclusion in the LABV.

2.0 Recommendation:

2.1 That the Council enters into a conditional contract for the grant of a long-leasehold interest in the Winter Gardens/ Priory Road Car Park/ Keystone House Car Park site on the terms identified in Section 7 of this report.  

2.2 The foregoing recommendation is subject to an independent valuation report confirming that the terms noted at paragraph 7 represent best consideration.

2.3 To apply the deposit to support the Town Centre Vision.

2.4 That, subject to an indemnity from the adjoining owner in respect of the Council’s costs, to authorise the use of Compulsory Powers to complete the land assembly for this scheme.

3.0 Reason for recommendation:

3.1 It is unlikely that the site would be developed by the LABV within the next two years, particularly as there is a need to undertake site assembly to facilitate a comprehensive redevelopment.  Also, because of the financial structure of the LABV, it would be a further two to three years before the Council would receive any capital receipts for re-investment in new capital projects.

3.2 The adjoining owner, on the other hand, has now secured most of the land required for a comprehensive scheme and anticipates securing planning consent within 15 months, subject to agreement of terms with the Council.  At that point the contract would become unconditional and the full premium would be payable.  It would also allow the start of the construction contract which would bring more than £60 million of inward investment into Bournemouth, along with new hotels and an all-weather family attraction.

3.3 A substantial capital receipt in 2012 could assist in the delivery of the Town Centre Vision by providing early finance for land assembly and major infrastructure works.

3.4 The action proposed is in line with the Council Priority: Better Planning and its Investment Priority: All-Weather Family Attractions.

Supporting Information:

4.0 Background detail:

4.1 Council on 28th July 2009 agreed the key objectives for the Town Centre Vision and to proposals for procurement and formation of a Local Asset Backed Vehicle (LABV).

4.2 Council on 23rd June 2010 selected Morgan Sindall Investments as its preferred Private Sector Partner (PSP) for the establishment of an LABV that will assist in delivering the Town Centre Vision.

4.3 The Winter Gardens/ Priory Road Car Park/ Keystone House Car Park site is identified for possible transfer to the LABV.  However, it is not one of the initial projects proposed by Morgan Sindall.  One of the reasons for this is the fragmented pattern of land ownership on adjoining land.  This is currently preventing a comprehensive redevelopment and could require the use of compulsory purchase powers at some stage in the future if agreement cannot be reached with the adjoining owners.  

4.4 The Council has received an approach from a private pension fund, A P Bond Children’s Settlement, which owns the freehold of 20 Exeter Road.  It is looking to complete a land assembly to facilitate a 66,000 m2 mixed use development on a site that includes the Winter Gardens, Priory Road Car Park and Keystone House.  Details of the proposed terms are contained in the confidential part of this report.

4.5 The scheme proposed will incorporate hotels, leisure, commercial units and residential flats, with associated car parking and landscaping.  This development is consistent to the aspirations of the Town Centre Vision.  Whilst the details of the scheme will crystallise as this development advances, it is hoped that this will incorporate a new, multi-screen cinema.  The developer and proposed cinema operator are aware of proposals for another cinema scheme in the town and they are confident that Bournemouth could accommodate two cinemas, with up to twenty screens between them.

4.6 It is proposed to proceed by way of a conditional contract that will lead to the grant of a long-lease at a premium.  This will allow the Council, as landlord, to influence the use of the site and any future redevelopment.

4.7 Careful consideration has been given to whether the needs of the town are best-served by proceeding with the grant of a long-lease to the adjoining owner or whether the site should be developed by the LABV.  The main reason for recommending proceeding with the adjoining owner is as follows:

 If successful, it will realise the benefits from this redevelopment, both in terms of economic regeneration and securing a capital receipt, at an earlier date than would be achieved through the LABV.

 It transfers the development risk to the adjoining owner.

 Much of the site assembly is complete and whilst compulsory powers may be required to finish this process, this will not delay the start of redevelopment.

 If the adjoining owner is unsuccessful in securing a planning consent, then the Council will retain the deposit, along with the copyright on any plans produced during the planning process, and the site will again be considered for inclusion in the LABV.

5.0 Consultation:  

5.1 Morgan Sindall Investments have been informed if the Council’s proposals in respect of this site.

6.0 Alternative options considered and rejected:

6.1 To develop the site through the Local Asset Backed Vehicle.  The rationale for proceeding with the adjoining owner, as opposed to a development with the LABV, is fully explored in this report.

7.0 Summary of Financial/Resource Implications – including comments from the Council’s Chief Financial Officer:

7.1 This contains exempt information as defined in paragraph 3 in Part 1 of Schedule 12A of the Local Government Act 1972 and is contained in a separate confidential report.

8.0 Summary of legal implications:

8.1 The Director of Law and Governance advises that the Council is under an obligation under Section 123, Local Government (Miscellaneous Provisions) Act 1972 to obtain best consideration on the disposal of land.  The adjoining owner is a special purchaser and provided that an independent valuation report confirms that the consideration represents the best price reasonably obtainable, then there is no need to offer the site for sale on the open market.

8.2 The procurement process for a Private Sector Partner for the Local Asset-Backed Vehicle has been conducted under the European Procurement Rules.  The Council has been clear throughout this process that the list of sites for possible inclusion within the LABV may be subject to change in order to allow for circumstances such as this.  Therefore, the exclusion of this site from the LABV will not infringe the EU Procurement Rules.

8.3 Compulsory purchase powers are available under the Town and Country Planning Act and that their use in these circumstances is entirely consistent with the requirements of that Act.   

9.0 Summary of Environmental impact

9.1 This project forms part of the Town Centre Vision.  A key objective of the Vision is to reduce the town centre’s carbon footprint, whilst improving its competitiveness. The Vision presents many opportunities to do this, including the possibility of combined heat and power systems, facilitated by a large scale and planned programme of development. Environmental impact analysis indicates that the process is likely to have a positive impact both in terms of the public realm and carbon footprint.

10.0 Summary of Equalities and diversity impact

10.1 An Equality Impact Needs Assessment (EINA) has been completed for the Town Centre Vision.  This indicates that the Vision provides substantial opportunities to create a positive Equalities Impact, particularly by improving accessibility of the town centre and harnessing substantial resources for the provision of affordable homes.

11.0 Summary of Risk Assessment:

11.1 An initial risk assessment has been undertaken and this shows the risk to be high.  This reflects the substantial monies involved and the importance of a development of this scale to the economy of the Town.  However, by entering into a conditional contract the planning risks, and the associated costs, transfer to the adjoining owner.  Furthermore, if planning consent is granted and the contract becomes unconditional, then development risk also passes to the adjoining owner.

Background papers:

1. The report of the Programme Director, Town Centre Master Vision to Cabinet on 22nd July 2009 entitled, “Town Centre Master Vision Local Asset Backed Vehicle”

2. The report of the Programme Director, Town Centre Master Vision to Cabinet on 23rd June 2010 entitled, “Town Centre Master Vision Local Asset Backed Vehicle”

3. Town Centre Master Vision Environmental Impact Assessment

4. Town Centre Master Vision Equality Impact Needs Assessment

5. Initial Risk Assessment