DD2506 North Middlesex University Hospital, adjacent site acquisition

The Land Fund
1.1.    On 27 November 2018, Mayoral Decision 2396 (MD2396) approved £486 million of funding from the Ministry of Housing, Communities and Local Government (MHCLG) to help unlock and accelerate housing delivery in London through land assembly, infrastructure investment and provision of gap funding. The Memorandum of Understanding (MoU) between the MHCLG and the GLA for this funding states that it is aimed at unlocking sites capable of delivering 8,000 housing completions in London by 2030.
1.2.    MD2396 provides a standing delegation to the Executive Director of Housing and Land, in consultation with the Deputy Mayor for Housing and Residential Development, to approve, via Director Decision (DD) Forms, the allocation of this funding in accordance with the terms associated with the programmes and in pursuit of the Mayor’s housing ambitions. 
1.3.    The governance arrangements for the allocation of this funding including the Land Fund Investment Strategy (LFIS) were approved by the Mayor through MD2615. This decision approved an integrated investment strategy covering both the £250 million commercial strand of the Mayor’s Land Fund that was established by MD2207 and the £486 million strategic strand of the Land Fund that was approved by MD2396. This decision also confirmed that where money is deployed through GLAP, the Land Fund Investment Committee (LFIC) is to be consulted to provide oversight and consistency. 
Background
1.4.    The North Middlesex University Hospital (NMUH) is located in Edmonton within the London Borough of Enfield. It is the local acute hospital for the boroughs of Enfield and Haringey, which have a combined population of approximately 600,000, of whom the hospital serves about 250,000. 
1.5.    In March 2019, GLAP acquired a 1.37-hectare site on Bridport Road in the south-east corner of the NMUH. The expenditure for the acquisition of this land was approved under Director Decision 2332 (DD2332). For the purpose of this DD, the existing GLAP site will be referred to as the ‘existing Bridport Road GLAP site’.
1.6.    DD2332 agreed a two-stage development strategy for the acquisition. It was agreed that the first stage would see GLAP acquire the existing Bridport Road GLAP site from LocatED (an executive non-departmental public body sponsored by the Department for Education) who had previously acquired the site from the NHS Trust in March 2016. The second stage would see the NHS Trust and the GLA explore options for developing a masterplan for the wider hospital site, with a view to incorporating an increased density of housing on any surplus land identified on the site alongside the replacement of, and additional, hospital facilities. 
1.7.    As part of the second stage of this agreed approach, the NHS Trust and the GLA jointly commissioned a masterplan for the wider hospital site in November 2019. This work is ongoing and is due to complete by the end of 2020. The GLA is however satisfied that no more significant areas of land will be released for residential use.
1.8.    As part of this masterplanning work, an opportunity has arisen for GLAP to purchase an additional 0.4-hectare site to the North of the existing Bridport Road GLAP site (see the map attached as Appendix 1 to this report for the location of the two sites). For the purpose of this DD, the additional site proposed that GLAP will acquire will be referred to as the ‘adjacent car park site’. 
 
The adjacent car park site acquisition
1.9.    It is proposed that GLAP acquires the adjacent car park site, located in the north-east corner of NMUH and to the north of the existing Bridport Road GLAP site, and currently owned by the NHS Trust. A map of the site is included as Appendix 1.
1.10.    The adjacent car park site is currently used by the NHS Trust for visitor and staff car parking. The site is bounded by Stirling Way to the north, the existing Bridport Road GLAP site to the south, two-storey terraced housing to the east, and the wider NHS hospital site to the west. The site has been identified as surplus to the hospital’s requirements further to the masterplanning exercise.
1.11.    A meeting between the GLA and the NHS Trust in July 2020 confirmed that the preferred approach for the site acquisition would be based on the site being brought forward as a mixed-use development with 3,000m2 of commercial office space and the remaining area used for residential development. It is proposed that the commercial office space is leased back to the Trust on a medium-term 15 to 20-year lease. This will require the selected LDP2 development partner to enter into a lease agreement with the NHS Trust for the new office space. The key commercial terms of this lease will be pre-agreed between the GLA and the NHS Trust in advance of the ITT being issued to bidders to ensure that proposals are developed on the same basis which also serves to de-risk the letting of the commercial space. 
1.12.    The purchase price has been informed by a Red Book Valuation that has been jointly commissioned by the GLA and the NHS Trust to ensure value for money for GLAP. The purchase price agreed between the two parties is based on a mixed-use scheme with the density of housing on top of the 3,000m2 of commercial office space informed by the masterplanning massing studies. The marriage value between the existing Bridport Road GLAP site and the adjacent car park site has also been taken into consideration, with an agreement to share the marriage value between the GLA and the NHS Trust. Further details are included in Part 2 of this DD. 
1.13.    The masterplanning work will inform the vacant possession strategy for the existing Bridport Road GLAP site and the adjacent car park site including the re-provision of the hospital facilities currently located on the two sites. This includes proposals for a new multi-storey car park to re-provide the car parking spaces currently located on the two sites, subject to planning permission. 
1.14.    The planning application will propose the re-provision of car parking spaces currently located on the GLAP site. The NHS Trust have advised that the new multi-storey car park is required as the shift patterns of NHS staff, that will predominantly be using the car park, do not align with the operating hours of the local transport networks. If staff are unable to access car parking close to their workplace then the NHS Trust are concerned that this will detrimentally impact on their ability to recruit and retain staff critical to the delivery of the hospital services. Evidence and justification for this approach will need to be submitted as part of the planning application. 
1.15.    The acquisition will enable the delivery by GLAP of at least 260 homes, of which 50 percent will be genuinely affordable, across a combined GLAP site in an area of critical housing need. In addition, the GLA/GLAP will reinvest all proceeds from the disposal to support the delivery of more new and affordable housing in London. With the GLAP land receipt for the adjacent car park site, the NHS Trust will be able to deliver enhanced health facilities including improvements to the car-parking arrangements which will assist in their decant from the existing Bridport Road GLAP site and the adjacent car park site. 
Leaseback agreement and vacant possession 
1.16.    The existing Bridport Road GLAP site is currently occupied by several NHS Trust facilities and services, under a lease from the GLA, of note: The Trust Headquarters buildings, the Pathology building and 156 existing car parking spaces. The adjacent car park site is currently occupied by the NHS Trust to provide 109 car parking spaces. 
1.17.    It is proposed that GLAP take on the management of a new leaseback arrangement agreed with the NHS Trust for the adjacent car park site from the completion date of the transaction to circa July 2022 (when the new multi-storey car park is complete). The terms of this agreement will be informed by the jointly commissioned valuation and further details are included in Part 2 of this DD.
1.18.    Regarding the re-provision of the Trust Headquarters building, this will be provided by the 3,000m2 of commercial office space that will be built to ‘shell and core’ specification by the selected LDP2 development partner for the site. The NHS Trust will then fit out the office space themselves and lease the space back from the selected LDP2 development partner. The existing leaseback agreement for the existing Bridport Road GLAP site will need to be re-negotiated with the NHS Trust, enabling it to remain in the existing Trust HQ building until the new commercial office space is complete. The rental terms for the new commercial office space will be pre-agreed between the GLA and the NHS Trust, and this will be informed by the joint valuation exercise. Further details are outlined in Part 2 of this DD.
1.19.    Phasing ensures that the NHS Trust can continue to operate at full capacity, while minimising impact to their service delivery. In addition, it avoids the NHS Trust having to decant into temporary offices which would likely be a poor quality replacement to their existing Trust HQ, as well as needing to be located on an area of surface car parking taking up more of the car parking spaces needed by the Trust for visitors and staff. 
Site disposal
1.20.    The GLA will combine the adjacent car park site with the existing Bridport Road GLAP site and bring this forward to the market as a combined scheme for disposal to a development partner procured through the LDP2 Framework Panel to deliver the scheme as a housing-led, mixed-use scheme that meets the GLA’s objectives for the site. A Mayoral Decision will be sought to approve the disposal.
Approach to planning
1.21.    The site is located within the London Borough of Enfield, in the Upper Edmonton ward. There are no material planning considerations or designations that apply to this site. 
1.22.    A planning consultant has been appointed as part of the consultant team working on the masterplanning work for the wider hospital site. This will be used to inform the planning strategy for the planning application required for any clinical improvements proposed for the wider hospital site and the planning application required for the proposed mixed-use development on the combined GLAP site. 
1.23.    The LDP2 development partner will be responsible for achieving detailed planning consent for the mixed-use scheme within the combined GLAP site red line boundary.
Governance
1.24.    The Deputy Mayor for Housing and Residential Development was consulted on 14 October 2020 on the proposals and endorsed the recommendation to acquire this site. 
1.25.    The business case for the proposed Land Fund expenditure set out in this DD was endorsed by the LFIC on 16 November 2020.   
 

2.1.    The additional 0.4-hectare adjacent car park site will be combined with the 1.37-hectare existing Bridport Road GLAP site and will be brought forward as a residential-led mixed-use development that will deliver a minimum 50 percent affordable housing at the optimum level of density. The site will also deliver the new Trust Headquarters which will be leased back to the NHS Trust on a medium-term basis. The acquisition of the site therefore directly enables and accelerates the delivery of an increased number of new homes in an area of critical housing need.
2.2.    The masterplanning massing studies have shown that the combined site has the capacity to deliver at least 260 homes. This is an additional 54 homes to the 206 homes that formed the basis of the Bridport Road GLAP acquisition.
2.3.    The proceeds from disposal of the additional land will be used by the NHS Trust to enhance healthcare facilities across the wider hospital site and improve car parking arrangements.
2.4.    A phased approach to achieving vacant possession will allow the Trust sufficient time to re-provide the services currently located on the existing Bridport Road GLAP site elsewhere on the larger hospital site, ensuring that the hospital’s services can continue to operate unencumbered. 
2.5.    The comprehensive regeneration of a large proportion of the hospital site will bring many benefits to the local communities of Enfield and Haringey and increase the much-needed housing supply in London. Enfield and Haringey are two of the most deprived Boroughs in London and the Upper Edmonton ward where the site is located was ranked amongst the most deprived wards in England with respect to Barriers to Housing and Services, which measures the physical and financial accessibility of housing and local services including affordability and homelessness (English indices of deprivation 2019, published by the Ministry of Housing, Communities & Local Government on 26th September 2019).
 

3.1.    Section 149(1) of the Equality Act 2010 provides that, in the exercise of their functions, public authorities must have due regard to the need to: eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under the Equality Act 2010; advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it; and foster good relations between persons who share a relevant protected characteristic and persons who do not share it.
3.2.    The protected characteristics under section 149 of the Equality Act are age, disability, gender re-assignment, pregnancy and maternity, race, religion or belief, sex, sexual orientation, and marriage or civil partnership status.
3.3.    When considering the needs of the existing community and those that will be affected by the proposed development (both currently and in the future development scheme), any development activity will look to minimise disadvantages to all protected characteristic groups within society. This decision is therefore expected to have a positive impact on persons with a protected characteristic under the Equality Act, as increasing the supply of housing in London will help to address problems such as overcrowding and homelessness, which evidence indicates disproportionately affect specific groups, including Black and Minority Ethnic groups and women.
3.4.    The delivery of new and additional homes will help to implement the objectives of the Mayor’s Equality Diversity and Inclusion Strategy “Inclusive London” (May 2018). This includes working with housing associations, councils, developers, investors and government to help increase the supply of homes that are genuinely affordable to buy or rent. This will help to tackle the inequalities experienced by certain groups of Londoners most affected by the city’s shortage of affordable homes.
3.5.    The delivery of high-quality housing on a combined GLAP site will also promote improved health and wellbeing, given evidence of an association between poor housing conditions and poor health. The health and wellbeing of residents will be a priority within the vision for the development to address this.
3.6.    The masterplanning work and the NHS Trusts use of the land receipt to improve healthcare facilities at NMUH, is expected to have a positive impact on persons with a protected characteristic under the Equality Act as these improvements will aim to address the health inequalities seen across the Boroughs and improve the opportunities and life-chances for the local population.
 

Key risks and issues
4.1.    The land value of the site may increase or decrease with the wider housing market, which could lead to the GLA receiving a lower land receipt when the site is disposed of to the LDP2 development partner than the acquisition price agreed with the NHS Trust. To mitigate this risk, a proportionate weighting will be placed on the price element of the evaluation to incentivise bidders to put forward competitive land receipt offers as part of their bid. 
4.2.    Another red book valuation will be carried out for the combined sites ahead of issuing the LDP2 Invitation to Tender to ensure GLAP’s obligations under s333ZC of the GLA Act to ensure Best Consideration reasonably obtainable on disposals of land, is met. This may include the use of Affordable Housing Grant to ensure the viability of the scheme.
4.3.    There is a risk that the proposed re-development of the site, and increased density may result in concerns and objections from the wider community. To address this, the selected LDP2 development partner will be actively encouraged to seek input from the wider community and bidders’ approach to stakeholder engagement will form part of the qualitative analysis of the bids. A continuous dialogue with the London Boroughs of Haringey and Enfield and the NHS Trust will seek to ensure that healthcare and housing priorities are positively addressed through the scheme.
4.4.    There are also risks to the delivery programme being delayed due to delays in securing planning consent or construction of the new health facilities including the multi-storey car park meaning that vacant possession of the site is delayed. The appointment of a planning consultant for the masterplanning work, will ensure that a robust strategy and programme for planning is agreed between the GLA and the NHS Trust. The homes delivered on the scheme will be released in phases, allowing time to achieve full vacant possession in accordance with a pre-agreed sequence with the Trust. Should there still be an issue, GLAP will ensure there are substantive penalties within the proposed lease back arrangements to ensure the Trust remain on target.
4.5.    The acquisition programme is also at risk of delay due to the Covid-19 pandemic, due to the risk that the NHS Trust must re-allocate resource away from finalising the legal agreements for the acquisition to focus their attention on responding to the pandemic if this becomes critical. Continuous dialogue between the GLA and the Trust will help to mitigate this risk. 
4.6.    In addition to the programme risks, the Covid-19 pandemic poses a risk to the wider economy, which may impact the land value of the site. Any market downturn or issues impacting cashflow may result in a halt to the development. Whilst the wider housing market is highly sensitive to external factors, the market for affordable housing is much less so, and a scheme with a high level of affordable housing such as this is better insulated against market downturns and can be re-phased to accommodate this should it be needed.
4.7.    The delivery of a commercial office space to be leased back to the NHS Trust has added financial and procurement risks associated with it. There is the financial risk associated with the bidder assumptions on build cost and rental value for the commercial office space impacting the GLAP land receipt. To mitigate this risk, rental values will be informed by the joint valuation exercise and these values will be pre-agreed with the NHS Trust and the GLA when agreeing the commercial terms of the acquisition. This information will be provided to all LDP2 bidders at ITT stage to ensure that bidders are bidding on a like-for-like basis. This may include a pre-agreed build-cost budget, with a mechanism for the development partner to reclaim any overspend linked to decisions made by the Trust. The procurement risk associated with LDP2 bidders not being interested in bringing forward a mixed-use development has been tested as part of the soft market testing exercise that was carried out for the existing Bridport Road site in July 2020. The responses from this soft market testing exercise have been used to inform the terms of the acquisition. 
4.8.    Any delay to the delivery programme for the re-provision of the NHS Trust services currently located on the site, may result in the GLA having to serve notice on the Trust to force them to vacate the site. There is therefore a reputational risk if the GLA is seen to be forcing the NHS Trust to vacate the existing Bridport Road GLAP site and proposed adjacent car park site before replacement facilities have been re-provided, particularly given the current pressures on the NHS Trust due to the Covid-19 pandemic. A continuous dialogue between the GLA and the NHS Trust to discuss progress with the business cases to re-provide these services will help to mitigate this risk. The proposal for the LDP2 development partner to deliver the new Trust headquarters also helps to mitigate this risk as it puts the development partner directly in control of the Trusts decant from the second phase of the site.
4.9.    There is also a reputational risk of the GLA delivering a sub-optimal scheme at the site which does not meet the Mayor’s objectives which would reduce confidence in the deliverability of the Mayor’s objectives. Legal and technical consultants will be appointed to advise the GLA on the procurement and ensure that the LDP2 tender documentation published for the NMUH site, and the subsequent assessment of bids, will result in the most appropriate development partner being selected for the site. This approach will help to ensure that the Mayor’s objectives are delivered. The proposed acquisition for the adjacent car park site will also provide greater opportunity for placemaking across a larger site which should help to deliver a higher-quality scheme.
Links to Mayoral strategies and priorities
4.10.    The London Housing Strategy sets out the policy rationale for the GLA to take a more interventionist approach in London’s land market, with the aims of building more social rented and other genuinely affordable homes; accelerating the speed of building; and capturing value uplift for public benefit. The acquisition of the adjacent car park site directly aligns with this objective, and it will allow a larger area of land to be released for housing at NMUH, whilst still ensuring that the NHS Trust can continue to operate unencumbered.  
4.11.    This collaborative approach, working jointly with the NHS Trust through the masterplanning work, links to the Mayor’s objective to work with other public sector landowners to release more land for housing and using the LDP2 to support this delivery (London Housing Strategy, 2018). It also meets the Mayor’s wider objectives to ensure more intensive and better use of hospital sites to facilitate a combination of improved facilities and the creation and release of surplus land for other priorities (Intend to Publish London Plan, December 2019).
4.12.    A failure over recent decades to build the number and type of homes London needs has resulted in a housing crisis characterised by increasing affordability pressures and rising housing need. To address this, the Intend to Publish London Plan sets a ten-year housing target for Enfield of 12,460 net housing completions (between 2019/20 and 2028/29), with a strategic target for 50 percent of these to be genuinely affordable. The vision and objectives for the combined site will ensure that an increased density of housing is delivered on the site than would otherwise have been delivered if the acquisition did not proceed. This will contribute towards the Mayor’s targets set within the Intend to Publish London Plan, with a significant proportion of the homes starting on site in the first phase by March 2023 and the remaining homes in the second phase starting on site by March 2025.
Impact assessments and consultations
4.13.    There have not been any formal impact assessments or public consultation for this proposed intervention. 
4.14.    GLA officers have engaged with the London Borough of Enfield Planning Officers during the development of the brief for the site, and informal comments received from the planning officers have been incorporated where applicable. As mentioned in 4.3, further consultation is anticipated during the planning process.  
4.15.    The proposed development on the site will be expected to follow the principles set out within the Intend to Publish London Plan which has been through a rigorous consultation and an Examination in Public. As part of this review of the Intend to Publish London Plan, a full Integrated Impact Assessment (IIA) hand Habitats Regulations Assessment (HRA) has been undertaken.  
Conflicts of interest
4.16.    There are no conflicts of interest to declare from any of the officers involved in the drafting and clearance of this DD.
 

5.1.    This decision requests approval of expenditure within GLAP to purchase land at NMUH located next to the site already purchased by GLAP. A capital budget is required to acquire the land at open market value. 
5.2.    The capital expenditure for the purchase will be funded from the Land Fund devolved to the GLA. There will need to be a transfer of funding between the GLA and GLAP. The GLA will receive the funding for the capital injection from the MHCLG Land Fund. Any additional revenue expenditure required to support the acquisition will be drawn down from the existing Land Fund revenue budget.
5.3.    Further comments are provided in Part 2.
 

6.1.    Section 30 of the Greater London Authority Act 1999 (as amended) (GLA Act) gives the Mayor a general power to do anything which he considers will further one or more of the principal purposes of the GLA as set out in section 30(2) which are:
i.    promoting economic development and wealth creation in Greater London;
ii.    promoting social development in Greater London; and 
iii.    promoting the improvement of the environment in Greater London

6.2.    and, in formulating the proposals in respect of which a decision is sought, officers confirm they have complied with the GLA’s related statutory duties to:
•    pay due regard to the principle that there should be equality of opportunity for all people;
•    consider how the proposals will promote the improvement of health of persons in Greater London, promote the reduction of health inequalities between persons living in Greater London, contribute towards the achievement of sustainable development in the United Kingdom and contribute towards the mitigation of or adaptation to climate change in the United Kingdom; and
•    consult with appropriate bodies.

6.3.    The contents of section 1 of this DD indicates that the decision sought of the Executive Director of Housing and Land falls within the GLA’s statutory powers.
 

7.1.    The delivery timetable for the acquisition of the adjacent car park site and subsequent disposal is outlined in the table below: