ADD2104 Beam Reach 8 disposal fees

Type of decision: 
Assistant Director's decision
Code: 
ADD2104
Date signed: 
11 April 2017
Decision by: 
Simon Powell, Assistant Director of Strategic Projects and Property

Executive summary

Protracted negotiations on a number of plots at Beam Reach 8 has resulted in a cumulative fees overrun.  The difficulties over agreement have largely arisen from lack of historic information in relation to the development of the plots and discussions around the allocation of environmental risk.  GLAP has sought to protect its position and therefore has had to provide additional information to purchasers before transactions can be finalised leading to some delays and extension of the legal scope.

Decision

That the Assistant Director of Strategic Projects and Property approves spend of £35,000 to cover historic overspend of £26,885 as well as current and future spend of £8,115 to conclude the final sale under discussion.   

Part 1: Non-confidential facts and advice

Introduction and background

1.1.    Beam Reach 8 forms part of the industrial land in London Borough of Havering that GLA Land and Property Limited (GLAP) inherited from the London Development Agency (LDA).  The site was assembled by the LDA to support the development of industrial activity in the area.  Beam Reach 8 is part of a series of sites that were identified as suitable for smaller occupiers.

1.2.    Beam Reach 8 comprises four distinct strategic industrial, brownfield development sites, located between Coldharbour Lane, Ferry Lane and the River Thames in Rainham.  In total this comprises 12.4 hectares of developable land and is within the London Riverside Opportunity Area, identified in the London Plan as providing the opportunity for industrial and manufacturing uses and particularly for the intensification and more efficient use of land to generate the opportunity for more jobs to be created.

1.3.    On 30th October 2005, Havering Council granted outline permission for 100,000sqm of B1b, B1c, B2 and B8 industrial and warehousing uses.  The GLA supported the scheme. The original outline planning permission was subsequently renewed on 19th January 2009, via an application to vary existing conditions from the 2005 permission.  The permission was then further renewed on 4th April 2013, again via condition variation, the permission having been partially implemented by this date.

1.4.    Since the 2012 when GLAP took control of the sites it has been working to sell the sites for development.  Previous approvals have authorised the sales and delegated the final terms of contract to the Executive Director for Housing and Land.  MDs 1251, 1309, 1363 and 1593 cover the various land disposals and required fees. 
 

Objectives and expected outcomes

2.1.    GLAP has been negotiating with purchasers and their agents to dispose of the land at Beam Reach 8 on a plot by plot basis as interest from the market arose.  GLAP retained two agents on a joint agency basis to market the sites and find potential leads.  

2.2.    Between August 2013 and February 2016 four separate approvals were sought for 5 transactions; the same solicitor was retained on each transaction for efficiency and because of their prior knowledge of the site.  At the outset of each negotiation the fees were forecast; however, because some of the negotiations became protracted in the final stages a number of the transactions went beyond the initially agreed legal fee budget.

2.3.    The issues have mainly related to the ground conditions and restrictions on title that have been of concern to purchasers but about which GLAP has relatively limited information having inherited the land from the LDA rather than having completed its own due diligence at the point of acquisition.

2.4.    The current cumulative financial position is that an overspend has occurred through the mismatching of approvals to transactions and therefore it has not been evident that cumulative approval was not in place.

2.5.    This paper requests a total of £35,000 to cover historic overspend of £26,885 and £8,115 to cover future transaction costs and conclude the remaining sale of land.

2.6.    Once all the land sales are complete Beam Reach 8 will have been redeveloped as a good quality industrial location supporting small to medium size enterprises in the Rainham area.
 

Equality comments

3.1.    The equality obligations of GLAP are not considered to have implications with regards to this approval.

Other considerations

Timing
4.1.    The spend needs to be regularised in time for the end of the financial year.
 

Financial comments

5.1.    This decision requests approval for retrospective as well as current and future revenue expenditure totalling £35,000 in relation to land disposal at Beam Reach 8. 

5.2.    Retrospective approval amounts to £26,885 for expenditure incurred prior to March 2016. Whereas, only £769 is related to 2016/17 financial year with the remaining balance (£7,346) to be incurred in the next financial year (2017/18). This and next year’s balances will be expended by underspend from Land and Property programme budget within Housing & Land department. 
 

Planned delivery approach and next steps

6.1.    The remaining transaction will be concluded or aborted within the next two calendar months.