MD1539 Albert Island Disposal

Type of decision: 
Mayoral decision
Code: 
MD1539
Date signed: 
10 September 2015
Decision by: 
Boris Johnson MP (past staff), Mayor of London

Executive summary

Albert Island is an 11ha brownfield site in the Royal Docks with the potential to deliver commercial development and jobs for London. The overall objective is to procure a development partner to deliver the comprehensive redevelopment of Albert Island. The requested funding detailed in this paper will be used to obtain independent commercial property and legal advice, site investigations and necessary due diligence to:
•    Support the completion of  the internal options appraisal process and determine a procurement strategy;
•    Assist in the preparation of supporting documentation including legal documents;
•    Assist with the management of the procurement process;
•    Provide technical expertise on the assessment of the commercial and financial elements of tenders; 
•    Support the completion of the legal documentation with the preferred bid; and
•    Allow the undertaking of site investigations and additional due diligence as necessary.

Expenditure of £139,000 was approved under DD1306 to appoint property and legal advisors. This form approves a further £111,000 of expenditure taking the total to £250,000

Decision

The Mayor approves expenditure of £250,000 for site investigations and further due diligence to assist with the Albert Island disposal.

Part 1: Non-confidential facts and advice

Introduction and background

1.1.GLA Land and Property Ltd (GLAP) owns the freehold of Albert Island, an 11ha brownfield site in the Royal Albert Basin at the eastern end of the Royal Docks in the London Borough of Newham and within the Royal Docks Enterprise Zone. The island is reasonably well connected, served by the Gallions Reach DLR station and direct access to the A13 and North Circular via Gallions roundabout (see appendix A – site plan). The majority of the Island is cleared. In the interim many of the individual plots currently accommodate short-term occupation that is subject to an annual review.

1.2.The Mayor of London is undertaking a strategic review of this site to identify proposals for the site’s future development. The site has been identified in the London Plan and TfL River Action Plan as a potential location for a strategic facility required for the growth of London’s leisure and working craft operating on the Thames. The Mayor is planning to market the site for a development partner, or a consortium of partners, to provide a mix of commercial premises and other uses to create jobs and growth in the area.

1.3.The major constraint over the Albert Island site is the London City Airport flight path, which imposes physical limitations on the location, height, and type of development in the north of the island. Supplementary planning guidance sets-out Obstacle Limitation Surfaces (OLS), a series of technical constraints, and the Public Safety Zone (PSZ). City Airport has been briefed on the proposals and is broadly supportive and open to further discussions.

1.4.There is limited site specific planning policy designation. The only specific designation in London Borough of Newham’s (LBN) Core Strategy is for open space (OS10). However, it is perceived as forming part of wider ‘Strategic Site’ allocation (S19) for the adjacent Albert Basin. A development brief for the island will be established in partnership with LBN to ensure a coordinated approach to future development and will be included within the ITT.

1.5.The expenditure was approved in-principle by the Housing Investments Group (HIG) on the 3 march 2015. HIG endorsed the development objectives and the initiation of a developer selection process, using an OJEU compliant competitive dialogue process, to deliver a commercial mixed use development incorporating a commercial boatyard and marina, the approved spend of £139,000 (DD 1306) and endorsed the proposal to allocate the balance of the £250,000 budget to site investigations. Additional legal fees may be required due to the chosen procurement route.

1.6.Since the HIG approval in March 2015 work has been undertaken to identify a procurement route and to carry out soft market testing to assess the potential for a boatyard and commercial-led development at the island.

1.7.The preferred procurement route has been identified as Competitive Procedure with Negotiation under the Public Sector Contracts Regulations 2015.

1.8.A Prior Information Notice was issued in May 2015 and a website established www.albertisland.london. This has solicited interest from the market and a database of interested parties has been established. The information gathered is currently being analysed and a decision to be taken on the form of development by September 2015.

1.9.This process has identified that there is a need for further site investigations to understand more fully the ground conditions and any structural issues which may exist.  

Objectives and expected outcomes

2.1.    The overall objective is to procure a development partner to deliver the comprehensive redevelopment of Albert Island. The requested funding will be used to obtain independent commercial property and legal advice to:

•    Support the completion of  the internal options appraisal process and determine a procurement strategy;
•    Assist in the preparation of the supporting documentation including legal documents;
•    Assist with the management of the procurement process;
•    Provide technical expertise on the assessment of the commercial and financial elements of tenders; 
•    Support the completion of the legal documentation with the preferred bidder; and
•    Allow the undertaking of site investigations and due diligence.

2.2.     The budget breakdown for the above works is estimated as follows: 
•    Procurement legal advice £116,000
•    Property advice and website £64,000
•    Site investigations and further due diligence £70,000

2.3.    It is expected that the work will result in the GLA securing a development partner with the capability to deliver a commercial led development at Albert Island which results in jobs and growth for London and the Royal Docks.  

Equality comments

3.1.    There are no equality implications. The request for additional funding is for site investigations and other work to prepare the site for disposal. This has no impact on the end users (future residents) and therefore no impact on any of the protected characteristics. 

Other considerations

Key risks and issues 

4.1.    Whilst policy supports the development of a boatyard on this site there is a high level of uncertainty around the boatyard’s viability and market interest in developing a facility of this kind. This work is intended to mitigate this risk and avoid unnecessary costs being incurred.

Mayoral strategies and priorities 

4.2.    Royal Docks Strategy. 

4.3.    Mayoral Priority of nurturing businesses (small and large) and help Londoners to find and access jobs.

4.4.    Improvement to local transport and green infrastructure to facilitate Regeneration – a Mayoral Priority - of the Royal Docks. 

4.5.    London Plan, Rivers Action Plan and Rivers Concordat objective to increase freight and passenger traffic on the Thames to 12m by 2020. 

Impact assessments and consultations.

4.6.        GLAP is working in close partnership with the Royal Docks Management Authority Ltd (RoDMA), Port of London Authority, Transport for London, Environment Agency and London Borough of Newham, to agree a coherent strategy for bringing forward the site for development. The site is of significant importance to both Boroughs and will deliver significant regeneration of an area substantial need.  

Financial comments

5.1.    The site is subject to temporary leases. Copies of all leases entered into have been supplied to Finance and Estates Management. 

5.2.    GLAP has opted to tax the land at Albert Island. Sales of GLAP land will be subject to VAT in the normal way. 

5.3.    The expenditure to be incurred is revenue in nature and will be monitored as part of the revenue programme budget monitoring.
   
5.4.    Further MD approval is required to dispose of any GLAP asset once the outcome of these studies is complete. 

5.5.    This spend can be financed by the project budget allocation of £250k for 2015/16. 

Investment and Performance Board

The proposal for additional expenditure of £111,000 for site investigations and further due diligence to assist with the Albert Island future disposal which was endorsed by the Housing Investment Group on the 3 March 2015.

Planned delivery approach and next steps

Consultants have been procured through frameworks and managed by the Strategic Projects and Property Team.

 

Activity

Timeline

Competitive with Negotiation OJEU Process

October -March 2016

Site investigations and Due diligence

September - October 2015

Delivery End Date  Development partner appointed

March 2016

Project Closure: Development commences

June 2016

Appendices and supporting papers

Appendix 1 Development area