MD1645 Stephenson Street project revenue expenditure

Type of decision: 
Mayoral decision
Code: 
MD1645
Date signed: 
22 April 2016
Decision by: 
Boris Johnson MP (past staff), Mayor of London

Executive summary

Through MD1626, the Mayor appointed Berkeley Homes as preferred developer for a site adjacent to West Ham station in the London Borough of Newham (LBN) following procurement through the London Development Panel (LDP) by GLA Land and Property (GLAP). 

The site is large and complex which requires further action by both GLAP and Berkeley Homes to ready the site for development. This MD requests expenditure of £330K across the remaining lifetime of the project to cover a number of work streams requiring technical due diligence and legal advice/expenditure. This expenditure will be contained within the existing Land and Property revenue budget.
 

Decision

That the Mayor approves expenditure of up to £330,000 to fund the legal and technical due diligence costs of GLA Land and Property Limited at the Stephenson Street site.

 

Part 1: Non-confidential facts and advice

Introduction and background

1.1    The site at Stephenson Street comprises 10.62 hectares and sits adjacent to West Ham station. Berkeley Homes have been selected as the preferred bidder for the site by MD1626. Expenditure related to the procurement via the London Development Panel was approved through DD1219. The site is a large, cleared (following MD1165) but with a number of constraints, such as poor access, contamination and restrictive covenants applying to the site which require further action by both GLAP and Berkeley Homes before the site can be developed.

1.2    To regularise these constraints there are a number of non-LDP standard documents to be entered into and therefore further legal fees in excess of those incurred on the two previous LDP disposals at Silvertown Way and Pontoon Dock.

1.3    In addition, there are a number of key stakeholders to reach agreement with, in particular with TFL for the purchase of air rights which will unlock the sites capacity thresholds significantly. 

1.4    The site was taken to market through the LDP for a residential-led mixed use scheme and will incorporate approximately 1/3 private for sale, PRS and affordable, and an appropriate quantum of employment space. Significant access and transport upgrades will be required, as well as the provision for Berkeley Homes to seek the provision of a free school on the site. 

1.5    Further details of financial forecasts are set out in part two of this decision.

1.6    The site has a historical approval of £120K (ADD75, ADD113 and DD1219) which covered geotechnical studies, legal fees, valuations and commercial advice. Of this budget £34K remains, which will fund historical Legal Fees. Officers have estimated the ongoing costs associated with the scheme. These are covered in part 2.
        
1.7    Once the development is in contract, which is imminent, we anticipate ongoing monitoring costs of £30K per annum for the next two years. Where possible the GLA will seek for Berkeley Homes to cover some of the legal costs incurred.

 

Objectives and expected outcomes

2.1    We anticipate this budget being sufficient to complete the finalisation of the Development Agreement and the further work required to ready the site for development, so far as they fall to be undertaken by GLAP.

2.2    The development will contribute upwards of 3,500 residential units when complete.
 

Equality comments

Equalities considerations will be taken into account in that all work will be procured in accordance with GLA duty.

 

Other considerations

4.1 The decision seeks approval for expenditure of £330k over the life of this project, spanning potentially three financial years. The anticipated profile of spend is as follows:

2015-16

1016-17

2017-18

46,000

254,000

30,000

 

4.2    The expenditure will be contained with the existing Land and Property revenue budget. Allocated budget for Stephenson Street over two financial years (15/16 & 16/17) totals £300k. At this stage there is no budget provision in 17/18 to fund the £30k budget requirement. It should be noted that the estimated cost of this project is currently indicative. Any costs beyond £300,000 will be funded in the first instance from within the existing Land and Property Revenue budget or within the Housing and Land existing revenue budgets. 

4.3    All the necessary budget adjustments will be implemented over the life time of the project to account for any movements over the years.
 

Financial comments

5.1    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

5.2    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.

5.3    Sections 1 and 2 of this report indicate that the Mayor has the power to agree to the decision set out above.
 

Planned delivery approach and next steps

The next milestones are as follows:

Activity

Timeline

Signing of Contract

March 2016

Grant of Planning

December 2016

Delivery Start Date

Q2 2017