MD1649 Floating village in Royal Victoria Dock

Type of decision: 
Mayoral decision
Code: 
MD1649
Date signed: 
28 April 2016
Decision by: 
Boris Johnson MP (past staff), Mayor of London

Executive summary

Using the GLA’s London Development Panel (LDP), GLA Land and Property Limited (GLAP) has selected the joint venture Carillion Igloo Genesis (Igloo JV) as the preferred partner to develop a mixed use floating development on 5Ha of water in Royal Victoria Dock within the Royal Docks, London Borough of Newham. Approval is sought to appoint Igloo JV to deliver 50 homes and associated commercial and leisure activities to create a high quality floating community. 

 

Decision

That the Mayor:

•    Approves GLA Land and Property Ltd  to enter into a development agreement with Carillion Igloo Genesis on the terms outlined in this paper and associated documentation necessary to facilitate the Floating Village project;
•    Approves GLA Land and Property Ltd  to enter into a surrender agreement with RoDMA for the 5ha of water on the terms set out in this paper;
 

Part 1: Non-confidential facts and advice

Introduction and background

1.1    On the 12th March 2013 at MIPIM (international property event in Cannes) the Mayor of London with the support of the Mayor of Newham announced that he would be launching a competition to seek a development partner to deliver a floating village in Royal Victoria Dock.

1.2    The Floating Village will create a unique concept to London by establishing a floating, mixed-use community. The high quality residential led scheme will incorporate a genuine mix of commercial and leisure uses, with the objective of attracting more visitors to the area, increase visitor dwell time, create local jobs and raise the profile of the Royal Docks.

1.3    In May 2013 the GLA’s Investment and Performance Board (IPB) endorsed a disposal strategy for the site, which was approved by a Mayoral Decision No 1285.  The recommended disposal option was to procure a development partner using the GLA’s London Development Panel (LDP). 

1.4    Following a three stage procurement process in July 2014, the GLA’s Housing and Investment Group (HIG) endorsed the selection of the Igloo JV as the preferred development partner for the Floating village scheme. A further update on progressing the details of the development agreement was provided in December 2015,

1.5    The purpose of this decision paper is to set out the basis of the competitive procurement process undertaken, highlight the  key commercial terms enshrined within the development agreement and gain a Mayoral Decision to proceed to  enter into the development agreement and ancillary documentation allowing the Igloo JV to proceed with the development.

The Site

1.6    GLAP’s site is a 5ha area of water within Royal Victoria Dock which encompasses the dock bed and associated dock water space, the adjoining dock edges, and stepped false quay access known as the Corniche within the London Borough of Newham.  It is located to the western end of Royal Victoria Dock close to the ExCeL Exhibition Arena and International Convention Centre.

1.7    The site is in easy reach of public transport connections of both Royal Victoria DLR and Custom House DLR stations and also the Emirates Airline. The anticipated arrival of the Custom House Crossrail Station during 2018 will provide access to central London, including a direct link to Liverpool Street station within 7mins, and a planned bus interchange to local destinations.

Disposal Strategy

1.8    Given the unique and innovative nature of this development, GLAP worked closely with the Royal Docks Management Authority (RoDMA) and the London Borough of Newham’s (LBN) during the procurement to ensure the objectives of the key stakeholders were represented.  

1.9    The developer selection process was based on a three stage approach incorporating an Expression of Interest (EOI), Sifting Brief and Invitation to Tender (ITT). GLAP were advised during the process by legal and procurement advisors at different stages. The EOI was issued to all 25 members of the LDP in December 2013 and following receipt of EOIs the Sifting Brief was issued to all interested LDP members also in December 2013.  The ITT was issued in February 2014 to the bidders shortlisted through the Sifting Brief evaluation and tenders were received by the prescribed deadline of 30th April 2014.

1.10    Igloo JV were recommended and endorsed by HIG in July 2014 on the basis that their bid represents the most economically advantageous tender using the evaluation criteria published in the ITT documentation.   

1.11    The key commercial terms on which GLAP intends to contract with the Igloo JV was endorsed by HIG in December 2015 and are set out in the confidential part 2 of this MD.
  
1.12    RoDMA board has endorsed the proposal to surrender the 5 ha of the water which currently forms part of a 225 year lease from GLAP, in place to give RoDMA the right to manage the water, via a lease. 

The RoDMA lease provides that where a surrender of the water area is sought, RoDMA can seek a premium.  RoDMA will receive a percentage share of any development receipts (less all legitimate costs incurred by GLAP) received by GLAP (see part 2).    
 

Objectives and expected outcomes

2.1    The project aims and objectives are to create a unique internationally recognised high quality mixed     use floating visitor destination which achieves the following:

•    The Place
    Create an internationally recognised high quality, innovative and architecturally outstanding     visitor destination;

•    Mix of uses
Provide a vibrant and genuine mix of uses which provides homes, visitor attractions and amenities;

•    The waterspace
The development must protect access to views across the waterspace and must also support active uses within the water body and retain the character of the docks;

•    Long term management
Provisions of a high quality and efficient long-term management for the development to ensure the high quality appearance of the buildings are maintained together with the public spaces.

2.2    The expected outcome of the development is to provide a high quality residential led scheme which      will incorporate a genuine mix of commercial and leisure uses which will attract more visitors to the     area, increase visitor dwell time, create local jobs and raise the profile of the Royal Docks. 

    The minimum development will be 50 residential homes and 25,000 sq m of non-residential     floorspace.  Under the key terms and conditions of this appointment the developer shall:

•    Enter into a Development Agreement (DA) based on a standard form, and a Head Lease.  The development agreement is conditional on the delivery partner securing a planning permission (which is subject to the approval of GLAP) and will need to provide evidence of funding delivery;

•    Submit a planning application within:
Submission Target Date:    10 months from the date of the Development Agreement
Submission Longstop Date:    20 months from the date of the Development Agreement

•    Pay a guaranteed minimum land value (net of all costs) on the basis of the financial offer, submitted as part of Igloo JV’s bid, on completion of the scheme or on the longstop date.
 

Equality comments

3.1    The public spaces and non-commercial areas of the scheme will be fully accessible and DDA Compliant together with a number of the residential units determined by the planning permission.      The proposal will meet this requirement and will be addressed in more detail as the detailed design progresses.    

      

Other considerations

4.1       Key risk and issues:

Key Risks

Mitigation Strategy

The bidder fails to gain a suitable planning permission

Ensure the bidder implements the strategy submitted as part of the tender.  A requirement of the Development Agreement is the development partner will enter into a Planning Performance Agreement (PPA) with LBN, which will specify milestones for submission of planning application and timescales for borough response. Work closely with LBN’s planning and regeneration teams to ensure the proposal meet their requirements. 

The successful tenderer defaults on the offer, which would delay delivery of the project

The purchase price within the Development Agreement is a guaranteed minimum sum due on the end date or practical completion of the development when all the Conditions have been satisfied.

The procurement process is challenged

As set out in this report, a transparent, fair and equal procurement process has been undertaken, in line with advice received from advisors

Lack of interest from occupiers

Support the developer in preparation of the sales and marketing strategy. Agree target dates for completion of the scheme.  Flexibility built into the Development Agreement regarding non-residential floorspace. 

 

Financial comments

5.1       Finance comments are in part 2 of this paper.

 

Investment and Performance Board

7.1    On 3 July 2014 Housing Investment Group (HIG) received a report outlining the results of a competitive tender exercise to develop the water within Royal Victoria Dock.  HIG endorsed     the preferred development partner and noted the receipt for the sale of the site.

7.2     On 9 December 2015 HIG received a further report which set out the key commercial terms on which the GLA have agreed to contract with the Igloo JV where were set out in the reserved part of the report.  HIG endorsed the completion of the development agreement with the Igloo JV on the terms outlined in private part 2 of the paper and also summarised in part 2 of this MD.  

 

Planned delivery approach and next steps

8.1       The next steps are summarised below:

Activity

Timeline

Mayoral Decision

April 2016

Enter into Development Agreement

April 2016

Submission of Planning Application

January 2017

Planning Approval/signed s106

August 2017

Start on Site (longstop)

March 2019

Completion

March 2022

 

Appendices and supporting papers

Appendix 1 – Red line boundary plan of the site