MD2520 Thameside West Coordinated Development

Type of decision: 
Mayoral decision
Code: 
MD2520
Date signed: 
10 September 2019
Decision by: 
Sadiq Khan, Mayor of London

Executive summary

This MD seeks Mayoral Approval to replace GLAP’s existing Joint Venture (JV) arrangements that have been in place for the Carlsberg Tetley site at Thameside West in Newham since 2003 with a new agreement that takes account of acquisition of the JV and additional land interests by a new party (Keystone Partners); delays associated with the Silvertown Tunnel; the associated safeguarding on the Carlsberg Tetley site; the need to ensure policy compliant levels of affordable housing; and the need to achieve an exemplary redevelopment of this strategic site.

GLA Land & Property Ltd (GLAP) holds significant land interests at Thameside West on the north bank of the River Thames in the London Borough of Newham (LBN). The site is of strategic significance, being part of the Beckton Opportunity Area, adjacent to the Royal Docks, and incorporating the northern entrance of the new Silvertown Tunnel. It is also a key component for the delivery of the Mayor’s DLR-based Housing Infrastructure Fund scheme to support additional housing growth which has been awarded £291m of funding by Government.

GLAP is bringing forward Thameside West for development in a partnership with Silvertown Homes Limited (SHL) – a subsidiary of Keystone Partners who purchased their interest from Quintain Developments in 2017. The site is currently subject to a planning application which has been jointly submitted for 5,000 new homes of which 1,625 are planned as affordable (50% by habitable room on GLA land, with the option to increase to 70%).
GLAP’s land interests at Thameside West include the freehold of the Thames Wharf site and a 33% interest in the so-called Carlsberg Tetley site (as tenants in common with SHL).

The existing JV is proposed to be replaced by a Cooperation Agreement which will allow GLAP and SHL to combine their respective land holdings to deliver a co-ordinated and comprehensive development of Thameside West The Co-operation Agreement will require the parties to collaborate to obtain outline planning permission for the entire Thameside West site and detailed planning permission for jointly-owned phases of development; bring forward necessary infrastructure and enabling works; establish an estate management strategy; and agree a disposal strategy for the Carlsberg Tetley site and jointly-owned phases.

Decision

That the Mayor approves:

i. GLA Land and Property Ltd entering into a Co-operation Agreement with Silvertown Homes Limited and Keystone Silvertown Limited (as Guarantor) and all other necessary ancillary documents on materially the same terms as set out in this Mayoral Decision (including part 2).

ii. The funding strategy as set out in Part 2 of this paper, including the establishment of a working capital float of up to £100,000 from project proceeds, to be used to cover unexpected or time critical expenditure.

Part 1: Non-confidential facts and advice

Introduction and background

Thameside West is a prime site for residential-led mixed-use redevelopment because of its excellent location on the River Thames, in Zone 3 with good transport links (Jubilee Line, Crossrail and DLR), and its proximity to the wider Royal Docks regeneration area. A plan of the site can be found at Appendix 1 which sets out the land ownerships. A masterplan has been developed for Thameside West which proposes 5,000 new homes of which 1,625 will be affordable, subject to planning approval from the local planning authority, the London Borough of Newham.

GLA Land and Property Ltd (GLAP) inherited its land interests in the Thameside West site from the London Development Agency in 2012 by statutory transfer. The transfer included the land shaded green as shown on the attached plan at Appendix 1, known as Thames Wharf, and the Carlsberg Tetley site on which GLAP hold the land as tenants in common with Silvertown Homes Limited (SHL) (SHL is a subsidiary of Keystone Partners). GLAP hold a one-third interest in the Carlsberg Tetley site and SHL hold the other two thirds. The parties entered into a joint venture arrangement for managing the site on 17 October 2003, but development was hindered as the safeguarding for the Silvertown Tunnel led to delays and uncertainty in developing the original joint proposals (see Part 2 for further detail). A significant proportion of surrounding land is owned by Silvertown Homes Limited (SHL).

Due to these wider ownership arrangements, SHL and GLAP concluded that their joint and individual interests in the site would be optimised by a co-ordinated strategy which aims to bring forward the comprehensive development of Thameside West as a whole, rather than developing sites in isolation.

Keystone Land Developers Limited (KLDL) is contracted by Keystone Partners to manage SHL land. KLDL’s CEO is the former chief executive of Quintain PLC and was involved in delivering Greenwich Peninsula and Wembley Park. KLDL’s Executive Director has held various senior director level positions at reputable development companies, demonstrating their track record as a developer and their experience in investing in major European projects.


In July 2014, MD1374 approved GLAP funding for masterplan feasibility work and a delivery strategy for the site, to be taken forward in collaboration with SHL. In April 2017, MD2102 approved budget for a coordinated masterplan on the Thameside West site, which has the potential to deliver large-scale residential-led development across both SHL and GLAP land.

A masterplan design brief was jointly set by SHL and GLAP in August 2017 to commission masterplan architects. This brief requires that physical and social infrastructure is provided in a coordinated manner across land ownerships, ensures high levels of affordable housing provision, and will allow SHL and GLAP to bring forward a comprehensive masterplan for Thameside West.

The Silvertown Tunnel will be constructed on the wider site, and will be bored through the jointly-owned Carlsberg Tetley site. Its entrance portal will sit on land wholly-owned by GLAP (Thames Wharf site). The masterplan has been designed to respond to the constraints of the tunnel and ensure that the site can be taken forward for the provision of affordable housing. The housing delivered on GLAP land will comprise 50 per cent affordable housing (by habitable room); housing on non GLAP land will comprise at least 35 per cent affordable housing.

As approved in MD2102, there is a Land and Works Agreement (LWA) in place between GLAP, SHL and Transport for London which sets out the temporary and permanent land required for the development of the tunnel. In addition, the LWA sets out the agreed leasing and land purchase arrangements.

It is proposed that GLAP and SHL now enter into a Co-operation Agreement to take forward the delivery of the masterplan. This Co-operation Agreement is based on the existing joint ownership of the Carlsberg Tetley site and sets the basis for joint working, collaboration and governance across the wider land holdings of both parties at Thameside West.

The planning context & the constraints affecting Thameside West

Thameside West is covered by a series of current and emerging planning documents including:

• LB Newham Core Strategy: Adopted in 2019.
• Safeguarded Wharves Policy: This forms part of the Blue River Network policy in the London Plan and has been consulted upon as part of the London Plan review. The removal of the safeguarding of Thames Wharf is a pre-requisite to any residential re-development and has been set out in the draft London Plan via a consolidation strategy with other wharves and re-provision elsewhere. The Port of London Authority have responded as part of the consultation period for the hybrid masterplan proposal.
• Royal Docks Opportunity Area Planning Framework: This is being undertaken by GLA Planning and is likely to be finalised in mid-2021.
• TfL Silvertown Tunnel Safeguarding: The Development Consent Order published by TfL in 2016 was given Secretary of State consent in May 2017 and has been considered in the hybrid masterplan design.

The Masterplan

GLAP and SHL have worked collaboratively for two years to develop a hybrid masterplan planning application. This consists of a detailed phase 1 element: a mixed-use residential and light industrial co-location scheme consisting of 460 homes and delivering 50 per cent affordable housing at the south eastern end of the masterplan area (designed by John McAslan and Partners); and an Outline component for 5,000 homes (designed by Foster and Partners). The hybrid planning application was submitted to the London Borough of Newham (LBN) and validated on 6 January 2019. The masterplan responds to, and mitigates the following constraints:

• To the north-east — the elevated Silvertown Way flyover is the site boundary which creates connection issues with the Royal Docks area. The under-croft of this flyover has been designed to accommodate light industrial workspace, creating jobs and activating the passageway through to the Royal Docks. A separate planning application for this project, titled the ‘Flyunder’ was submitted to LBN and has been given permission to grant by the borough’s Strategic Planning Committee on 18 June 2019.
• To the south-east — adjacent third-party ownerships and industrial uses present an opportunity to pilot co-location of residential and industrial use classes, and industrial intensification, in accordance with London Plan Policy E7. The masterplan also re-provides Strategic Industrial Land in the form of a stacked industrial development between Dock Road and the Silvertown Tunnel Approach Road.
• To the south-west — the River Thames provides an excellent vista but the site needs to improve its flood protection to meet Environment Agency standards. An intertidal flood defence terrace has been designed to mitigate this risk, extending along the 1km river edge of the site and creating publicly accessible walking routes along the Thames Path.
• To the north-west — the River Lea's confluence with the River Thames forms the north-western edge of the site and the development addresses neighbouring development at Trinity Buoy Wharf with landing points for a new bridge over the Lea, secured in three places to match safeguarded landing points at Trinity Buoy Wharf.
• Below ground — the site includes the Jubilee Line tunnels, an old docks system culvert, and the route of the Silvertown Tunnel, all of which clearly constrain development. The landscape designs (by Patel Taylor Architects) include a new four-acre park over the Silvertown Tunnel and areas of natural habitat planted on the Site of Importance to Nature Conservation (SINC) adjacent to the new Silvertown Tunnel Approach Road.
• Above the site — the building heights respond to the City Airport safety zone restrictions and to those of the Emirates Airline.
• Through the site — the DLR linking Woolwich Arsenal and Canning Town runs through the site. A new DLR station has been designed into the outline scheme which connects into the new public realm designs.

The DLR station is required to unlock the delivery of a significant number of homes on the site and is part of the Housing Infrastructure Funding (HIF) Bid for the DLR amplified growth programme. Thameside West station forms part of an integrated and complementary programme of investment totalling £291million. The programme will deliver additional DLR rolling stock to increase frequency on the Lewisham and Woolwich branches.

Silvertown Tunnel

Under the Mayoral approval granted in MD2102, a Land and Works Agreement (LWA) was signed in 2017. A condition of this agreement is that GLAP and SHL work collaboratively to gain planning consent for the enabling works associated with the Silvertown Tunnel.

In March 2017, GLAP and SHL submitted a planning application for the enabling works associated with the Silvertown Tunnel on behalf of TfL. Resolution to grant planning permission was given in June 2017 and work has been carried out to meet the various planning conditions. To meet all conditions, closer joint working between TfL’s Project Company (the team that manages the delivery of the Silvertown Tunnel) and GLAP / SHL is required, which has been documented in a variation to the LWA and will be further supported by the provisions set out in the Co-operation Agreement.

TfL’s project company selected a preferred contractor to build the tunnel in June 2019 - Riverlinx. The construction programme currently indicates that the tunnel will complete in 2025 but this date is subject to any further delays in the procurement of the developer for the Silvertown Tunnel impacting the current estimated timetable.

A Deed of Variation to the Land and Works Agreement fixes the original land payment dates to allow for clearer business planning and forecasting for TfL and GLAP.

Objectives and expected outcomes

By working collaboratively to develop the Thameside West masterplan, SHL and GLAP will accelerate the phased regeneration of the area, sharing expertise, resources and planning costs and deliver at scale and speed. Without the provisions set out in the Co-operation Agreement, accessing development sites and developing simultaneously would prove challenging. In addition, the opportunity to coordinate and share extensive enabling and infrastructure costs between the parties would be lost.

SHL and GLAP are also able to respond positively to the constraints of the Silvertown Tunnel designs that affect both SHL and GLAP land, to secure sustainable long-term redevelopment in the Royal Docks and Beckton Opportunity Area.

Subject to the relevant processes and consents being met under the Co-operation Agreement (see 2.10 – 2 17 below), construction of the first phase will commence on the jointly-owned land at Carlsberg Tetley in 2020. GLAP and SHL have been in discussion with several GLA G15 registered providers regarding the delivery of Phase 1, which will deliver a minimum of 50 per cent affordable housing. The remaining phases can proceed when TfL return land to the parties upon completion of the Silvertown Tunnel – anticipated to be between 2023 and 2025 - subject to any delays in the procurement of the developer for the Silvertown Tunnel impacting the current estimated timetable.

In bringing land ownerships together, the parties have been able to adopt a co-ordinated approach to Employment and Strategic Industrial Land (SIL) and are proposing to re-provide intensified industrial space with improved access and increases to the overall quantum of industrial floor space. GLAP and SHL are responding to new London Plan policy E7 and showcasing a ‘masterplan-led’ approach to industrial intensification, putting the creation of new employment opportunities at the heart of the redevelopment proposals.

The hybrid masterplan application proposes to deliver:

• 5,000 new homes of which 1,625 are affordable homes (37 per cent by Habitable Room), with 50 per cent affordable housing delivered on GLAP land;
• Of these 1,625 homes, 975 are London Affordable Rented homes (60 per cent) and 650 are Shared Ownership homes (40 per cent);
• 75,000 sqft of retail floorspace;
• 200,000 sqft of flexible industrial floorspace;
• 72,000 sqft of community and leisure floorspace;
• 13.6 acres of new publicly accessible open space;
• A new four form entry primary school; and
• A new DLR station.

It is anticipated that the development will be brought forward in phases. The phasing plan can be found at Appendix 2 and the planning application has been uploaded to the London Borough of Newham’s planning portal.

Governance

GLAP and SHL have established a Working Group which has operational responsibility for the project and reports to a Steering Group. The Working Group meet on a bi-weekly basis and manage the project in accordance with the Business Plan, and the emerging Co-operation Agreement.

A Steering Group has also been established, which comprises two senior representatives each from SHL and GLAP, and which is responsible for overseeing the project and reviewing progress, as well as considering matters which are referred to it from time to time by the Working Group, including Business Plan updates.

The Business Plan safeguards the joint vision for the site and is designed to govern and regulate the relationship between SHL and GLAP. Underpinning the legal relationship are a series of contractual gateways to monitor progress and allow the parties to move forward in a coordinated fashion. This Business Plan helps to navigate those gateways and sets agreed Key Performance Indicators and milestones.

Co-operation Agreement

Under MD2102, Mayoral approval has been granted to improve the existing arrangements in place for Carlsberg Tetley and include provisions for the wider Thameside West land holdings.

The Cooperation Agreement is an umbrella agreement which includes the provisions of the existing JV and refers to the future works or services and agreements that may be entered into for future stages of the project outside of the existing JV. These later agreements will be subject to further decisions in accordance with the Greater London Authority’s Scheme of Delegation.

Upon entering into the Co-operation Agreement, the 2003 JV Agreement will be terminated.

The Co-operation Agreement foresees the parties working together to: obtain outline planning permission for the Thameside West site (and detailed planning permission for jointly-owned phases of development); acquire any additional third party interests in the Thameside West site; bring about necessary infrastructure and enabling works; establish an estate management strategy; and establish a disposal strategy for the Carlsberg Tetley site and jointly-owned phases.

GLAP, SHL and Keystone Silvertown Limited (SHL’s guarantor) will also enter into an ‘equalisation agreement’ which sets out an agreed mechanism to balance the affordable housing allocation under the masterplan and to set out the basis on which future infrastructure expenditure is shared between the GLA and SHL (this is based on Gross External Area (GEA) and GLAP will pay 38 per cent and SHL will pay 62 per cent).

The development of the Thameside West site will be divided into different phases. The Co-operation Agreement provides that where SHL and its affiliates own a majority of the land area within a phase (SHL Majority Phase), and provided that SHL or its named affiliate meets certain criteria (relating to covenant strength, funding and relevant experience), SHL or the named affiliate will be the approved developer for that phase and will enter into a disposal arrangement and/or development agreement with the landowners for the relevant development. However, this does not apply to plots of land wholly-owned by GLAP, within a jointly-owned phase.

The Co-operation Agreement also provides that, for any SHL Majority Phase where SHL and GLAP are jointly developing the land, the landowners will engage Keystone Land Developers Limited (“KLDL”) to provide development management services, provided that KLDL meets certain criteria related to its skills, resources and previous performance, and KLDL will enter into a development management agreement (“DMA”) with GLA and SHL (or the relevant landowner(s) of the Jointly Owned Phase) for this purpose. KLDL is owned 50 per cent by the same Keystone entity that owns SHL and 50 per cent by the founder and CEO of Keystone Partners, Max James. Again, this does not apply to plots of land wholly-owned by GLAP within a jointly-owned phase.

On the same date as signing the Co-operation Agreement, GLAP, SHL and KLDL will also enter into the following:

• A land acquisition agreement (“LAA”), under which KLDL negotiates the acquisition of relevant interests in the Thameside West site from any necessary third parties;
• A development agency agreement (“DAA”), under which KLDL provides site-wide development agency services in connection with the development; and
• An estate management services agreement ('EMA'), under which KLDL manages the Carlsberg Tetley site (which is SHL Majority Phase land).

These agreements will terminate upon outline planning permission being secured. Thereafter, SHL and GLAP will liaise to ensure that appropriate arrangements are in place for the provision of equivalent services post-planning.

SHL has appointed or will appoint various consultants to assist on the planning applications. GLAP will pay 38 per cent of the consultants' fees associated with the outline planning application and one-third of the fees associated with the detailed planning for Carlsberg Tetley. Going forward GLAP will pay 38 per cent of fees associated with the detailed planning applications for other jointly owned phases.

These changes have been documented under a Co-operation Agreement and various supporting documents which are ready for signature. Further detail on the agreement can be found in the confidential Part 2 to this paper.

This Mayoral Decision seeks permission to enter into the Co-operation Agreement and ancillary documents with Silvertown Homes Limited.

Equality comments

Under section 149 of the Equality Act 2010 (the “Equality Act”), as a public authority, the GLA must have ‘due regard’ to the need to eliminate unlawful discrimination, harassment and victimisation, and to advance equality of opportunity and foster good relations between people who share a protected characteristic and those who do not. Protected characteristics under the Equality Act comprise age, disability, gender re-assignment, pregnancy and maternity, race, religion or belief, sex, sexual orientation and marriage or civil partnership status.

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 positive impacts 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, Asian and Minority Ethnic groups and women.

The development of Thameside West will deliver strategic objectives from the Mayor’s Equality, Diversity and Inclusion Strategy (section: making London a great place to live).

The masterplan has been designed to provide a minimum of 50 per cent affordable homes on GLA land, in line with the draft London Plan. The tenure split meets local borough policy, therefore increasing the supply of genuinely affordable homes. This will advance equality of opportunity for groups with a protected characteristic.

The London Borough of Newham is one of the most disadvantaged boroughs in London and one of the most diverse in terms of faith and ethnicity. It is paramount to redevelop this gateway to the Royal Docks in a considered and sustainable way and consider how the regeneration of the area will provide benefits for all local communities. The outline masterplan has been designed to respond to the diversity of the surrounding area and in the design of the landscape and homes and follows all Part M requirements to create an accessible development in the Royal Docks.

There is a high proportion of young people in the London Borough of Newham compared to other London Boroughs. The play space, large new park and natural habitat areas, along with the new four form entry primary school create opportunities for communities to come together and foster good relations between diverse groups.

The proposals in this paper have no negative impact on those with protected characteristics. The GLA’s assessment is that this initiative will not have an adverse effect on any groups with a protected characteristic and will assist in fostering good relationships between groups.

Other considerations

This decision outlines an opportunity to comprehensively redevelop a significant brownfield site in East London and make the best use of GLAP land.

The Thameside West project will aim at implementing a number of the Mayor’s policies, such as those outlined in the new draft London Plan, A City for All Londoners, Healthy Streets Approach, Culture Strategy, London Housing Strategy, Transport Strategy and is aligned with the Mayor’s Equalities Framework to consider the requirements of relevant equalities groups.

As the project sits on GLA owned land, when the GLA considers the planning application, the Mayor will delegate authority to the Deputy Mayor for Planning, Regeneration and Skills, as is the protocol in these scenarios.

There are no conflicts of interest to note for any of those involved in the drafting or clearance of the decision.

Key Risks

Delays to the delivery of the Silvertown Tunnel could significantly delay the delivery of later phases of the scheme. Under terms of the Land and Works Agreement, regular progress meetings have been established with the tunnel delivery team to ensure that any issues can be mitigated quickly, and that information can be shared to ensure the smooth delivery of the project.

Masterplan delivery may stall if SHL and GLAP are not able to collaborate in the joint delivery of the project. The extensive governance and delivery provisions in the Cooperation Agreement are designed mitigate this risk.

The constraints associated with the site result in high infrastructure costs which will be required for the initial stages of the project. The Equalisation Agreement (ancillary to the Cooperation Agreement) sets out how these costs can be shared between GLA and SHL and helps to mitigate the risk of the project being undeliverable in its early stages.

Thames Wharf (GLAP’s ownership) is safeguarded as a wharf for the protection of river freight capacity. This designation is part of the London Plan review and it is likely that a recommendation is made to consolidate a number of wharves to improve efficiency and overall capacity. Only once this consolidation is complete can the safeguarding be lifted, so GLAP will need to work with LBN and the PLA (and other relevant third parties) to ensure any recommendation is implemented.

The commercial and legal risks are further outlined in Part 2.

Financial comments

This decision requests approval for GLAP to enter into a Co-operation Agreement with Silvertown Homes Limited and a funding strategy set out below.

MD1374 previously agreed the spend of up to £200,000 on feasibility and delivery strategy work.

MD2012 approved spend of up to order to £1,000,000 on Planning fees relating to the submission of the planning application for the enabling works; engineering; legal; masterplanning; property advice; from the 2017/18, 18/19, 19/20 and 20/21 budgets.

Of this £1,000,000, £613,920 has already been spent with the remaining £386,080 committed.

The costs related to the LWA enabling works planning application are split 50:50. Moving forwards, there is an understanding that the design and planning cost for the whole site is to be split by Gross External Area (GEA) which results in 38 per cent of fees being paid by GLAP and 62 per cent being paid by SHL, and costs which relate purely to the development of the Carlsberg Tetley land will be split 66.7 per cent SHL/33.3 per cent GLAP.

The income received by GLAP from TfL as land payments and to compensate for the effects of the Silvertown Tunnel will be accounted for under the normal GLAP procedures; it will be accounted for in a separate Income Account known as Thameside West CTS Income and will be held to fund the expenses. The expenses will be subject to the standard GLAP approval processes and paid from the GLAP main bank account.

The land payments received from TfL are to be used to cover costs associated with developing the site. At present, there is an element of “netting off” involving TfL carrying out works to the river wall under GLAP’s demise. This netting off may extend further to cover additional infrastructure, such as the Thames Wharf DLR station which will be built within the Thameside West demise.

The Business Plan for the project will determine the anticipated future expenditure and income which will be audited by commercial advisors, and this will be signed off by the project Steering Group.

This MD seeks approval to establish a working capital float of up to £100,000, to be used to cover unexpected or time critical expenditure. It will be treated as a non-current debtor on GLAP’s balance sheet. A breakdown of the expenses incurred by this fund will be received by GLAP monthly, expensed by Finance, thereby reducing the balance of the non-current debtor.

GLAP and SHL are both registered for VAT. In addition, there is a separate VAT registration for the Carlsberg Tetley jointly owned land.

Further Decisions will be sought before entering into any delivery vehicles for future phases of the project in accordance with the Greater London Authority’s Scheme of Delegation.

Activity table

Activity

Timeline

Mayoral Decision

September 2019

Cooperation Agreement signed

September 2019

Deed of Variation to the LWA signed

September 2019

Silvertown Tunnel implementation

Q1 2020

Phase 1 start on site

Q4 2020


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