MD3251 - Blackhorse Yard – Meanwhile Use

1.1.    GLA Land and Property Limited (GLAP) acquired the Blackhorse Yard site, in the London Borough of Waltham Forest (LBWF), in 2016 and secured a development partner for the site in 2017, receiving planning permission in March 2021 for a residential-led scheme to deliver 359 affordable homes. 
1.2.    The consented scheme is no longer viable under the terms of the Development Agreement (DA), due to challenging macroeconomic conditions and regulatory changes. This DA was ended between the parties in February 2023 and the planning permission will lapse in March 2024. In June 2023, GLAP commenced feasibility work, looking at optimising development potential to improve viability of the site. This will inform a new procurement exercise, due to launch later this year. The comprehensive redevelopment is forecast to start on site in late 2027. In the meantime, the site requires shorter-term activation for place-making and financial reasons. The financial impact of this vacant site is detailed in Part 2 of this decision. 
1.3.    Activation and cost savings are key drivers for GLAP’s strategy for meanwhile use. Another is social value particularly as Blackhorse Yard is located within a Creative Enterprise Zone (CEZ), and therefore presents an opportunity to deliver impactful outcomes for local people and businesses. Broadly, these emerging meanwhile objectives are supported by LBWF’s Local Plan and Affordable Workspace Study, both of which also identify a need for affordable workspace. This need will be further intensified by planned local business displacements resulting from the recent planning permission for the redevelopment of the adjacent Uplands Business Park.
1.4.    Through ADD2672, £40,000 revenue expenditure was approved in October 2023 to test meanwhile use across GLAP’s portfolio. This unlocked a process of meanwhile optioneering at Blackhorse Yard to establish site constraints, and market demand and requirements; and to engage local stakeholders prior to reviewing financial viability. 
1.5.    These options have been further scrutinised through direct engagement with landscape architects and local businessowners, and within the Mayoral family. These conversations have highlighted several local operators with a strong interest in delivering meanwhile use on the site, whilst clarifying that businesses prioritising social value require funding for start-up and servicing costs. Broadly, these interested parties consist of:
•    commercial storage operators
•    social enterprises providing affordable workspace
•    community gardens/growing operators.
1.6.    The recommendations set out in this document are informed by the findings from this market engagement.
 

2.1.    Prior to the long-term redevelopment of Blackhorse Yard, estate, maintenance, and security costs are being incurred at the site. These costs are broken down in Part 2 of this decision document. 
2.2.    Since October 2023, efforts to reduce these costs, activate the area, and deliver social value for local people and businesses have been explored with meanwhile consultants REDO and PRD. This workstream has tested a broad range of meanwhile options, through targeted research and engagement with local stakeholders. It has also considered two major constraints with providing meanwhile uses on the site. 
2.3.    Firstly, our consultants highlighted that uses delivering higher levels of social value generally require a degree of enabling works and associated costs. There is no capital budget allocated to develop such initiatives; therefore, expenditure must be sought from within existing budget lines for Blackhorse Yard, such as the estate management budget. Secondly, underground site conditions (including contaminated soil, buried tanks and a culverted brook) mean that deep excavation works would be financially prohibitive for such proposals, and could carry health and safety risks.
2.4.    Given these constraints, the proposal focuses on uses requiring only surface-level enabling works for the main site area. Only a small rectangle (465m2) to the northeast corner of hardstanding is suitable for occupation without major initial works. 
2.5.    The site also contains bulrushes growing to the southeast, in an undevelopable branch of land. This offers an opportunity to evolve this area into long-term public green space, subject to appropriate management of potential environmental contamination. Health and safety management is detailed at paragraph 2.14 below.
Recommended option
2.6.    The preferred approach seeks to deliver cost savings from inception and reinvest surplus profits into meanwhile uses that support activation and deliver social benefits through local businesses and community organisations. These outputs will be directly monitored via key performance indicators (KPIs) captured in lease terms.
2.7.    These objectives are expected to be achieved through a combination of storage, affordable workspace, and community gardens, creating a sustainable meanwhile ecosystem until comprehensive development is secured. This will be delivered through a phased programme to keep capital expenditure to a minimum. The provision of a shortcut (red route) will also be explored, potentially shortening journey times to Blackhorse Road tube station for Sutherland Road residents. A breakdown of the target uses is shown in the image below.

2.8.    In Autumn 2024, the first meanwhile phase will aim to reduce estate costs through onboarding a storage operator for the main site area. Once contracted, this operator will undertake its own enabling works, fencing and clearing the plots; and will commission site security. This will reduce GLAP’s ongoing estate management risks whilst generating a rental stream. 

2.9.    Profits from the storage function will then help subsidise the setup and ongoing costs of the affordable workspace and the red route, before supporting community gardens in the southeast corner. The final quantum and type of community-focused uses will be subject to the level of revenue generated by the storage use and available for reinvestment, as well as social value operators’ requirements and constraints. 
2.10.    It is anticipated that the red route works will be commissioned under the existing estate management contract. Eventually, the route’s security, lighting and access could be amalgamated into the community garden services. Therefore, these costs are included in the ongoing management fee allowance for community gardens as detailed in the cashflow shown in Part 2.
2.11.    Discussions with TfL Estates, TfL Legal and our consultants have helped ascertain the early steps to delivery for each element. These are summarised in Part 2, alongside key metrics and deliverables. The financial modelling is detailed in Part 2.
Minimising GLAP ongoing responsibilities
2.12.    The recommended option aims to minimise GLAP’s ongoing estate management costs and responsibilities for Blackhorse Yard whilst a developer partner is secured. This is detailed below.
Management
2.13.    Currently, GLAP commissions estate services to manage the security, maintenance and safety of the Blackhorse Yard site. These services are material due to the size of the site. As is common practice in commercial leases, these costs and responsibilities will be taken on by prospective tenants as leases are signed, which will be on a full repairing and insuring basis but outside of the 1954 Landlord and Tenant Act. The current arrangement will remain in place until site areas are handed over. This is accounted for in the financial modelling in Part 2.
Health and safety 
2.14.    As noted above, the site is contaminated and a culvert runs through the site, which has been partly de-culverted in places. Detailed site surveys identifying these health and safety risks will be shared and discussed with all potential occupiers; and suitable mitigations will be agreed and monitored. This process will include health and safety assessments with operators, to be signed off by a health and safety professional. Bespoke lease terms will also contain health and safety clauses, setting out requirements to operators.
Business rates
2.15.    It is likely that activating the site will mean business rates are payable for the commercial elements. These will be incorporated into operator’s costs. Opportunities for business rate relief via small-business or charitable relief will be explored with the affordable operators. However, any payable rates will be the operator’s responsibility.

3.1.    Under section 149 of the Equality Act 2010, as public authorities, the Mayor and the GLA are subject to a public-sector equality duty and must have ‘due regard’ to the need to:
•    eliminate unlawful discrimination, harassment, and victimisation
•    advance equality of opportunity between people who share a relevant protected characteristic and those who do not
•    foster good relations between people who share a relevant protected characteristic and those who do not. 
3.2.    Protected characteristics under section 149 of the Equality Act are age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, sex, sexual orientation, and marriage or civil partnership status. Throughout the progression of this project, due regard has been had to the ‘three needs’ listed above. 
3.3.    The design team, which supported PRD and REDO in developing the meanwhile use approach for Blackhorse Yard, was selected and appointed in accordance with the GLA Group Responsible Procurement  principles. The team offered two work placements for local students from Waltham Forest College. The meanwhile use strategy was specifically developed in collaboration with a local emerging artist from a minority ethnic background, appointed as part of the design team. 
3.4.    The proposals will seek to address the following key challenges and needs identified in the local area:
3.5.    In 2022, 13.2 per cent of those aged 18-24 in London were not in employment, education, or training . The affordable workspace could offer a training and enterprise programme for local young people, supporting them to realise their ambition. 
3.6.    New business births fell by 17 per cent between 2019 and 2022 in LBWF . The affordable workspace would provide for local creatives, giving them the opportunity to develop and expand business ideas. 
3.7.    In 2021, LBWF had the second-lowest level of job density  (i.e. jobs undertaken by local people and those that commute into the borough). The proposals will have the following effects in this regard:
•    the delivery of a shortcut route to Blackhorse Lane tube station would increase connectivity in the local area and reduce barriers to local employment
•    the implementation of a new storage operator on the site would contribute to supporting the local economic network and jobs.
Contribution to equality, diversity and inclusion (EDI)
3.8.    Introducing meanwhile uses on GLAP land offers significant opportunities to contribute towards EDI objectives throughout site development, during the leasing period, and in final occupation. The table below shows EDI opportunities and how these are being explored through the recommended option.

Options appraisal
4.1.    The options are detailed in the table below.

Risks and issues
4.2.    The key risks and issues are outlined in the table below. 

Links to Mayoral strategies and priorities
4.3.    The proposals support the following strategies and priorities.
•    Encouraging London’s diverse communities to come together: the potential for affordable workspace supports the Mayoral CEZ initiative. This involves certain areas of London being designated to have potential for a concentration of creative enterprises, and receiving support in the form of affordable workspace, skills initiatives, and employment support. Supporting local businesses to expand and the possibility for jobs created tie into the Mayoral strategy for Good Growth principles. 
•    Tackling air pollution; and education and youth: the potential for community gardens supports wellbeing, education, and air quality, helping local young families. The enterprise and training programme gives young people the skills and confidence to find future employment.
•    Active travel and making transport more affordable: the proposed red route would add to activation and placemaking for the area. The pedestrian route will encourage active travel and support local connectivity, reducing the need for costly modes of transport.
•    Fighting for London’s economy: the proposed use of storage presents best value offer for the site. This supports economic development for the local businesses and more widely. The ability to store materials/machinery/fleet vehicles is key to the broader supply chains of businesses in London. 
Exit strategy
4.4.    An essential part of meanwhile use is that operations can be quickly and easily terminated for construction of the final development. This should not create problems with the storage operations, which will be contracted outside of the 1954 Landlord and Tenant Act and include a three-month break clause following the original term.
4.5.    For the social operations, the management approach will be intentionally fluid to create opportunities for these aspects to evolve into the final development, insofar as possible. Business retention will also be explored in preliminary discussions with the developer partner.

Conflicts of interest
4.6.    There are no conflicts of interests to declare from anyone involved in the drafting or clearance of this decision form.

5.1.    Meanwhile use is a good option, as the site can be put to other uses in the meantime. This approach reduces associated estate services costs paid for by GLAP, with the majority of the cost passing on to occupiers. 
5.2.    The cashflow forecast (appended to the Part 2 form) shows the site to be loss making for the first two years (2024-25 and 2025-26), largely down to the investments, following which, it is expected to start making profit from 2026-27 onwards. 
5.3.    The impact of this meanwhile use on estate costs and the additional income to GLAP will be included in future iterations of GLAP’s business plan. Based on the meanwhile forecast information, this is deemed good value for GLAP.    

6.1.    TfL Legal will continue to work with GLA officers as the proposals outlined in this paper progress, ensuring the GLA Contract Funding Code is complied with when the proposed meanwhile uses for the Blackhorse Yard Site are established; and legal risks are highlighted and minimised in resulting legal documentation.
6.2.    Section 30 of the Greater London Authority Act 1999 (as amended) gives the Mayor a general power to do anything that he considers will further one or more of the principal purposes of the GLA as set out in section 30 (2). These are:
•    promoting economic development and wealth creation in Greater London
•    promoting social development in Greater London
•    promoting the improvement of the environment in Greater London.
6.3.    In 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 an equality of opportunity for all people
•    consider how the proposals will promote the improvement of the 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.
6.4.    Sections 1 to 3 of Part 1 of this report indicate that the Mayor has the power to proceed to make the decisions as requested within this report.

7.1.    The project will be delivered according to the following timetable: