CD148 - Procurement of Savills for Western Lands Valuation Support

In January 2020, the Board approved OPDC's revised delivery approach which included the following key elements:

• a new focus to the regeneration of the area (as supported by CD130), taking a comprehensive view of the 'Western Lands' along Old Oak Common Lane, Old Oak Lane and Victoria Road where key sites are owned by Department for Transport (DfT) and Network Rail;
• developing an evidence base of the benefit of a comprehensive and coordinated approach to land, development and infrastructure funding to optimise the strategic opportunities that the area offers;
• securing the support of major partners including public sector landowners and funders; and
• developing an engagement plan to ensure local and future communities in the area can influence the development and delivery of this major opportunity for London.

Since January, OPDC officers have engaged with key stakeholders including Network Rail, HS2 and the boroughs to begin the process of securing the support of the major partners to the development of the strategy for Western Lands. OPDC has also engaged with central government - via the Ministry for Homes, Communities and Local Government (MHCLG), Homes England (HE) and the Infrastructure and Project Authority - to discuss potential funding opportunities.

OPDC's Planning Policy team have been working on proposed modifications of the Local Plan that would allocate new sites in its "Western Lands" area for residential led, mixed use development.

To support the delivery of the Local Plan's targets, OPDC's Development Team is developing a funding and delivery strategy which will be supported by this work across the following broad areas:

• funding - where planning gain may not fund sufficient infrastructure, or fund it early enough in the development cycle to support accelerated, high quality delivery
• infrastructure - providing greater certainty on costs, deliverability and timing of delivery required to support development
• land and rights - providing greater understanding of the land that might be required to deliver infrastructure and public realm improvements
• viability and deliverability - advice for specific development sites that could be brought forward more quickly

Cumulative approved expenditure on Western Lands preparatory work totals to £418,000.

The 13 October Board paper has superseded these approvals and approved a delegation for the Development Team's Western Lands budget of £440k. This approval is being sought within that delegation.

The proposal and how it will be delivered

OPDC intends to instruct Savills to provide the above services under their existing call-off contract with OPDC (HCA Contract No.DN336104). Savills have detailed knowledge and experience of working in the OPDC area and this work is congruent with the scope procured under the HCA Contract No.DN336104.

This commission will cover the following work streams:

• obtaining professional commercial advice on the EUVs of all Project Area sites
• developing a framework for financial appraisal of all sites in each specific Project Area that can flex with different assumptions and details relative to the marriage value or participation or lack thereof in a joined up or master planned development project. This will allow OPDC to undertake the detailed technical work supporting an OSBC relative the the acquisition of sites into its authority alongside the GLA and LDP2 or other parties such as Homes England or private development and landowner partnerships
• developing quick win site appraisals for sites F6 (Tommy James Car Park) and A8 (2 Scrubs Lane) relative to their current marketed position to the open development market to see if we can secure in principal indications of funding from the GLA Land Fund in December 2020
• creating a bespoke financial model for all project areas including any necessary review initial assumption inputs based on emerging delivery scenarios, programme and timings
• using the output financial model to review net project cashflow across development activity, potential receipts and infrastructure investment under different delivery scenarios for discussion and negotiation with funding partners
• provide commercial assumptions and professional advice on market absorption; valuation, programming and development costs as required for the development of financial models and to support OPDC decision making
• preparing a final report summarising all of the findings and releasing the model to OPDC for iteration in the future

OPDC has positively engaged with MHCLG, Homes England and the GLA on funding support. However, eligibility for this funding has not yet been established. Although OPDC will require the outputs of this work to establish eligibility and set out the business case for any necessary funding support from these future programmes, it will manage expenditure throughout delivery and ensure that this able to stop work should project risks or the viability of funding streams suggest this work is unnecessary or potentially abortive.

The objective of the proposal is to establish OPDC's baseline net cashflow position for critical Western Land Project Areas and inform our commercial conversations with potential funding sources as well as landowners.

The output will be the EUVs, the bespoke appraisal models, the commercial programme advice and a final summary report.

The outcome will be an increase in the Corporation's knowledge and understanding of its true funding requirements as well as the valuation and programme information which will inform our path of execution.

Savills will be appointed for 16 weeks.

Strategic Fit

This proposal supports OPDC's Western Lands strategy; a revised delivery approach which was approved by the Board in January 2020.

OPDC must have 'due regard' to the need to eliminate unlawful discrimination, harassment and victimisation as well as to the need to advance equality of opportunity and foster good relations between people who share a protected characteristic and those who do not.

The outputs from the Savills' consultancy commission, where material to future corporate plans, strategies, policy development, communications, investment/funding requests and delivery plans, which will be subject to equalities assessments at the appropriate time. This will inform how OPDC, the Mayor and other Stakeholders can ensure that the investment in HS2 and other public sector assets can be leveraged locally to maximise regenerative impacts and opportunities for local communities.

Savills have adopted Equal Opportunities Policy.

Project governance and assurance

The Development Director will act as Senior Responsible Officer (SRO) for this procurement, and the subsequent management of the Savills contract. Day to Day management of the work will be led by the Senior Development Manager.

The SRO will coordinate, control and regularly monitor Savills' instructions and outputs; ensuring that relevant outputs are reported internally

Risk and issues

The following risks are associated with this proposal:

There are no extant issues that require management or mitigation.

Other considerations

There are no other considerations that need to be noted in the taking of this decision.

Conflict of interest

No one involved in the preparation or clearance of this form, or its substantive proposal, has any conflict of interest.

Expenditure of up to £100,000 will be funded from the 2020/21 Western Lands budget in the Delivery directorate.

The call-off contract does not have a financial limit; however, it is time constrained to June 2022. This expenditure will be met from the respective budget for the year to which the expenditure relates.

Further expenditure and contract variations are subject to the Corporation's decision making process.

The report above indicates that the decision requested of the Chief Executive falls within the OPDC's object of securing the regeneration of the Old Oak and Park Royal area and its powers to do anything it considers appropriate for the purpose of its objects or purposes incidental to those purposes, as set out in the Localism Act 2011.

The officers have indicated in section 2 that the services required are within the scope of the existing call-off contract with the service provider (HCA Contract No. DN336104) and will be instructed in accordance with the terms and conditions of that call-off contract.

Officers must ensure that the appropriate call-off contract mechanism is followed and required documentation is put in place when instructing the services.