grant of preferred developer status - Bristol City Council

AGENDA ITEM 10
BRISTOL CITY COUNCIL
CABINET
4 July 2012.
REPORT TITLE: Redcliffe Wharf, grant of Preferred Developer Status.
Ward. Cabot
Strategic Director: Will Godfrey, Strategic Director Corporate Services.
Report Author: Officer Working Group.
Contact telephone no and e-mail address.
0117 9224033 richard.bunce@bristol.gov.uk
Report Sign off. Councillor Anthony Negus
Purpose of the report
1. The Council placed the Redcliffe Wharf site on the market in 2011 with a view to
appointing a Preferred Developer to bring forward the site’s comprehensive
development based around a commercially led mixed use scheme.
2. The report deals with an update of the marketing process, the submission and
evaluation of the final two bids along with a recommendation to Cabinet
concerning the grant of Preferred Developer Status.
RECOMMENDATION for Cabinet approval:
3. That Cabinet confirm the appointment of Complex Development Projects Ltd
[CDP], as the site’s Preferred Developer, on the basis that the parties conclude
heads of terms, including confirmation of funding arrangements and
documentation, within a period of four months.
4. Subject to concluding heads of terms and documentation the Council and CDP
will enter into a Conditional Contract for a period of 30-months.
5. On discharging the pre-conditions, that include the Council securing vacant
possession of the site, CDP will enter into a Development Agreement to bring
forward the site’s development, followed on completion by the grant of 150-year
lease[s].
6. The preparation and signing of the documentation including the Conditional
Contract, Development Agreement and Lease[s] will be done by the Strategic
Director of Corporate Services under delegated powers.
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7. It is recommended that Stoford Developments Ltd [Stoford] be confirmed as
second preferred developer, as the Council may wish to revert back in the event
of any issues arising in finalising matters with CDP.
8. Further information including details on the site’s marketing and the terms of
disposal are included in the body of the report and in the two sets of appendices
(one being confidential).
The proposal
9. Council’s development objectives. The site is identified in Plan No N4530, see
Appendix 1. It occupies an important waterfront location in the Redcliffe
Conservation Area. The quality of the development and choice of materials is of
particular significance.
10. The objective is to secure the site’s comprehensive development based around a
commercially led, mixed use scheme. Issues covering design, massing and layout
of the proposed development are of particular significance, as is the layout of the
public realm.
11. The importance of maintaining views to and from the surrounding area cannot be
over emphasised as it has an impact on the height and scale of new buildings.
12. Planning policy. A decision on any future planning application for this site will
need to be in accordance with the Development Plan. Part of which is in the form
of Supplementary Planning Guidance Note 3 (SPD3) the “Future of Redcliffe”
which establishes the requirements for the site’s redevelopment. The relevant
extract is included as Appendix 2.
13. In addition the Council prepared two Informal Planning Guidance Notes that
explain, in planning terms, specific guidance on development issues including
building heights and likely S106 obligations. These also explain the preapplication
consultation process that the selected developer will be expected to
follow.
14. Marketing process. In February 2011 Officers in Corporate Property were
instructed to remarket the site, following the end of negotiations between the
Council and the previously preferred developer, Westmark Developments Ltd. An
Officer Working Group [OWG] was established to take the marketing process
forward and involved staff from City Development and Corporate Property.
15. The Property Consultants, BNP Paribas, have also participated and advised the
Officer Working Group as the marketing exercise has progressed. This includes
the evaluation of the bids that have been submitted.
16. The site was placed on the market in February/March 2011, inviting developers to
put forward expressions of interest to secure the site’s comprehensive
development.
17. Initial submission of bids Following expressions of interest four parties were
short listed and invited to work up and submit detailed bids.
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18. At the request of Members the OWG liaised closely with the Redcliffe Futures
Group [RFG] and the Bristol Civic Society [BCS] in working up and agreeing a
Marketing and Development Brief and the second Informal Planning Guidance
Note. The Marketing and Development Brief included the five evaluation criteria
that would be used in the evaluation of bids.
19. The four parties presented proposals in July 2011 and these were considered by
the OWG along with RFG and the BCS, who took part in the initial evaluations.
20. The evaluations came to the conclusion that each bid had different strengths and
weaknesses, and that no party was in a position to be offered Preferred
Developer status. Consequently all were invited to resubmit proposals and given
the opportunity to re-bid, and address areas of concern.
21. Re-submission of bids. During the autumn the four parties took the opportunity
to meet with the OWG to discuss matters of design and layout together with
financial viability and each then resubmitted a bid for re-evaluation by the OWG.
22. Having evaluated the proposals in early November using an Evaluation Matrix
based on the five evaluation criteria, two parties Stoford and Complex
Development Projects were considered by the OWG to have worked up schemes
that delivered in terms of planning policy, in particular meeting the objectives in
SPD3.
23. At this stage the other two parties were advised that they had been unsuccessful.
24. Outcome. Stoford and CDP were therefore short listed and given a further period
to finalise their proposals for re-evaluation. It was necessary for each party to
clarify issues including likely package of terms, development commitments and
financial offer.
25. A further period of evaluation took place which is explained in more detail below.
Proposals and scheme content from Stoford and CDP.
26. Each party has an established track record in terms of partnership projects
delivering mixed use comprehensive development, although the nature of their
developments is different.
27. Stoford have undertaken large mixed use commercial schemes often pre-let to
office occupiers, as well as projects including mixed use schemes and
refurbishments in conservation areas.
28. CDP have been involved with mixed use regeneration and restoration schemes
which seek to retain the historic character of the local environment.
29. Both schemes secure the restoration of the two derelict buildings on site and
include large areas of public realm along with improved waterfront moorings.
Pedestrian routes are enhanced with routes along the waterfront and into the
adjoining Quaker Burial Ground, all as required in SPD3.
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30. The proposals provide for the site’s comprehensive development. Each includes a
stand alone office building in excess of 30,000 sq ft, of accommodation.
31. CDP include two large restaurant [A3] units, 14 residential units together with a
mix of small café/retail/workshop-office units. This provides a slightly wider variety
in terms of the land use mix.
32. The Stoford scheme centres on a 56 bedroom boutique hotel, together with two
restaurant units; one might be linked with the hotel. The scheme also includes a
number of workshop/office units.
33. Both parties have identified potential pre-lets, but at this stage it is worth
emphasising that these are only potential, which is not unusual in the current
financial climate.
34. Bids are conditional on securing pre-lets, planning consent and vacant
possession of the site.
Evaluation of proposals from Stoford and CDP plus the
recommendation from the Officer Working Group.
35. In completing evaluations, the OWG made visits to see examples of both parties’
work, and also held a series of meetings with Stoford and CDP. This has included
discussions with potential pre-lets and funding partners. BNP Paribas have
participated in these discussions.
36. Particular considerations have focussed on each bid’s prospect for securing
planning consent alongside its financial viability and level of financial offer.
37. Bids must be seen in the context of the current economic climate; the property
development and construction sectors have been particularly affected by the
economic recession.
38. Evaluation criteria. These were set out in the Marketing and Development Brief
and comprise:
o The manner in which proposals interpret and meet the objectives and
requirements in this Marketing and Development Brief and the two Informal
Planning Guidance Notes.
The standard of design and layout is of particular importance.
o An assessment of the prospects of a scheme securing Planning Permission.
o Overall viability and level of financial offer based on the terms of disposal.
o Confirmation on the availability of development funding.
o An assessment of the proposals delivering the site’s comprehensive
development within a reasonable period.
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39. These five evaluation criteria were used to create an Evaluation Matrix used to
assess the bids in November 2011. The Evaluation Matrix did not change for the
final assessment process, rather, as far more information was available the OWG
had the opportunity to drill down into the five evaluation criteria in greater detail.
40. Market considerations. It is important that in reaching a decision the evaluation
process considers the criteria as a whole and not just individually.
41. The two schemes being assessed are not detailed proposals as they have not
secured planning consent, nor have site investigations and designs reached the
stage where drawings and specifications establish the basis on which contractors
can accurately price building costs.
42. Nevertheless it is essential that a proposed scheme demonstrates good
prospects of being worked up into proposals, not only to secure planning consent
and deliver a scheme of quality, but also be financially viable.
43. Cost projections, including S106 contributions, should be realistic, with rents and
incentives that reflect current market conditions.
44. While a scheme may secure planning consent, if the design is expensive and the
layout of limited appeal to occupiers, the prospects of achieving financial viability
are unlikely. A scheme that does not appeal to occupiers will not command rents
that underpin an expensive development proposal.
45. Previous track record and expertise, along with the ability to assemble a strong
professional team, combine to provide comfort to tenants who commit to
occupation and those providing development funding; without which a scheme
cannot proceed.
46. However expectations in terms of what can be secured through the development
process must be realistic, particularly in the current financial climate, which has
had a major impact on the commercial property sector. Further comments on the
property market are included in the written advice from BNP Paribas.
47. Planning and design considerations. Redcliffe Wharf has its own particular
characteristics. Development aspirations focus closely on the scale and context of
development in the conservation area. Detailed proposals will be worked up in
consultation with the local community.
48. The concept of partnership working with the Council and the local community and
stakeholders, throughout the preparation and implementation of development, is
an important feature in each proposals.
49. Both schemes could be successfully worked up to secure planning consent. Each
scheme satisfies the requirements of SDP3 and in the two Informal Planning
Guidance Notes and address S106 obligations. Following a review, the building
heights maintain required views.
50. Both schemes exhibit strong sustainability credentials when tested against
relevant Local Plan Policy. In terms of longer term flexibility it is considered that
the CDP layout and building form offers more potential to adapt to any change of
use either at some future date, or during the planning process.
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51. Both schemes emphasise and demonstrate the ability to work in partnership
alongside the public/private sectors. CDP exhibited a better understanding of
stakeholder engagement as evidenced by schemes the OWG visited.
52. Each scheme provides the required areas of public realm, however the amount
and layout of the public realm in the CDP scheme plus the level of investment
they allocate to this important element gives them the edge. This aspect was
evident in the schemes the OWG visited.
53. The broader mix and distribution of uses in the CDP scheme will also encourage
pedestrian movement throughout the public realm with scope for staging small
scale events.
54. Financial and viability considerations. In terms of viability both parties have
proposals which will appeal to the occupier market, plus track records in terms of
delivery. Development appraisals cover anticipated areas of expenditure and
include contingencies for additional items and S106 contributions.
55. CDP have made the larger financial offer.
56. There are positive indications on funding, but this is subject to securing planning
consent and pre-lets. The parties are in a position to fund the necessary predevelopment
work and submit a detailed planning application.
57. While CDP have made the larger financial offer, in terms of financial viability,
there is little to separate the parties’ at this moment.
58. Both proposals are subject to securing pre-lets.
59. Further details are set out in the Bid Summary in confidential Appendix 8.
Conclusion
60. Both Stoford and CDP have responded well to the Council's marketing exercise in
terms of working up and presenting proposals. However in the current economic
climate, both schemes should be regarded as “work in progress”.
61. The OWG have assessed both parties’ schemes in the light of the requirements
of the Marketing and Development Brief and the Informal Planning Guidance
Notes. We conclude that both CDP’s proposals for this site and their completed
projects elsewhere demonstrate more fully their expertise in delivering
regeneration schemes sensitive to historic context and location.
62. Consequently it is recommended that CDP is offered preferred developer status
to take the development process forward. This is subject to CDP and the Council
concluding negotiations on heads of terms and documentation within a period of
four months and CDP confirming commitments from their funding partners.
63. It is also recommended that the Stoford be confirmed as second preferred
developer, as the Council may wish to revert back in the event of any issues
arising in finalising matters with CDP.
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64. The advice from the Council’s Consultant BNP Paribas, the OWG Matrix
Evaluations together with the Bid Summary which includes a comparison of
financial proposals and offer are set out in the confidential appendix’s 6, 7 and 8.
Terms of disposal (Subject to Contract)
65. The City Council and Complex Development Projects will enter into a Conditional
Development Agreement for a period of 30 months.
66. During the conditional contract CDP, at its own risk and expense, will secure all
consents and approvals to implement development in accordance with agreed
plans and specifications.
67. During the first 15-months of the Conditional Contract CDP, will undertake public
consultations, and work up and submit a planning application
68. On satisfying agreed pre-conditions, the preferred Developer, under the terms of
a Development Agreement, will undertake and complete the development of the
site in accordance with agreed plans and specifications within a period of two to
three years.
69. The Council will grant a 150-year lease(s) on Practical Completion of all
development work. The leases will be on a full repairing and insuring basis.
70. The Council will receive a capital receipt and ground rent on the commercial
accommodation, to be reviewed every five years on an upward only basis and
equal to 5% of open market rack rental value.
71. The Council will also participate in the scheme’s profitability by way of an
Overage provision.
Next Steps
72. The Council and CDP will work on heads of terms and documentation during the
next four months.
73. CDP has confirmed that they will enter into a Planning Performance Agreement
which will guide the formal pre-application process and the submission and
determination of the actual planning application within three months of being
confirmed as Preferred Developer.
74. CDP have also intimated that they will wish to engage in early discussions with
the local community.
75. It is also intended to arrange for early informal discussions between the Preferred
Developer, the Equalities Team and Sustainable City Group, prior to the
preparation of detailed development proposals.
Other options considered
76. The site has been derelict for many years. Currently the development sector, like
many other parts of the economy, has been depressed since 2007.
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77. It would be possible to mothball the site until the market recovers. However the
site would continue to suffer from a lack of investment, remain derelict and the
opportunity to work up any redevelopment proposals would be placed on hold.
78. Proposals have come forward following a competitive marketing exercise which
offers the prospect of securing the site’s redevelopment in line with planning
policy and wider community aspirations.
79. It is important that proposals reflect the context of the site’s history and its
surrounds while enhancing its waterfront environment. However expectations, in
terms of what can be secured through the development process, must be
realistic, particularly in the current climate.
Consultation and scrutiny input
Internal consultation:
The report includes input for the Equalities Unit, the Sustainable City Team and
the City Docks Team.
Legal Services, in particular the Conveyancing Team has worked on the
registration of the site’s title and in the preparation of draft legal documentation.
Internal Audit has advised on the evaluation process.
External consultation:
Early stakeholder engagement involved the Redcliffe Futures Group and Bristol
Civic Society, who assisted with and signed off the Marketing and Development
Brief and second Informal Planning Guidance note and also assisted with
observations on the initial submissions by the four developers.
BNP Paribas have acted as external Property Consultant in providing advice to the
Council during the marketing and evaluation process. Their observations are
included in the main body of the report and written advice is set out in Appendix 6.
Risk Management Assessment see appendix 3
Public sector equalities duties. See below and Appendix 4
Step 1 of the Equalities Impact Assessment has been completed on the basis that
this report is asking for approval from Cabinet to grant preferred developer status so
that the development proposals for the area can be taken forward and worked up
with reference to the land at Redcliffe Wharf.
It appears that no final decisions have been made with reference to the
development content so it is important that the chosen Developer is open to
suggestions and works together with the residence/local community/BCC so that
there is a balance to the final scheme proposals.
Understandably at this moment the current equalities information is limited, and it
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will be necessary to take into consideration possible negative/and or positive
impacts that might arise from this potential development.
This will require further equalities work with stakeholders and will need to be
progressed at the earliest opportunity when the planning application is being worked
up and consulted upon, so that informed decisions can be made.
It is recommended that the Preferred Developer with the assistance of BCC staff
involved in the project should complete a full Equalities Impact Assessment prior to
the submission of any planning application submitted. Customer data is required
with reference to those who use or who will be affected by the proposals.
The development works include forming new areas of public realm, plus improved
pedestrian links. Consequently it will be essential that an EqIA is undertaken at an
early stage prior to any development proposals being worked up and taken forward.
At that stage approved further direct consultation will need to take place with key
equality stakeholders to ensure any issues/concerns are known from an equalities
perspective and therefore reflects the needs of local residents, organisations,
current and potential service users
Environmental checklist/eco impact assessment. See below and
appendix 5
The positive impacts of this project include the refurbishment and re-use of two
important but currently derelict buildings, improved public access in the area and
improvements to the harbour wall and mooring facilities. Negative impacts include
those from the demolition and construction phases which will consume nonrenewable
resources. The new buildings will create an ongoing energy demand.
There is the potential for increase vehicular movements in the area due to the
development and potential for a negative visual impact.
Mitigation of these negative impacts will be achieved by:
o Ensuring that the development agreement between BCC and the Preferred
Developer requires that all residential development is built to Code for
Sustainable Homes level four and all non-residential development is built to
BREEAM excellent.
o Meeting planning policy guidance BCS13-16 as laid down in Bristol City
Council's Core Strategy 2011. In order to demonstrate compliance with the
core strategy a Sustainability Statement, this will include Energy, Water and
SUDS’s strategy, and submitted with the planning application. It is
recommended that the developer works on the Sustainability Statement with
the assistance of BCC staff involved in the project;
o Meeting planning policy guidance BCS14 by ensuring that the development
incorporates on-site renewable energy sources in order to achieve a 20%
reduction in CO 2 emissions arising from residual energy demand. The new
development will show that the heat hierarchy has been followed;
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o Ensuring that the development agreement between BCC and the preferred
developer requires that any timber used must be in accordance with UK
Government Timber Procurement Policy (CPET). It will also ensure that all
construction materials covered by the BRE Green Guide to Specification
must be rated B or above unless there are significant technical or financial
reasons why this cannot be achieved. Equivalent ranking schemes will be
considered;
o Ensuring that the development agreement for the overall site includes a
requirement for a travel management plan for each different use;
o Requirements outlined in the informal planning guidance notes and the
planning process will ensure good visual standards for the new development.
This project will create a new energy demand through the construction of new
buildings and will consume non-renewable resources. Overall the environmental
impacts of this proposal are considered to be negative but by following the
mitigation measures outlined in the Eco-IA these impacts will be minimised.
Resource and legal implications.
Finance
Financial (revenue) implications: The grant of a development Agreement and new
lease will see the Council responsibilities for the site, responsibility for security etc;
pass to CDP with nominal savings.
On entering the Conditional Contract CDP will make a contribution toward the
council's marketing costs which are currently being met from existing budgets.
The development proposals will secure a future annual rental income that is
reviewed every five years.
Financial (capital) implications:
The development proposals will secure a capital receipt for allocation to other
corporate commitments/priorities.
Advice given by Mike Harding, Finance Business Partner, Neighbourhoods and City
Development Date 6th June 2012.
Legal
The development is subject to the Preferred Developer obtaining the necessary
planning consent, funding, satisfying pre-conditions, entering into a Conditional
Contract, Development Agreement and then a 150 year lease as set out in this
report.
The selection of the Preferred Developer has been subject to a detailed selection
and evaluation process by the Council. Further details are set out in the appendix.
Advice given by Penny Wilford Principal Solicitor, Community Services. 31 st May
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2012.
Land/property implications:
The Redcliffe Wharf site is shown edged black on Plan No N4530, it has an area of
approximately 0.68 ha (1.68 acres). See Appendix 1.
The site is owned by the Council. Current occupation includes the waterfront
moorings; which will be temporarily relocated during the period of the development
works.
The boat building/repair activity is undertaken by Mark Rolt and located in the
single-storey building and land at the western end of the site. This is let to Mark Rolt
on a four year contracted out lease from July 2009. The lease includes a rolling six
months break provision.
Advice given by Jan Reichel, Project Officer, Corporate Property. 31 st May 2012.
Human Resources implications:
There are no direct HR implications arising from these development proposals.
Advice given by Rachel Falla, Employee Relations Manager. Strategic HR. 15 th
June 2012.
Appendices:
1. Site plan.
2. SDP3 planning policy
3. Risk assessment
4. Equalities IA
5. Eco Impact Assessment.
Exempt appendices:
6. Advice from BNP Paribas the Property Consultants advising the Council.
7. Officer Working Group Evaluation Matrix
8. Bids Summary - financial comparison.
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