Clive Read sets out nine practical steps local authorities can take to successfully manage their property development.
Making effective use of assets is a key obligation for local authorities. The trick is ensuring how to deliver best value in development projects, especially where local authorities are taking the lead with other bodies. It is not just at a macro level where this is important but individual projects too.
We have all seen the wow factor that accompanies a brand new building: staff enjoy the environment created by a state of the art facility, accolades can be won and there is generally the positive well-being effects that come from having a modern, well-equipped and designed workplace.
However, we all know that basking in the after-glow of a successful project has often come at a price in terms of long hours, massive commitment on behalf of staff and the odd testing time along the way. There are no easy answers but there are some things to do or, more importantly, not to do, in order to make your life easier. Here is our guide based on many years’ experience, some pain, and plenty of happy days when it all goes right.
1. Plan ahead
Complex projects contain many different strands and even the best managed projects can go awry. The best place to start is at the end: when do you want to open the new facility?
You need to work backwards from an intended opening and then good project management will help you clarify whether you have allowed enough time to secure the relevant consents, build out and fit out in time for your intended opening. More complex arrangements, where you may be selling premises and re-investing the sale proceeds into paying for a new build can be tricky. A delay can have a massive impact on morale, but also on cash-flow, so a project needs constant checking for affordability and timing. The key is to check and build in room for manoeuvre with the other side where you can.
2. Check what you own
This is basic but fundamental and it is easy to slip up. Check the legal boundaries - do you own absolutely everything? What about access rights?
We have seen instances where the building is within a red line but a canopy overhanging the main entrance fell outside the legal boundary or another where a new wider development scheme meant a client needed legal rights of access across land it didn’t actually own nor, despite raising the question, had it been thought fit to ask for rights of pedestrian access at the time of the legal transfer.
It is also vital to make sure that the boundary for the development as used within the planning application precisely matches the legal title. These issues can usually be fixed but invariably cause delay and cost money.
3. Get buy in
This works internally across the governance, strategy and financial parameters within which you operate. Make sure you factor in times for executory approvals, and delegated authority outside those meetings. Reports to Members will invariably address the fundamentals behind the rationale for the development. A well-written report will explain the background, provide the options that have been considered (and in an even-handed way discounted), assess the transaction for best value, as well as ensuring the local authority’s statutory duties are complied with. The key is to ensure that the authority’s decision-making processes are reasonable and not susceptible to judicial review.
It also means getting the support externally: does the finance stack up and deliver best value? Is a development likely to go through planning smoothly? What about engaging with constituents and making sure you garner public support? An early conversation with advisers will help identify any likely pressure points.
4. Consider what (regulatory) consent you will need
Early consideration should be given to the nature of the development and whether it is a land deal or subject to OJEU rules and regulations. If the local authority is developing its own premises, then OJEU will invariably feature if you wish to incur in excess of £4.1m of works where the local authority is exercising a decisive influence on the type or design of the work.
Care always has to be taken if a project is being developed off-market. The question of whether OJEU applies will depend not only on the sums and design input the local authority wishes to have, but also on whether a project is actually a land deal and can be described and documented as such.
The courts will always look behind the wording so care needs to be taken, especially if you are engaging in any sort of joint venture, because it is practically often difficult to unpick commercial deals if the procurement analysis changes.
Planning Building Regulations Listed Building consents are the principal regulatory issues to address in relation to the development itself. Less obvious ones might be legally driven around your title: development near a boundary might mean you need party wall consent from your neighbour (remember foundations, too) and in a built up area could mean rights to light need checking.
A failure to address these early on can be expensive in terms of time and money, just when you need to be saving both.
5. Make sure your project is free from challenge
Part of this turns on the fundamental rationale for the development and recording this in a cogent and clear way, making sure the local authority’s own rules and procedures are followed correctly.
Part of this also turns on securing planning permission, that has been properly granted (a key point where the local authority may well be developer/land owner and also the LPA) and is immune from challenge.
It might also be, however, making sure that you have procured a contractor and professional team in a legally compliant way, in accordance with OJEU, or at least understood the nature of risks. Greyer areas exist where a developer is offering to sell land to a local authority but with the benefit of a new building… and the local authority is taking an interest in the specification and fit out. Beware!
6. Expect the (un)expected
Quite often things will come in from left field. In pretty much all major developments, something will happen which might impact on funding, timing, need for consent or sometimes all three.
It might be a ribbon of shifting sand which was undiscovered when a contractor was doing trial boreholes which then meant piling foundations (luckily a fixed fee construction contract had been entered into) or the need to cap off redundant service media (when buying a brownfield site, be sure to make a seller practically responsible or allow a deduction from the purchase price).
Whatever the situation, the moral is to allow for a sufficient contingency because something will invariably happen, you can expect it.
7. Keep on top of the detail, but don’t lose sight of the bigger picture
The ultimate aim should be to develop out new buildings on time and on budget. Good advisers will help you get there and should advise on the risks of doing or not doing things in a certain way. We have plenty of experience of advising senior managers on a host of risks but the aim should be to make sure the project happens. The law should be seen as an aid to project delivery not an end in itself. Grand-standing by your professional advisers is to be avoided at all costs.
8. Have a good team and be organised, but also flexible
You will have an experienced team within your organisation, a handful of whom will be involved in a major project, but they also have a day job to do. This is where experienced advisers and good project planning comes in, internally but also feeding off what your advisers bring in.
An experienced development lawyer should work with your project managers to ensure the legal documentation is negotiated and settled in a timely way, working within the time frames for planning, funding and overall deliverability. Yes, the (un)expected might happen but hopefully you have allowed sufficient contingency into the programme. We always recommend an early meeting to tease out likely issues.
We also recommend having regular project team catch-ups (sometimes even daily at times of great activity) of advisers and the client with identifying key action points and tasking individuals to make things happen. In that way, you can adapt quickly and with little fuss.
9. Did we mention timing?
Be clear about timing from the outset and what are the likely matters that could send the project awry? Have all relevant time frames been built in or insured against? A common issue can be the time it takes from obtaining a resolution to grant planning and then securing planning contingent on completing a s106 agreement. The grant of planning will follow completion of the s106. It is only then that period within which a third party can challenge the grant of planning starts to run. You have a choice of either waiting for those 6 weeks to expire or obtaining insurance against the risk of challenge. Either way there is a cost - of time or money.
Embarking on a major project is exciting if a little daunting. There are plenty of traps for the unwary. With good planning, good organisation and practical and experienced advisers around you, you can deliver a major development on time and on budget.