7. Technical advice for an outline planning application; and the method of marketing.

8. Affordable Housing Allocation

(a) The area of land required for the new residential extension is in Council ownership as is most of the land required for the employment zone. As such the Council, as both Landowner and Planning Authority should aim to set achievable quality standards and thresholds to inspire future developers on the Island.

(b) The development will provide some 750 – 800 dwelling units. This will help meet the Council’s housing requirements set in the Unitary Development Plan and the emerging Regional Plan. Therefore a key decision is to set the level of affordable social housing to be provided.

(c) The baseline percentage of affordable housing to rent in Housing Policy is 30% and this is being proposed for this scheme. The three main goals for the Council as Housing Authority remain as: affordable housing to rent; elderly housing; and, housing for young persons.

(d) Homeless acceptances on the Island are running at 300 families per annum and with a build target of 200 affordable dwelling units per annum the shortfall impacts on the Council’s budget at a cost of £312,000 per annum net, that is, £3,000,000 over ten years.

(e) A reduced target from 30% to 25% would cost the Council £120,000 per annum in providing temporary accommodation.

(f) The development will require very significant enabling works to provide new infrastructure such as roads and drains. This cost is currently estimated at £8.5 million.

(g) The Council’s policy for planning gain from this scale of development with contributions towards community benefits and off site works (usually referred to as Section 106 Agreements) is currently estimated at £6.5 million. Contributions to off site works have been identified to include: Education, formal sports facilities, off site highway works, public transport, off site pedestrian and cycle routes and environmental improvements to the area in particular the Pan Local Centre and Garden Way.

(h) A target also needs setting for Eco Home Rating. Guidance in May 2003 indicated the cost of Eco Home ratings for sustainable housing achieving a very good rating or an excellent rating is estimated at an additional construction cost per unit of £1,680 and £3,040 respectively.

(i) The work by Whitbybird provides guidance on the options for low energy housing at Pan and needs progressing to identify explicit recommendations that will drive sustainable energy. Detailing this advise for incorporation into the design guidance is estimated to cost some £12,000 and would be reproduced as guidance for other developments. It maybe possible to off set some of this cost through grant funding and this is being pursued.

(j) The implementation of a bypass causes a loss of 2.9 hectares of land and equates to 116 homes. A bypass would cost an additional £4,164,000.

(k) Provision of starter homes, elderly persons homes and key worker housing require new innovative approaches that fulfill these needs. There are several different pilot schemes being tried elsewhere and it is proposed any developer will be expected to make some provision aimed at promoting an innovating solution towards these elements of affordable housing.

(l) The following analysis of the above dynamic costs by DTZ Consulting shows the impact on capital receipts for a traditional land sale and the effect of going above a 30% baseline for affordable housing to rent.

	Benchmark 1	Benchmark 2	Benchmark 3
Dwellings	784	784	784
Affordable Ratio	20%	30%	45%
Eco Home Rate	0	Very good	Excellent
Land Value	£8,000,000	£1,800,000	-£8,970,000

(m) With some 250 affordable homes to be provided through this project there will need to be a housing association or a group of housing associations appointed to take on the affordable social housing as the registered social landlord. Council housing policy prefers this appointment should be a local association with the market knowledge and management capacity. This appointment will need to be made along with the decision to appoint the developer and the Housing Corporation will be asked to help bring this forward.

9. Procurement of Outline Planning Application Advice

(a) With the SPG in place this sets the tone for a Master Plan it explains the overall vision for the development of the Pan Urban Extension together with the factors that will shape the Master Plan proposals. It outlines the key aspirations for the Master Plan and shows diagrammatically how these could be met. The SPG also sets out the development framework principles and how this should be applied to any proposals that come forward. It also incorporates urban design guidance and design principles with illustrations to show how these may be achieved for each of the areas of distinct character. It also provides guidance on promoting a sustainable development.

(b) The Master Plan proposals will need to be progressed to form the basis of an outline planning application. The outline planning application should include an environmental assessment and be accompanied by a range of supporting documents as follows:

· The results of a staged programme of archaeological evaluation as necessary, comprising a desktop assessment, programme of field evaluation and agreement of required mitigation (with agreed mitigation works required to be carried out before development commences).

· An environmental statement (ES)

· A transport assessment.

· An ecological assessment.

· A survey and assessment of trees and other vegetation on the site.

· A detailed design guidance or design code to accompany the Master Plan.

· A drainage strategy.

· An assessment of flood risk.

· A visual impact assessment of the proposals.

· Sustainability criteria or targets for the development.

· Feasibility studies into sustainable features or projects for instance district heating and a demonstration project.

· A phasing programme setting out how the delivery of market and private housing will relate to the delivery of infrastructure, landscape and other community developments.

(c) A procurement exercise looking to appoint a master planning team to prepare and submit the outline planning application has been undertaken. Of the six submissions scored the team being recommended is the one lead by Tibbalds who also prepared the SPG. The master planning team will be made up of the following specialists each appointed by separate contract:

· Tibbalds Planning and Urban Design: master planning and lead consultants;

· Alan Baxter Associates: highway, traffic and transport;

· Campbell Reith Hill: drainage, infrastructure, utilities, ground conditions, contamination and technical input to ES;

· Luszezak Associates: landscape, open space and visual assessment;

· Drivers Jonas: marketing;

· Wilson Cambridge Associates: archaeology;

· IWC Countryside Management: ecology;

· Integer Partnership: intelligent and Green Housing;

· Whitbybird: energy systems.

(d) The price of the outline planning application with all its elements including the combined work of the entire team is estimated at £280,000. Whilst this cost is estimated as a maximum the final cost will depend on the contribution by each specialist. For example the initial key tasks of review include the environmental assessment, ecology and client requirements. This will inform and refine delivery strategy as well as formulate key principles to be addressed by the team. The total work flow diagram is shown below and is expected to take about 11 months.

10. Marketing Scheme

(a) Whilst the construction of this development could be directly commissioned by the Council this is not core Council business. Neither does the Council have the sufficient skills in house. Provision of this development is best in the hands of an experienced developer or a joint development partner. In either case this is likely to be a national house builder and several such companies already have an established presence on the Island. Clearly important elements of this selection process will include experience and examples of quality development.

(b) Members will see in the table above (7.(m)) that the consideration to the Council as landowner as a capital receipt through a traditional land sale is limited. This is due to scale of infrastructure and other requirements. In real terms the property market demand for new dwellings will dictate the pace of construction and is currently estimated to take more than 5 years. This very much depends on the number of new home starts each week. Because the construction period will be over several years an annual review and report to the Council will be appropriate.

(c) The alternative to a traditional land sale is the joint development partnership approach with the Council receiving a percentage of gross development value (GDV). Under a partnership scheme the Council collaborates with the developer by selling each plot as building works proceed and market forces permit. This way the developer carries the capital risk of infrastructure but not land costs. In return the Council receives an annual income flow of capital over the development period estimated at upto10 years.

(d) By partnering a master developer the Council should be able to secure some 20% to 25% of GDV which is greater than a traditional sale but will depend on developers bids. For example allowing for 750 dwellings units and ignoring the value of 30% affordable housing could provide the Council with 20% GDV of 500 units. Given then an average unit value of £120,000 this provides potential receipts in the order of £12,000,000 over the development period and a budget for capital receipts should be achievable at £1,000,000 per annum over 10 years or less.

(e) Because the selection process includes the transfer of Council owned property either in the short term or over a longer period the Council is required to obtain best consideration. As such the Council will be seeking competitive bids for its property according to a range of targets. The matrix being recommended for development partners to compete against is as follows:

Housing Requirement	BID A Market Price for Land (£)	BID B Percentage of Sales Received Offer (%)
25% affordable, plus 5% innovation all to rent all best eco home rating
30% affordable housing to rent all best eco home rating
30% affordable, plus 5% innovation all to rent all best eco home rating

(f) It is recommended to undertake a two stage marketing process. Firstly to draw up a shortlist of developers following national and local advertising, this list will be selected according to quality and ability. Secondly developers will be asked to bid against the criteria set out in the table above.

STRATEGIC CONTEXT

11. By enabling the Urban Extension at Pan the Council will be fulfilling several corporate objectives and the aims of the Local Strategic Partnership. Most important among these aims and objectives are the provision of housing, building a quality environment, promotion of the economy, economic development and creating a sustainable community.

12. By collaborating with other agencies in particular the Isle of Wight Economic Partnership (IWEP) and the South East England Development Agency (SEEDA) the Island has an opportunity of attaining sustainable development through economic lead regeneration. Both IWEP and SEEDA are able to target new employment opportunities for Cowes Waterfront the Medina Valley and Newport including Pan by scoping resources and proposals not available to the Council. Discussions are ongoing with SEEDA how best to develop the employment zone for this Urban Extension and at this time the continuation of this collaborative working is being proposed.

13. By aiming for a quality development designed to a high standard the scheme will be better placed to secure and attract the significant initial development investment from a business sector that is confident of success.

14. By working with Cowes Waterfront Project the aim is to make Cowes, Medina Valley and Newport a place of distinction with a sense of wellbeing.

CONSULTATION

15. The public engagement and consultation for the Pan Urban Extension is already widely based through the SPG exercise and links are already in place with the Local Strategic Partnership as well as the Pan Urban Renewal Project. This engagement will be ongoing as the outline planning application comes forward whether led by the Council’s consultants or a partner.

FINANCIAL/BUDGET IMPLICATIONS

16. Including extra land acquisitions and SPG the Council has already committed £1,600,000 to bring forward this urban extension. This is in addition to holding the existing asset value. Clearly a development on this scale with such significant infrastructure investment has a major planning requirement. The cost of that requirement is a further expenditure of £280,000 to £300,000. On balance given the projected income to be generated in 2006 from this development in the form of capital receipts then the current requirement is prudent and can be managed as part of the capital programme.

17. The emerging “Towards the South East Regional Housing Strategy 2006” being undertaken by the South East Housing Board may materially affect the funding and implementation of this delivery. If this proved to be the case, future reports will reflect this development.

LEGAL IMPLICATIONS

18. This project will require significant input of legal advice and legal services. The transactions planned and envisaged all tend to be complex and to date the Head of Legal and Democratic Services has been able to manage this work with external support. This situation will be kept under review.

19. The Council will in due course dispose of land under s123 of the Local Government Act 1972. The 1972 Act and part 1 of the Local Government Act 2000 empower the Council to undertake work in preparation for the development where to do so is consistent with the Community Strategy. The terms being proposed must represent best consideration unless an exemption from the Secretary of State is granted. The matter of disposal will be the subject of a further report after the marketing process has taken place.

OPTIONS

20. To sell its entire property holdings now, given the benefit of the Supplementary Planning Guidance and take a capital receipt whilst also fixing certain goals, such as affordable housing requirements and leave the highest bidder to work through the detailed planning process, this would in effect be the do nothing option for the Council.

21. To bring forward an outline planning application for the area and subject to the outcome of that application sell the entire property to the highest bidder.

22. To seek to appoint a joint venture partner now who in partnership with the Council becomes the master developer for the site and brings forward the detail planning proposals at no cost to the Council.

23. The Council could progress the submission of an outline planning application and subject to the outcome of that application market the opportunity to identify a master developer as a joint development partner who with the benefit of outline planning consent and the Master Plan would deal with detailed planning applications.

EVALUATION/RISK MANAGEMENT

24. This is a large scale development which will take place over many years. Various dynamics will affect the pace and ongoing standard of development major among these influences includes local and national prosperity, building and energy innovation, good and bad cost planning, aspirations and legislation. The Council shall make and the public shall be kept informed of the need and reasons for ongoing management decisions by way of an annual report.

25. Selling the site with the existing SPG would be easy and simple. There is little or no risk and the Council would leave the planning process to secure its primary goals. However under this in effect do nothing option the developer/purchaser bears unknown risks and will bid accordingly.

26. By bringing forward an outline planning application most development constraints will be addressed. This will give potential developers much more information and confidence about the development and make for a competitively higher bid. It will however take more resources initially to achieve the outcome which should be reflected in the future receipt.

27. Whether the Council or a Development Partner makes the outline application is an important question. By making the application the Council as landowner will be able to influence: quality; affordable housing; traffic impact; environment assessment; sustainability; fix design standards and guidance; agree off site works, and overall agree best solutions for the existing and the new communities. Whilst a development partner will find solutions to these questions the result could fall short of the standards the Council would prefer to exemplify at the outline stage. By managing the outline application as landowner the Council will clarify further for itself the value of its landed asset. Once these key issues are decided it will be reasonable and usual for the developer/partner to progress the detailed planning applications.

28. The likely benefits of working with a development partner out weigh a traditional land sale because it avoids interest charges on land acquisitions thereby enabling substantial start up infrastructure costs. It should also improve financial outcomes where the development period is over many years during which time the property market may go up or down but generally is expected to move upwards. By enabling one partner that partner will more readily coordinate infrastructure; formulate an over view and plan for affordability sustainability and quality. That partner will also have confidence to invest in staff training and relationships with the existing community.

29. The best time to advertise for a development partner will be when the outline planning application is ready for submission. This way the selected partner will be able to input improvements to the development process and its programme. At the same time the Council will be recommended to appoint the local Housing Association. The developer and Association may also have useful ideas and this way gain an understanding in the decision making process. Having the developer in place at this stage could also support a referral to Government Office and help economic planning of the employment zone with SEEDA.

30. The competition to appoint the developer will be in two stages. Those short listed will be required to make a commitment in terms of a development programme; confirmation as to the acceptance of design codes and the design guidance for incorporation in a future detailed planning application; and the scheme for site supervision and sales marketing. The selected developer will therefore enter into a comprehensive agreement with the Council to provide housing on the Council’s property at no cost to the Council, with the Council having little or no development risk. In the case that the development partner was to fail, then the Council will be entitled to appoint a replacement developer to continue the project.

RECOMMENDATIONS

31. In conclusion the Council is being recommended to progress the development of Pan Urban Extension, as follows:

(i) To appoint a team of specialists to prepare and submit the Outline Planning Application on behalf of the Council.

(ii) To market this development opportunity to select a Joint Development Partner whose appointment and terms will be the subject of a further recommendation to the Executive.

(iii) That the minimum percentage of affordable social housing is to be 30%.

(iv) That the target for Eco Home Rating is to be very good with an aspiration to achieve Excellent.

(v) That the Executive receive an annual progress report and decision scheme variations as landowner.

Contact Point : Mr A J Flower, Head of Property Services ' 01983 823263 email [email protected]

TONY FLOWER

Head of Property Services

REG BARRY

Portfolio Holder for Resources

SUMMARY/PURPOSE

STRATEGIC CONTEXT

EVALUATION/RISK MANAGEMENT