PAPER B3

ISLE OF WIGHT COUNCIL PLANNING COMMITTEE - TUESDAY 3 APRIL

REPORT OF THE DIRECTOR OF ENVIRONMENT SERVICES

TCP/13520J/P1367/00 Parish/Name: Newport

Registration Date: 25/08/2000 - Outline Planning Permission

Officer: Mr. C. Boulter Tel: (01983) 823568

Outline for office & residential development (readvertised application - revised scheme), land at St. Cross Business Park, south of Lower St. Cross Farm and east of, Dodnor Lane, Newport

Site and Location

Irregular shaped site of some 1.46 hectares, with frontage of some 170 metres to Dodnor Lane and 50 metres to Monks Brook. The northwestern part of the site has frontage to Dodnor Lane of about 50 metres and depth of 35 metres and is occupied by barns and outbuildings formerly occupied in connection with Lower St Cross Farm. Extending from the southeast corner of the site is an irregular shaped area with a depth of about 80 metres, linking to Monks Brook. Adjoining the site to the southwest are the Isle of Wight Partnership and Technology Management Centre, to the east is open space including a stream and SP Systems buildings, to the north is open countryside and to the west, on the other side of Dodnor Lane is open land to the north of St Marys Hospital.

Relevant History

Application for change of use of agricultural buildings to north to sales of sand, ballast, cement, ready mix concrete and plant hire submitted April 1995 and withdrawn in September of that year. Development of this site (apart from the former farm buildings) and the land to the south and east granted outline consent in September 1996 for industrial purposes with various detailed approvals for infrastructure provision and development of individual sites (e.g. SP Systems, Aerolaminates, Isle of Wight Partnership and Technology Management Centre) granted since that date.

Outline application for residential accommodation and speculative office building with access from Dodnor Lane and Monks Brook submitted June 1999 and withdrawn November that year, prior to consideration by Planning and Countryside Committee on the following day. Subsequent application in outline for mixed use, speculative office and executive housing development on a similar site to that now under consideration refused in April 2000 because proposal did not meet criteria in UDP for mixed use development on allocated employment sites and residential accommodation in close proximity to employment land and facilities could lead to either unacceptable nuisance to residents or unreasonable constraints on operators.

Details of Application

Proposal is similar in principle to that refused planning permission last April. It is in outline, with all matters reserved for future approval, for proposed housing and office development. A plan submitted with the application shows twelve detached dwellings located in the northern part of the site, six of which have individual accesses onto Dodnor Lane and six served by an access road with a short cul-de-sac linking Dodnor Lane and Monks Brook. Three of the dwellings fronting Dodnor Lane are shown to have small (75 square metres floor space) workshop units within the curtilage.

In the southern part of the site are shown four separate office buildings each of 648 square metres grouped around parking for 76 vehicles in the central southern and southeastern parts of the site.

The applicant's agent has submitted a supporting statement which is copied and attached to this report for Members' information. This statement, in summary, indicates that the applicants are seeking to meet an unfulfilled demand for speculative office floor space but that the withdrawal of grant aid means that the relatively low rental returns for such development on the Isle of Wight are insufficient to meet the build costs, without substantial "funding" which was previously obtained through grant aid. Such grants are now no longer available and therefore if the need for speculative office development on the Island is to be fulfilled, an additional source of finance must be obtained. The applicant suggests that this gap can only reasonably be closed by the development of residential units on the site and they suggest that such development would be in accordance with Policy E4 of the Deposit Draft Unitary Development Plan.

Confidential financial information is submitted to explain why the development of the floor space proposed needs twelve dwellings to cover the "gap" in funding. Applicant's suggested phasing is that Phase I would be the completion of the office block adjoining the Isle of Wight Partnership building which would trigger release of the site for the first six residential properties, Phase II is the construction of the shell and core of the next office block and provision of services to the two remaining office blocks which would trigger the release of land for the remaining six residential properties to be developed and occupied. Phase III would be the fitting out of the second block when tenants are found and the construction of the third block to full building shell. This process would be repeated for the next block. The occupation of the first two offices would enable funding to be brought forward for the third and fourth buildings, the rents from which will in turn enable funding of the rest of the business park units in similar stages.

Development Plan Zoning and/or Policy

The majority of the site is within the development envelope defined in the Deposit Draft UDP and is allocated for employment purposes. The northern extension of the site adjacent Dodnor Lane, currently occupied by former farm buildings, (about 13% of the overall site) is outside the development envelope.

Relevant UDP Policies are E3, which resists development of allocated employment land for other uses (but allows uses which protect or enhance the employment use of existing or allocated employment land), E4 which indicates mixed uses will be approved where they promote employment development and allows mixed use on land which has been allocated for employment in certain locations. The application site is not included amongst those listed in E4 where that policy may apply. TR16 (Parking Policies and Guidelines) seeks to reduce car parking requirements towards operational minimum. Site is within Zone 3 therefore level of provision should be between 0% and 75% of the standard one space per 20 square metres of office floor space.

Representations

Highways Engineer recommends conditions if approved.

Property Services Manager has reviewed the applicant's confidential financial information and whilst the details are to remain confidential, he considers that the financial appraisal is soundly based and that the number of houses proposed even at the enhanced gross development value for the residential element is still below, albeit only just, the minimum to close the funding gap, without leading to excessive developers' profit.

The Principal Environmental Officer recommends the application, insofar as it relates to residential development for refusal on the basis of B2 use in close proximity which may cause nuisance to occupiers of the residential units, or place undue constraints on the industrial operators adjoining.

Principal Planning Officer (Policy) considers if the application is to be approved, the Planning Authority will need to be assured that the proposal will be viable as well as not providing excessive capital. Part of the site is outside the development envelope/employment allocation but it is possible that a different design/layout solution could achieve development wholly within the envelope. If some development outside the boundary must be accepted, then using the site of the farm buildings would be the best option. He questions the viability of having work units in the grounds of detached properties.

The Isle of Wight Partnership fully supports the application, the key element of which is the construction of the speculative office buildings. According to the Partnership, one of the major weaknesses in the Island's case for attracting inward investment has been the lack of suitable buildings to house relocating companies. The building of speculative office space has been a long-term objective of the Partnership for sometime. By comparison with the previous refused application, they make the following points:

Scheme covers whole of remaining undeveloped land on St Cross.

There is a phased programme that covers the release of the housing land and the building of the speculative office space.

Demand for office space has been established.

Financial analysis of issues such as the funding gap and land values is much more robust.

The Partnership's view is that the application meets all criteria of UDP Policy E4 which covers use of mixed development to fund employment uses.

A further letter from the Isle of Wight Partnership suggests that there is potential in this scheme for the creation of over 250 jobs. This is based on experience, especially the Innovation Centre, where job creation is of the order of one job per 10 square metres floor space. Job creation will also be supported in other ways, including:

Providing "move-on" space for the start-up companies in the Innovation Centre. The alternative would be to lose these companies to the mainland, once they have outgrown the Innovation Centre.

Providing temporary accommodation for larger users while a bespoke building is being built. We have missed out on several significant call centre opportunities in recent years due to the lack of this style of accommodation.

The boost to he local office market provided by this scheme will stimulate further office development, as well as possibly releasing current less suitable locations for regeneration with other uses.

The Isle of Wight Partnership is still experiencing a high level of demand for this type of accommodation and remains confident that it will help Inward Investment and the expansion of existing Island business.

The Isle of Wight Partnership feel that the development of office space on the St Cross Business Park is a vital strand of the Island's economic development.

If this opportunity is missed, then it is highly unlikely that a true business park will be developed on the Island in the foreseeable future.

Residents of two nearby properties objected to the application in its originally submitted form on the following grounds:

Residential development outside development envelope and any housing allocation.

Access road from Dodnor Lane to dwellings and industrial estate will increase traffic flows in Dodnor Lane.

No more development should be permitted which affects residential property in Dodnor Lane.

Proposal will destroy rural feel of remainder of Dodnor Lane, something the developer indicated he did not want.

Access to and from the industrial units must be from Monks Brook, that it what it was built for.

Development of housing will create undesirable precedent.

Proposal is solely to increase profit margins.

Application doubles the number of houses from the previously refused proposal.

Business considerations regarding funding of development should not be a planning consideration.

Loss of hedgerows, natural habitat and feeding grounds would be destroyed thus affecting barn Owls and Sparrowhawks who live and feed in the area.

Farm buildings only take up a small part of the proposed residential site.

Site is poorly drained with possible subsidence.

No information on conversion rate enquiries for office space to actual lettings therefore need is supposition and should not be taken as part of the planning application.

One resident has resubmitted his letter following re-advertisement of the application. This letter contains a request to be read at the meeting, but is copied and attached for Members' information.

Evaluation

On the face of it, an application for residential development on land allocated for employment purposes and also extending in part outside the development envelope, ought to be refused. However, this proposal does raise issues relating to the funding of employment development, which are in part anticipated in the Deposit Draft UDP. Indeed, the last application, with similar justification, was refused in April 2000 because it was considered to be contrary to the policies and aims of the UDP.

As in the previous case, Policies E3 and E4 are of particular importance in indicating how this application should be determined.

E3 is quite specific. Its stated aim is to "resist the development of allocated employment land for other uses." Applications for the change of use of land or premises to those outside employment use will not be permitted unless they fall within specific exceptions set out in the policy as follows:

(a) there is an identified need for the proposed use and no other suitable site is available; or

(b) where alternative equivalent floor space suitable for employment purposes can be found in the area without releasing land outside the development envelope boundary for development; or

(c) the loss of the site would not prejudice the ability of the area to meet local employment needs; or

(d) the development involves the relocation of a nonconforming use from an unsuitable existing site; or

(e) the proposal is for the overall development of the site and involves an acceptable mix of uses.

In my opinion, (a), (c) and (e) might be agreed to apply to this particular proposal.

The previous scheme was considered only to meet criteria (a) and (c) of E3 but the proposal now submitted does indicate how the remainder of the employment allocation at St Cross might be developed. This land is within the applicant's control and the indications of four further business and office units (totalling some 6,800 square metres) with associated access, parking and landscaping, would in principle be considered an acceptable form of development for the remainder of the site. Criterion (e) is also considered to be complied with. Only one of the criteria in E3 needs to be complied with, if a proposal is to meet policy. I therefore suggest that the proposal is acceptable under E3.

This proposal must once again be considered against the Council's policy, expressed in the Deposit Draft UDP, regarding mixed uses to promote employment development. This is set out at Policy E4, which was the subject of a proposed change prior to the UDP Inquiry. The Inspector agreed the change (which promoted a more positive approach to mixed use development) but did not suggest any other changes in his report. The wording of E4, set out below, includes the change recommended by the Inspector and is the wording which the Council has decided to include in the plan, when it is adopted. The policy reads as follows:

"E4 - Planning application for mixed used development (including Housing but not Retail) on land allocated for employment uses will be approved, providing:

(a) it can be shown conclusively that the development of a mix of uses is necessary for the appropriate development of the employment use and that no excess profits are being made. The secondary development should be just sufficient effectively to fund the primary use, taking into account normal developer profits;

(b) the site and surrounding area are appropriate for the mix of uses proposed;

(c) the mix of uses proposed are complimentary to each other, with satisfactory layout and design;

(d) the application is for the whole of the allocated site;

(e) full details of the phasing programme are provided;

(f) appropriate agreements are drawn up to ensure that the employment elements of the scheme are both completed and retained for employment use;

(g) the primary use of the site will conform with the Development Plan allocation and be a necessary and appropriate development;

(h) full financial details of the development costs and financial returns are provided to the Council;

(i) there is a current demand for the proposed industrial development."

Once again, for the proper determination of the application, it will be necessary to examine each of the above criteria in turn in the context of the information provided by the applicant and the analysis of that information by officers and consultees. The lettered paragraphs below relate to the relevant criterion in the policy.

(a) The Property Services Manager has examined the confidential financial information submitted on behalf of the applicant. He agrees that the layout and composition of the report are appropriate to set the parameters within which to consider the financial details of the proposed developments. He concludes that the estimated growth development value as set out in the consultant's report for Phases I and II of the development is broadly appropriate. The component costs of construction set out are considered appropriate and the percentage of developer's profit taken against the GDV is towards the lower end of the desired profit a normal developer would wish to return. On this element he concludes:

"I do not feel that an excessive profit is anticipated or indeed will result in this case. This makes the funding gap shortfall detailed ...... reasonable ....."

Although he considers that the individual value to each residential unit may be set unduly low, he concludes that the financial appraisal is soundly based and that the number of houses proposed even at the enhanced gross development value for the residential element is still below, albeit only just, the minimum to close the funding gap without leading to excessive developer's profit.

In the light of this analysis, it would appear that the developer would not be likely to make excess profits from the mixed development now proposed and therefore the proposal meets criterion (a) of Policy E4.

(b) The site adjoins open countryside to the north of the development envelope and the allocated employment site and in this context might be considered appropriate for the mix of uses proposed. I would therefore accept that the proposal meets this criterion.

(c) The layout now proposed shows dwellings fronting Dodnor Lane both within the employment site and within the area of the existing farm buildings, which stand outside the development envelope. A link is still proposed between Dodnor Lane and Monks Brook but this is designed in a way which is likely now to minimise conflict between residential and employment traffic. Access to the office car parking areas is most conveniently obtained from Monks Brook and a "pinchpoint" traffic calming measure is proposed on the route linking the two roads. Landscaping is proposed on the frontage to the office buildings which would face the residential development and in my opinion a satisfactory relationship between the two can be achieved.

It must however be mentioned at this stage that the Principal Environmental Protection Officer suggests that the application should be refused because the residential units, at their closest point, are only some 70 metres away from existing factory units with unrestricted B2 use. This is likely to lead to potential for dis-amenity to residents, or undue constraints on industrial operators. Members may recall that these concerns were expressed in his comments on the previous application for similar development on this site and were taken forward as a reason for refusal of the application. This relationship would still be a potential reason for refusal of this application but will have to be measured against the potential benefits from the "kick start" provided to the development of the remaining employment land within this allocation and the fact that any potential residents would be aware of the relationship between the proposed properties and the existing and proposed developments on the site. The Isle of Wight Partnership building (which is the nearest to the proposed residential units) is restricted by condition to B1 use, which by definition can be undertaken in a residential area without causing disturbance to occupiers, and, if approved, conditions could be imposed on the proposed office units whose construction would be triggered by the residential development, to ensure that their use remains within Class B1 as well.

(d) Once again, the site proposed for residential development is a small part (0.6 hectares or 5%) of the overall employment allocation of 12 hectares at St Cross. A substantial part of this overall allocation has now been developed with the Isle of Wight Partnership and Technology Management Centre buildings, two substantial buildings for SP Systems and the major building for Aerolaminates. The remaining undeveloped part of the allocation is shown in the submitted application as being within the applicant's control although not included within the application site itself; the phasing information provided indicates that once the "kick start" has been applied to the speculative office development, it would be seen to continue on the opposite side of Monks Brook, as an integral part of the overall development of the site. In this context, I think it is extremely unlikely that any residential development would be either proposed or accepted on the remaining undeveloped central part of the St Cross employment allocation. On the basis that criterion (d) applies to the whole of the employment allocation, a significant portion of which has already been developed, I am satisfied that criterion (d) is complied with.

(e) Unlike the previous proposal, details of phasing for the current scheme are provided as part of the supporting information submitted by the applicant's agent. These details are quoted as follows:

"Phase I is the completion of the office block adjoining that of the Isle of Wight Partnership and then for the release of the site for the first six residential properties, fronting Dodnor Lane, for development."

Phase II is for the construction of the shell and core of the next office block, the provision of the services to the remaining two office blocks and then the release of the site of the remaining six residential properties for development. The additional cost of servicing the final two office blocks will be in the region of �200,000.

Phase III is for the fitting out of the second office block, when tenants are found, and the construction of the third block to full building shell. The process is repeated for the next block.

The occupation of the first two offices will enabling funding to be brought forward for the third and fourth buildings, the rents from which will in turn enable funding of the rest of the Business Park units in similar stages, depending on the specific demands of tenants."

It is reasonable for the development to proceed in stages but I am not satisfied that the phasing suggested by the applicant will deliver enough completed office floorspace in return for the twelve dwellings proposed. I consider it would be more appropriate if the residential land were released in three stages, rather than two. I have discussed the best mechanism for achieving this with the Council's Legal Services Manager and it is suggested that a Section 106 Agreement is the most appropriate method of securing the following sequence of construction of the development.

Firstly, the completion of the construction (ready for occupation) of the first office block BEFORE the commencement of the construction of the first phase of four residential units.

Secondly, the completion of construction of the shell and core of the second office block and the installation of all usual services to the sites of the remaining two unconstructed office blocks BEFORE the commencement of construction of the second phase of four residential units.

Thirdly, the completion of the fitting out of the second office block and the completion of construction of the shell of the third office block BEFORE the commencement of the construction of the third phase of the residential units.

It is understood that the remaining development would then be self-financing through the rents generated from the occupied office buildings. Any Section 106 Agreement should also cover retention of the proposed "atelier" units within the grounds of three of the proposed residential properties. Subject to conclusion of agreement with the applicants to provide three stages of residential development, rather than two, I consider the proposal acceptable under criterion (f).

(f) This criterion suggests that an agreement will be necessary to ensure employment elements are completed and retained for employment use. The phasing arrangements outlined under Section (e) above will ensure that the relevant parts of the employment buildings are available prior to the release of land for residential development. I do not think it reasonable for an agreement to be in place to ensure that the employment buildings continue to be occupied but it is quite clear if consent is granted for a specific B1 use, then the buildings cannot be used for any other purpose without the grant of further consent from the Local Planning Authority. In my view this is a sufficient safeguard to ensure that the buildings remained available for employment use without the need for specific agreement.

(g) As indicated under (d) above, only some 5% of the overall employment allocation would be devoted to residential use if the application is approved and the development takes place. I am therefore satisfied that the proposal would not compromise the Development Plan allocation for employment use. The Property Services Manager agrees that the financial information submitted by the applicant shows that there is a significant "funding gap" which prevents at the present time speculative office development from being provided here or on any other site. The Isle of Wight Partnership has indicated its belief that the provision of such floor space will prove an important addition to the office which the Island can make to perspective employers and it may therefore be considered that the proposal for mixed residential and employment development is both necessary and appropriate to further the Council's aims in achieving a full range of employment opportunities. It is therefore suggested that criterion (g) has been complied with.

(h) The applicant has provided full financial details of the development costs and financial returns and criterion (h) is therefore complied with.

(i) Supporting information submitted by the applicant and more importantly information provided by the Isle of Wight Partnership following consultation would indicate that there is a demand for the employment development proposed. Criterion (i) is therefore complied with.

Bearing in mind the above analysis, it is evident that the criteria set out in Policy E4 have been recognised and addressed. Part of the site, however, the most northerly frontage onto Dodnor Lane, is outside the development envelope. This part is currently occupied by redundant farm buildings which could, under UDP Policy C17 could benefit from an appropriate conversion or change of use. It is suggested by the applicant that although outside the development envelope, the removal of these buildings and their replacement with two detached dwellings as part of the overall "enabling" development, will not prejudice the aims of protecting the countryside. Indeed, the applicant argues that the replacement of these buildings with two dwellings would be an improvement to the visual quality of the area.

If Members consider that the overall benefit of the proposal in terms of "kick starting" the development of the remaining part of St Cross for employment purposes outweigh the disadvantages of residential development in the area, then the fact that a small part of this residential development is outside the development envelope will have to be considered as part of the "price" that has to be paid for the overall benefits accruing from the development. Officers have undertaken negotiations to try to provide all the necessary residential development within the defined development envelope but this has been countered by the applicant with the argument that either more employment land would have to be devoted to residential development or that a smaller number of dwellings could be provided, thus leaving insufficient developer profit adequately to fund the speculative development. If Members agree that the development now proposed is both necessary and acceptable, then the fact that a small part of the site is outside the development envelope (albeit the site of former farm buildings) will have to be accepted.

The Council has accepted the principle that residential development can be provided on employment land in order to fund necessary employment development, for example the Pascall's scheme at Ryde. That, however, was slightly different in that there was a specific developer who required gap funding to provide floor space for his own purposes, rather than for the provision of speculative floor space as is now suggested. However, the floor space now proposed could improve the attractiveness of the Island to a wide range of potential employers and this, together with the potential for some 250 new jobs, is the benefit which the Isle of Wight Partnership is seeing in this proposal.

If it is accepted that the availability of speculative office or business floor space is a vital component of the Island's drive to attract new employers and that the current market circumstances mean that without the availability of grant aid to cover the difference in costs between floor space provision and anticipated rental levels, an alternative source of "gap funding" is required, then the Council has two basic alternatives. Firstly, to wait until market circumstances or the grant regime change to allow developers to provide speculative floor space with some degree of assurance that substantial losses will not be made, or to use the planning process constructively, within the context of Policy E4, to allow a mixed development such as that now proposed to go ahead.

Members may therefore consider that there is a proven and substantial need for the speculative floor space now proposed and that, notwithstanding the views of the Principal Environmental Protection Officer, that the relationship between proposed residential properties and both existing and proposed employment uses is such that any new occupiers of residential property will be fully aware of the nature of developments near to the dwellings and the potential for dis-amenity.

On balance, it is considered that the advantages of the scheme outweigh the disadvantages and therefore it is recommended that, subject to a Section 106 Agreement being included regarding phasing and occupation, conditional approval be issued.

Reason for Recommendation

Having given due regard and appropriate weight to all material considerations referred to in this report, it is considered that the proposal for mixed development accords with the policies of the Deposit Draft Unitary Development Plan (specifically policies E3 and E4) and that the benefits to the Island's economy which it is anticipated will arise from the proposed development, outweigh any possible disadvantages.

Recommendation -

Approval (subject to a Section 106 Agreement to secure the sequence of construction of the development in accordance with the Legal Services Manager's views reported above).

Conditions/Reasons:

D W JAGGAR
Director of Environment Services