London council set to pursue 50/50 development joint venture
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A London council was this week set to approve the creation of a joint venture to develop three major sites in the borough.
London Borough of Harrow’s cabinet, due to meet on Thursday, was due to vote on a recommendation to push ahead ahead with the JV project and green light a procurement process to find a development partner.
Known as the Harrow Strategic Development Partnership (HSDP), the JV will take ownership of three core sites currently owned by the council: Poet’s Corner, Peel Road (a site for the council’s new civic centre) and the Byron Quarter.
The council would own 50% of the project which is expected to last up to 35 years, while the deal is likely to be structured as a limited liability partnership.
Harrow has a fund of £1.7m to cover set-up costs.
A report to the meeting from the council’s corporate director, Paul Walker, says: “The option gives the greatest chance of achieving regeneration and development on a scale consistent with the council’s ambitions and objectives and enable the wider economic and social benefits the council requires.”
Though the report concedes that a JV means sacrificing some control to the appointed partner, and may take longer to get underway, it also listed a raft of benefits.
According to the report, a partnership model allows an “appropriate level of risk related return”, offers more control over development timing and design, and can be structured to offer equal incentives and disincentives to both the council and partner.
The report also argues that a JV is “more flexible” and therefore able to respond to market changes. The council would also gain access to private sector skills and could use the partnership to address other development projects.
Harrow has dismissed other options, such as selling the sites or direct delivery of the project.
Other councils have gone down the JV route to tackle development and regeneration needs.
In March Kingston voted to set up an LLP with Countryside Homes to launch an £800m project to redevelop housing on the council’s Cambridge Road Estate.
The deal was backed by a £26.6m loan from the GLA for the buyback of leasehold property, plus an allocation of £20m through the Building Council Homes for Londoners grant.
Brentwood Borough Council has opted for a similar direction.
The council signed a JV arrangement earlier this year with Morgan Sindall worth £1bn for development in the borough.
At the time, the council described it as the “largest and most significant” development project ever undertaken by the authority.
JVs do not always end well. When London Borough of Haringey dissolved a similar arrangement with its preferred partner Lendlease, the cost amounted to £3m.
The deal came to an end after the election of a new council administration last year.
A council report at the time said the new regime took a “different view on the acceptability of the risks,” and was “not prepared to accept the scale and nature of risk implied by the aggregated volume” of the proposed development programme.
