Planning Advisory Service Viability Course COMMISSIONING AND INTERROGATING ADVICE

When to seek professional advice To inform a negotiating position in relation to a specific application or project To guide policy

The differences Policy studies – Higher degree of generalisation appropriate: typologies Standard assumptions about values & costs Not practical to consider how individual sites differ Specific schemes – Detail is required to achieve the required level of usefulness and accuracy

Where to secure advice In-house – Use simple model and this advice – May want consultant to ‘audit’ conclusions Out of house – Brief should ask for explicit methodology To ensure approach is broad enough to reflect variations across study area Cover demand, value, forecasting and assessment of market risks Neither!

Approaches There tend to be two approaches usually adopted: – Confrontational: Each side uses its own information to negotiate – Collaborative: Both sides try to arrive at a shared view This can take two forms: – confrontational = minimal information shared – collaborative = open book

Specific schemes - confrontational Developer always holds upper hand – Holds back information on how layout can be improved – Has specific advice on values and costs – Knowledge of terms of land purchase and scheme financing This cannot be replicated or second guessed But forensic examination will help on specific issues Use of model as an alternative

Specific schemes - collaborative Superior because it improves the information available to the LPA. But be careful – Advice from developer can be ‘loaded’ Financing arrangements Values Developer will only agree if model used produces an outcome no less advantageous than their own

Assessing value Need information on design, layout and phasing Main information on values – Locally-based agent vs regional/national practice

Approaches to assessing value Sometimes just a phone call will suffice Surveyors reports – Liability restricts outputs Insist that all calculations and background information is provided Sensitivity analysis – Quantified market forecast Particularly from larger consultancies

For local firms, distinguish between chartered surveyors and estate agents – One knows valuation and appraisal; one knows local markets

Assessing costs Need engineering and cost consultancy advice – Generally expensive Cut your cloth accordingly – Some needs can be more easily met than others – Is desktop study going to give you the answer you need?

Procurement approaches Panel of consultants Main advisor (district valuer, in-house surveyor) Individually tendered to consultant

Procurement advice The brief – Ask for explicit methodology Don’t ask open-ended questions – Be focused in what you want - avoid long ‘shopping lists’ The invitation – Likely to be wide and differing levels of suitability for the job Don’t get wrong firm at right price

ITT requirements – A lot of smaller firms won’t be able to tick all the boxes E.g. H&S, Equal Opportunities, ISO, QA procedures

CASE STUDIES Plan making Development management

Strategic advice – North Chelmsford AAP Source: North Chelmsford AAP Submission Document

Commissioning approach Chelmsford BC approach 3 firms informally RTP helped CBC shape the brief Key questions – Are requirements for developer-funded infrastructure sound, justifiable and practically achievable? – How should development be phased to ensure necessary infrastructure can be delivered? – What changes/additions need to be made to NCAAP?

Several iterations of brief – Helped to focus on most relevant needs – Tasks to fit AAP timetable Four stages Two dimensions of assistance: – Tactical (AAP and live applications) – Technical (a Deliverability Assessment)

Commissioning approach…cont… Fixed fee, with additions as necessary, for each – e.g. cost consultancy for distributor road – So important to factor in a contingency where there are uncertainties

Outputs Interim outputs (Stages 1 and 2) – Viability Assessment Report – Recommended changes to AAP – Simple and transparent viability model (A4 sheet)

Site-specific advice – Canada Water, Southwark Source: Conrad Phoenix

2.31 ha site Occupied by 2 large retail sheds – 6,190m²

Proposed uses 430 residential units 4-10 storey buildings Two main “phases” (two architects) 9,104m² retail store (pre-let) 1,287m² of other A1/A3/A4/A5 space 644m² B1 office space 528m² D1/community space Basement car parking 340 cars Extensive public realm improvements

Viability issues Southwark BC policy 35% affordable housing Southwark priority for full 106 = c £4m Developer offering <25% affordable Developer advised by Savills Three Dragons model (GLA standard) used Southwark used Borough Valuer to review inputs

Disagreement about important inputs: – Purchase price – Build costs – Sales values Three Dragons model the ‘standard’ in London – But didn’t provide a solution parties could agree

Issues with approach…cont… No site specific work commissioned by LBS – Relied on generic advice and local comparables – Developer had to commission some extra work on main disputed variables Over 25% affordable housing required politically

In the end, developer made an “offer” to settle -27% affordable housing (even though not 3D viable) Agreement to review viability for Phase 2

Lessons Highly competent DM officer but Did not fully understand viability – Forced to rely on internal advisor – Acted mainly as go-between for the two valuers – Could not intervene and negotiate effectively Result was a wasteful process – 9 months of negotiation between valuers – No mechanism for resolution Planners do need to understand viability for the DM process to be efficient