Deferred Receipt Mechanisms Long Lease Seminar Edinburgh 1 June 2010

Deferred Receipt Mechanisms Long Lease Seminar Welcome & introduction Patrick Flynn, Scottish Government

Deferred Receipt Mechanisms Long Lease Seminar Long Leases best value, best practice, best outcome? Alasdair Fleming & Roger Cotton Brodies LLP

Long Lease Arrangements and their use in unlocking the latent potential or public sector sites Development Agreements, Licences and Long Leases - best value, best practice, best outcome? Alasdair Fleming Partner Head of Urban Regeneration Brodies LLP

Key issues Hot topic with pre-credit crunch issues in sharper focus:  Land values  Public realm and infrastructure  Sustainability  Profitability  Fundability

Why innovate? Balance all parties’ interests Managing risk Engaging Public and Private sector Encouraging activity in a difficult market Maintaining momentum and meeting demand Developing communities

Models for future development Development Agreement  Standard agreement for whole site;  Contains obligation to enter into Lease;  May incorporate Licence Lease – obligation to enter into long lease (175 year)  gives Public Sector control over delivery of public realm works  duty on developer to complete site  Overage delivers public sector profit

Models for future development Sublease – gives private sector right to sublet  Allows introduction of consortium partners  Aids site delivery – social housing  Facilitates commercial development  Encourages and facilitates engagement of private sector

Funding  Security  Land Value and Long Leases  Step-In  Sub-Leases  Irritancy Protection Agreements

The way forward? Residential – the route of out of recession? Maintaining momentum to meet current and future demand Further application of model - best solution in current climate Public sector toolkit Private sector engagement including Funders? Developing Communities

Making development agreements and public procurement work together Roger Cotton Partner Projects Brodies LLP

Key issues Much higher on the risk register than before: Competition for limited public sector investment Public sector striving for best value, and aversion to risk New remedies/penalties for getting it wrong Can be a tool for objectors to a scheme

Identifying the interface When will the procurement rules apply: Public sector initiative Public sector land Public sector investment Public infrastructure and public realm Public sector specification

Steering round the procurement rules Truly ancillary to a land deal No obligation to develop Planning powers only No public sector contribution or risk....but watch out for the courts developing the law

Embracing procurement! Needs to be an early call There can be no choice but to comply The process can be streamlined for developers and authorities Procurement is not an “add-on” – it is at the core

Using competitive dialogue effectively Since its introduction in 2006, the Competitive Dialogue procedure has received a mixed response: caution in the face of growing costs, yet recognition of the efficiencies gained. Early planning and preparation govern the success of the procedure. If it is run effectively and efficiently, it has the potential to have a positive impact and ensure benefits can be realised by both parties. The PPP Journal

Using competitive dialogue effectively Prepare and work with a good set of documents Avoid “dialogue drift” Coordinate the different strands of dialogue Use the freedom of dialogue phase without rushing to final tenders

Deferred Receipt Mechanisms Long Lease Seminar Panel discussion

Deferred Receipt Mechanisms Long Lease Seminar Summary & closing remarks

Deferred Receipt Mechanisms Long Lease Seminar Lunch