Christine de Ferrars Green considers how best to deliver and manage community assets in new garden cities and settlements
There has been a lot of discussion about garden cities this year, with the recent announcement of the winner of the Wolfson Economics Prize 2014 and the publication by the government of the Garden Cities Prospectus.
With the revival of interest in garden settlements, local authorities, landowners, investors and developers are considering how they can be delivered in the 21st century. Although the garden city model of development was put forward more than a hundred years ago, as brought to life by Letchworth Garden City, the underpinning principles remain equally applicable to the communities of the future.
Community assets in new places
Community assets, such as parks and community centres, are vital elements of high quality, attractive new places. The management arrangements and long-term funding to maintain them must be planned at the outset, and not be dealt with as afterthoughts in new developments.
This management and maintenance relies on some form of local management organisation taking on the legal ownership and practical responsibility, acting on behalf of the community. In the past, this has been done, with varying degrees of success, by traditional estate management companies and local authorities. However, with increasing pressure on local authority budgets, private sector-led community stewardship approaches to the long-term ownership and management of new community facilities become much more relevant.
Managing community assets
How do local planning authorities, landowners and developers take on the challenge of providing, funding and managing community assets? In an age of local government austerity, how can each of those players engaged with creating new places ensure that these vital amenities within the new development are well looked after in perpetuity, working with an effective estate management strategy that enhances the development and investment values?
Capturing land value
At the heart of the garden cities’ principles, as espoused by the Town and Country Planning Association, is the concept of land value capture for the benefit of the community.
Whatever can be captured can be invested in the infrastructure of the new development and the provision of community facilities. These are then maintained by securing future income from the retained investment in the development estate. The quantum of value depends on the economic viability of the development, as to which the base land value is the starting point supplemented by the ability to derive further capital and income at a later date.
There is a parallel between the garden cities’ model of land value capture and what is achieved as planning gain by section 106 agreements. Almost without exception, all new residential-led developments of more than just a few new homes bring with them the provision of sometimes extensive new community facilities, both built – in the form of schools, libraries and community halls – and green spaces, formal and informal play areas, allotments and woodlands.
Of course, some of those, such as schools, must be passed from the developer to the local education authority or other education provider. In the past, most of the rest of these facilities were also transferred to the local council, which would take on land ownership from the developer together with payment of a commuted sum.
This cash payment, calculated to a notional thirty-year maintenance period, was paid into the council’s accounts, but local government finance arrangements make no provision for ringfencing the money, or hypothecating its future expenditure. Instead, these facilities would in future be run by the local authority’s parks department and leisure services, funded by rates and council taxes.
The local government spending cuts witnessed in the past few years are likely to be sustained for the foreseeable future, with local councils focusing on core, statutory functions. So there is an increasing reluctance on the part of many local councils to take on significant new ownership and management responsibilities without being confident of the financial means and the skills of experienced personnel to manage them.
Moreover, developers have become increasingly resistant to paying significant commuted sum payments, especially if the new play areas, parks and gardens may not be maintained to their initial high standards in the future.
Estate management strategy
Section 106 agreements and planning conditions frequently include requirements for an estate management strategy to be prepared, setting out a comprehensive plan for the long-term management and maintenance of whatever new community assets are being created alongside the new homes.
This plan identifies the legal body that will own, say, the country park or the new community hall, and will also show the source of revenue funding dedicated to maintaining and renewing the community buildings and open spaces. This may take the form of an endowment of cash or income-producing assets to be held by the stewardship body, as well as establishing a local residents’ stewardship charge to be levied on an annual basis. The strategy must be flexible, to allow the development to progress and mature, particularly where schemes of several thousand new homes will take many years to be built out.
Choosing a legal framework
A number of considerations apply to choosing the legal structure for a new stewardship body. It is most likely to take the form of a company – probably a not-for-profit one, which may be a community interest company, an industrial and provident society or a charitable incorporated organisation. Important issues such as the personal liability of members/shareholders must be considered, and also the ownership of the company that controls the assets and has responsibility for the liabilities arising in relation to them. Whatever legal structure is created, the governance structure must allow effective operation and legitimacy of decision making, for the benefit of the local community.
Consider the assets
It is important to look at the range of assets that are being provided and to consider the most appropriate ownership and funding structure for each, individually. Not all assets need to go to the same local management organisation or council and, in large-scale developments, the new residents may be better served by a varied approach. The type of use, the likely users and the anticipated cost of maintenance and repair in the long-term will be some of the key determining features.
The estate management company
An estate management company is now more likely to take on ownership and management of assets that in the past would have been transferred to a local authority, with local residents paying directly for their upkeep. So, landowners and developers establishing these companies are seeking greater levels of community engagement and participation from those living in the new development.
The traditional estate management company is being restyled as a community land trust or community development trust in some places. But rather than the developer issuing shares to all residents at the same time as initial plot sales and, having built out, passing control to those residents, developers are now looking to stay in control for longer than the initial development phase, to ensure continued high-quality amenity services for the new community. This new model incorporates innovative local management organisations, giving the new residents a real say in how facilities are put to use.
The role of councils
The local and parish councils may still have an important role to play. In many instances, the parish council is still the preferred local owner of a playground, football pitch or neighbourhood allotments. Local councils are still taking on community halls and formal leisure facilities, working closely with community groups employing professional managers on long-term agreements.
Achieving the best outcomes
Local planning authorities, landowners, developers and delivery partners have to work together to achieve the best outcome for the new communities that they are involved in creating. Section 106 agreements can provide the framework; an estate management strategy will provide the detail. Whatever form the legal ownership, community participation and funding takes, these must be well matched to the resources available for the facilities to which they relate.
Case study: Alconbury Weald
Alconbury Weald is a new garden settlement of 5,000 new homes, 290,000 sq m of employment and a full range of new community facilities and associated infrastructure.
These include schools, library, community halls, and extensive formal and informal green spaces – allotments, sports pitches, play areas, woodlands and the infrastructure of the sustainable urban drainage system.
The developer, Urban&Civic, is considering a range of stewardship bodies: a single, site-wide management company, with subsidiary elements for residential and commercial areas; a land trust; a community development trust; and statutory adoption.
Already, Urban&Civic are working closely with the local parish council, which has taken a long lease of allotments and community woodland adjoining the development site.
The estate management strategy sets out the main objectives: to take a comprehensive approach to estate management, by establishing a common character and high standard of land-asset maintenance throughout the new development. The costs will be met through financially sustainable management bodies.
The emerging new community will be involved in estate management decisions, and implementation of the strategy will evolve and respond to the new community, as the development is built out.
The plan will allow for innovation in management solutions over the long term, held together by Urban&Civic’s overarching vision for an inspiring place for working, living, learning and leisure.
Christine de Ferrars Green is a partner at Mills & Reeve
