by John Comerford
The current intensity of the inner-city debate could say more for our sense of guilt than for our ability to solve its problems. Certainly a simple property solution does not appear to exist in isolation from other economic, political and social initiatives. The accusation is that developers only put money into areas of economic growth when there is a certainty of profit. Commercial momentum cannot be easily sparked in areas of declining industry, as Michael Heseltine found out when trying to evolve a consortium-regeneration of Liverpool a few years ago.
Although examples like pouring government finance into Consett showed some positive results, the general political view is that not enough money can be made available to provide self-perpetuating economic momentum by tax-led solutions. On the other hand unfettered monetarism leaves socially deprived areas totally neglected and deepens the inner-city problem.
The spiral is difficult to stop. Will we continue to contemplate our navels, or are there indeed development solutions to the problem? Continuing doubts were voiced at this year’s College of Estate Management annual property conference which took the subject as its theme.
However, there also seems to be emerging a new sense of urgency in the debate. The conference, significantly did not choose a purely property-based forum but drew together a group of experienced practitioners representing the socially deprived and homeless, small business enterprises, public and private housing sectors and commercial developers from the UK and the USA. A broad assessment identified the main issues of decay and deprivation and suggested mechanisms for dealing with them. Significantly, an American overview gave practical examples of major participation schemes between private and public sectors, showing that new economic climates can be created for local revival of seemingly derelict districts long regarded as “dead”. Co-operation between venture capitalists and local planning authorities was the message, with a suggestion for Private-Sector Development Organisations (PSDOs). Are our British Urban Developments (BUDs) and Consortium Developments (CDs) the first sign of this approach?
Certain forms of inner-city deprivation are undoubtedly widespread. While there is a very clear recognition of major problems in conurbations like Tyneside, West Midlands and Liverpool, what is not so obvious is that provincial towns have similar problems to a greater or lesser degree. The cumulative impact is arguably greater than a single city problem and even reaches into towns in the sunny south like High Wycombe. It is clear that all towns have varying composites of both economic growth and social success living alongside pockets of decline, failure and neglect. Even in Liverpool it could be argued that there is 80% full employment and that 90% of buildings are also usefully occupied; what is emphasised depends on the political stance taken. It is the balance which should occupy our thoughts. Can the property professions alone aid the solution, and can the existing commercial momentum, such as it may be and which creates local growth values, somehow be transferred to solving the problem of local deprived areas?
Pressure for planning gain deals has built up for many years. The increasing use of planning gain agreements was recently questioned by eminent academic at the Institute of Economic Affairs, as being merely an excuse for easing local authority budgets. The claim is that developers’ gifts of a swimming pool or community centre are merely sops to gain planning permissions. These commentators argue that you might as well charge for planning permissions.
But is this academic view totally realistic? Would the same dynamism for regenerating the local economy be helped by more “taxation” of the planning application? Have we not traversed several similar routes over the last 40 years in attempts to tax land and its uses for community benefits? Would enough be collected and would planning authorities or local authorities have the expertise and direct ability or accountability to implement such construction? Past history declares these hypotheses to be a pipe dream even though the idea of local taxation has some attraction.
The planning gain route with its economic drive generated by hard-nosed developers must have more to offer if joint public and private sector co-operation takes place in an atmosphere of true practical and positive co-operation. If land ownership could be harnessed — possibly with the aid of some compulsion — could some of the values created by the commercial momentum, which exists in all towns, be syphoned off to subsidise needy local purposes? How do we harness part of these values and how do we ensure that above a reasonable commercial level of profit, redevelopment schemes could create surplus value which could then be transferred directly to the use of the local community? Planning gain agreements, as Circular 22/83(*) insists, can in theory only require infrastructures which have direct relevance to the particular site being developed and that is why developers cannot take a broader viewpoint of social gifts for the benefit of the community. Charitable gifts used to be common in the past.
Planning gain agreements could actually be used to provide “relevant” economic and capital infrastructure related to the benefit of a whole community, provided it was fair and that schemes would seem to be carried out openly in competition. An American at the CEM conference used a management term which suggested that in the UK we should examine “best practices”, of how, if at all, some councils are achieving benefits and others are not. It is not certain that CDs or BUDs are necessarily going to be effective unless they avoid greenfield sites and their intentions are socially supported by the local authorities and the Government alike, as well as having economic viability to attract funding institutions. Far more joint participation in local comprehensive development schemes would arise if the orientation was towards redevelopment rather than new development. The need for commercial expertise and the involvement of the valuer becomes obvious. Some of the more successful examples of dynamic joint approaches to planning problems have been recently demonstrated in Horsham, Sussex.
Three methods have been used in the town which might be worth putting on the list of “best practices”. All have achieved planning-led community benefits from private developments, and these methods could well form models for use in less wealthy areas of the country. They point to joint co-operation between the local planning authority, the owner and the developer.
The surplus land method
In Horsham the council owned an ex-army camp and sports centre which was sold to Tesco. The identified need for an out-of-town superstore provided a £6m contribution which was used for social and physical infrastructure, particularly for the relocation of displaced businesses and other uses and to solve traffic and highway problems affecting the town centre.
The benefits were obvious and are now creating confidence to the private investor in the redevelopment of new competitive shopping areas and commercial premises to the increased economic health of the town.
Planning gain method
A number of small gain schemes have been used in the district, but two major section 52 agreements were entered into recently. One involved a scheme for development of over 50 acres and another of over 200 acres providing comprehensive solutions to identified housing, social and industrial need. A key product was a basket of “social goodies” which dealt with otherwise insoluble strategic problems of long standing.
In the first case there was a simple need for a village bypass and in the second case a complex range of town-centre problems. Essential ingredients in both formulae were the allocation and concentration of land uses to satisfy planning need in the District Plan Review into one defined location with the targeting of willing landowners to co-operate in the planning gain scheme. This avoided any “ransom” element from detracting parties by reason of ownership fragmentation.
The Broadbridge Heath bypass had been planned for nearly 30 years but awaited the availability of public finance. The allocation of land to meet the local need for jobs and homes along the route of the proposed bypass miraculously unlocked the values necessary to provide it. The bypass itself was designed in consultation with affected landowners to mitigate their own operational problems. The difference between isolated site-specific planning gain deals and this scheme were:
- its comprehensive nature of satisfy a number of real identified social and planning needs;
- assessment of values in advance to determine the required scale of allocation;
- prior consultation and route planning with the owners; and
- the legalities were managed by the local planning authority.
In the second major Horsham case of comprehensive development a lesson had been learned from the Broadbridge Heath scheme. Realised surplus value was ploughed back into the local community and used to provide a substantial social package involving the gift of 15 acres of council housing land, a 6-acre commercial site for relocation of town-centre displaced uses, such as a church site, provision of a pub, and land for sheltered homes and very sheltered housing. Seven acres were given to the council for private-rented accommodation and housing association use; 70 acres of open space and playing fields plus parks, riverside walks, school sites and financial contributions were given for provision of parish hall and recreational uses. Also involved were schemes for preservation of an historic monument and provision of woodlands. Added to all this were major improvements to the district distributor road system.
The scheme in this case was initiated by local agents with planning departments who were advising a major landowner, but full refinement and consultation developed with the co-operation of the local authority.
Finally, another Horsham example, was an effective package involving joint compulsory purchase/private-sector activity.
Compulsory purchase/private sector
Sun Alliance, a major employer in the town centre, wished to rebuild its substandard office premises, but its ownership was fragmented. Joint use of CPO powers to assist in a revised route for relief road provision was planned in conjunction with the redevelopment of a new town-centre scheme to consolidate the new building into one location. Rejuvenation of the town centre is being managed and co-ordinated by the council’s chief executive. Delicate negotiations had to be synchronised with the other major planning gain proposal for 200 acres already outlined because the resiting of some displaced uses outside the town centre had to be arranged. Without an entrepreneurial understanding by the council’s leader and a valuation input the task could have been impossible.
Conclusion
The College of Estate Management property conference identified several necessary elements in resolving inner-city problems, but the Horsham examples might be a guide to how practically diverse problems can be dealt with at local level. Large cities have well-documented and targeted solutions such as UDCs and EZs. Values can be created and concentrated into one location by quango power or government edict. But on small sites there can only be small solutions, which are dispersed and of little planning and social impact — though every little helps.
A single building in Halifax, a wharf in Bristol or a shop site in Manchester only generates limited economic activity and cannot produce surplus value of sufficient size or location to allow comprehensive gifts to the community, which in turn could encourage the commercial momentum needed to attract further perpetual private investment. The answer may lie in joint partnerships of local authority owners and developers like the Horsham solutions, with more positive identification of willing landowners and complete co-operation in the consultation process.
The targeted locations of uses to satisfy planning need will create usable value in itself. The initiative must be a planning-led exercise directed by local authorities. Unfortunately, the required expertise does not currently exist on a wide scale and the valuation implications may not yet be understood by the planning professions.
(*) The test applied in paragraph 8.