The London Assembly is to quiz the Greater London Authority over the details of an Olympic land sales deal that will see it take on £231m of debt.
It follows Boris Johnson’s administration’s deal to take a share of future Olympic asset sales to cover £231m of outstanding Olympic land debt that the GLA is inheriting from disbanding London Development Agency.
Negotiations with the government about how the GLA will be compensated for taking on the LDA’s Olympic debt are now complete.
The government is set to provide the GLA with sufficient grant funding to reduce the debt from £349m at 1 April to £231m by 31 March 2014, but no further grant funding specifically to pay off the debt is expected beyond this date.
The GLA will now be entitled to the first proceeds of the sale of Olympic land assets in order to repay the debt.
The Mayor of London’s draft budget sets out the following key points relating to the Olympic land debt:
• The GLA will get full receipts from the sale of Sugar House Lane to LandProp, the development arm of InterIKEA
• The first £223m in subsequent Olympic land receipts will go to the GLA to enable it to repay the Olympic land debt inherited from the LDA
• After that, there will be a 25:75 split between the GLA and the national lottery until the lottery has been repaid in full
• There will be a 50:50 split between the GLA and central government on any remaining land receipts
• The government will also provide the GLA with an extra £12m in 2011-12 to put towards Olympic land debt costs over the next three years
The previous Olympic land transfer deal determined that central government would be entitled to 85% of the first £650m, with the remaining 15% – £97.5m – going to the GLA.
Under the new agreement, in addition to Sugar House Lane, the GLA will receive £417m of the first £1bn of receipts, compared with £150m of the first £1bn under the old agreement.
But the London Assembly has queried whether it is a good deal for Londoners in what is “an uncertain property market with unknown interest costs”.
The Assembly’s budget and performance committee will tomorrow question the Mayor of London’s chief of staff, Edward Lister, about the agreement.
nick.whitten@estatesgazette.com
