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Cushman and Wakefield report - Ealing Council

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Cushman and Wakefield report - Ealing Council Powered By Docstoc
					    STRATEGIC DISPOSAL ADVICE

                ACTON TOWN HALL




                  DATE:            17 August 2010
                  REF:             MAM/RP
                  STATUS:          Public




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                                                      Page No
1.   INTRODUCTION                                        3

     1.1.   Background                                   3
     1.2.   Brief / Scope of Work                        4
     1.3.   Methodology                                  5

2.   SITE DESCRIPTION / CONTEXT                          6

     2.1    Acton                                       6
     2.2    High Street & Environs                      6
     2.3    Properties Under Consideration              7
     2.4    The Library                                 7
     2.5    Acton Town Hall                             8
     2.6    The Kings Rooms                             8
     2.7    Acton Public Baths                          9
     2.8    Salisbury Street Car Park                   10
     2.9    The Priory Centre                           10
     2.10   Summary of Accommodation                    11

3.   OPPORTUNITIES                                      12

     3.1    General                                     12
     3.2    Magistrates Court                           12
     3.3    Sheltered Housing                           13
     3.4    Salisbury Street                            14

4.   SITE CONSTRAINTS                                   15

     4.1    General                                     15
     4.2    Legal                                       15
     4.3    Planning Context                            17
     4.4    Heritage Issues                             20
     4.5    Physical & Contextual Issues                22
     4.6    Utilities                                   23

5.   SPATIAL REQUIREMENTS AND SPECIFICATIONS            24

     5.1    General                                     24
     5.2    Pool / Leisure                              24
     5.3    Library                                     24
     5.4    Community                                   24
     5.5    Council Offices                             25
     5.6    Spatial Requirements                        25

6.   MARKET DATA                                        26

     6.1    Residential                                 26
     6.2    Retail / Leisure                            27
     6.3    Offices                                     28
     6.4    Hotels                                      29

7.   COST INFORMATION                                   30

     7.1 Cost Reports                                   30


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8.   HIGHEST AND BEST USE ANALYSIS                   31

     8.1 General Matrix                              31
     8.2 Use by Location                             31
     8.3 Tactical Considerations                     32

9.   EVOLUTION OF SCHEME OPTIONS                     35

     9.1 General                                     35
     9.2 Potential Options                           35
         36

10. FINANCIAL APPRAISALS                             37

     10.1   Appraisals                               37
     10.2   Priory Centre                            37
     10.3   Library                                  37
     10.4   Town Hall Conversion                     37
     10.5   Town Hall Extension                      38
     10.6   The New Leisure / Community Facility     38
     10.7   Community Space                          38
     10.8   Option Outturns                          41


11. PROCUREMENT / DISPOSAL                           42

     11.1    Law / Restrictions / Market Appetite    42

12. RISK ANALYSIS                                    44

     12.1    General                                 44
     12.2    Swot / Risk Identification              44
     12.3    Mitigation of Risks                     45
     12.4    Outline Programme                       45

13. CONCLUSIONS AND RECOMMENDATIONS                  46

     13.1    Recommended Scheme Option               46
     13.2    Implementation of Recommended Option    46




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1.      INTRODUCTION

1.1     BACKGROUND

1.1.1   The London Borough of Ealing („the Council‟) is the freehold owner of a number premises including
        public and municipal buildings in Acton, located on Acton High Street, Acton Lane and Salisbury
        Street. These premises include:

        1.1.1.1     Acton Town Hall (built for Acton Urban District in 1910, and subsequently extended in
                    1939) („the Town Hall‟)

        1.1.1.2     Acton Swimming Baths (built in 1905) („the Baths‟)

        1.1.1.3     Acton Library („the Library‟)

        1.1.1.4     the Priory Community Centre (a former school building which provides space for
                    community groups) („the Priory Centre‟)

        1.1.1.5     The Salisbury Street Car Park („The Car Park‟),

1.1.2   The Council also owns and manages social housing for rent units at Acton Lane / Neville Close,
        immediately adjoining the Car Park.


                                          EXTENSION


                                                                 BATHS



                     LIBRARY




                  TOWN HALL                                              PRIORY CENTRE




                                                           CAR PARK




1.1.3   The Baths no longer meet contemporary standards for public leisure facilities and significant money
        has been spent on repair and maintenance in the past and is required be spent again to secure
        continued use. The Council has therefore reached the decision that the Baths will need to be
        decommissioned within the near future.

1.1.4   The Council is looking to replace the Baths with modern new facilities within the vicinity of the
        existing premises. To this end it has commissioned S&P Architects / EPS to provide an outline costing
        and specification for new facilities.



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1.1.5    The Priory Centre is actively used by community groups. However, the current arrangement is not
         considered to be the most efficient or appropriate use for this site and the Council has proposed the
         relocation of these user groups, either to new purpose built or refurbished accommodation as part of
         any regeneration scheme. There also remains a possible education requirement in the short to
         medium term, for a new primary school and this property may potentially provide a temporary
         solution for that requirement.

1.1.6    The Council is also considering the future library requirements and whether this can be most
         efficiently served from the existing premises, or whether this function might also relocate as part of
         the wider regeneration initiative either into new accommodation or refurbished space within existing
         held premises.

1.1.7    The Council‟s operational and related floor space requirements for Adults, Childrens and Families
         Services are also under review and the Council would like to accommodate a new service hub within
         the town hall regeneration complex. The Council is willing to consider options to dispose of the
         Town Hall building as part of any operational rationalisation.

1.1.8    In general terms, the Council wishes to encourage regeneration of the Town Hall environs, and is
         looking to explore how the prospects of surplus asset disposals and structured redevelopment of
         these properties can contribute to these wider regeneration aspirations.

1.1.9    The Council has previously commissioned DTZ to consider the development potential for these sites,
         which indicated a significant financial shortfall. Since that time, the economy and property market has
         experienced a significant downturn and with previous experience of a failed disposal the Council
         requires a revised analysis of the options available to it to bring forward solutions and on site activity
         in the short to medium term.

1.1.10   Following a comprehensive public consultation exercise in June 2009, which lead to some design
         workshops in late 2009, and following further internal reviews of operational requirements, the
         Council has concluded the Acton Town Hall location is the appropriate location for any replacement
         baths and leisure facilities as well as for one of the new Council “service centre hubs”.


1.2      BRIEF / SCOPE OF WORK

1.2.1    Cushman & Wakefield LLP („C&W‟) was appointed in July 2010 to review the issues and to advise the
         Council on appropriate strategy to realise value from these premises, to satisfy requirements and to
         bring about regeneration.

1.2.2    One of the Council‟s primary objectives is to re-provide the Baths and associated leisure facilities. In
         addition, ensuring the long term requirements of the Library and the Council‟s occupational
         requirements are secured at Acton and to ensure the potential requirement to provide replacement
         accommodation for the various community functions is provided for.

1.2.3    The Council has indicated that it has set aside a significant cash reserve to help overcome the
         anticipated financial hurdles and that it is also prepared to provide additional bridge finance where
         necessary and that it would also contemplate the disposal of other surplus assets within its portfolio,
         to help ensure the comprehensive regeneration of the Acton Town Hall locality.

1.2.4    C&W has therefore been asked to report to the Council on the following matters:

         1.2.4.1 the highest and best use of the properties;

         1.2.4.2 the development potential of the properties;


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        1.2.4.3 the potential financial receipts to the Council realised on the sale of the various properties in
                the vicinity of Acton Town Hall, which might be generated to fund or “subsidise” the
                development of new public facilities;

        1.2.4.4 identification and quantification of risks;

        1.2.4.5 the recommended disposal and/or procurement routes as would be applicable.


1.3     METHODOLOGY

1.3.1   We have approached our advice using a „highest and best use‟ methodology. Firstly we have
        considered the site constraints, including legal, planning, heritage, physical and other issues. Secondly
        we have assessed market demand and values across a range of potential uses. We have concluded
        with which uses / arrangement of uses would maximise the potential of these various assets. Taking
        these conclusions, we have identified a number of developments options, and appraised these, leading
        to a preferred option, described herein. Finally we have considered the risks associated with
        delivering the preferred option, and made recommendations as to the most suitable disposal /
        procurement routes.

1.3.2   The report and our findings rely on base data collated from the Council and other sources.




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2.      SITE DESCRIPTION / CONTEXT

2.1     ACTON

2.1.1   Acton is a district of west London, located some 6 miles to the West of Charing Cross. At the time
        when the Town Hall was developed, Acton was a Municipal Borough in its own right. However in
        1965 Acton merged with Ealing and Southall to form the London Borough of Ealing.

2.1.2   Formerly an area of intense industrial activity, Acton is now principally residential. At the time of the
        2001 census, Acton had a resident population of c. 56,000 people.




2.2     HIGH STREET & ENVIRONS

2.2.1   Acton High Street forms part of a key arterial route into central London, which includes the Vale,
        Uxbridge Road and Holland Park Avenue.

2.2.2   In spite of the numerous rail and underground connection which service Acton, the nearest
        connections to the High Street are Acton Central (Over-ground) and Acton Town (Piccadilly) which
        are 4 minute and 16 minute walk respectively from the Site. The High Street is well served by buses,
        albeit the route into central London suffers from considerable congestion.

2.2.3   The High Street is principally dominated by retail use at ground floor, with the Town Hall building
        forming a notable exception to this trend. The retail provision is relatively weak and is comprised
        predominantly of value oriented independent traders, with a relatively high proportion of cafes, pubs
        and independent grocers.

2.2.4   Moving west along the High Street the retail offer improves modestly, and includes The Oaks shopping
        centre, which whilst value oriented is home to a number of multiples including Netto. Nevertheless,
        the principal comparison shopping destination for most Acton residents is likely to remain either
        Ealing Broadway, or Westfield in Shepherds Bush or the West End. The nearest foodstore of any
        significance is Morrisons on Kings Road, some 200m from the site.



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2.2.5   Moving south off the High Street down Acton Lane, the area is dominated by residential terraced
        housing.


2.3     PROPERTIES UNDER CONSIDERATION

2.3.1   Our brief requires us to consider disposal, refurbishment and development options for a number of
        properties currently in Council ownership. Although not entirely contiguous, being separated by
        public highways, the properties are sufficiently proximate to be potentially considered for a single
        coordinated/comprehensive approach.


2.4     THE LIBRARY

2.4.1   The Library is a red brick built Victorian building of 2-storey height. The main and secondary
        entrances to the Library are off Acton High Street, and the property also benefits from a third point
        of access and return frontage to Winchester Street.

2.4.2   Immediately adjacent on the High Street frontage is a parade of retail units with residential
        accommodation above.

2.4.3   The property has a detailed façade on the High Street frontage, but behind this the building is
        relatively linear and offers well dimensioned floor plates, that might suit a variety of alternative uses.

2.4.4   To the rear of the property is a small passageway / outdoor storage area.

2.4.5   The Library is currently occupied by the Council‟s libraries services division.

2.4.6   The quality of the existing building is likely to influence its future redevelopment potential.




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2.5     ACTON TOWN HALL

2.5.1   Together with the Town Hall Extension, the Town Hall is a significant and imposing structure built
        over 3 levels, with a long frontage to the High Street, and a return frontage to Winchester Street and
        Salisbury Street.

2.5.2   The Town Hall was built in two phases. Phase One, along Winchester Street, was completed in March
        1910, and included council offices, a council chamber and a large committee room. The building was
        subsequently extended in 1939 to include an assembly and concert hall, („the Extension‟)

2.5.3   Both the „new‟ and „old‟ town halls are understood to be masonry built, with a number of internal
        structural walls and period features such as fireplaces and chimneys.




2.6     THE KINGS ROOMS

2.6.1   The Kings Rooms dates to 1926, preceding the development of the Town Hall Extension. It was
        designed as a facility allied to the Baths, and there is significant historical connectivity with the Baths,
        albeit the property no longer has any operational connectivity with the baths.




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2.6.2   The Kings Room building is three storey in height, and of red brick construction and stone detailing.
        Whilst it occupies a prominent position at the corner of the High Street and Acton Lane, the
        configuration of the building provides restricted flexibility for conversion for alternative uses.

2.7     ACTON PUBLIC BATHS

2.7.1   The Baths were built in 1904 and refurbished in 1989. They consist of 2 principal bays with a series of
        interconnecting ancillary rooms, including a small fitness room.

2.7.2   Outward facing the design is simple and mirrors the street pattern. Facing inwards towards the Town
        Hall Extension, the arrangement of buildings is confused and haphazard.

2.7.3   Annexed to the plant room on the interior of the Town Hall Island is a red brick chimney which used
        to serve the Baths. This is of considerable heritage value, as discussed below. The chimney is only
        loosely connected with the Baths and it may be possible to disaggregate this structure in a
        development proposal.

2.7.4   The baths themselves are not listed. However, the adjoining chimney structure and the Acton town
        hall itself are listed. Any redevelopment of the baths is likely to require sensitive treatment as a result.

2.7.5   The Baths are the subject of a significant dilapidations / refurbishment liability. In addition the Baths no
        longer meet contemporary standards of public leisure accommodation, with for example shared
        changing facilities within the main pool rooms and a limited associated health and fitness facility. The
        need to re-provide new facilities to replace the existing Baths is one of the key drivers behind the
        regeneration project.




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2.8     SALISBURY STREET CAR PARK

2.8.1   The Car Park to the South of Salisbury Street is a surface level Council operated car park. It
        comprises circa 72 car parking spaces, has a site footprint of circa 21,090 sq ft, and is controlled
        through a pay and display system. Due to the topographical land changes, the car park is bounded to
        the south by a significant retaining wall.




2.9     THE PRIORY CENTRE

2.9.1   The Priory Centre, formerly a school, now houses a number of Council-led community groups and
        other charities.

2.9.2   The building is of 2-storey height and enjoys a long frontage to Acton Lane, a principally residential
        street.

2.9.3   To the rear of the building is a reasonably large yard (former playground), which is currently part used
        for car parking for up to 45 cars.




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2.10     SUMMARY OF ACCOMMODATION

2.10.1   The following table summarises the scale of the principal sites/premises considered by this report.



                    PROPERTY                      BUILDING FOOTPRINT                    SITE FOOTPRINT

                                                      (SQM / SQFT)                        (SQM /SQFT)

                 ACTON LIBRARY                          493 (5,315)                        540 (5,820)

               ACTON TOWN HALL                        2,963 (31,895)                      (SEE BELOW)

              ACTON PUBLIC BATHS                      1,596 (17,186)                      (SEE BELOW)

           TOWN HALL AND BATHS SITE                        N/A                    6,412 (69,026) (1.585 ACRES)

            SALISBURY ST CAR PARK                     1,959 (21,090)                      1,959 (21,090)

           PRIORY COMMUNITY CENTRE                    1,418 (15,265)                      3,904 (42,022)




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3.      OPPORTUNITIES

3.1     GENERAL

3.1.1   We have been asked to consider how best to maximise the value of the Council‟s landholdings. This
        necessarily requires consideration as to the potential to acquire third party properties, or consider
        joint venture opportunities with adjacent landowners, where such arrangements may realise
        synergistic value which could enhance the potential capital receipts. Three potential opportunities
        present themselves, and these are considered below.




                                                                            SALISBURY STREET




                                                                                  SHELTERED HOUSING

                  MAGISTRATES




3.2     MAGISTRATES COURT

3.2.1   The former Magistrates Court is located adjacent to Salisbury Street Car Park. Taken together with
        the Car Park, there is potential to create an enlarged site which might present additional development
        permutations. The site is presently owned in freehold tenure by the Secretary of State for
        Communities and Local Government.

3.2.2   The Magistrates Court is a single storey, brick building with pitched roofs dating to 1907. The building
        has a footprint of around 8,000 sq ft, while the site covers approximately 13,000 sq ft. It is not listed
        at a national or local level. The site is the immediate neighbour to the Salisbury Street Car Park; there
        is no intervening land with title held by a third party. Acquisition of the Magistrates Court for
        inclusion in the development scheme would increase the area of the Car Park site from 21,000 sq ft to
        34,500 sq ft.

3.2.3   On 23 June 2010, the Lord Chancellor and Secretary of State for Justice, Kenneth Clarke, announced
        proposals for consultation on closing 103 magistrates and 54 county courts across England and Wales.

3.2.4   The consultation asks for views on a number of proposals to enable HMCS to operate high quality
        courts within reasonable travelling distance for communities, while ensuring value for money for
        taxpayers. It also invites views on any other factors to be considered when deciding on the future
        provision of court services. Finally, and on the basis of the above, it asks questions on a series of
        specific courts which have been identified as potential candidates for closure.



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3.2.5   We are told that the consultation period will run until 15 September 2010. All the considerations will
        then be taken into account before the Lord Chancellor decides whether to close individual courts.

3.2.6   If the HCMS consultation concludes that Acton Magistrates Court is surplus to requirements and free
        to be disposed of, the site provides an option to acquire additional development land to be included in
        the scheme. At this stage it is unclear whether the procurement of the Court, most probably at
        market value for residential redevelopment (given the discussion that has already occurred
        surrounding the possibility of conversion to residential use) will add significantly to the redevelopment
        value of the site.

3.2.7   The Council could only justify acquiring the site to support its proposals in the event that some
        synergistic value could be unlocked through doing so. (i.e. the purchase of the asset must release a
        greater value for the development than the purchase price). At this stage it is difficult to conclude
        with any certainty whether this would be the case. On the basis that the owner is seeking a
        redevelopment value this prospect is reduced. It is therefore our advice that this opportunity should
        be disregarded, since to promote a deal contingent upon approval of a third party landowner is likely
        to create significant uncertainty.




3.3     SHELTERED HOUSING

3.3.1   The Council also owns a number of sheltered housing units as part of a generally low rise scheme, in
        close proximity to the above sites, immediately adjoining the car park. Some of these units are in
        private ownership. There are no plans for this site as part of the Acton Town Hall Regeneration
        scheme.




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3.4     SALISBURY STREET

3.4.1   Salisbury Street itself is an adopted highway which separates the Town Hall / Baths site from the Car
        Park.

3.4.2   The Council has stated a willingness to consider calming or stopping up this street, if to do so would
        assist the development proposals.

3.4.3   It is understood that Salisbury Street is an important bus route at present and that several utility
        services run along its length which would need to be considered in any redevelopment/closure
        proposal.




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4.      SITE CONTRAINTS

4.1     GENERAL

4.1.1   Site constraints comprise those matters which would fetter a developer‟s ability to produce a market
        led scheme on the site. These include physical matters, such as the topography of the site and the
        location of service media. They also include regulatory and legal issues, such as charges against the
        legal title, planning policy and heritage constraints.

4.1.2   Collectively these form the parameters within which a developer can respond to market demand and
        maximise the capital potential of the site. The parameters should not necessarily been seen as
        intransigent, and there is often scope to negotiate with the regulatory authorities, and mitigate the
        effect of physical constraints, albeit there may be costs attached to doing so.

4.2     LEGAL

4.2.1   We have been provided copies of title reviews produced by the Council in respect of its landholdings.
        These suggest that all property which is the subject of consideration is held in freehold tenure.

4.2.2   The root of title across the site varies, the Council having assembled the site piecemeal. Much of the
        property was acquired through historic conveyances dating back to the 19th century. As there have
        not since been any registrable dealings with the land, much of the site is unregistered. We recommend
        that in order to provide a more marketable title, the Council begins the process of voluntary
        registration with the Land Registry.

4.2.3   The separate parcels of ownership are illustrated on the plan below, red being unregistered land and
        blue being registered land.




                                                                      DENSITY RESTRICTION




                                                                     APPROVAL OF PLANS




              ALCOHOL RESTRICTION




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4.2.4    There are a number of charges made against the land and contained within the various conveyances.
         Many of these appear immaterial. However we would specifically note the following entries:

         4.2.4.1 a restriction on the sale of alcohol on the library site

         4.2.4.2 a restriction on the sale of alcohol on the town hall site

         4.2.4.3 a requirement to seek approval of plans for development on the Salisbury car park site

         4.2.4.4 a restriction on part of the Town Hall site in relation to the maximum number of residential
                 units that may be constructed.

4.2.5    On the face of it these might all pose restrictions on the type of development that could be
         implemented on these sites. However, as the charges are relatively historic, with most dating back to
         the nineteenth century, it may be possible to either seek to have the charges removed from the
         register, or alternatively to take out an indemnity insurance policy against the prospect of an
         enforcement claim.

4.2.6    We have been advised by the Council‟s legal team that it should be possible to appropriate the land
         for planning purposes, which would remove the alcohol restriction on the title. For the purpose of
         this report, we have therefore assumed that we can ignore this restriction.

4.2.7    The Council‟s legal team has considered the other restrictions, and whereas no firm determination of
         the position is possible at this stage, it is considered that these might be indemnifiable under an
         insurance policy. The likely cost of such policy should be established in early course, and has not been
         accounted for in this report. We have currently allowed a figure to remedy the title defects, but there
         is a risk that the actual figure could exceed the amount assumed.

4.2.8    The majority of the subject properties are occupied by the Council. For the purpose of this report
         we have been asked to assume a baseline position whereby the Council can terminate public
         occupancy of the properties with no impact on the critical path to disposal / delivery.

4.2.9    There are however some third party interests which will need to be discharged in order to achieve
         vacant possession of the site. We understand that these are tenants in respect of which no lease
         exists, but who may have developed some statutory protection by virtue of their occupation of the
         properties. We believe that all of these tenants can be evicted using Landlord & Tenant initiatives, or
         through Council separate controls, without impacting on critical path; however we recommend that
         this assumption is reviewed by the Council‟s legal team. Our understanding of the tenancies that may
         need to be extinguished is summarized in the table below:

           BUILDING                      TENANT                                STATUS           VP TIMETABLE
           Priory Centre                 MIND                                 Holding Over        6-12 Months
           Priory Centre                 Bizzy Lizzy's Playgroup              Holding Over        6-12 Months
           Priory Centre                 Somali Womans Refuge Centre          Holding Over        6-12 Months
           Priory Centre                 Connexions                           Holding Over        6-12 Months
           Town Hall Extension           Pupil Parent Partnership             Holding Over        6-12 Months
           Town Hall                     Unison                               Holding Over        6-12 Months
           Town Hall                     Arc                                  Holding Over        6-12 Months



4.2.10   We have made a provisional allowance to extinguish these tenancies, but this figure should be verified
         in early course.




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4.2.10   A potential purchaser of any of the assets is likely to require certainty in respect of vacant possession,
         and so it is important that a clear management strategy is established to achieve this in support of the
         preferred scheme option / disposal route. This is discussed later in this report.


4.3      PLANNING CONTEXT

4.3.1    This section sets out an overview of the planning policy context for the sites. It provides a summary
         of the main relevant considerations relating to national, regional and local planning policy, adopted and
         emerging.

         NATIONAL PLANNING POLICY

4.3.2    Planning Policy Statement 4: Planning for Sustainable Economic Growth (December
         2009)

         Paragraph 10 of PPS4 contains a number of Government objectives to achieve prosperous economies
         including:
                       improving the economic performance of cities, towns, regions, sub-regions and local
                        areas;
                       reducing the gap in economic growth rates between regions;
                       delivering more sustainable patterns of development; and,
                       promoting the vitality and viability of town and other centres.

4.3.3 Policy EC3 deals with planning for centres. Local planning authorities should set out a strategy for the
      management and growth of centres over the plan period and encourage, where appropriate, high-
      density development accessible by public transport, walking and cycling.

4.3.4 A key component of the town centre strategy is the identification of sites to accommodate new
      development, where needed. This includes opportunities to expand the centre, which may entail
      expansion of the primary shopping area, as well as opportunities for redevelopment and replacement of
      outdated facilities.

4.3.5 Residential and office development are encouraged above ground floor retail, leisure or other facilities
      within centres.

4.3.6    Planning Policy Statement 5: Planning for the Historic Environment (2010)
         Planning Policy Statement 5 sets out the Government‟s national policies on the conservation of the
         historic environment.

4.3.7    To conserve England‟s heritage assets in a manner appropriate to their significance:

                        decisions should be based on the nature, extent and level of that significance;
                        wherever possible, heritage assets should be put to an appropriate and viable use
                         consistent with their conservation;
                        the positive contribution of such assets to local character and sense of place should be
                         recognised and valued; and
                        consideration of the historic environment should be integrated into planning policies
                         and promoting places.

4.3.8    In considering the impact of a proposal on any heritage asset, local planning authorities should take
         into account the particular nature of the significance of the asset and the value that it holds.




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4.3.9    Local Planning Authorities should take into account the desirability of new development making a
         positive contribution to the character and local distinctiveness of the historic environment. The
         consideration of design should include scale, height, massing, alignment, materials and use.




         DEVELOPMENT PLAN POLICY

4.3.10   The development plan consists of the London Plan (February 2008) and Ealing Unitary Development
         Plan (adopted October 2004).

4.3.11   A review of the London Plan is currently underway with consultation on the revised plan undertaken
         in October 2009 and the Examination in Public being held from July 2010. LB Ealing has made some
         progress with their Local Development Framework, which will eventually replace the Unitary
         Development Plan. The Core Strategy DPD options document has been prepared and consultation
         on the submission version of the document is due to be undertaken from September 2010.

4.3.12 Planning Policy Designations

         The Library, Town Hall, Public Baths, Car Park and former school site are all located within the
         boundary of Acton Town Centre. The sheltered housing, adjacent to the car park site, is outside of
         the Town Centre boundary within a „Residential Area‟. The Library, Town Hall and Public Baths are
         within the Acton Town centre Conservation Area. The Town Hall, Town Hall extension, chimney &
         library are all statutory listed buildings. The Kings‟ Rooms and Public Baths are locally listed buildings.
         All sites, with the exception of the library, are within an Area of Archaeological Significance.

4.3.13 London Plan Policy (February 2008)

         Residential – The London Plan sets a housing target for Ealing of 9,150 dwellings between 2007 and
         2017. Policy 3A.2 supports the provision of residential development as part of the redevelopment in
         town centres. Policy 3A.3 looks to ensure that development proposals achieve the maximum intensity
         of use compatible with local context, design principles and public transport capacity.

         The Mayor‟s strategic target for affordable housing provision is for 50 per cent to be affordable, with a
         Londonwide objective of that provision being 70 per cent social housing and 30 per cent intermediate
         provision and the promotion of mixed and balanced communities.

         Retail & Leisure – Policy 3D.1 encourages retail, leisure and other related uses in town centres. The
         scale of retail and leisure development is to be related to the size and role of the centre and its
         catchment. The strategic priorities for West London include enhancement to the attractiveness of
         town centres.

         Design and Sustainability – Policy 4B.12 seeks to ensure the protection and enhancement of
         historic assets, including conservation areas and listed buildings, whilst Policy 4B.13 provides support
         to schemes which bring redundant and under-used buildings into appropriate use.

         All new development is required to be of the highest standards of sustainable design and construction.

4.3.13 Consultation draft London Plan (October 2009)

         The consultation draft London Plan seeks to bring forward capacity in and around town centres with
         good public transport accessibility to accommodate leisure, retail and civic needs and high density
         housing.



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         Emphasis is placed on the enhancing the condition and quality of homes, with greater power given to
         boroughs in determining the amount of affordable housing provision needed over the plan period.

         Development is required to preserve, refurbish and incorporate historic assets with new buildings
         sympathetic to the form, scale, materials and architectural detail of conservation areas and listed
         buildings.

4.3.14 Ealing Unitary Development Policy (2004)

         Town Centres - The Council expects all significant new development of shopping and other key
         town centre uses to take place in existing centres, at a scale appropriate to their position in the
         shopping hierarchy. Where shopping and other key town centre uses are proposed outside an existing
         centre, account will be taken of retail need, the sequential approach, and the effect on the vitality and
         viability of existing centres. Whilst the sheltered housing site is outside of the town centre,
         employment, local shops and community facilities are all considered to be acceptable uses in
         „Residential Areas‟.

         Residential - New developments comprising 15 or more housing units, or of over 0.5 hectares, must
         provide at least 50% affordable housing. The Council seeks to resist the loss of existing housing.

         Commercial - The alternative development of office buildings to other uses is encouraged, especially
         where the development encourages employment. Hotel development will be given positive
         consideration on sites in town centres, provided there is no loss of houses.

         Community Facilities - The improvement of existing facilities is encouraged, but their loss will be
         resisted unless it can be shown that the particular facility is no longer needed in that location or an
         alternative site can be provided. Whilst the Council will seek to resist alternative uses of existing
         community facilities, if the Local Planning Authority is satisfied that no appropriate alternative facility
         can be found, then affordable housing would be acceptable in principle.

         Urban Design - Statutory listed buildings (town hall, town hall extension, chimney & library) will be
         refused demolition unless there are exceptional circumstances for their removal. Changes of use,
         internal and external alterations will need to show they are sympathetic to the historic and
         architectural character and appearance of the building. The demolition of locally listed buildings (Kings‟
         Rooms, Public Baths) will also be discouraged, unless it can be shown that the benefits to the
         community outweigh their loss.

         Development within and adjacent to conservation areas will be allowed provided they are well related
         to the character of the area. Redevelopment of existing buildings in the conservation area must
         „preserve or enhance the character of the area‟ or consent will not be given.

         Development within Areas of Archaeological Interest development must not adversely affect any
         historic remains within the area.

4.3.15 Emerging Ealing Core Strategy (Development Proposals - September 2009)

         The spatial vision set out within the Core Strategy places a particular focus on the development of
         new homes and businesses in town centres.

4.3.16   The plan makes particular reference to the site in proposal 2.2, regarding the regeneration of Acton
         Town Centre. It states that “Development of 3,000 sq m of retail floor space, additional food and
         drink outlets, a new swimming pool and improved cultural and community facilities at prime sites,
         including Morrisons, The Oaks, Beechworth House and the Town Hall site.”




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4.4     HERITAGE ISSUES

4.4.1   The properties which are the subject of this report all have connected heritage issues. This in our
        view will be the most significant impediment to realising the maximum capital receipt.

                                    NATIONAL           LOCAL LISTING     CONSERVATION         ARCHEOLOGICAL
            PROPERTY             LISTING STATUS           STATUS             AREA              INTEREST AREA
        Town Hall                     Grade II                                 Yes                   Yes
        Town Hall Extension           Grade II                                 Yes                   Yes
        Kings Rooms                                         Yes                Yes                   Yes
        Baths                                               Yes                Yes                   Yes
        Chimney                       Grade II                                 Yes                   Yes
        Library                       Grade II                                 Yes                   Yes
        Priory Centre                                                           No                   Yes

4.4.2   All properties are located within an Archaeological Interest Area. In particular, we understand that the
        Car Park site was formerly the location of Berrymead Manor, a significant house dating to the
        seventeenth century. This is likely to have an impact on the timescales and costs of developing any
        new building on the site.

4.4.3   All properties with the exception of the Priory Centre site are located within a Conservation Area,
        and this has implications as noted above, in relation to the form of any development proposals.

4.4.4   The Town Hall, Town Hall Extension, the Chimney and the Library are all Grade II listed structures,
        meaning that they are „nationally important and of special interest‟. In respect of these assets there is
        a presumption in favour of conservation and any loss of or harm to these buildings will only be
        permitted in „exceptional‟ circumstances. Such loss or harm may be justified where:

        4.4.4.1 “the substantial harm to or loss of significance is necessary in order to deliver substantial
                public benefits that outweigh that harm or loss; or

        4.4.4..2 (a)          the nature of the heritage asset prevents all reasonable uses of the site; and
                 (b)          no viable use of the heritage asset itself can be found in the medium term that will
                              enable its conservation; and
                    (c)       conservation through grant-funding or some form of charitable or public ownership
                              is not possible; and
                    (d)       the harm to or loss of the heritage asset is outweighed by the benefits of
                              bringing the site back into use.” [PPS5 – HE9.2]

4.4.5   Clearly these are significant hurdles to discharge, and a detailed case for redevelopment will need to
        be made in order to obtain listed buildings consent. Stemming from this will be considerable
        uncertainty regarding the quantum and form of any development. It is likely that a purchaser would
        either want to manage this risk in the form of a conditional contract (whereby the Council only gets
        paid for the site once a „suitable‟ planning permission is achieved.) This would push back timescales for
        receipt and put the prospect of any receipt at all at risk. Alternatively, a purchaser may enter into an
        unconditional contract; however in doing so is likely to discount the purchase price considerably. This
        may take the form of a base offer (a small certain receipt paid at day one) with an overage (a more
        significant top-up payment paid upon grant of planning). Again this would present the Council with an
        uncertain payment. If the Council needs to „bank‟ this money to pay for other aspects of the
        development, then this might be unsatisfactory. Tactics to best manage this position are discussed in
        the conclusions to this report.




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4.4.6   In respect of the Town Hall, and the Town Hall extension, a report by Donald Insall has identified the
        parts of the building that he believes will be of most concern to English Heritage and the planning
        authority in determining whether any development proposals are acceptable. The features identified
        as the most important include:

        4.4.6.1 the Assembly Hall (a large open structure on 2nd / 3rd floor level fronting the High Street); and

        4.4.6.2 the Committee Room (located in the Southern Wing of the original Town Hall building, at
                second floor level).

        4.4.6.3 the Main Entrance to the Town Hall Extension and central staircase.

        It is likely that any proposal which has a significant structural impact on these features would be
        opposed by English Heritage and the planning authority.

4.4.7   By comparison, the ground floor to much of the buildings, and in particular the Town Hall Extension is
        deemed to be of lesser quality, and may be suitable for some form of sensitive redevelopment.

4.4.8   The Baths and the Kings Rooms are locally listed. Whilst this does not afford these properties any
        statutory protection, it does mean that the Council has publicly recognised the importance of these
        structures. English Heritage has declined to list the Baths and (we infer) the Kings Rooms to date
        (with the exception of the Chimney, which is almost a stand alone structure). Whilst there are still
        obstacles to redevelopment through the planning process, these might be seen as more flexible than
        the nationally listed structures. Any development of these properties will however need to respect
        the context of the listed structures surrounding them.

4.4.9   The Priory Centre does not have either listed or locally listed status. Nevertheless, the building is of
        some architectural merit, and there is a danger that it could be spot listed. This may extend to the
        whole building, or it could relate to the façade. In either event, the development potential of the site
        will be constrained and the receipt reduced from that identified below.




                CHIMNEY




                                                            ASSEMBLY HALL


           COMMITTEE ROOM




                                                      ARCHEOLOGY




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4.5     PHYSICAL & CONTEXTUAL ISSUES

4.5.1   As noted above, the presence of listed buildings within the Town Hall island site presents constraints
        on the physical layout of development. The interrelation of retained and new buildings on the site will
        need to be sensitively managed in order to produce a workable design solution that also meets the
        needs of the local planning authority and English Heritage.

4.5.2   The Town Hall island site and the Library both benefit from frontage to the busy Acton High Street.
        The nature of this location is such that any residential uses ground floor will need to consider noise
        and privacy issues. By comparison, retail uses which benefit from footfall are likely to be well suited to
        the High Street frontage. Upper floors may suit a variety of uses, albeit the High Street frontage may
        better suit office or hotel use, rather than residential. The Winchester Street frontage to both the
        Town Hall and the Library are more flexible, and more suitable for residential or hotel
        accommodation. The Town Hall, having both a prominent frontage onto the High Street and a more
        secluded aspect to Winchester Street / Salisbury Street may well suit a hotel user.

4.5.3   There is a moderate topographic shift moving downwards from North to South. However this is not
        believed to be sufficient to cause significant design issues. It may however present opportunities to
        push the existing built envelope to a greater height on parts of the island site. As the site is bounded
        by adopted highway, sensitivities to adjacent buildings and rights of light issues will be to a large extent
        mitigated.

4.5.4   The Priory Centre site tapers towards to the east where it is bounded by the railway line. As the site
        narrows, configuration options become more limited. In conjunction with this, any residential
        development located particularly close to the railway line is likely to suffer from loss of amenity.

4.5.5   The Car Park site is of linear dimensions and relatively even topography. This lends itself to a variety
        of development configurations. There are a number of mature trees on the site; however we
        understand that none are the subject of a TPO.


                                                                   RETAIL AT GRADE




                                                                        DOWNWARD SLOPE

          HERITAGE STRUCTURES

                                                                                RESIDENTIAL CONTEXT




                                                         TOPOGRAPHICAL SHIFT
                  FLAT LINEAR SITE




                                                                                            RAILWAY LINE


`




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4.5.6   Both the Priory Centre site and the Car Park site are closely bounded by residential uses, and in
        planning and design terms this is likely to impact on the types of uses that may be suitable on these
        sites. The existing building on the Priory Centre site is lower than the surrounding properties, lending
        support to a more dense development on this site..

4.6     UTILITIES

4.6.1   We have not had sight of a Utilities report in respect of the properties, nor made any enquiries of the
        relevant statutory undertakers. For the purposes of this report we have assumed that there are no
        significant service media, such as gas mains or sewers which affect the properties, and might impact on
        development proposals, and that there is adequate capacity to serve the proposed redevelopment
        scenarios discussed herein.

4.6.2   The exception to this statement is that we understand there are service media running beneath
        Salisbury Street. This is likely to make development proposals which involve new buildings on Salisbury
        Street itself uneconomical.

4.6.3   We would recommend that a utilities study is commissioned in early course to address this lack of
        clarity, in particular in relation to the Priory Centre and to the Town Hall / Baths site, to ensure no
        adverse financial burden would effect the proposals.




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5.      SPATIAL REQUIREMENTS & SPECIFICATIONS

5.1     GENERAL

5.1.1   The Council has a number of requirements for space in Acton, and has determined to provide,
        where possible, new facilities as part of the redevelopment project. These largely take the form of an
        updated reprovision of space for existing occupiers. The Council wishes to achieve where possible
        modern, functional space for these activities/uses and wishes to explore the possible synergies that
        would result from co-location and rationalisation of space.

5.1.2   The potential new facilities are:

        5.1.2.1 A new pool / leisure facility including fitness gym and trainer pool

        5.1.2.2 A new library

        5.1.2.3 New community space, to replace the existing facilities and those in West Acton.

        5.1.2.4 New Council office / day care space notably for the Children‟s, Families & Adults Services

5.1.3   As part of the wider strategy to create community hubs, there may be additional requirements for
        Council office space in this project. Consequently the strategy herein commended is flexible enough
        to accommodate requirement changes, albeit we strongly advocate clarity is sought on requirements
        as a key priority.

5.2     POOL / LEISURE

5.2.1   In replacement of the existing Baths, the Council proposes building a new 8-lane 25m swimming
        facility and trainer pool with ancillary gym, changing and studio space. The development is intended
        to provide the community with a modern purpose built facility suitable for contemporary leisure use.

5.2.2   Following consultation, it has been determined that this facility will be re-provided on this site. In
        reaching this decision, the Council has accepted that there will be a period of time where the
        current amenity will not be available to the public.

5.2.3   S&P Architects have been commissioned to produce feasibility level drawings for accommodation of
        this facility on the site. Together with S&P, we have evolved a series of scheme options for this
        study.

5.2.4   The Council has currently allocated £12.0m of its capital reserves to contribute towards progressing
        the overall regeneration scheme and to the delivery of development of these facilities.

5.3     LIBRARY

5.3.1   The Council‟s Library Services currently occupy the Library building. The existing library facilities are
        considered to no longer be ideal in light of changing use patterns. As part of this development, the
        Council is seeking new library facilities in replacement of the existing facility. Where possible, these
        facilities should share adjacencies with the new community and leisure facilities.

5.4     COMMUNITY

5.4.1   The Council currently provides subsidised space for various community groups in the Priory Centre
        and Town Hall. If possible, these community facilities should be upgraded as part of the
        development. In the event that the Priory Centre is demolished or converted to other uses,



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        replacement space is understood to need to be provided. The space should preferably be more
        functional and efficient than the existing facility.

5.5     COUNCIL OFFICES

5.5.1   The Council‟s Adult & Children‟s Services function currently operates out of the Town Hall building.
        The space does not reflect contemporary office standards, is modular in nature, and is somewhat
        dilapidated.

5.5.2   As part of the redevelopment, the Council is seeking to create new office space more in keeping
        with its operational requirement. Alternatives have also been considered, including off site
        development, and acquiring an existing building.

5.6     SPATIAL REQUIREMENTS

5.6.1   The Council has undertaken an audit of its spatial requirements for these facilities. The process has
        been iterative, taking account of the emerging spatial options presented in this report. At present we
        understand the operational requirements to be as follows:-

                 FACILITY                                   REQUIREMENT
                 Pool / Leisure                             8-lane 25m pool + ancillary
                 Library / Community                        c. 15,000 -20,000 sq ft
                 Offices                                    c. 14,000 sq ft




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6.      MARKET DATA

6.1     RESIDENTIAL

6.1.1   We have sought to establish a market tone for the value of residential properties in proximity to the
        properties. In doing so, we have conducted our own research, and taken the view of the C&W
        residential team. We have also made enquiries of local estate agents, and gathered comparable
        evidence.

6.1.2   The national residential market has witnessed considerable dynamism over the past 3 years. Largely
        as a consequence of the collapse of the US sub-prime market in 2007, global credit restrictions were
        put into place as the major banks re-priced property risk. The response was reduced and more
        selective lending, with expectations for greater deposits and additional risk premiums. The result of
        this was lower demand for property and price reductions, which varied significantly across the
        country. In some prime areas prices were almost unaffected, whereas the worst affected properties
        lost up to 40% of value within the space of 24 months. Typically the worst affected properties were in
        immature, untested markets and took the form of largely homogenous flatted developments, where
        there was little ability to distinguish product.

6.1.3   Many economic forecasters now believe that the UK economy has stabilised, and whereas growth
        over the coming 5-years will be measured reflecting the climate of austerity, the prospects of a
        „double-dip‟ recession appear to be waning. Against this backdrop, pricing has increased for much of
        the past 12 months, albeit at a tempered rate. The deficit of supply to the market during the
        recession has helped to prop up pricing, and provided that credit restrictions continue to ease, this
        trend is likely to continue.

6.1.4   Affordable housing supply faces increased pressure, as the availability of public funding diminishes.
        Whereas affordable housing is likely to remain a priority for the coalition government, a move by the
        HCA away from funding and towards „assistance‟ is likely to make delivery more challenging.

6.1.5   The area immediately surrounding the properties (with the notable exception of the social housing in
        Council control) is dominated by red-brick Victorian terraced housing. Whilst not commanding the
        level of pricing that exhibits in Ealing to the West, Chiswick to the South or Shepherd‟s Bush to the
        East, this is to a large extent a pleasant, leafy residential environment. The same cannot be said of the
        2,000 home South Acton Estate, a post-war mono-tenure estate to the South of the properties. The
        Council has plans to redevelop this estate to the benefit of Acton generally.

6.1.6   Regarded historically as one of the more affordable areas of west London, and a „poor cousin‟ to
        Ealing, Acton is becoming more strongly regarded and benefitting from the gentrifying effect of out-
        movers from central London looking for better value. Acton is noted as a good neighbourhood for
        first time buyers, and has been popular among Antipodean renters. The proximity of the subject site
        to the High Street and its amenities is likely to appeal to a younger market. The potential to
        incorporate residential development in heritage assets could also be a differentiating factor, provided
        that the product is specified and marketed carefully.

6.1.7   Of note is Berkeley Homes‟ „West 3‟ development, which is located some 800m to the East along The
        Vale. We are of the opinion that this is better located than the subject property, and that the
        specification (achieved through rebuilding behind a façade) is likely to be higher than can effectively be
        achieved on the subject site. Nevertheless it does demonstrate a demand for higher end product in
        relative proximity to the properties. The better configured apartments within this development have
        sold at over £500 psf; albeit that this includes the provision of a car parking space.




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6.2     RETAIL / LEISURE

6.2.1   We have formed a view on pricing and demand for retail through sourcing comparable rental data in
        the immediate vicinity of the site, and incorporating the opinion of the C&W retail leasing team.

6.2.2   The immediate environs of the site are characterised by fast food outlets, budget stores, and off
        licenses. The closest national multiple retailer is Superdrug at 118-120 High Street, which is 0.1 miles
        away.




                                    OAKS SHOPPING CENTRE




                           MORRISONS




                                                                                WESTFIELD, WHITE CITY




6.2.3   The principal destination for comparison retailing for residents of Acton is likely to be the newly
        opened Westfield London Shopping Centre at Shepherds Bush, 1.8 miles from the site. Westfield
        London is home to 1.615m sq ft of shopping space, comprising a total of 265 stores over 5 floors, with
        car parking for 4500 vehicles. The Centre is the largest indoor urban shopping area in the European
        Union, and the third largest shopping centre overall in the United Kingdom. Westfield has 5 anchor
        tenants, including Marks & Spencer and The House of Fraser. The development also incorporates a
        high end retail area known as „The Village‟, including brands such as Gucci, Louis Vuitton and Tiffany &
        Co. It has established itself as a rival to luxury retail destinations in the West End and Knightsbridge.

6.2.4   We consider that in its current guise, the Town Hall building is highly unlikely to appeal to unit shop
        retailers for two reasons.

        6.2.4.1 that the pillars on the ground floor level of the Town Hall, with frontage to the High Street,
                constitute a particularly unappealing facet of the design of the building to prospective tenants,
                as they prevent the installation of full width glass shop frontages,

        6.2.4.2 Even assuming it were possible to overcome this obstacle, another factor which renders the
                site of limited interest to retailers is its distance from the central High Street area of Acton.
                Despite being only 0.2 miles away from the town‟s prime retail pitch, research shows that
                consumers are unwilling to travel more than 500m away from a town centre to shop. This
                leaves the site at a distinct disadvantage to those retail units located more centrally, as it will
                attract significantly less footfall.

6.2.5   We note that this situation could change in the event that a foodstore takes space within the
        proposed development. This would generate a significant number of visits to the area, with retailers


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         willing to occupy units adjacent to the proposed supermarket in order to benefit from increased
         traffic to the area. This of course is dependent upon such a retailer taking up the space.

6.2.6    All of the major national supermarkets have a presence within 3 miles of the site. Their proximity and
         size is shown below.

             RETAILER                      DISTANCE FROM SITE (MILES)                AREA (SQ FT)
             Sainsbury’s                   1.2                                       75,000
             Waitrose                      1.7                                       19,000
             Morrison’s                    0.7                                       49,000
             Tesco                         2.9                                       49,000
             Asda                          2.6                                       95,000


6.2.7    The most significant food competition for this site is provided by the nearby Morrisons store. We
         would note that despite the significant quantum of existing floorspace within this range, the density
         and available spend in this area of London is sufficient to provide for additional new store
         opportunities.

6.2.8    We have discussed the prospect of a new store in this area with the major foodstore retailers, who
         have provided the following feedback:


                           RETAILER                                    INTEREST


                          SAINSBURY’S                                      Yes


                           WAITROSE                                        Yes

                          MORRISON’S                                     Unlikely


                            TESCO                                          Yes


                             ASDA                                        Potential

                             ALDI                                          Yes

6.2.9    The rental potential of a foodstore on this site will depend on a number of factors, including the
         strength of demand, the store configuration, and the available car parking.

6.2.10   Without an anchor tenant and with the assumed design restrictions we are of the opinion that unit
         retailing would not be a viable proposition in this location.

6.3      OFFICES

6.3.1    London is the primary office market in the United Kingdom, and is split between the two centres of
         the West End and the City. The momentum in take up of office space in these areas was not
         maintained in the second quarter of 2010 compared with the first three months of the year. The
         impact of slow economic growth, the general election and concerns over the budget resulted in
         occupier decisions being stalled.

6.3.2    While the development site is not situated within the core London office markets, Ealing is one of
         three London Boroughs which are home to Park Royal. Spread over 750 hectares and comprising
         more than 2000 businesses which employ 40,000 people, Park Royal is Europe‟s largest industrial



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        estate. In addition to a plethora of small industrial firms, Park Royal also houses a number of large
        multi-national corporations, such as McVities, Heinz and the drinks company Diageo, owner of the
        Guinness brand, amongst others. Current policy dictates an intention to maintain Park Royal as an
        industrial area. It has been designated an Opportunity Area by the Mayor of London, with the
        intention of creating 11,000 new jobs at the site over the next 20 years.

6.2.3   There is a limited supply of purpose built B1 office space in close proximity to the Acton Town Hall
        site, which reflects the location‟s desirability to major office tenants. Much of the space that is on
        offer takes the form of converted townhouses and typically extends to little over 2,500 sq ft.

6.3.4   One exception is Long Island House on Warple Way, which is 0.7 miles from the site. Warple Way is
        a recently completed refurbished office block which provides spaces of between 500 and 15,000 sq ft.

6.4     HOTELS

6.4.1   We have sought to establish whether there would be demand from hotel operators for space within
        a refurbished Town Hall. In doing this we have made enquiries both with operators directly and with
        our Hospitality and Leisure teams.

6.4.2   It is evident from our enquiries that the nature of the building is such that the relatively high
        operating costs and inefficient division into rooms would prove unattractive to most budget hotel
        operators. Conversely, the more up-market operators, who tend to occupy period buildings, do not
        have requirements for Acton.

6.4.3   An enquiry into Travelodge‟s requirements for Acton revealed demand for 22,500 sq ft of space,
        providing 75 rooms, each 300 sq ft in size. .

6.4.3   Additionally, we have identified a potential requirement from Accor, whose Etap brand have a
        format for period building conversions.

6.4.3   To sell for hotel use would clearly require an operator, and such is unlikely to be forthcoming until
        formally marketing commences. Even assuming that we could secure a hotel operator for this site,
        we are of the opinion that a hotel conversion would not return a higher premium than renovation
        for residential use. We have tried to retain a degree of design flexibility in the appraisal which would
        allow for inter-changeability of elements between hotel and residential use, subject to the market.




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7.      COST INFORMATION

7.1     COST REPORTS

7.1.1   EPS has been contracted though S&P architects to provide cost data based on the evolved options.
        We have relied on this data in producing our financial appraisals

7.1.2   Where cost data has been unavailable we have made what we believe to be reasonable estimates
        based on our experience elsewhere.

7.1.3   Various costs have been excluded from the EPS cost reports; including professional fees, finance
        charges etc. Where this is the case, we have made assumptions based on our own experience and
        used these to create the financial models.




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8.      HIGHEST & BEST USE ANALYSIS

8.1     GENERAL MATRIX

8.1.1   Using the market data identified above, and in combination with the cost estimates, we have
        prepared a matrix identifying the relative worth of the Council‟s land in various different uses.
8.1.2   Residual values are expressed per square foot in order to standardise comparison. Please note that
        the residual values are intended for comparative purposes only, and do not reflect the actual land
        values once all costs have been accounted for. The matrix is intended to show generic values on a
        non-site specific basis and assuming no site constraints.

8.1.3   The matrix shows that the use that delivers the highest value is food retail.

8.1.4   Residential use also delivers high land values, although this is sensitive to the construction costs,
        which are less transparent on refurbishment projects than new builds. Value from residential
        projects is significantly diminished in the event that a 50% affordable housing requirement is
        demanded.

8.1.5   Offices uses are by comparison not particularly attractive. New build offices in particular are unlikely
        to be viable, which explains the relative lack of new build office product in Acton. On the basis that
        new build offices are not viable, the Council should bear in mind that it will have to pay an above
        market rent (or account for a similar notional rent in a capital project) if it requires new build space
        as part of this development. Refurbished space would also require subsidy, dependent on the
        specification of the refurbishment.

8.2     USE BY LOCATION

8.2.1   Whereas the matrix provides a useful guide to relative land values, it does not take into account the
        locations and configurations where a development of these uses would be viable. The following
        section takes account of the site constraints and seeks to identify the considerations behind location
        of use, which is then taken forward into the evolution of scheme design in section 9.

8.2.2   In our opinion, retail use is only likely to be possible with either full or partial frontage to the High
        Street. Due to the configuration of the buildings and in the context of other High Street operators,
        we do not believe that unit retail is a viable in this location. The only exception might be the Library
        site; however we feel that this structure and size of this building is more likely to be of interest to a
        restaurant / leisure operator.

8.2.3   The most attractive use in terms of land value is for foodstore use. However there are issues
        connected with this, such as the need for a well configured / dimensioned site, the associated car
        parking requirement, and the need for careful design of the foodstore if it is to sit in the context of
        heritage buildings. We would have concerns over the delivery potential of foodstore on the
        Salisbury Street / sheltered housing site, which straddles the town centre boundary (for retail
        development purposes and has poor High Street visibility. The Priory Centre site would also be
        inappropriate. The remaining option is to incorporate a foodstore on the island site, and this is
        something that we have considered further.

8.2.4   The Town Hall and Town Hall Extension sites are limited in terms of their redevelopment. We have
        assumed, based on the information available to us, that it will not be possible to significantly alter the
        external envelope of the buildings. There are certain sympathetic internal alterations that may be
        permissible, with the exception perhaps of significant alternations to the Assembly Hall or
        Committee Room. It may be possible to introduce some form of retail / leisure use into Town Hall
        Extension building, and this has been considered further.




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8.2.5    In both buildings, we conclude that the highest value use is residential. This sits in the context of the
         alternative uses which are (1) an office refurbishment, (2) some form of community space, (3) a
         hotel.

8.2.6    In conjunction with S&P we believe that the Town Hall building on Winchester Street could convert
         reasonably well to residential uses, and that the opportunity would appeal to a developer. We are
         of the opinion that the Committee Room would not be capable of a conversion to residential;
         however it might be appropriately used as some form of allied facility such as a gym. A ready
         alternative to residential in this space is use as a hotel, however this is likely to be of lesser appeal to
         a developer unless a pre-let materialises, or the developer is itself a hotel operator.

8.2.7    Conversion of the Town Hall Extension is more problematic. The ground floor fronting the High
         Street is not likely to be particularly appealing to prospective occupiers. The upper floors are
         dominated by the Assembly Hall, in respect of which conversion to residential would be a difficult
         prospect both in planning and design terms. We consider that this building is likely to be put to best
         use as events or civic or community space. It may be possible to secure an events operator paying a
         commercial rent on the Assembly Hall space. This could be supported with a licensed use at ground
         floor. The alternative use as community / Council operated space would not provide the project
         with a capital receipt, but may satisfy a need to provide space.

8.2.8    The Priory Centre is a well configured site sitting within a residential context. We believe that
         marketed as a residential development opportunity, this will attract significant developer interest.

8.2.9    The Car Park site lends itself to various forms of development, most notably residential. This is set
         off against the need to re-provide 72 car parking spaces in the event of redevelopment.

8.2.10   We have explored further this thinking in the form of a series of development options for the site.


8.3      TACTICAL CONSIDERATIONS

8.3.1    In order to financially appraise scheme options, we have to make certain assumptions on timing /
         cashflow and other disposal assumptions. The following section considers some of the tactical
         considerations that underpin these assumptions.

8.3.2    The project can be split into 3 discrete elements:

         8.3.2.1 The delivery of the leisure centre; a new build project

         8.3.2.2 The delivery of the community / civic facilities; either new build or refurbishment

         8.3.2.3 Sale of the remaining assets; by simple disposal or development agreement.

8.3.3    The degree to which these discrete project elements can or should be integrated is a matter for
         consideration. Our thoughts and comments are as follows:

8.3.4    Following a period of recession, construction prices have fallen to a historic low. Whereas we
         cannot be certain about the direction of cost growth over the next 5 years, there is strong market
         sentiment that costs are likely to rise. Factors affecting this include the global cost of commodities,
         and in particular steel (which is impacted by demand from India and China), and local factors such as
         wages (which might inflate as a result for example of demand for labour contingent on pre-
         committed Olympics Projects).




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8.3.5    Property values across all sectors also fell during the recession, and although there has been some
         growth over the past 12 months there is market sentiment that there is still the prospect of
         continued growth at measured levels over the coming 5 years.

8.3.6    The leisure centre element of the project is not intended to be brought to the market as an
         investment. Therefore it is only really relevant to consider cost side of the development equation,
         which as noted above is presently low and likely to increase. On this basis, it would seem
         advantageous to bring the construction tender to the market as soon as possible.

8.3.7    Whereas low costs are also likely to be of advantage to the potential capital receipts available on
         disposal of other assets (since these are priced as developments), the value side of the development
         equation also needs to be considered in this context. If value growth is anticipated to outstrip cost
         growth, then it may be appropriate to defer disposal of these assets to take account of a divergent
         pricing differential. However it is not currently clear whether this is the case.

8.3.8    Together with the identified public funding, the site disposals bring value to the project to pay for
         the construction of the new civic facilities. On the basis that the Council is reliant on the site
         disposals to part fund the project, it may require certainty on the quantum of funds realised in this
         way prior to commissioning the construction. The only way that this can realistically be achieved
         would be to enter into unconditional sale contracts prior to, or at the point of entering into the
         construction contract. However, an unconditional contract is not likely to realise the same value as
         a conditional contract might (since the developer has to price in planning and other risks into its site
         bid). Therefore there is a dichotomy to be addressed between certainty of receipt and maximisation
         of receipt and impact on programme.

8.3.9    On the assumption that the sites to be disposed of are disposed of as development opportunities,
         none would be currently available for construction as they would need planning and other consents.
         The developer‟s potential receipts from such assets will be even further delayed, following
         construction and securing occupiers. The Council is understood to be able to borrow at 5.00%. It
         is likely that developers would not be able to secure these kind of rates, and their bid would be
         discounted to reflect their time cost of capital. Therefore a deal may be structured to the benefit of
         both parties which secures the Council‟s receipt at the outset under the terms of a contract, but
         defers payment of the receipt until completion of construction. This way the Council can budget
         against receiving money up front, but also improve its capital receipt.

8.3.10   An alternative which would secure maximum receipt for the Council would be to enter into subject
         to planning contracts. However these would come with the inherent risk that if planning is not
         forthcoming, the receipt could be lost, reduced, or deferred indefinitely.

8.3.11   The Council could attempt to de-risk the planning position prior to sale through a number of
         mechanisms including producing a development brief or adopting a planning brief for the site,
         establishing an agreed position with English Heritage, or even putting in its own planning application
         against the sites to flush out any issues.

8.3.12   There may be opportunities linked to the planning system which could be realised through joining
         disposals and planning applications. We consider that it will be possible to structure a planning
         argument for entirely mitigating the affordable housing requirement on a residential scheme in the
         event that the improved receipt goes to subsidy of the new leisure facility. This would require that
         the planning applications were linked.

8.3.13   There may be some practical synergies in linking the disposals of the assets within the island site. A
         developer may be able to evolve a more comprehensive solution if it has control of the entire island
         site and this may in turn lead to financial benefits.




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8.3.14   Against this, there are benefits through disaggregating the sites. For instance, it is likely that a
         contractor with expertise in delivering leisure schemes will not be as competitive at residential
         conversions, which typically require different skill sets and expertise. This is not to preclude the
         possibility of a joint venture / consortium approach, which might be encouraged as part of the
         tendering process.

8.3.15   We have taken these tactical considerations, and applied them in the context of the scheme
         evolutions and procurement considerations below in order to formulate our conclusions. A
         comprehensive scheme is, at face value, appealing. However, this introduces a level of complexity
         and risk which is more likely to lead to delay and uncertainty, with any scheme proceeding at the
         pace of the “slowest” element.




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9.      EVOLUTION OF SCHEME OPTIONS

9.1     GENERAL

9.1.1   The key driver behind this development is the provision of a new Council owned leisure facility.
        There are limited options to site a facility of this size, and so to some extent the form of
        development is dictated by such. The configuration of the remaining site has been designed to
        maximise the potential sales value, whilst taking account of the competing desire to house the other
        required Council facilities.

9.1.2   In conjunction with S&P Architects we have considered numerous iterations for scheme design for
        this project. We have disregarded many as unviable, or not maximising the site‟s potential. In
        conclusion of this exercise, we have focussed on the following approach:-

9.2     CONCEPT
                                         COMMUNITY /
                                           LIBRARY




                                                                      LEISURE
                                                                   + CIVIC OVER



         RETAIL / A3
                                                                INFILL RESIDENTIAL

                                                                                           HOUSING SCHEME
        RESIDENTIAL
        CONVERISON




                       CAR PARK




9.2.1   This approach is designed to minimize land take, and create a simple and deliverable scheme within
        the budget constraints.

9.2.2   The Town Hall Extension is refurbished as civic space.

9.2.3   The Priory Centre site is sold subject to planning consent and vacant possession for a housing
        scheme.

9.2.4   The Baths are demolished and a new leisure facility with civic space above is procured on this site.
        The scheme design to avoid the listed chimney

9.2.5   The Town Hall is converted for residential use, and a further infill residential block is added to the
        site.

9.2.6   The Library is let and sold as a restaurant / bar / pub, subject to first obtaining planning consent.



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10.      FINANCIAL APPRAISALS

This section has been redacted to remove confidential and commercially sensitive information

10.1     APPRAISALS

10.1.1   In order to appraise the scheme options, we have employed a series of financial and qualitative
         assumptions..

10.1.2   Using these assumptions we have produced indicative financial analyses and cashflows, both on the
         entire schemes, and on their constituent components to analyse where in the scheme value is
         created, and how best to maximise the value of the overall opportunity.


10.2     PRIORY CENTRE

10.2.1   In each scheme option, we have considered the Priory Centre as a separate component, and in each
         case we have specified a residential development on this site, following relocation of current
         facilities.

10.2.2   We have assumed an unconditional site sale to a house builder, and that there are no issues with
         demolishing the existing building. Further, we have explored sensitivities around the level of
         affordable housing. We have also considered the effect on pricing of entering into a conditional
         transaction, where land value is deferred and profit reduced.


10.2.3   In our master appraisal, we have assumed a receipt predicated on the Council accepting a reduced
         quantum of affordable housing than would be typically prescribed by policy.

10.2.4   The Council should note that if it should seek to retain the façade or the whole of the building
         pursuant to a disposal or using its planning powers than the site value will be diminished.

10.3     LIBRARY

10.3.1   In all options the Library is also capable of being treated as a stand-alone disposal following re-
         provision. We believe that that the property is likely to be viewed by the market as a refurbish and
         let opportunity rather than a significant development. It is likely to attract interest from
         entrepreneurial investors, and /or owner operators.

10.3.2   The property could be sold with vacant possession or alternatively the Council could address the
         planning issues and secure a tenant prior to disposal.

10.3.3   A final alternative is to retain this property for civic use.

10.4     TOWN HALL CONVERSION

10.4.1   We have worked with S&P Architects to evolve a residential conversion scheme for the Town Hall.
         A scheme which incorporates element of the Town Hall Extension to the West of central staircase
         provides for circa 50 converted apartments arranged over 3 levels. The scheme would include
         limited / no car parking space for residents, albeit shared use of the Salisbury Street Car Park could
         be contemplated.

10.4.2   We have made the critical assumption that no affordable housing will be required as part of this
         scheme as the proceeds of this sale will be spent on refurbishing the remainder of the heritage asset.



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         For sensitivity purposes, we have explored the impact on value that a 50% affordable housing
         requirement would have.

10.4.3   We have assumed that it will not be possible to convert the Committee Room for residential. This
         room which would benefit from separate access could be used as ancillary facilities such as a basic
         resident‟s gymnasium, or a conference room. It could also be given over to community space,
         provided that such user was not at odds with the residential use.

10.4.4   On the basis of these assumptions, the refurbished residential component produces a positive
         residual value. However, in order to secure this receipt we believe that the planning position will
         have to be materially de-risked, either through a subject to planning deal, or through a robust
         position statement from English Heritage and the planning authority.

10.4.5   We have also provided for an element of infill residential, which we have assumed benefits from the
         same assumptions as above.


10.5     TOWN HALL EXTENSION

10.5.1   We believe that this space is suited to satisfying the Council‟s civic requirements. We have therefore
         appraised the refurbishment cost, which could incorporate the installation of a new partial
         mezzanine structure. We have not however applied a value to this space. The ultimate specification
         determined by the Council will materially impact on the costs of refurbishing this space. We have
         assumed a minimal refurbishment would take place.. A high quality refurbishment would be
         comparably expensive to procure new space within a purpose built facility / hub.

10.5.2   S&P have also worked up another variant for this space which could be developed. This incorporates
         a new well specified library with partial mezzanine floor in the Assembly Hall, with links into the new
         leisure facility.. Whether the Council wishes to pursue this option is a qualitative judgement of the
         standard of the proposed accommodation, and the ability to locate the other civic space use
         elsewhere within the scheme. We would note that the cost of providing a mezzanine is lower than
         the cost of building new space.


10.5.3   The use of this space as a civic asset is considered in more detail below.


10.6     THE NEW LEISURE / COMMUNITY FACILITY


10.6.1   We have assumed that the leisure centre is a project cost, with no associated value. This is
         conservative as there will be charges for users, albeit these will need to cover operational costs The
         capitals cost is assumed to be met by the allocated £12.0m capital reserves.



10.7     COMMUNITY SPACE

10.7.1   Our brief from the Council is that the project requires a total civic space provision of 29,000-34,000
         sq ft based on:

         10.7.1.1 offices / day care 14,000 sq ft

         10.7.1.2 community / library 15,000-20,000 sq ft]



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10.7.2   Over the evolved options, we have identified the following potential areas where these requirements
         might be satisfied:


            LOCATION                              QUANTUM (circa)            TYPE
            Library building                      10,900 sq ft               Refurb
            Town Hall Extension (3 floors)        18,000 sq ft               Refurb
            GF under Assembly Hall                7,300 sq ft                Refurb
            Assembly Hall                         8,000 sq ft                Refurb
            Mezzanine in Assembly Hall            3,200 sq ft                New
            FF in Assembly Hall                   3,900 sq ft                Refurb
            2nd Floor of Leisure Facility         14,000 sq ft               New
            TOTAL / AVERAGE                       65,300 sq ft

10.7.3   Clearly, not all of this space is required to deliver the civic/community requirements.

10.7.3   There are three separate uses competing for differently specified space. Some uses may be more
         appropriately accommodated in the different areas and the Council will need to prioritise
         accordingly. In the event that the Council requires new facilities for each of these functions then this
         will come at a greater cost, and will not necessarily generate any significant income from space that
         would be otherwise used. We would therefore advise that the Council seek to take advantage
         where possible of cost effective solutions.

10.7.4   As we have allocated the space generically to civic uses which would be retained by the Council as
         part of the project, there is no need to make immediate decisions on how this space is allocated.
         We would note that the Council may wish to consider the following:

         10.7.4.1 The need for functionality of floor-plates / open plan working, which could be easily
                  accommodated in the new offices, and less easily in the modular ground floor of the Town
                  Hall Extension.

         10.7.4.2 Phasing requirements. In particular if the community groups are to be relocated from the
                  Priory Centre early to allow for redevelopment and then given continuity of use, they
                  would need to move into existing space rather than new space.

         10.7.4.3 If the Library remains a library, then moving costs will be minimised. If the Library space is
                  no longer suitable for a library and the library function requires continuity, then it will have
                  to be relocated to allow for a refurbishment.

         10.7.4.4 The space created in the Assembly Hall element of the Town Hall Extension could be
                  aesthetically suited to either an events or library space.

         10.7.4.5 The modular offices at the ground floor of the Priory Centre could be used effectively
                  either for private meeting rooms for community grounds, or alternatively for Library
                  storage space / quiet reading rooms.


10.7.5   Following discussions with the Council, and having assessed the quantum and type of space in each
         potential location, it is our suggestion that the space is occupied as follows:

         Space above pool:                   Children‟s, Families‟ and Adult‟s Services
         Space below Assembly Hall:          Community
         Assembly Hall + Mezzanine:          Library



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10.7.6   In addition to the exclusive demised space, we believe that the preferred arrangement will allow a
         more fluid use of space across the entire site. For instance the Adults and Children‟s Services might
         benefit from use of the café / kitchen in the Leisure Centre, and the community can avail itself of the
         hall in the gymnasium on a licence basis. All uses might be able to share the ICT in the proposed new
         Library.

10.7.7   For the purpose of this appraisal, we have not allocated a value to the civic space. Therefore this
         space is subsidised by the project. It might be appropriate for the Council to pay a rent on retained
         space and sell the resultant income stream as an investment to secure a further potential receipt.


10.8     OPTION OUTTURNS

10.8.1   We have performed a series of financial analyses and on the commended option the summary
         outturn is £13.21m deficit.

10.8.2   The figures are estimates based on the assumptions above and evolved in discussion with the
         professional team. Specifically they ignore the effect on finance on the scheme.

10.8.3   We have run a cashflow on the numbers set out above. In doing so, we have assumed that disposals
         are treated as credits to the cashflow, whereas construction costs incurred by the Council are
         treated as debits. A finance rate of 5.0% has been applied to both positive and negative balances.

10.8.4   As the cashflow benefits from an assumed receipt of £12.0m at the outset, the finance effect is
         positive. Therefore the project deficit is modestly reduced. Please note that we have not allocated a
         borrowing charge / cost of capital for this £12.0m to the project and have assumed that this is
         accounted for elsewhere. In the event that a charge needs to be made, then the cashflow benefit will
         be negated.

10.9     CONCLUSIONS ON VIABILITY

10.9.1   The recommended approach shows a significant financial deficit, which is to be expected. On the
         basis that the Council chooses to go ahead, it will need to identify a projected net capital funding for
         the scheme of c£13.21m. However the interim funding (which is ultimately offset by receipts) will
         require a higher figure to be set aside and we consider it prudent to allow up to £20m of interim
         finance for the scheme.

10.9.2   The current estimated requirement for funding / financing is set out below.


           THRESHOLD                     INCREMENT          SOURCE                  NATURE
           Up to £12.0m                  £12.0m             Cash Reserves           Existing commitment
           £12.0m - £13.21m              £1.21m             Other (see below)             New permanent
                                                                                           commitment
           £13.21m - £20.0m              £6.8m              Borrowings                    New temporary
                                                                                           commitment

10.9.3   We understand that the £1.21m permanent shortfall identified above can be funded through savings
         in the wider property strategy that have been facilitated by this development. (i.e. the reduction in
         cost of the service hub project as a result of housing an element of that project within this scheme)

10.9.4   The Council may also wish to consider taking a lease of the space that it will occupy at a market
         rent, as a means of defraying the estimated capital expenditure, (as considered above).



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10.9.5   As with any significant capital project of this nature, which involves planning consents, procurement
         of major build contracts and interrelated disposals, we are obliged to note the potential risk that the
         projected receipts / costs will not materialise at anticipated levels, or in accordance with the
         projected programme. In this event, some / all of the temporarily committed monies may have to be
         committed on a permanent basis. We have considered the risks in more detail below.




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11.      PROCUREMENT / DISPOSAL

11.1     LAW / RESTRICTIONS / MARKET APPETITE

11.1.1   The procurement of public works and/or services is governed by a number of sources including:

         11.1.1.1 The Council‟s own standing orders

         11.1.1.2 National Law

         11.1.1.3 European Law

11.1.2   By comparison, disposals of property are specifically excluded from the EU procurement
         Regulations. The Council is however still under an obligation to comply with its standing orders, to
         carry out the disposal process in a fair and transparent fashion, and to achieve best consideration for
         its property pursuant to s123 Local Government Act 1972.

11.1.3   Public works such as the leisure centre will exceed the prescribed public works cap and will be
         subject to the European Regulations, which provide inter alia for advertisement in the European
         Journal of the European Union, and a formulaic procedure for selecting a contractor. There are still
         various forms that the procurement can take, and we would advise this process be kept as simple as
         possible to minimise cost exposure to the Council and prospective partners.

11.1.4   There is a lack of clarity in whether a Development Agreement constitutes a property disposal, or a
         matter which should be procured subject to European Law. This uncertainty has been exacerbated
         to some degree following the Roanne case, albeit some clarity has been restored in the subsequent
         Helmut Muller case and OGC Guidance Note.

11.1.5   Professional opinion on this subject is divided. However, it is generally accepted that the question of
         whether the European rules apply depends on the degree to which the Council specifies the
         developer‟s design obligations under the development agreement. The safest way to ensure that
         European rules do not apply is to avoid any design specification and sell unconditionally, reliant on
         the planning process to control design. This might not however guarantee regeneration nor the
         ultimate solution, as the disposing authority is reliant on market forces and largely upon their
         relative influence though the planning process.

11.1.6   Developers have become more risk averse in recent times, and in particular are in the large part
         unwilling to spend significant cost at risk in an open bidding process or to follow a lengthy process.
         The European requirements place considerable process and cost on developers and procuring
         authorities at a point in the transaction where the neither party has a secure position. For this
         reason, and in order to maximise interest in the site and capital receipt to the Council, we would
         advise structuring property disposals which so far as it is permissible would fall outside the
         application of the European Regulations. This will however mean that the Council has more limited
         control, at face value, over the timescales for delivery and nature of the end scheme.

11.1.7   In most instances, and to ensure that best value and transparency principles are met, we believe that
         the Council will feel obliged to formally advertise each disposal, rather than rely on a limited
         shortlist. Counter-intuitively, it is our experience that the highest capital receipt can often be
         obtained by going to a limited rather than full market. Limited marketing tends to give developers
         more confidence in their prospects of success, and encourages them to spend money properly
         investigating the opportunity and entering a full bid.

11.1.8   The Council may place limitations on the form of any development on transferred land, and may
         sanction an „undervalued‟ receipt consequent on these limitations in the event that one of the



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         criteria in the General Disposal Consent is met. (e.g. specifying retention of a façade). However in
         this instance, where the intention of the Council is to maximise receipt, this would seem
         inappropriate.

11.1.9   In the event that the European procurement rules apply, the Council has a series of options for
         implementation depending on the nature of structure of the proposal transaction, these principally
         include: the Negotiated Route, the Open Route, the Restricted Route and Competitive Dialogue.

11.1.10 Historically the Negotiated Route was preferred for complex transactions where all outputs could not
        be easily established at the outset. Current policy is that the Negotiated Route should only be used in
        „exceptional circumstances‟ and now complex projects should typically be procured using Competitive
        Dialogue. By comparison, for those projects where it is possible to easily assess the project outcomes
        (such as building to a pre-defined specification) it is considered more appropriate to apply the
        Restricted or Open Routes.

11.1.11 It is our opinion that, were the series of disposals and public works required by this project to be
        packaged as a single comprehensive project with a single partner procurement exercise, the Council
        would be obliged to follow a Competitive Dialogue process. Competitive Dialogue is typically the
        most costly and most protracted process.

11.1.12 A local authority may not artificially separate out works into multiple smaller contracts with the
        deliberate intention of obviating procurement regulations. However, we believe that in the context of
        the options explored above it would be legitimate to separate out the disposals. The components of
        the project are suitable different in nature to warrant a series of individual disposals and procurement
        exercises and are not linked save as to broad location and current ownership.

11.1.13 In respect of those components where the Council is procuring public works (i.e. the leisure centre
        and the refurbishment of space for Council occupation) the requirement for a complex process can be
        mitigated through providing greater certainty to each project. This might be achieved through
        producing a detailed specification against which to provide a costing and where applicable making a
        planning application for the proposed works. We consider a "fit out" or "design and build" contract
        for a detailed specified building with planning consent is NOT „complex‟ and therefore does not
        require Competitive Dialogue. On this assumption we consider it would be appropriate to then use
        the Restricted Route to appoint a contractor to deliver the leisure centre works. This is likely to be
        the most programme certain and least costly procurement route, and if accelerated is likely to benefit
        from lower construction pricing, reflecting the current market conditions.

11.1.14 It appears that the individual refurbishment projects may fall below the price threshold for European
        procurement. Therefore, the Council may wish to consider alternative methods of procuring these
        contracts should that indeed be the case.

11.1.15 We have set out a specific list of procurement recommendations in the conclusion to this report.
        Please note however, C&W is not in a position to provide a definitive legal opinion on the application
        or otherwise of EU Directives on procurement and the Council is advised to instruct suitably qualified
        and experienced external legal advisors to confirm the views expressed herein. In our experience the
        precautionary principle typically applies where no external advice is sought, despite in many cases the
        risk of challenge being comparatively small.




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12.      RISK ANALYSIS

12.1     GENERAL

12.1.1   The procurement of public works envisaged above, and to a greater extent the disposal of property
         cannot be budgeted with 100% accuracy. Whereas we have made prudent assumptions based on the
         information made available to us, there remains inherent uncertainty contingent on the economy, the
         property market, construction pricing and the application of regulatory and legal frameworks.

12.1.2   We have included a risk register. These risks should be noted carefully with our conclusions and
         recommendation. We have given an overview to the project risks below, and advice on how these
         risks might be mitigated.


12.2     SWOT / RISK INDENTIFICATION

12.2.1   We consider that the following are the key strengths, weaknesses, opportunities and threats
         associated with the project.

                         STRENGTHS                                         WEAKNESSES

                 Land in Council ownership                          Significant heritage issues
                 Construction pricing presently low                 Weak funding market
                 Availability of public funding

                      OPPORTUNITIES                                           THREATS

                 Potentially simple procurement                     Economic downturn / stagnation
                 De-risking project prior to tender                 Failure to secure planning consent
                                                                     Loss of public funding



12.2.2   The project carries various risks. Some carry greater probability or effect than others. We have
         sought to visualise this on the chart below.


RELATIVE
                          Funding Withdrawal               Planning Risk
EFFECT
                   Title Risk
                                Construction Pricing


                      Procurement
                      Risk

                                                    Market Slowdown




                                                                            RELATIVE LIKELIHOOD


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12.3     MITIGATION OF RISKS

12.3.1   Based on the above, we consider the most significant risk, both in terms of effect and likelihood is
         the planning risk. We have sought to address the key heritage / planning issues in producing our
         proposals. However, achieving consent for the proposals is not a foregone conclusion and is likely to
         meet with some opposition. There are lower grade planning risks such as the quantum of residential
         units that might be permitted and some significant risks, such as a failure to achieving consents for
         the redevelopment of the Baths. In the event of the latter the effect on the project will be terminal.
         It is therefore imperative that this is addressed in early course.

12.3.2   We would recommend evolving a proposal for agreement with English Heritage. Once a scheme is
         agreed, we would recommend formalising this as policy through production of an SPD, in parallel
         with going for consent on the site

12.3.3   The cost of the leisure construction contract is the most significant cost item in the project. Assuming
         that consent is forthcoming, then this is the second most significant risk. This can be mitigated though
         (a) achieving planning consent (b) structuring the contract to place the risk on the contractor and (c)
         implementing the proposals as swiftly as possible to take account of current pricing. The latter point
         can be assisted through the adoption of an appropriate procurement strategy.

12.4     OUTLINE PROGRAMME

12.4.1   We have set out a proposed programme for this project, which reflects the recommendations and
         splits the project down to its component parts. The critical dates are as follows:

         Scoping, Preparatory &Appointments          Q1 2011
         Consent for Leisure                         Q1 2012
         Start on Site Leisure                       Q4 2012
         Completion Leisure                          Q1 2014
         Project Completion                          Q2 2014

12.4.2   Against this preferred programme, in the event that the Council determines to follow a Competitive
         Dialogue Route, we would suggest that the critical dates would be revised as follows (for the leisure
         component) albeit there remains significant risk or further delay, on any “pre-let” hurdle, “funding”
         hurdle or “viability hurdle” or any other such conditions imposed during negotiations which principally
         reflect “de-risking” other components of the comprehensive scheme, but could otherwise delay the
         pool component:

         Marketing                                   Q4 2010
         Selection Preferred                         Q4 2011
         Contract negotiations finalisation          Q2 2012
         Planning                                    Q2 2013
         Start of Site                               Q4 2013
         Project Completion                          Q1 2015
         Completion                                  Q2 2015

12.4.3   It should be noted that delay is likely to increase underlying construction costs, as construction
         inflation is anticipated to emerge as the economy improves, following the period of price contraction
         witnessed as a consequence of the recent economic recession.




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13.      CONCLUSIONS & RECOMMENDATIONS

13.1     RECOMMENDED SCHEME

13.1.1   We recommend that the Council implement the following:.




                                                                   LEISURE
                                                                + CIVIC OVER



          RETAIL / A3
                                                             INFILL RESIDENTIAL



                                                                                      HOUSING SCHEME
         RESIDENTIAL
         CONVERISON




                        CAR PARK




13.2     IMPLEMENTATION OF RECOMMENDED OPTION

13.2     There are various stages to implementation of this option, and a number of routes which the Council
         could follow. We have formed a view on implementation strategy, and we commend the following
         sequential programme to the Council.

         1.   Register title immediately

         2.   As part of title registration, resolve restrictive covenant issues. Appropriate / indemnify if
              necessary.

         3.   Resolve and determine final civic spatial requirements, specification and arrangement of uses.
              Make a decision on whether to take lease of space and sell investment.

         4.   Immediately produce a planning brief for the site which supports the objectives of the project.
              Seek buy-in from English Heritage

         5.   Resolve and determine public funding availability, ensuring a conservative view adopted to cover
              “cashflow” risk in relation to timing of any receipts,

         6.   Perform a full occupation audit and extinguish security of any 3rd party tenancies as soon as
              practicable in the Town Hall, Town Hall Extension and Priory Centre




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     7.   Intensify office use in short term to facilitate vacant possession of Assembly Hall. Also resolve a
          strategy for exiting Old Town Hall and procuring vacant possession where necessary.

     8.   Instruct professional team to submit planning application for the redevelopment of the Baths and
          the community element in the Assembly Hall.

     9.   Upon consent procure refurbishment of Assembly Hall and separately the demolition /
          construction of baths. These works could be marketing on a design and build basis under an
          open or restricted procedure, leading to restricted pool of tenders based on required
          experience of similar projects. Lowest price tender based on the planning consent and
          specification from suitably capable and experienced contractor.

     10. Market the Priory Centre as a subject to planning sale. Whilst this process is ongoing, arrange
         for relocation of community groups into Assembly Hall block providing for vacant possession of
         the Priory Centre within a defined period. The Priory Centre should be sold on a subject to
         planning basis, without EU procurement provided that the Council can clarify when vacant
         possession can be secured.

     11. The Old Town Hall may be sold on a subject to planning basis. We would strongly recommend
         that an SPD is put in place, which supports the change of use and internal changes to the listed
         structure.

     12. The Library can be let subject to an "agreement to lease" to a new private occupier. The
         agreement would be on a subject to planning basis for change of use, appropriation of the title
         restriction and any landlord‟s works for conversion to tenants agreed specification. We would
         recommend a prior period of soft market testing to establish demand and a programme for
         achieving vacant possession. This is not likely to require EU procurement as the works are below
         threshold costs. Post-letting the property can be sold either with or without planning consent as
         an investment with the benefit of the agreement to lease. No EU procurement is required for a
         straight investment sale. It may be worth evolving a policy base in the form of a SPD to support
         the proposed change of use. Transaction cannot be concluded until replacement library facilities
         in Assembly Hall are complete.




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