4. Ensure adequate resources and tools for partnerships to take advantage of public assets
When local authorities are looking at how to make the most out of their assets to support the local economy, they must provide the extra dedicated resources that collaborations using those assets will require, otherwise they will fail to realise the proposed benefits. Resources are required for setting the overall vision as well as making the most of assets in individual partnerships.
Dedicated resources, committed primarily to the success of a partnership rather than the partners, helps to maintain the direction and momentum of a project. Helping to fund this kind of dedicated resource to provide clear project management has been a central recommendation of the One Public Estate programme. Without dedicating staff to a new project or partnership, those within partner organisations will often – naturally – concentrate on their own work and progress will falter.
Case study 4: Getting the most out of Transport for London’s varied property assets
With the central government’s removal of its capital grant, Transport for London (TfL) has been forced to raise more revenue to fund itself and its capital investment.
Lack of affordable housing in the capital is an economic as well as a social problem identified by the Mayor of London and business bodies such as London First. Elected in 2016, Sadiq Khan has set out a clear vision for affordable housing in London and TfL and partners understand that they need to support this vision.
TfL brought in expertise from large developers to set up a Property Partnership Framework (PPF) so that it can collaborate with developers to deliver affordable housing in line with the broader vision quickly. This also helps meet the objective of the TfL Business Plan, which aims to earn £3.4 billion in non-fares income by 2023.
TfL has a large, diverse, and strategically important asset base with huge potential to support, shape, and also limit growth, covering 5,700 acres (including road and railways).
With the work of the PPF, it took TfL six months to fully understand its assets and what opportunities existed within them that fitted the Mayor’s economic vision for London.
Working with Deloitte, over 500 potential major development sites were narrowed down to less than 75 for consideration within the PPF.
The previous strategy of asset disposal has now become a strategy of entering into partnerships with developers. This brings with it both greater risk and greater opportunities requiring a change of mindset, and the addition of specialist skills and capacity.
The PPF is made up of 13 developers out of over 50 applications, which frontloaded the administrative burden of setting up joint ventures on each site. This selection process is designed to speed up the creation of joint ventures for sites as they are brought forward.
To offer each site individually without the PPF would impose a greater administrative burden on TfL and developers, and slow down the procurement process as sites would also have to be offered through the The Official Journal of the European Union (OJEU). TfL could have decided to avoid some of these burdens by choosing a single development partner, but the volume and variety of sites would be too great for any single developer.
The framework should allow TfL to release one site per month. Collaborating with the PPF also allows TfL to do soft market-testing of sites with partners and improve the offer according to responses.
Setting up a partnership of this kind is difficult and requires expertise. According to TfL, the essential requirement for making such a partnership work is to make sure that the right people are in place who have the appropriate commercial experience and skills to understand the value of the assets and their market potential.
TfL’s commercial development team has grown from five to 30 people in recent years. TfL’s Head of Commercial, Graeme Craig, has said that to get a ‘private sector’ development team that can achieve the mayor’s aims and TfL’s business plan requires wages comparable to those paid in the private sector. The team includes former heads of retail at major developers such as Land Securities who have experience in identifying the opportunities and risks in the market. It can be a difficult thing to argue for, but to be more commercial, organisations need to understand their environment and their partners.
The first of the PPF sites, for 400 homes at Kidbrooke in a joint venture of TfL and Triangle London Developments, also benefited from strong personal relationships (see section 5). Network Rail owns 26 per cent of the site and has allowed TfL to use this land in order to enable an improved transport hub. These negotiations are likely to have been aided by the strong relationship between current chair of Network Rail, Sir Peter Hendy, who is also the former Commissioner of TfL and Mike Brown, his successor.