Deferred Receipt MechanismsLong Lease Seminar

Edinburgh1 June 2010

Deferred Receipt MechanismsLong Lease Seminar

Welcome & introductionPatrick Flynn, Scottish Government

Deferred Receipt MechanismsLong Lease Seminar

Long Leases best value, best practice, best outcome?

Alasdair Fleming & Roger CottonBrodies LLP

Long Lease Arrangements and their use in unlocking the latent potential or public sector sites

Development Agreements, Licences and

Long Leases - best value, best practice, best outcome?

Alasdair Fleming

Partner

Head of Urban Regeneration

Brodies LLP

Key issues

Hot topic with pre-credit crunch issues in sharper focus:

Land values

Public realm and infrastructure

Sustainability

Profitability

Fundability

Why innovate?

Balance all parties’ interests

Managing risk

Engaging Public and Private sector

Encouraging activity in a difficult market

Maintaining momentum and meeting demand

Developing communities

Models for future development

Development Agreement Standard agreement for whole site; Contains obligation to enter into Lease; May incorporate Licence

Lease – obligation to enter into long lease (175 year) gives Public Sector control over

delivery of public realm works duty on developer to complete site Overage delivers public sector profit

Models for future development

Sublease – gives private sector right to sublet

Allows introduction of consortium partners

Aids site delivery – social housing

Facilitates commercial development

Encourages and facilitates engagement of private sector

Funding

Security Land Value and Long Leases Step-In Sub-Leases Irritancy Protection Agreements

The way forward?

Residential – the route of out of recession?

Maintaining momentum to meet current and future demand

Further application of model - best solution in current climate

Public sector toolkit

Private sector engagement

including Funders?

Developing Communities

Making development agreements and public procurement work together

Roger Cotton

Partner

Projects

Brodies LLP

Key issues

Much higher on the risk register than before:

Competition for limited public sector investment

Public sector striving for best value, and aversion to risk

New remedies/penalties for getting it wrong

Can be a tool for objectors to a scheme

Identifying the interface

When will the procurement rules apply:

Public sector initiative

Public sector land

Public sector investment

Public infrastructure and public realm

Public sector specification

Steering round the procurement rules

Truly ancillary to a land deal

No obligation to develop

Planning powers only

No public sector contribution or risk

....but watch out for the courts developing the law

Embracing procurement!

Needs to be an early call

There can be no choice but to comply

The process can be streamlined for developers and authorities

Procurement is not an “add-on” – it is at the core

Using competitive dialogue effectively

Since its introduction in 2006, the Competitive Dialogue procedure has received a mixed response: caution in the face of growing costs, yet recognition of the efficiencies gained. Early planning and preparation govern the success of the procedure. If it is run effectively and efficiently, it has the potential to have a positive impact and ensure benefits can be realised by both parties.

The PPP Journal

Using competitive dialogue effectively

Prepare and work with a good set of documents

Avoid “dialogue drift”

Coordinate the different strands of dialogue

Use the freedom of dialogue phase without rushing to final tenders

Deferred Receipt MechanismsLong Lease Seminar

Panel discussion

Deferred Receipt MechanismsLong Lease Seminar

Summary & closing remarks

Deferred Receipt MechanismsLong Lease Seminar

Lunch