FINAL SUBMISSIONS ON BEHALF OF THE COUNCIL
Introduction
1.
This objection attempts to defeat years of effort by the public and
private sectors aimed at achieving the redevelopment of the
Southgate area of Bath. The arguments in support of the
objection are generalised, in that they do not relate to the
specific circumstances of the objection site. The objector
suggests that, in the absence of the Scheme, the centre might
undergo a degree of refurbishment. However, Mr Morpeth made
it clear that any intention to refurbish in the absence of the
Scheme does not mean the CPO should not be confirmed.
2.
The reality is that Somerfield, understandably, want to occupy the
new foodstore in the Scheme[1]. It is difficult to see how their
commercial interests could have been furthered by pursuing this
objection in the way that they have, although that was of course a
decision for them.
3.
Somerfield does not suggest that its land is not required for, or
not suitable for the implementation of, the Scheme. It agrees
that the Scheme is fully compliant with the relevant provisions of
the Development Plan and other planning policy. It does not
bring to the inquiry any evidence that there are other material
planning considerations which militate against the confirmation of
the CPO.
4.
In truth, the objection is wholly implausible. Firstly, as Mr
Beese made clear, there is no suggestion that the matters he raises
in relation to planning conditions and the Scheme’s section 106
agreement indicate that there is no reasonable prospect of the
Scheme proceeding at all.
5.
Secondly, Somerfield seeks to cast doubt about the deliverability
of the Scheme. However, the notion that a company as
experienced in developing and managing shopping centres as CGNU,
with the resources it has, would work for 10 years to secure
planning permission for a development, underwrite the costs of the
CPO process and enter into a Building Agreement with the Council in
circumstances where it does not really believe that the Scheme is
likely to proceed is clearly ridiculous. Board approval has
been given to proceed with the Scheme, including making the
necessary financial resources available to build it in its
entirety. An equity partner or funding institution may come
in to share the costs of developing the scheme, and the profits to
be derived from that, but it is Mr Paterson’s uncontested evidence
that that is not necessary for the Scheme to go ahead.
6.
In fact, the logical outcome of the objection is that virtually no
town centre redevelopment CPO could ever be justified, since it
would be necessary to have obtained every conceivable approval, and
to have completed every necessary agreement with every contractor,
before the CPO could properly be made. It has even been
pointed out that two of the Conditions Precedent in the Building
Agreement require the CPO and SUO to have been confirmed, and that
this casts doubt on the likelihood of the Scheme proceeding.
On that basis, one would need a confirmed CPO before the CPO
process could start – hardly a tenable position to adopt.
Planning impediments?
7.
The objector seems to have forgotten that the policy of the
Secretary of State is that it must be demonstrated that there is a
reasonable prospect of the Scheme going ahead[2] – not
complete certainty, therefore, not immediately, and not within any
particular timescale[3]. There is nothing in
policy to suggest that the fact that there are outstanding
planning conditions, or (as here) 106 requirements akin to
planning conditions, to be discharged, might constitute a
planning impediment such as to cast doubt on whether the Scheme
was likely to proceed at all. In fact, the Circular
asserts in terms that an extant planning permission “would
clearly demonstrate” the Scheme would not be blocked by planning
problems, except where the permission is about to expire or be
modified or revoked[4].
8.
Here, the permission is relatively recent, is the outcome of years
of option appraisal and development, and accords in all respects
with the provisions of the adopted and emerging development
plan.
9.
There are numerous conditions to be discharged before the
development can be fully built out. The objector does not,
however, suggest that this means that the Scheme is unlikely to
proceed at all – rather, that it is unlikely to start in August
this year, which is currently the earliest realistic start
date.
10.
Why it matters if the start date slips back to later this year, or
even into next year, has not been explained. Mr Paterson has
made it clear that, in relation to the likelihood of the scheme
proceeding, the date has no relevance[5]. It is simply a date towards which the
team is working. Mr Beese accepts that the conditions and 106
requirements are not fundamental issues in the context of a CPO,
and that the satisfaction of the conditions here is not likely to
defeat the Scheme[6].
11.
Mr Morpeth described the August 2005 date as “a slight
irrelevance”; and Mr Beese accepted that it has “no
significance”. As the objector has rightly pointed out, the
CPO and SUO may not be confirmed by that time – in which case, it
is unlikely that a start would be made to the development which
would commit CGNU, under the terms of the Building Agreement, to
finish it. It can hardly be suggested, and Mr Beese did not
suggest, that there is no reasonable prospect of the Scheme
proceeding because the developer has to await the outcome of these
statutory processes.
12.
It is therefore not the Council or CGNU who have attached
importance to the August 2005 projected start date, but the
objector. The difficulty however is that the objector has
failed to identify any relevant connection between the question of
whether or not the development will start in August 2005 and the
question whether or not the CPO should be confirmed. Mr Beese
agreed that this date is not critical to the Scheme proceeding.
13.
In fact, however, it remains possible that works will be able to
start on site in August 2005. Mr Brownlie has been given
instructions to submit applications for detailed approval of the
bus station works, since it is in this area that the development
will begin[7]. Service diversions can be done in
advance of the satisfaction of the Conditions Precedent in the
Building Agreement[8].
14.
The draft schedule setting out the timetable for securing
compliance with the conditions[9] is
consistent with a possible August start date. The only
conditions that have to be met before any development can commence
are
(i)
condition 4: this relates to details of site compounds and is
plainly simple enough to satisfy;
(ii)
condition 15: this requires the submission of a ground
contamination method statement. The ES includes a
considerable amount of material about ground contamination,
consulting engineers are instructed by CGNU to deal with this, and
the preparation of the statement will require no further ground
investigations[10]. This condition too
therefore should be capable of being satisfied in a short
timescale. The attempt to resurrect some sort of case in
relation to condition 15[11], given the terms of the
condition and the background to it, is completely implausible: it
is simply not possible for condition 15 to have the effect of
preventing the Scheme from being built.
15.
The only other condition that merits mention is no. 23. Some
works (demolition and clearance on the bus station, WPD and former
dairy sites) can take place before this condition is satisfied, but
in fact a substantial volume of material has already been submitted
to the Council which includes drawings showing much of the
“constructional and architectural detail” which the condition
requires to be submitted for approval[12].
16.
So far as the requirement to agree the construction phasing is
concerned[13], it is plain from the May 2002 Committee
Report[14] that the application included a draft
phasing programme which was updated as required throughout the
progress of the application. The Council is therefore well
aware, subject to any necessary detailed changes, of the way in
which the development will be phased. Again, there is no
reason to suppose other than that this requirement will be able to
be satisfied quite rapidly. Mr Beese takes no issue with the
current phasing proposals as set out in Mr Paterson’s and Mr
Carran’s evidence.
17.
As to car parking, Somerfield put forward no evidence that the
position during the construction period would be
unacceptable. It has always been apparent to the Council,
from the information given in the application about the phasing of
the development, that there would be a period of 2½ - 3 years
during which the site would become a large hole in the ground, and
therefore that there would a substantial loss of car parking
capacity in the city centre during that period[15]. However, because the existing shopping
floorspace in the Southgate Centre would also be lost at the same
time, and because of spare capacity on the buses and in Park &
Ride sites serving Bath, it was not considered necessary to impose
obligations on the developer to make up this shortfall, for example
by providing temporary parking elsewhere in the city centre or by
contributing towards additional P&R facilities. Although
a financial contribution towards the proposed new Lambridge P&R
was offered and then withdrawn[16],
the Council had never taken the view that this was needed either on
traffic grounds or because of the temporary loss of parking as a
result of the construction of the Scheme. Had the Council
seen this as an issue, they could and should have imposed a
requirement accordingly on the planning permission; but they did
not.
18.
In view of these considerations, and of the Council’s support for
the Scheme, it would probably not be open to the Council[17], and it is certainly highly unlikely, that
the Council would refuse to approve the construction phasing
details on the grounds that the temporary loss of car parking
was unacceptable, as Mr Beese accepted.
19.
As you would expect with a major project of this kind, therefore,
the developer and its consultants have been actively addressing
those matters that need to be addressed before the Scheme can
proceed, alongside the CPO process.
20.
There has perhaps been a degree of misunderstanding about the
residential element of the Scheme. This will be provided at
upper levels, and so it is hard to see how a housing developer
could impose their standard house types on the Scheme. The
external design of the blocks in which the flats will be provided
has already been approved, as part of the planning permission;
Strutt & Parker have provided advice on the marketability of
the flats, which will be in an excellent location in a very popular
city for living; discussions have been held with a Housing
Association in relation to the affordable housing; and so, all in
all, the proposed residential provision not only accords with
policy at all levels encouraging mixed-use development, but also is
likely to be a very attractive element of the Scheme. A
housing developer/provider may or may not be brought in to fit out
the residential units – this will be decided over the next few
months, and has no implications for Scheme deliverability.
21.
The leisure element has also been included on the basis of market
advice and testing[18]. This is a
perfectly appropriate and viable element of the Scheme as a
whole.
22.
The clear conclusion is that there are no planning impediments to
the Scheme proceeding.
Other impediments?
23.
The fact is that the objector, whilst engaging in a commentary on
the Council’s evidence as to Scheme deliverability, has not
produced any direct evidence at all of its own directed at
demonstrating, or even raising a material doubt, as to the
viability of the Scheme. To put viability in issue in any
real sense, there surely must be evidence to set against that of
the scheme promoter, that he is committed to the scheme and that it
is going to happen. The objector has in fact given no
evidence of any kind that could persuade the Secretary of State
that there was not a reasonable prospect of the Scheme
proceeding. There is a clear indication of funding intentions
and commitment, no real uncertainty about the viability of the
Scheme, and also a very compelling case for undertaking the
compulsory purchase of the objector’s interest[19].
24.
It is quite wrong to say that, without the Minimum Rate of Return
figure in Schedule 2 to the Building Agreement[20],
it is not possible to give any evidence as to Scheme
viability. Mr Morpeth could, for example, have produced an
outline appraisal, or any element of such an appraisal, including
an estimate as to build costs, with a view to demonstrating that
the return on cost was negative or too low, by normal commercial
standards. This is often done; it is then for the promoter to
respond to this. However, this was not done. Therefore,
as Mr Morpeth agreed, the only evidence before the Secretary of
State as to Scheme viability is that of Mr Paterson and Mr
Herbert.
25.
As already submitted, funding is unquestionably in place to
construct the Scheme. The Scheme has reached this stage
because one of the UK’s largest institutional investors considers
it to be viable.
26.
The likelihood that the Scheme will proceed is firmly underwritten
by the clear (and unchallenged) evidence of Mr Adams and Dr Raggett
that there is a very significant amount of capacity, in terms of
comparison retail expenditure, to support the Scheme; and strong
retailer demand in Bath for units of a size and configuration that
are in short supply in the city, and which the Scheme will
provide.
27.
It is not remotely credible, as Mr Morpeth accepted, to think that
CGNU would have entered into the Building Agreement, or that the
Board would have authorised Mr Paterson to proceed with the Scheme,
and would have authorised funding from CGNU’s own resources, in the
expectation that the Minimum Rate of Return precondition was
unlikely to be met. That an organisation of CGNU’s standing
and experience has already expended millions of pounds in promoting
the Scheme to this stage, has made a formal commitment to proceed
with it, and is continuing with all necessary preparations to
enable start of development in the near future, is sufficient in
itself to demonstrate that the Scheme is likely to proceed.
28. The MRR condition is, along with the other Conditions
Precedent, a common – in fact standard, as Mr Morpeth acknowledged
– provision in agreements of this kind. It could fairly be
said to be there to protect the developer in the event of a quite
unexpected adverse turn of economic events. The MRR is not
yet achieved, on the latest viability appraisal, nor was it at the
time Board approval was given; as is not unusual for a scheme of
this complexity and scale. Again, Mr Morpeth accepts what Mr
Paterson says on this. However, the anticipated IRR has been
gradually improving as further cost savings have been made and as
the uncertainties have reduced as progress is made towards a likely
start date. The objector produces no evidence that casts any
doubt on that evidence.
29. Securing pre-lets to Boots and to a department store will
further enhance the viability of the Scheme since it will make the
Scheme highly attractive to other prospective retail tenants, thus
reducing uncertainty and improving the yield. Discussions are
ongoing with Boots and two department store operators, who are
therefore in competition for representation in the Scheme, and
there is every likelihood that deals will be secured in the near
future[21]. Mr Morpeth accepts that there is
every likelihood that a sufficient number of pre-lets will be
achieved to enable the Scheme to proceed.
30. There appears to be disagreement between Mr Morpeth on the
one hand, and Mr Paterson and Mr Herbert on the other, about the
state of the economy in general and the retail market in
particular. This type of speculation attracts no real weight
as evidence, and the Secretary of State could not refuse to confirm
the CPO on the basis of unsubstantiated concerns about the state of
the economy.
31.
As further site investigations are carried out, and the Scheme
design and construction are worked up in more detail, the likely
costs of the Scheme similarly become more certain, and the risk of
cost overruns is reduced. This too has a beneficial effect on
yields, and thus Scheme viability. Mr Paterson’s clear
evidence was that, within months, the MRR precondition is likely to
be met. There is no reasonable basis on which that evidence
could properly be doubted.
32.
Both Strutt & Parker’s appraisals, and those carried out by
Morley using their own financial model to test the outcome of
S&P’s work, have tested the sensitivity of the appraisals to
variables, such as voids and rent-free periods, which respond to
the strength of market demand. The rental assumptions are
based on rents that are already being achieved in Bath. The
mall leading from Marks and Spencer to the new department store
will be on prime pitch; the other rents that have been assumed in
the appraisals reflect their relationship with this prime area.
33.
Much of the objector’s case has been concerned with the
implications of BWR for Southgate. In terms of the viability
appraisals, the risks presented by the prospect of High Street
comparison shopping at BWR have been factored into the appraisals,
by reason of the testing of the assumptions made. This is the
key point. That being the case, all of the other points made
about the debate in relation to BWR at the Local Plan inquiry are
of very limited relevance.
34.
Mr Beese agreed that it would be inconceivable for the Secretary of
State to refuse to confirm the CPO on the basis that there was a
competing out-of-centre scheme. To do so would be wholly
contrary to the central principles of the Government’s policies for
the strengthening and regeneration of the nation’s town and city
centres.
35.
To the extent that it is necessary to deal with the minutiae of the
debate, the Council and CGNU agree that the redevelopment of
Southgate is essential to the city centre as a whole, in order to
address the quantitative need for additional comparison retail
floorspace and the qualitative deficiencies in retail provision in
the city, and which are particularly manifest in the existing
Southgate centre. It is also needed to remedy the very poor
townscape quality of this very important part of central Bath, and
to provide greatly improved bus and rail facilities.
36.
It is perhaps important to emphasise that there is in reality no
divergence of view between the Council as landowner and as planning
authority as to the importance of the Southgate redevelopment to
the future of the city. Policy R3 of the adopted Local
Plan[22] allocates the Southgate area for
comprehensive, primarily retail, redevelopment. The site
is again allocated in the emerging Replacement Local
Plan[23], which also recognises the importance
of the site in the provision of additional retail floorspace in
the city[24]. The emerging plan
effectively assumes that Southgate has been delivered.
37.
The disagreement between the Council and Morley in the context of
the Local Plan is not as to whether or not Southgate should be
protected against possible out-of-centre development, but whether
the protection afforded by the Plan is adequate. The Council
submitted that it is[25]. The bringing
forward of Southgate expeditiously was, according to Mr Beese, a
“given” between the Council and Morley.
38.
Morley’s concern is about the prospect of High Street-type
comparison shopping at BWR, and the way in which this could
undermine investor confidence in the city centre as a whole.
Neither Mr Adams nor Mr Herbert contended that there was any
likelihood of Southgate not proceeding at all as a result of the
policies in the draft Plan; and Mr Paterson confirmed[26] that the two department store operators with
whom CGNU is currently negotiating have not expressed any concerns
about BWR or any interest in occupying a store on that site.
39.
These issues, and the submissions and evidence of the parties, are
very familiar to the CPO Inspector because she is also the
Inspector holding the Local Plan inquiry. As Local Plan
Inspector, it is for her to decide whether the Council or whether
Morley are right, and to recommend accordingly.
40.
In the context of the CPO, therefore, and particularly in the light
of the evidence of Mr Adams and Mr Herbert to the Local Plan
inquiry, it would patently be absurd if the Inspector were to
recommend that the CPO should not be confirmed because the emerging
Local Plan contained provisions that undermined the likelihood of
the Southgate redevelopment proceeding. Under adopted
policies, BWR is not allocated for retail development, and (being
out-of-centre) would require very strong justification, notably
clear evidence that city centre regeneration and redevelopment was
not put at risk. BWR therefore has very limited weight as a
consideration in the CPO context. If the Secretary of State
were concerned about the implications of a BWR planning application
for Southgate, rather than refusing to confirm the CPO he would
surely call the application in for his own
determination.
41.
The Inspector is not obliged, in reaching her conclusions on the
CPO, to ignore her knowledge of the issues concerning the provision
made for development at BWR in the Local Plan. The decision
on the CPO, and the outcome of the Local Plan process, will combine
to ensure that the policies in the Local Plan do not result in
retail development outside the city centre which could harm
development prospects within the centre.
42.
The Scheme will therefore proceed whatever the outcome of the BWR
debate at the Local Plan inquiry, and its deliverability has been
appraised with all relevant risks taken into account, including
BWR.
Conclusions
43.
It is agreed between the objector and the Council that the
objector’s land is both suitable for and required in order for the
Scheme to proceed. All of the considerations set out in s
226(2) indicate that the CPO should be confirmed.
44.
The clear evidence is that the Scheme is likely to be delivered
within a relatively short timescale. There are no planning or
other impediments which could lead to any other conclusion.
45.
If the Scheme does not proceed, the massive benefits which it will
produce – including much needed additional retail floorspace, a new
transport interchange, new residential units (including affordable
housing), and a major uplift in the environment of the city centre
in its widest sense – will be lost.
46.
The CPO should therefore be confirmed in respect of Somerfield’s
interest.
Landmark Chambers
NEIL KING Q.C.
RUPERT WARREN
19th May 2005
[1] See Somerfield’s representations on the
planning application (CD 5.1) and GL Hearn’s letter of objection to
the CPO (16 November 2004). Mr Beese and Mr Morpeth confirmed
that it remains Somerfield’s position that it seeks representation
in the Scheme.
[2] Circular 02/03 para 19
[3] 02/03 (para 18) indicates that it would be
only exceptionally that a CPO could be justified “where there
was little prospect of implementing the scheme for a number of
years”.
[4] 02/03 Appx A para 16
[5] BNES/2/4 para 2.1 and Rebuttal evidence in
chief
[6] Other (possibly) than condition 15 – see
below
[7] Brownlie in chief; schedule of meeting
dates; BNES/2/3
[8] Response to Questions Relating to
Conditions Precedent in Building Agreement, paras 5-7
[9] BNES/11/2. A similar document is very
shortly to be submitted dealing with the details requiring
approval under the 106.
[10] Guy and Paterson Rebuttal evidence in
chief
[11] Beese ReX
[12] Guy Rebuttal in chief and ReX
[13] s 106 Agreement (CD5.7) clause 6)
[14] CD5.1 p 65 of 68; also Guy Rebuttal in
chief
[15] BNES/12/1 paras 1 and 2
[16] CD5.1 p 46 of 68; CD5.4 pp 18/19 of 29
section 12
[17] Since any requirement to compensate for
temporary loss of parking would have had to have been imposed on
the 2003 planning permission
[18] BNES/2/4 para 2.6
[19] Circular 02/03 Appx A para 19
[20] BNES/11/1
[21] Paterson and Herbert Rebuttal
evidence. Mr Morpeth proffered some observations on Boots’
latest profit results, but gave no detail and did not suggest
either that Mr Paterson and Mr Herbert’s evidence was incorrect or
misrepresented the position or that the information about Boots’
position in any way implied that they no longer wish to maintain
representation in Bath.
[22] CD2.2
[23] CD2.3 policy S.3/GDS.1(B4)
[24] CD2.5 paras 5.28, 5.31
[25] BWR Hearing – Submissions on behalf of the
Council, paras 9, 13, 32, 42
[26] ReX
