British
and Irish Legal Information Institute
Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
If you found BAILII useful today, could you please make a contribution?
Your donation will help us maintain and extend our databases of legal information. No contribution is too small. If every visitor this month donates, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
United Kingdom Upper Tribunal (Lands Chamber)
You are here: BAILII >> Databases >> United Kingdom Upper Tribunal (Lands Chamber) >> Ridgeland Properties Ltd v Bristol City Council [2009] UKUT 102 (LC) (03 June 2009)
URL: http://www.bailii.org/uk/cases/UKUT/LC/2009/ACQ_447_2007.html
Cite as: [2009] UKUT 102 (LC), [2009] RVR 252
[New search] [Printable PDF version] [Help]
|
|
||
|
UPPER TRIBUNAL (LANDS CHAMBER) |
||
|
|
||
|
UT Neutral Citation number:
[2009] UKUT 102 (LC) LT Case Number:
ACQ/447/2007 |
||
|
|
||
|
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
COMPENSATION – Compulsory
purchase – substantial former city-centre office building – development
prospects – planning – hope value – costs – residual valuation –
alternative schemes – compensation
£4,500,000 |
||
|
|
||
|
IN THE MATTER of A NOTICE OF
REFERENCE BETWEEN
RIDGELAND
PROPERTIES LIMITED
Claimant
and
BRISTOL CITY COUNCIL
Acquiring Authority
Re: Tollgate House, Houlton
Street, Bristol BS2 9DJ Before: P R Francis FRICS and A J Trott
FRICS |
||
|
|
||
|
Sitting at: Procession House, 110
New Bridge Street, London EC4V 6JL
on 29 September - 3 October, 6
-10 and 13 -14 October 2008 |
||
|
|
||
|
Timothy Mould QC and
Guy Williams, instructed by Brecher, solicitors of London W1 for
the
claimant
Neil King QC and Rupert
Warren, instructed by Ashurst, solicitors of London EC2 for
the
acquiring
authority |
||
|
|
||
|
© CROWN COPYRIGHT 2009 |
||
|
|
||
|
1 |
||
|
|
||
|
|
||
|
The following cases are referred to in this
decision: |
||
|
|
||
|
Jumbuk Ltd v West Midlands
Passenger Transport Executive [2008] RVR 186 Spirerose Ltd v
Transport for London [2008] RVR 12
Transport for London v
Spirerose Limited (in Administration) [2008] EWCA Civ 1230 Gateley
v Central Lancashire New Town Development Corporation [1984] 1 EGLR
195 Bwllfa and Merthyr Dare Steam Collieries Ltd v Pontypridd
Waterworks Co [1903] AC 426 |
||
|
|
||
|
2 |
||
|
|
||
|
|
||
|
DECISION |
||
|
|
||
|
Introduction
1. This is a
decision to determine the compensation payable to Ridgeland Properties
Limited (the claimant) by Bristol City Council (the “council” or
“acquiring authority”) in respect of the compulsory acquisition of
Tollgate House, Houlton Street, Bristol BS2 9DJ (the subject property)
under the Bristol City Council (Broadmead Expansion, Bristol) Compulsory
Purchase Order 2003 (the CPO). The notice of reference was lodged with the
Tribunal by the acquiring authority on 9 August 2007.
2. Mr Timothy
Mould QC and Mr Guy Williams of counsel appeared for the claimant and
called David Napier FRICS, a director of G L Hearn, Property Consultants,
of London W1 who gave planning evidence, Stewart Wallace MRICS, managing
director of Kingfisher Associates of Teignmouth, Devon who gave evidence
of conversion and development costs and James Edward Sydney Hewetson
MRICS, a partner in Matthews & Goodman, Chartered Surveyors of London
SW1 who gave valuation evidence.
3. Mr Neil
King QC and Mr Rupert Warren of counsel appeared for the acquiring
authority, and called Michael Orr BA (Hons) B.Pl Dip UD MRTPI, founding
partner of CSJ Planning Consultants Ltd of Bristol who gave planning
evidence. Tim Martin BSc CEng MICE MRICS, Christopher Baldwin BSc MRICS
and Richard Alexander Owen BA MRICS IRRV, all partners in Drivers Jonas
LLP, Property Consultants, gave costs, residential property and valuation
evidence respectively.
4. Closing
submissions were received from the parties by 4 November 2008; we
undertook an accompanied inspection of one of the comparable sites, Ocean
Views, Portland on 10 November 2008, and made an unaccompanied inspection
of the former location of the subject property and its surroundings on 6
January 2009. A laptop computer containing the “Circle Developer” software
upon which the valuation experts had constructed their residual appraisals
(and containing their final versions of these) was provided to the
Tribunal on 26 January 2009.
The claim
5. The
claimant, which had acquired the subject property in August 1999 with the
intention of converting it principally to residential use with elements of
leisure and office uses, sought, in its amended statement of case,
compensation on two alternative bases. Firstly (its principal case) that,
due to the CPO scheme, it had been unable to proceed with a development
(“the amended claim scheme”) which would, on increasing the height
of the existing building by six storeys, comprise 485 flats (including 145
affordable units), a health club/gym of 23,850 sq ft, 18,425 sq ft offices
and 371 parking spaces. Planning consent for such a scheme could be
assumed to have been forthcoming at the valuation date, and the
residualised land value was in the region of £37,000,000. In the
alternative, a scheme that did not involve raising the height of the
existing block (“the amended baseline scheme”) and which would
comprise 335 |
||
|
|
||
|
3 |
||
|
|
||
|
|
||
|
residential units, a 26,695 sq ft
health club/gym, 18,425 sq ft offices and 317 parking spaces would, the
claimant said, have obtained consent at the valuation date. The
residualised value of that, including an element of hope value to reflect
the likelihood or prospect of subsequently obtaining a revised consent for
the amended claim scheme, was in the region of £26,000,000. On each basis,
additional claims were made for loss of profits, together with
reinvestment costs, but these were subsequently withdrawn. By the time the
hearing commenced, some amendments and corrections were made to the
claimant’s valuation of the amended claim scheme, which had the effect of
reducing the principal claim to £36,500,000. The amended baseline scheme
claim remained the same.
6. In its
reply, the acquiring authority, whilst acknowledging that planning consent
could reasonably have been anticipated for a major mixed-use (C3/B1/D2)
development, contended that there was no prospect whatsoever of the
claimant obtaining consent for its proposed amended claim scheme.
Following meetings in November 2007 between the parties’ planning experts,
a scheme evolved that involved no increase in height to the main block and
which would comprise 303 residential 1 and 2 bedroom units, 327 parking
spaces and a new four storey block containing a health club and offices
(“the November 2007 scheme”). Whilst in principle it was likely to
have been considered favourably in planning terms, there were serious
deficiencies in terms of the affordable housing element and section 106
obligations. The claimant’s amended baseline scheme subsequently followed
but in the council’s expert’s view a residual valuation of such a scheme
would produce a negative value for the land. The council then produced a
scheme (“the Bristol scheme”) which was a variation of the
claimant’s amended baseline scheme and which was considered by them to
demonstrate a viable alternative that produced a positive site value. The
Bristol scheme provided for 236 residential units (of which 30% were
affordable housing, split 70/30 social rented/shared ownership), a 10,000
sq ft health and fitness centre and 11,250 sq ft of offices together with
190 parking spaces and would maximise the land value at £1,909,789. The
loss of profits and reinvestment claims were, on any basis the council
said, unsustainable.
7. By the
time the hearing commenced, and some further amendments had been made, the
parties had agreed that for the purposes of valuation, three schemes were
to be considered:
The claim scheme
comprising 425 residential units of which 122 were affordable. A
Health and Fitness centre of 23,850 sq ft, and new-build offices of 18,425
sq ft gross (15,091 sq ft net), 369 car parking spaces (290 in a newly
constructed underground car park), 29 motorcycle spaces and facilities for
parking 231 cycles. Height of building increased by 8
storeys.
The baseline scheme
comprising 295 residential units of which 88 were affordable. A Health
and Fitness Centre of 26,695 sq ft, office accommodation as above, 310
parking spaces (again, 290 underground) and motorcycle/cycle parking as
above. No material change to building height.
The Bristol scheme Amended
to 236 residential units, with 70 affordable. Health and Fitness Centre of
11,539 sq ft, offices of 13,498 sq ft gross (11,276 sq ft net), 187 car
parking spaces of which 167 were accommodated in a new multi-storey
car-park, 10 motorcycle and 236 cycle spaces. No material change to
building height. |
||
|
|
||
|
4 |
||
|
|
||
|
|
||
|
Facts |
||
|
|
||
|
8. The
parties produced a statement of agreed facts and issues from which,
together with the evidence, we find the following facts. Tollgate House
comprised a 19 storey (17 principal storeys with mezzanine decks above)
tri-form office building constructed in 1976 of concrete frame with
lightweight pre-cast concrete panel cladding incorporating aluminium
framed single-glazed windows. It had 142,600 sq ft of accommodation
including ground floor reception and offices, 16 upper floors of offices
served by 6 high-speed passenger lifts in a central core, a
17th floor comprising restaurant and plant rooms, and a
mezzanine deck above with further plant rooms and a warden’s flat. 121
parking spaces were located around the building. It occupied an island
site of 1.2 acres (0.486 ha) and was located on the north-eastern
periphery of Bristol City Centre, on the edge of the St Pauls area at the
junction of Newfoundland Street (the gateway to the city centre from the
M32) and Houlton Street, from where access was obtained. It was within 200
yards of the Broadmead shopping centre, separated therefrom by Dale
Street, a multi-storey car park and a large open tract of land that had
historically also been used for car parking. To the south of the site,
Frome Street separated the property from Aldworth House, a four-storey
block of flats occupied by social housing tenants. Nearby were a furniture
showroom and other tertiary retail units.
9. Tollgate
House had been the former headquarters of the Planning Inspectorate, but
was vacated some 4 years prior to the valuation date and, by the date of
acquisition, had suffered extensive vandalism. The CPO, which was stated
to be for the “securing and the carrying out of a comprehensive scheme of
redevelopment (including retail, office and/or hotel, residential and
leisure uses together with car parking and alterations to the highway
network) at Broadmead, Bristol” was made on 3 November 2003. The claimant,
as a statutory objector, whilst not opposing the principle of the
expansion of the Broadmead Centre per se, unsuccessfully opposed the
inclusion of the subject property within the scheme at the public inquiry.
The Inspector’s report of 25 August 2004 recommended that the order be
confirmed without modification, and the Deputy Prime Minister and First
Secretary of State thus confirmed the CPO on 18 May 2005. A General
Vesting Declaration was made on 11 August 2005, and the acquiring
authority took possession and entered upon the reference land on 13
September 2005. That is the valuation date for the purposes of this
reference. The building was subsequently demolished.
Planning policies
10. At the valuation
date, the statutory development plan was the Joint Replacement Structure
Plan (2002) and the Bristol Local Plan (1997). The First Deposit
(consultation draft) Proposed Alterations to the Bristol Local Plan were
published in 2003, and its proposals were material planning considerations
at the valuation date. Regional planning policy was contained in Regional
Planning Guidance for the South West (RPG10): 2001. The subject property
was within an area allocated in the Bristol Local Plan as a City Centre
Mixed Commercial Area, to which Policy CC2 applied. That policy permitted
a range of uses including office, research and development, light
industrial, leisure, residential, institutional and small-scale retail
uses. The subject property was adjacent to the Portland Square
Conservation Area. |
||
|
|
||
|
5 |
||
|
|
||
|
|
||
|
11. It was agreed
that the following supplementary planning guidance notes were material
considerations at the valuation date:
(a) PAN 1
(Planning Advisory Note) – Residential Guidelines
(b) PAN 12 –
Affordable Housing (published May 2002)
(c) PAN 15 –
Responding to Local Character – a Design Guide (March 1998)
(d) SPD 1
(Supplementary Planning Document): Tall Buildings (January
2005)
(e) SPD 4:
Achieving Positive Planning through the Use of Planning Obligations (draft
published December 2004 – adopted October 2005)
National Policies:
(a) PPS 1 –
Delivering Sustainable Development (2005)
(b) PPG 3 –
Housing (2000)
(c) Better
Places to Live by Design: A companion guide to PPG3
(d) PPG 13-
Transport 2001 Other material considerations:
(a) Guidance on Tall Buildings
(CABE/English Heritage) (2003)
Issues
12. The
parties agreed that, in determining compensation in accordance with
section 5, rule (2) of the Land Compensation Act 1961 (the 1961 Act),
sections 14 to 16 of that Act are relevant, and it is to be assumed that
full planning permission would have been granted at the valuation date for
a predominantly residential scheme of development. Whilst it was agreed
that the value of the reference land for one of the aforementioned 3
schemes would have exceeded its value based upon use as offices either in
its actual condition at the valuation date, or following a scheme of
renovation, it was the form of the scheme to be assumed that was in
dispute. It was common ground that the local planning authority would, in
considering proposals for Tollgate, seek significant overall improvement
in the design and appearance of the building, and would seek to achieve
“architectural excellence”.
13. In determining
the scheme, or schemes, for which detailed planning consent could
realistically be assumed to have been forthcoming, the key issues relate
to the interpretation of the relevant planning policies in terms
of:
1. Height of building – plan for
additional storeys (claim scheme only)
2. Cladding materials (all 3
schemes) |
||
|
|
||
|
6 |
||
|
|
||
|
|
||
|
3. Affordable housing mix – social rented
and shared ownership (all 3 schemes)
4. Section
106 obligations - requirements for contribution to public realm, highways
infrastructure and travel plan (all 3 schemes)
14. In determining
the value of the site, the following issues relating to the cost of
development remained in dispute (in respect of all three schemes unless
otherwise stated):
1. Whether
cost estimates should be taken at the valuation date, or the date of the
projected commencement of building works
2. Approaches
to costs estimation
3.
Procurement
4.
Preliminaries, demolition and enabling works
5. Nature and
cost of cladding to the residential tower
6. Design
requirements, engineering solutions and construction costs of subterranean
car park (claim and baseline schemes)
7. M&E Services
8. Other
disputed items relating to the superstructure of the tower (balconies,
lift cores, floor plate extension, suspended slab and fit out), the
offices and the health and leisure complex
9.
Landscaping and external works
10. Development
programme and phasing
11. Affordable
housing – valuation by reference to TCI or Bristol Matrix
12.
Contingencies
13. Professional
fees
14.
Profit
15. Hope value
(baseline scheme only)
15. We consider
firstly the evidence relating to the planning issues and, from our
conclusions on these, move to the question of development costs and
valuation issues relating to the scheme or schemes for which detailed
planning consent could, in our judgment, have been anticipated. We
conclude with a summary and our valuations. |
||
|
|
||
|
7 |
||
|
|
||
|
|
||
|
Planning
Preamble
16. It was the
claimant’s case that, in the light of the prevailing local and national
planning policies, full planning permission could reasonably have been
anticipated for both the claim and baseline schemes; the proposals
relating to the recladding, affordable housing mix and s.106 obligations
would each have been acceptable, and would neither individually, nor taken
together, constitute grounds for refusal. The proposal to raise the height
of the building by the construction of additional floors in respect of the
claim scheme would, they said, also be acceptable. The acquiring
authority’s case was that whilst in principle a mixed use development
along the lines of that proposed under the baseline scheme (and, by
association, the Bristol scheme) would have found favour with the local
planning authority, the issues that remained the subject of dispute in
respect of the baseline scheme would have required revisions in order to
comply with the authority’s policies and requirements. Failure to comply
with any one of those issues was sufficient, in their view, to warrant a
refusal.
17. At the
commencement of his oral evidence, Mr Orr dealt with an apparent
contradiction in his evidence relating to the council’s position on the
planning matters remaining at issue. Whilst he had never demurred from his
view that the proposals to increase the height of Tollgate House (the
claim scheme) were unacceptable, he had said in his main report (at
paragraph 11.7):
“... I consider that the
[amended] baseline scheme might reasonably have been expected to achieve
planning permission. Whilst there are strengths and weaknesses to the
proposals and certain assumptions have had to be made because of missing
information, I believe that there is sufficient justification to assume
that competent professional consultants could have negotiated a
conditional planning permission subject to appropriate planning
obligations secured through a section 106 agreement.”
In his subsequent rebuttal statement, he concluded, at
paragraph 11.21:
“My overall conclusion in the
light of my main report and the foregoing [comments on Mr Napier’s report]
is that there is no reason to assume that planning permission could
reasonably have been expected to be granted for either the [amended]
baseline scheme, or the [amended] claim scheme.”
The council had also said (in
respect of the November 2007 scheme – which did not involve increasing the
height of the building), in its amended reply to the claimant’s amended
statement of case:
“Subject to the conclusion of
planning obligations to secure the provision of affordable housing and the
financial contributions ... and subject to planning conditions addressing
(inter alia) the phasing of the development, the acquiring authority
accepts that a development broadly as described ... can reasonably be
expected to have been granted planning permission at the valuation date in
the no-scheme world. The November 2007 scheme is therefore a reasonable
starting point for an assessment of the open market value of the property
as at the valuation date.” |
||
|
|
||
|
8 |
||
|
|
||
|
|
||
|
18. Mr Orr said that
in his initial report he had assumed competent professionals would,
through negotiation, plug any remaining gaps, especially in connection
with the proposed appearance of the building, and anticipated that any
remaining points could have been resolved. However, he said that by the
time Mr Napier had produced his report, it had become clear to him that
there remained major differences between them on the disputed issues, and
as a result he had changed his mind over the likelihood of an acceptable
solution being achieved. Thus, he had formed the view that the claimant’s
proposals as to cladding, affordable housing mix and section 106
contributions would each have been sufficient grounds to warrant a
refusal.
The height of the tower
19. This was the
only planning issue that related solely to the claim scheme. Mr Napier,
for the claimant, has 30 years experience in matters of valuation,
planning and development both nationally and in the Bristol area, and has
formerly advised Bristol Development Corporation in respect of the Temple
Quays regeneration. He appeared for the claimant at the inquiry into the
Broadmead Expansion CPO, from which this claim emanates, and produced an
expert planning report and a rebuttal statement for this
hearing.
20. He set out the
planning background, statutory assumptions and policy framework (the
majority of which was agreed) that would be relevant in consideration of
both the baseline and claim schemes at the valuation date. Regarding the
latter, he explained that the claimant had, following consultation with
the council, submitted a planning application in 2001 for renovation and
conversion of the tower to provide 350 flats. To achieve this, it had been
proposed to increase the height of the building by 8 storeys. The planning
officer’s report to committee of 18 November 2001 gave 9 reasons why the
application should be refused but, in Mr Napier’s opinion, none of these
were insurmountable. However, the claimant withdrew the application before
the committee considered it, and it was, therefore, not
determined.
21. The claim scheme
plan was also to increase the total height of the main building by 8
storeys to 27. The proposals (as explained in Mr Wallace’s report) were to
remove the existing upper floors, which housed the plant rooms and
caretaker’s accommodation, down to the 16th floor slab, and add
a lightweight steel and concrete structure which would incorporate duplex
penthouses on the new 25th and 26th floors. This
would increase the overall height of the structure from 56.5m to 78m, ie
by 38%.
22. Mr Napier said
that CABE (Commission for Architecture and the Built Environment) and
English Heritage (EH) jointly published “Guidance on Tall Buildings” in
2003. Acknowledging that, in the right place, tall buildings can make
positive contributions to city life, the report set out the aspects that
should be taken into account in considering proposals. These included
natural topography, scale, height, form and massing, proportion and
silhouette, facing materials, urban grain, streetscape, built form and
effects on skyline, together with its interaction with and contribution to
its surroundings and the environment, including conservation areas and
their settings. Supplementary Planning Document 1: Tall Buildings (SPD 1),
which was adopted by the council in January 2005, provided the assessment
criteria for Bristol and contained specific advice on remodelling existing
tall buildings. Tollgate |
||
|
|
||
|
9 |
||
|
|
||
|
|
||
|
House, Mr Napier said, was an
established tall building and, with the council having accepted the
principle of the baseline scheme in planning terms, there was no question
regarding its retention. The advice stated that, should it be determined
that it was acceptable to retain a tall building on a particular site, it
would be possible to provide “a new lease of life through relatively
simple measures” including “re-cladding with more contemporary materials”,
the “addition of upper floors to change the profile of the building” and
“introducing active ground floor uses”. The document, he said, was written
in permissive fashion and acknowledged that increasing building height
could bring about improvements. This was particularly important as the
existing building (which he accepted was the third tallest building in
Bristol) was somewhat “squat” in appearance and increasing its height,
together with re-cladding, would accentuate the slenderness ratio, and
significantly improve its overall appearance and its impact on the street
scene. The proposed additional floors would not, Mr Napier said, add
substantially to the height, but whilst the building would be marginally
more visible from surrounding areas (including the Portland Square
Conservation Area), the improvements in terms of overall appearance would
have served to preserve or enhance such views. The proposals also provided
for active uses on the site, by the provision of the leisure and fitness
centre.
23. In order to
provide evidence as to the potential visual impact of the redevelopment of
Tollgate House, Mr Napier produced a Visual Impact Assessment (VIA) based
upon the 2005 Guidance on Environmental Impact Assessment set out in
Circular 02/99, and the Guidelines for Landscape and Visual Impact
Assessment (2002). It had been prepared by members of his staff and the
claimant’s architect. Following discussions with the council’s planning
officers, view points were identified, photographic records were used to
show how the existing building would have appeared (it having been
demolished by the time the exercise was undertaken), and comparative
montages were added to indicate the projected appearance of both the
baseline and claim schemes. Whilst accepting in cross-examination that the
quality of the montages was poor, and the assessment as a whole would have
been insufficient for inclusion with a formal planning application (for
instance, the nature of the proposed cladding had not then been decided),
Mr Napier said the VIA demonstrated that the increased height would not
result in a demonstrably more imposing building. Indeed, he said, the
scheme would result in an improvement in what had been identified and
accepted as an important gateway location. He accepted that the
methodology set out in Appendix E to SPD1 had not been used and that SPD1
would, at the valuation date, have been a significant material
consideration.
24. Acknowledging
the inadequacies of the VIA, and having accepted that plans for any
proposed scheme would need to clearly demonstrate architectural excellence
and to produce a “step change” over what was already there (Policy B6 of
the Bristol Local Plan), he did say that whilst the developer would, of
course, need to have regard to all the relevant criteria, the working up
of the scheme design would have been an iterative process. The proposals
would have evolved following meetings and discussions with the council
over, possibly, a period of years. Nevertheless, and in the light of the
concerns raised by the council, Mr Napier said he commissioned two further
reports, although neither of the authors was called to give evidence
before us. The first, prepared by Collado Collins, Architects and Urban
Designers of London W1, was to consider (taking into account the relevant
planning policy framework), the prospects of securing approval for a
conversion that involved increasing the height of the building. Mr
Jonathan Collins reiterated the iterative nature of achieving success in
obtaining consents for tall buildings, and gave examples of 3 schemes in
London, two of which were for |
||
|
|
||
|
10 |
||
|
|
||
|
|
||
|
40 storey towers. He said that 18
months of design work and consultation with the local planners, statutory
consultees and the wider community occurred before final designs were
achieved, and the scheme in Woolwich went through 15 design iterations due
to input from CABE, English Heritage and public consultation before
planning consent was finally granted.
25. As to Tollgate
House, whilst he did not specifically consider either the claim or
baseline schemes that formed the basis of this reference, he was of the
view that a conversion/extension scheme stood a good chance of obtaining
consent, subject to a visually and environmentally sympathetic design
being devised, particularly one that served to increase the building’s
presently low slenderness ratio in comparison with other tall buildings in
Bristol. Given sufficient time and resources, and through detailed
consultation with the LPA, it was Mr Collins’ view that an elegant
solution could be achieved that would increase the legibility of the city
centre, contribute positively to its immediate surroundings and preserve
the character of adjacent conservation areas. Mr Napier accepted in
cross-examination that the Collado Collins report was generic rather than
specific, and that although Mr Collins had looked at the claim scheme, he
had also suggested alternative methodologies for achieving the required
consent – for example by extending the tri-form wings in an asymmetric,
spiral form. Mr Napier also accepted that the report underlined the
importance of consultation with CABE and English Heritage.
26. The second
report, by Dr Peter Smith B Arch RIBA PhD, principal of Dr Peter Smith,
Architects and Planners of London NW3, commented upon the impact that the
upward extension of Tollgate House might have on the Portland Square
Conservation Area. In his opinion, due to the orientation of its streets,
and the layout of the contours, the claimant’s proposals would not have a
substantial impact upon the Conservation Area as a whole, except where it
abutted Newfoundland Street, the busy main access from the north into
Bristol where, in any event, many of the frontages have been rebuilt or
replaced by modern development. The only significant view of the subject
property from the main Georgian square was in a south-easterly direction,
and that was only in the winter when the trees were defoliated. The worst
effect of the building, as it previously existed, was from the “heavy
concrete cap” that housed the plant rooms and staff areas. Any
improvements to the building, by softening the elevations and improving
the silhouette would, in his view, more than offset any impact created by
the proposed additional height. Mr Napier said, in cross-examination, that
the proposals upon which Dr Smith had been asked to comment were those
that were “evolving” into the claim scheme that was now before the
Tribunal. He accepted that the report did not make any reference to CABE
or English Heritage, and that the location of the building in the context
of the adjacent Conservation Area was an important
consideration.
27. Mr Napier was
asked why he had made so little in his reports of the 2001 planning
application, the planning officer’s proposed reasons for refusal and,
particularly, the objections that had been received from CABE and English
Heritage, which had clearly been couched in the strongest possible terms.
He said that the 2001 scheme had considerable differences, especially in
respect of its external appearance, although he acknowledged that it was
comparable in terms of proposed height. The letters from CABE and EH would
have been important considerations, he said, but would not have been
determinative. The local planning authority was not bound by their
concerns and, indeed, he said that the claimant’s scheme at Ocean Views,
Portland, Dorset (which was 9 storeys high) had also received objections
from |
||
|
|
||
|
11 |
||
|
|
||
|
|
||
|
EH, but planning consent had
still been obtained. Mr Napier said that the letter from CABE was not
commenting specifically on height, although on a personal level, he did
not disagree with their views as to the overall design impact. However,
that scheme bore no resemblance to the proposed claim scheme and whilst he
was sure CABE (and EH) would make similar comments if the 2001 scheme was
re-submitted in 2005, the claim scheme was a significant improvement and
he would expect their comments about that to be completely different. He
accepted that neither he nor the claimant had sought the advice of those
bodies in respect of these latest proposals.
28. Mr Orr has
practised in Bristol since 1984. For the first 5 years of his professional
career he was employed with Bristol City Council in both the development
control and policy divisions. Since setting up his own practice in 1995,
he has been involved with major regeneration and residential schemes in
the Bristol area, including applications, appeals and section 106 planning
obligation negotiations. He produced a report and a rebuttal
statement.
29. He said that
Tollgate House was located within, but on the fringe of, an area of
Bristol city centre that had been identified as potentially appropriate
for tall buildings. However, the property was already a very tall building
at 19 storeys, and SPD 1 (the relevant sections of which he dealt with at
considerable length) did not provide the basis for an assumption that any
further height would be acceptable or appropriate. Although the SPD lends
support for tall buildings to be located on gateway sites, which this
undoubtedly was, it said that new buildings should be of a higher quality
than existing tall buildings if such proposals were to be supported. Mr
Orr said that SPD1 was supplemental to the other, agreed, Local Plan
policies, and sections 4.11 and 5 provided the key criteria to be
considered, these being derived to a large extent from the joint
CABE/English Heritage Guidance. Three of the 10 assessment criteria in
section 5 were particularly important and, in his view, the claimant’s
proposals failed to meet them:
Assessment Criteria (i):
Relationship to context, including topography, built form and skyline.
Mr Orr said that Tollgate House was already the third tallest building in
Bristol, and its scale was at the upper limits of the townscape context of
the city. Any additional height would be overly dominant particularly
bearing in mind its high-profile location at the end of the M32, which was
the principal vehicular access into Bristol from the M4 and the north. He
produced photomontages which, he said, indicated the increased dominance
that the claimant’s proposed additional 8 storeys would
create.
Assessment Criteria (ii):
Effect on historic environment at a city-wide and local level. The
close proximity of the building to the Portland Square Conservation Area,
from which it was already clearly visible, would mean that any upward
extension could have a seriously detrimental impact on such a sensitive
area containing, as it did, Grade 1 listed buildings of considerable
architectural importance. Such a development would thus be contrary to the
statutory test and guidance contained in PPG 15 – to preserve and enhance
conservation areas. The same comments applied, he said, to the Old Market
Conservation Area and Castle Park. Bristol City Council, Mr Orr said, had
spent 29 years bringing the conservation areas up to scratch, so any
potential impact on them would be a key consideration. He said that the
photomontages produced by Mr Napier purportedly showing the impact (or
lack of it) from surrounding areas had been highly selective and did not
reflect the reality that would have existed. |
||
|
|
||
|
12 |
||
|
|
||
|
|
||
|
Assessment Criteria (iv):
Architectural excellence of the building. The claimant’s proposals,
particularly in respect of the method of re-cladding the building, did
nothing to take away or reduce the slab like effect of the building, and
adding additional storeys would only serve to exacerbate the problem and
create a “visually jarring form”.
30. Mr Orr stressed
that whilst other issues, such as re-cladding proposals, affordable
housing provision and section 106 contributions might, in normal
circumstances, be capable of resolution, the question of increasing the
building’s height would be non-negotiable. The strict guidelines laid down
in SPD 1 and the CABE/EH requirements could not possibly be complied with.
Although it was accepted that there were significant differences between
the 2001 application and the claimant’s 2005 proposals in many respects,
the question of height was virtually no different. Both CABE and EH were
extremely critical of the 2001 application, and circumstances had not
changed sufficiently to assume that the previous objections did not still
apply, or were likely to be overridden. The local planning authority would
attach very significant weight to any comments received from CABE/EH,
together with those from other consultees such as The Bristol Conservation
Advisory Panel, St Pauls Unlimited Group (a local amenity society),
Bristol Civic Society and the Kingsdown Conservation Group.
31. Although Mr Orr
accepted that, for the purposes of formulating a bid for the subject
property, a developer would not go to the lengths required to enable a
full submission to be made for detailed planning consent, the indicative
elevational designs and the Visual Impact Assessment produced with Mr
Napier’s evidence were inadequate, unconvincing and lacking in the
necessary detail. He said that the 7 views selected in the VIA notably
excluded conservation areas (except one from Portland Square) and was
therefore an incomplete assessment. The report subsequently obtained from
Dr Smith was also extremely brief, did not contain reference to relevant
policies such as PPG 15 and gave no explanation as to why the proposals
would be considered acceptable, or how they would comply with policies.
The photograph Dr Smith produced showing Tollgate House visible from
Portland Square indicated just how significant in terms of visual impact
any height extension would be. Mr Orr was also dismissive of the Collado
Collins report. It was generic in nature and failed to adequately consider
the effect of the schemes. Whilst he agreed that a height extension would,
marginally, improve the slenderness ratio, the fact that the building was
constructed in a tri-form configuration accentuated the impression of
visual bulk and an acceptable slenderness ratio was, therefore, likely to
be unachievable. That consideration was, in any event, only one factor of
the many that would have to be overcome, and in terms of overall
appearance, it was the treatment of the cladding that would be the most
significant.
Submissions
32. It was submitted
by the claimant that the principal relevant policy consideration should be
whether the proposal to increase the height of the building, alongside
re-cladding the exterior, would deliver a significant improvement in the
design of a property, which the acquiring authority had described as “a
building of stunning mediocrity”. If the proposals did serve that purpose,
then there was no question that such a development would preserve, and
indeed could possibly enhance, views from the nearby conservation areas,
thereby meeting the established test for acceptability in planning terms.
That was Dr Smith’s view, and his professional opinion should be given
weight. It was common ground that there were
positive |
||
|
|
||
|
13 |
||
|
|
||
|
|
||
|
reasons to support the retention
of Tollgate House, that it occupied an important location at the northern
gateway to the city in an area identified as suitable for tall buildings,
and that there was an opportunity to improve the quality of its design and
appearance. The claimant’s proposals sought to respond to the “relatively
simple” measures referred to in paragraph 4.11 of SPD1 by re-cladding the
building with more contemporary materials, and increasing height to
improve its profile. In the claimant’s view, the policy objectives set out
in SPD1 – which was the appropriate supplementary guidance and consistent
with policies B5 and B6 in the Bristol Local Plan – would be
met.
33. Mr Orr’s opinion
that the existing building was at the upper limits of scale was, it was
submitted, indicative of the sort of prescriptive approach which national
planning policy advised against in PPS 1. It was a fact that there was
nothing in the Bristol Local Plan or SPD1 that prescribed upper limits to
tall buildings and, as explained in the Collado Collins report, it is a
principle of urban design that increasing the height of a building can, by
giving it a greater vertical profile, produce a more elegant and less
imposing form. The claimant said Mr Orr’s criticism of Mr Napier’s VIA was
misplaced. It was produced purely to give the Tribunal an indication of
the impact that the proposals might have. The points from which the
photographs were taken, and the montages produced, were chosen following
consultation with the council and it was never intended to be sufficient
for incorporation within a formal planning application. Indeed, none of
the plans or details that had been produced purported to contain enough
detail to enable a formal planning decision to be made, but were all
designed to enable the Tribunal to understand the proposed changes to the
profile, form and design of the building.
34. As to the
acquiring authority’s reliance upon the CABE/EH responses to the withdrawn
2001 application, it was submitted that each application or scheme should,
and would, be judged on its own merits, and that the 2001 scheme was
significantly different in terms of form, profile and elevational
treatment. It was unhelpful, they said, to speculate as to whether
consultees would voice similar concerns in 2005 in respect of the claim
scheme, especially as neither Mr Orr, nor the acquiring authority
themselves had sought the opinions of EH or CABE on the
matter.
35. The acquiring
authority submitted that it was inconceivable that planning permission
would have been granted for a material increase in the height of Tollgate
House, and the onus was on the claimant to prove that it would have been
through the production of convincing evidence. The evidence that had been
provided was wholly unconvincing and inadequate, and it was remarkable
that Mr Napier did not include reference to the significant objections
that had been raised in connection with the “broadly similar” 2001 scheme.
Although it was acknowledged that the design of the building in the latest
proposal was less offensive than the 2001 scheme, there could, it was
submitted, be little doubt that there would still have been significant
objections from both of these principal consultees.
36. It was a fact
that all the relevant planning policies, and the CABE/EH guidance placed
considerable emphasis on the need to secure high standards of design and
high quality development – in short, “architectural excellence”. The
building as it existed had little, if any, architectural or urban design
merit, and it was implicit therefore that any scheme would need to
encompass a step-change in terms of quality of finishes and appearance.
The impact of the scheme on the conservation areas would have been as
important a consideration in 2005 as it |
||
|
|
||
|
14 |
||
|
|
||
|
|
||
|
was in 2001, and the claimant’s
evidence singularly failed to demonstrate that there would be enough of a
step-change to overcome any concerns about its impact. The reports,
submitted with Mr Napier’s rebuttal report, from Collado Collins and Dr
Smith were also inadequate for the Tribunal’s purposes. In the light of
the evidence, it was submitted that the council, acting reasonably as a
planning authority, would have refused planning permission at the
valuation date for the claimant’s claim scheme.
Conclusions
37. The fourth of
the 9 proposed reasons for refusal listed in the Planning Officer’s report
to committee in connection with the 2001 application is instructive on the
subject of increased height. It said:
“4. The proposed development by
means of its height, massing, bulk and overall design would further
exacerbate the impact of the building which is unduly prominent within the
existing street scene and visually jarring with the Bristol City Centre
skyline and would therefore be contrary to policy B1, B2, B5 and B6 of the
Bristol Local Plan (December 1997). In addition, the proposal would fail
to preserve and/or enhance the setting of the Portland Square Conservation
Area and would therefore be contrary to policy B13.”
Whilst accepting that a number of
the design considerations of the claim scheme differ from the earlier
application, in terms of the effect created by the increase in height, we
are of the view that an application for the claim scheme, in 2005, would
have elicited, quite justifiably, similar comments.
38. The letter from
English Heritage that the council had received, objecting to the 2001
application said that “its aggressive design is an unfortunate feature,
particularly when seen rising above the formal composition of historic
buildings surrounding Portland Square” and “the increased height and
dominance of the new design over Portland Square will be further
detrimental to the setting of this important group of listed buildings,
and to the conservation area generally.” We agree with the council that
the claim scheme is somewhat less offensive, is softer in terms of general
visual impact and much less aggressive than the 2001 proposals appeared to
be from the rather limited information that was before us at the hearing.
However, notwithstanding those improvements, it is the question of
dominance that we find hard to reconcile. All of the computer generated
images (CGIs) that were provided by the claimant in the evidence both
before and, at our request, additionally during the hearing, related to
the baseline scheme and were principally prepared to show the effect of
the proposed re-cladding. It would have been helpful if similar CGIs had
been forthcoming showing the claim scheme with its additional 8 storeys.
The only indications showing the potential impact of the additional
storeys were the photomontages produced in Mr Napier’s VIA and Mr Orr’s
own efforts that simply showed a slab like structure on top of the
existing building.
39. In our view, Mr
Napier’s montages comparing existing, baseline and claim schemes from
various points demonstrate just how overbearing such a height extension
would be in terms of its immediate location, and from farther afield. This
is particularly apparent from the two viewpoints on the M32/Newfoundland
Street approach where the building dominates the |
||
|
|
||
|
15 |
||
|
|
||
|
|
||
|
skyline to a considerable degree.
It is from these vantage points on what was described as (and with which
we agree) the major northern gateway into the city centre that the impact
is most severe. We accept that the increased dominance would have been an
important factor for consideration in terms of its potential effect upon
the adjacent conservation areas, but it is our view, having undertaken an
inspection on 6 January 2009, that Mr Napier was correct in saying that it
would only be the closest part of the Conservation Area to the proposed
building that would be seriously impacted. In any event, much
unmeritorious development has been undertaken in this location, the office
buildings overlooking Brunswick Square being a case in point.
40. As to the impact
upon the main Georgian square, we think that the proposed increase in
height to Tollgate Tower would be of little consequence. Having placed
ourselves at the precise point on the square from which Mr Napier’s
photograph was taken, it is evident that the new building on the corner of
St Paul Street and Wilson Street that was under construction when the
image was taken, and has now been completed, would have almost completely
shielded the tower from view. The additional height would have been barely
visible and would certainly, where glimpsed from other parts of the
square, be no worse than the view of Castlemead Tower seen when looking
down Pritchard Street off the south west corner of the square. Whilst
there is no question that Portland Square is a Conservation Area, we are
of the view that we must make some comment in relation to Mr Orr’s
statements as to the importance placed upon it in terms of sensitivity and
the fact that “the council has spent 29 years bringing conservation areas
up to scratch.” At the time of our inspection, the square contained a
number of unoccupied (except perhaps for squatters) and run down buildings
that served to give it an air of urban decay that belied Mr Orr’s claims.
Finally, in respect of the impact of tall buildings upon adjacent
conservation areas, it did not go unnoticed that the west side of nearby
Brunswick Square is completely dominated and overpowered by a very large
1960s /1970s office building.
41. Regarding the
reports from Collado Collins and Dr Smith that were provided with Mr
Napier’s rebuttal report, we agree with Mr Orr’s comments on their
inadequacy and, particularly as neither Mr Collins nor Mr Smith was
called, we attach little weight to them.
42. Policy B5 of the Bristol Local Plan states
(where relevant):
“The layout and form of
development should seek to reinforce or create attractive and distinctive
identity, and establish a scale appropriate to its locality and use. In
determining applications, account will be taken of the
following:
(iv) Enclosure and height, scale and massing of
development.”
43. Policy B6 states:
“Building exteriors and
elevations which are designed to a high standard and provide visual
interest, particularly adjacent to public routes, will be welcomed. In
determining applications, account will be taken of the
following:
(i) The impact of development from both distant and close
views.
(ii) Existing skylines and the creation of new
skylines. |
||
|
|
||
|
16 |
||
|
|
||
|
|
||
|
(iii) The appropriate use of materials.” |
||
|
|
||
|
Each of these points are material
considerations which the local planning authority is obliged to take into
account, and in respect of all of them, we accept the council’s arguments
that the claim scheme proposals, as presented, would not satisfy them. SPD
1, which is specific to tall buildings, contains the key objectives in
this instance. These would attract significant weight as material planning
considerations. We accept and agree with Mr Orr’s opinions on assessment
criteria (i) and (iv)(paragraph 29 above). In our judgment the
proposals fail to meet the high standard of design and “architectural
excellence” that is a pre-requisite, would not secure sympathetic
integration within the local and city context and would not provide the
step-change to the quality or appearance of the existing building that Mr
Napier accepted was necessary.
44. It follows
therefore, that in our judgment, had a planning application been made for
the claim scheme at, or immediately before, the valuation date, it would
have been refused on broadly similar grounds to reason 4 of the proposed
reasons for refusal given in the planning officer’s report in connection
with the 2001 application, although, as we have stated, we do not share
his views about the severity of the impact of the proposal upon the
Portland Square Conservation Area.
45. In its closing
submissions, the claimant referred to the council’s criticisms about the
adequacy of Mr Napier’s VIA, and their suggestion that the material
provided to the Tribunal was “a pitifully inadequate basis upon which to
make an assessment of the claim [and baseline] schemes, had planning
permission been sought for them in 2005”. The claimant said that this
Tribunal’s decision in Jumbuk Ltd v West Midlands Passenger Transport
Executive [2008] RVR 186 (at paragraphs 25 and 28) had rejected
similar criticisms “in trenchant terms”. The claimant was of the view that
the material in this case was sufficient and fit for purpose, particularly
in enabling the Tribunal to understand the changed profile and form of
Tollgate House, and whether it would have provided an overall improvement
to the design and appearance of the building, significant enough to
satisfy the council’s policies.
46. In
Jumbuk, the issue had been whether full or outline planning
permission could have been anticipated for a significant new office
development in Dudley town centre, and the amount of effort and research
that a prospective purchaser would have undertaken in formulating a
proposed bid for the site. The Member, Paul Francis FRICS, said
this:
“25. In his closing submissions,
Mr Roots said that the test was not, as advanced by the acquiring
authority, whether the revised BBLB drawings were sufficient to obtain a
full planning consent, but whether, in the absence of the scheme and on
the balance of probabilities, it can be concluded that full planning
permission would have been obtained, at the valuation date for the form of
development illustrated by those plans. I agree. It should be noted, Mr
Roots said, that despite the argument that only outline consent could have
been expected, it was not suggested either in Mr White’s rebuttal
valuation report, or was it put to Mr Cook, the claimant’s valuer, in
cross-examination that, if it was to be found that a residual valuation
was the correct approach, he should have made an allowance to reflect the
alleged uncertainties and delay that would inevitably result from an
outline only consent being in place at the valuation
date.” |
||
|
|
||
|
17 |
||
|
|
||
|
|
||
|
He went on to consider the
Tribunal’s then recent decision in Spirerose Ltd v Transport for London
[2008] RVR 12 (which was subsequently upheld in the Court of Appeal –
Transport for London v Spirerose Limited (in Administration) [2008] EWCA Civ 1230) which concluded that full planning consent could have been
expected to have been achieved by the valuation date. Mr Francis
continued:
“28. It seems to me that the
circumstances here are to all intents and purposes the same, and there is
no dispute between the parties that planning permission would have been
achieved. The question is simply, would it have been full or outline
permission. In my view, Mrs Brooke-Smith painted a somewhat exaggerated
picture in terms of the landmark and highest quality issues (which I deal
with more fully under the question of costings), and was unrealistic when
it came to interpreting the BBLB plans. In cross-examination she conceded
that there was nothing to suggest that an applicant, in the absence of the
metro scheme, would not have done everything in its power to achieve full
planning consent by the valuation date, and that it could be expected they
would have held detailed discussions with the local planning authority to
that end. I am satisfied from the evidence that the BBLB plans as
presented were sufficient for the purposes of this determination, and
represented a scheme that would have been entirely appropriate, in
planning terms, for the subject site. I accept Mr Roots’ submission that
the acquiring authority’s arguments that only outline permission could be
assumed because the plans and costings that had been prepared in respect
of this compensation claim were not sufficient to achieve full consent in
the real world, are absurd. I do not think it realistic to expect the
claimant, as appeared to be suggested by the acquiring authority, to have
expended perhaps another £50,000 in professional fees in providing
sufficient supplemental information to make the BBLB proposals into what
would effectively be a full planning submission to prove the argument that
applies in this hypothetical situation, especially bearing in mind the
concessions that had been made by Mrs Brooke-Smith. As Mr Roots said,
quite rightly in my view, even if more substantial plans, costings and a
planning brief had been produced, that could well have served as a vehicle
for more subjective debate.” |
||
|
|
||
|
47. During the course of the
hearing of this case, we reminded the parties (in the light of the vast
amount of detail that the experts had gone into, particularly in respect
of costings), that as far as determining value was concerned, the question
of what a prospective developer purchaser would do in formulating what he
could afford to pay for the land needed to be constantly borne in mind.
The costs involved in making a formal planning submission on a development
of the nature proposed for somewhere like Tollgate House would be
considerable, and the exercise would be time consuming. It could be
expected, therefore, that a prospective purchaser in a competitive
situation would have to make certain broad assumptions. He would, of
course, obtain input and advice from planning specialists, architects and
others, and would make inquiries of the local planning authority, but the
question is: how far would they realistically go? This has to be a
question of balance, and would, in our view, be likely to vary depending
upon which particular aspect of the project was under consideration. For
instance, the exercise required to establish likely construction and
associated costs on particularly complex aspects of the development would
be (as we refer to again later) more substantial than, say, estimating the
level of s.106 contributions. As to the proposal to increase the height of
the building, in our judgment, whatever level of detail was provided to
the planning officer in respect of the proposed claim scheme, the informal
advice that would have been received would have been that such an
application would be refused, for the very reasons we have
given |
||
|
|
||
|
18 |
||
|
|
||
|
|
||
|
in our decision on this issue.
Therefore the issue of whether the Tribunal had sufficient information
from the claimant to form a judgment on this aspect, was not one that has
created a problem for us. Whilst Mr Napier’s evidence, particularly in
respect of his VIA, could rightly be criticised for its inadequacies, the
policy issues and material considerations referred to above are so
strongly against a major increase in height in this location that, for our
purposes, the lack of further detail really does not matter.
Other planning issues
48. We turn now to
the remaining planning issues in dispute, each of which apply, to varying
degrees, to both the baseline and Bristol schemes.
Cladding
49. In this section,
we consider only the question of whether or not the claimant’s choice of
design and materials for the proposed re-cladding of the building, if it
were included within a planning application would, on its own, have been a
ground for refusal. The subject of the comparative costs between the
claimant’s proposals and those that the council consider would have been
appropriate are, of course, key issues in the determination of the value
of the site for redevelopment, and the evidence and argument on these is
considered separately below under “development costs”.
50. Mr Napier said
that in both the claim and baseline schemes, it was proposed to remove the
existing external cladding and replace it with new finishes. This would
allow the floor plates to be extended, providing an additional 175 sq m of
space per floor. He said that the principle of re-cladding a tall building
was accepted in SPD1 where it said: “it is possible to provide a new lease
of life through relatively simple measures including...re-cladding with
more contemporary materials.” There was no issue with the acquiring
authority on the principle, but it was the proposed materials to be used
that were in dispute. The claimant, Mr Napier said, had costed the schemes
on the basis of re-cladding with factory made rendered panels,
manufactured by Marmorit, and which incorporated double-glazed uPVC window
units. The construction, which he and Mr Wallace described as being of
high quality, comprised a steel frame that incorporated pre-formed slabs
of insulation block to which the “through colour external render” was
applied. Thus, the rendering could be any hue that the client required,
chosen from a palette of many hundreds of different shades, the colour
being stirred into the final finish, which was mixed on site. At this
point in his examination in chief, Mr Napier produced three CGIs that gave
indications of how the finished article might look on the baseline scheme.
He accepted in cross-examination that no details had been provided in the
statement of case, and said that he had not, prior to the hearing, delved
into Mr Wallace’s proof of evidence to establish precisely what that form
of cladding comprised. He said that the CGIs showed a darker finish at
lower levels, lightening up as the height increased, which served to
attenuate the appearance and give the impression of a more slender
structure. The images had been sent to Mr Orr two weeks previously and had
been produced in response to his expressed concerns that rendered finishes
would produce a somewhat slab-like appearance, and there would be “no
visual gradation over height”. Mr Napier said that Marmorit was widely
used, and was indeed being utilised at Comer Group’s ongoing redevelopment
of the |
||
|
|
||
|
19 |
||
|
|
||
|
|
||
|
former Portland Naval base in
Dorset (now known as Ocean Views), which we were invited to visit. He said
that the part of the Ocean Views development that was virtually complete
was “almost” a tall building, at 8 or 9 storeys, and used a single colour
render that had been approved by the local planning authority. There were,
he said, full width balconies on the Portland buildings’ frontages that,
for the purposes of comparison, would need to be ignored as they were a
dominant feature and the proposed balconies at Tollgate House only
extended along a short section of each of the building’s three
wings.
51. In his view the
proposals complied in all respects with Policy B6 of the Bristol Local
Plan, where it stated that the exteriors of buildings, designed to a high
standard and providing visual interest, particularly adjacent to public
routes, would be welcomed, and with the requirements set out in sub
paragraphs (i), (ii) and (iii) of that policy (see paragraph 43 above). He
believed that it would provide the step-change that was required, and that
a sufficient degree of architectural excellence would be achieved. He did
not agree with the suggestion that the use of rendered finishes (which Mr
Wallace had costed on the basis of a 50/50 split between fenestration and
rendering) would emphasise mass and height.
52. Mr Orr said that
Tollgate House was a particularly prominent landmark that made, or had the
opportunity to make, an entrance statement to Bristol. The choice of
cladding materials was therefore a fundamental planning issue. The
existing tri-form arrangement of the building tended to exaggerate its
mass and bulk when viewing it from a distance. The “wings” of the tower
became indistinguishable from each other, thus accentuating the bulk.
Rendered or concrete panels are monotonous in colour and lack
articulation. The single type of finish would be unrelenting, and this
would only be marginally improved by varying the colours. Although there
was no issue as to the quality of the proposed materials, it was
considered to be a rudimentary system that “simply did not make the
grade”. On a building of 19 storeys it would most certainly not satisfy
SPD1 in terms of architectural excellence. Furthermore, PPS 1 promoted the
taking of opportunities to improve the character and appearance of areas,
and although Mr Orr felt that planning officers would not be prescriptive
in their demands or requirements, they would have seen the mitigation of
the building’s existing solid appearance and the provision of a
fenestration pattern that lessened its visual impact as important
objectives. He accepted that there was no particular right or wrong in
terms of the chosen materials, but in achieving the required design
excellence, a subjective judgement would be made based upon the
arrangement, colour and articulation of materials.
53. In his view, in
terms of design quality, Mr Orr said that the only way a satisfactory
conclusion could be delivered was by implementing a scheme of finishes
along the lines of those indicated in images produced by Glenn Howells,
Architects of Birmingham, in connection with the council’s suggested
alternative to the baseline or claim schemes – the Bristol scheme. He also
gave details of his involvement with another local Bristol landmark, the
former Bristol and West (B&W) Tower at Broad Quay, Bristol, and used
that as an example of the level of design excellence that would be
required. He said that his practice had negotiated the planning consent
for conversion of that building from offices to a Radisson SAS hotel with
complementary mixed uses on the lower floors. The council’s initial
pre-application stance had been to require demolition, despite the fact
that the original cladding was of high quality granite materials. However,
the council eventually capitulated, and following design and re-cladding
negotiations that involved the input of professional architects and public
art |
||
|
|
||
|
20 |
||
|
|
||
|
|
||
|
consultants, approved a scheme
that comprised a high quality glass curtain walling system. Mr Orr said
that if a curtain walling system of similar quality and appearance had
been proposed by the claimant, he thought that there would have been a
reasonable prospect of planning consent being achieved at Tollgate
Tower.
54. Mr Orr said that
he had visited the Ocean Views development with Mr Martin, and that this
confirmed his concerns in terms of both quality and design issues.
Although he subsequently said that he was satisfied that the materials
were likely to be of sufficiently durable quality (as a product), he still
had doubts over its weathering characteristics since green algae growth
and some fracturing to surfaces was already apparent. It was the planning
perspective that was the main stumbling block, and he could not agree that
Ocean Views could be seen as a proxy for Tollgate Tower. Although he
accepted in cross-examination that there were limitations as to what could
be done bearing in mind the existing configuration of the subject
property, and that it was difficult to “make a silk purse out of a sow’s
ear”, its location in particular demanded finishes that would create an
iconic structure. Marmorit would not do that, whatever the treatment as
far as colour gradation was concerned.
55. Nor would
increasing the percentage of glass. In that regard Mr Orr produced, during
the hearing, a supplementary report that dealt with the claimant’s
response to a question asked by the Tribunal during Mr Napier’s evidence.
We had suggested that, in the light of Mr Orr’s concerns, it would be
helpful to receive further CGIs depicting a greater percentage of
fenestration upon which the acquiring authority could comment. A series of
images was produced that showed varying treatments to the glazing,
including higher levels of glass to the lower floors, reducing
proportionately higher up the building, and with that treatment reversed.
Mr Orr said that the creation of a more lightweight appearance towards the
top of the building was essential to help reduce its visual mass and bulk,
and the second option, with more glazing towards the top, went some way
towards achieving this. Of the three alternatives that were shown on this
basis, the one with the highest proportion of glazing to render (75%) was
the most aesthetically pleasing. However, despite that improvement, he was
still deeply concerned about the inclusion of rendered panels at all in
such a high building. It was inherently unsuited to a 19-storey tower, in
such a location, and would remain particularly dominant especially to the
end elevations. In summary, therefore, he was of the view that none of the
options demonstrated the level of architectural excellence that was
needed.
56. In
cross-examination, Mr Orr said that if a scheme could be produced that
satisfactorily covered the concerns about massing and bulk and comprised
high quality durable materials then there was a good prospect of planning
permission being granted. However, he felt unable to alter his opinion
that render finishes were simply not appropriate – they did not offer
sufficient visual interest, articulation and modulation. He said that his
own opinions, with which he thought planning officers would agree
(although he had not discussed the proposals with them), were not
prescriptive. He was not saying that the B&W tower scheme had to be
replicated here, and accepted that the finishes to that building did not
offer much in the way of articulation, gradation or modulation in colour,
but, as his Glenn Howells images were intended to show, a glass curtain
walled option would offer the architectural excellence that was essential.
It was accepted that there was nothing in the policies upon which the
planners had to rely that said a render finish could not be used, and an
application could not be refused just on the basis of the officer’s (or
committee’s) personal tastes. However, the
unrelenting, |
||
|
|
||
|
21 |
||
|
|
||
|
|
||
|
slab like and monotonous
appearance of the claimant’s proposed finishes would properly invite
refusal.
Submissions
57. The claimant
submitted that the major problem appeared to stem from Mr Orr’s personal
aversion to any form of render finish. His comments and reasoning were
examples of the over-prescriptive, over-detailed and subjective approach
that a planning authority is required to avoid in policy-making and
development control. The fact that he personally favoured a curtain
walling solution could not carry any weight in relation to the claimant’s
proposals. The alternative designs that the claimant put forward at the
Tribunal’s request were an indication of what might happen in any
negotiation process that would occur in the real world, and it was
reasonable to assume that the prospective developer and the local planning
authority would be able to reach a mutually acceptable accommodation on
the issue.
58. The reference to
the B&W scheme was, it was submitted, irrelevant as the proposed use
of the original tower, that was to be re-clad with a glazed curtain
walling system, was to be used as a hotel. The appropriateness of finishes
was dependent upon the use to which any building was to be put, and it was
pertinent to note that the residential elements of the B&W scheme,
themselves falling within the category of tall buildings for planning
purposes, made extensive use of coloured render.
59. The acquiring
authority submitted that the key consideration was whether the claimant’s
proposed cladding system would create the desired level of architectural
excellence, and it was their case that it would not. The use of a render
finish would only serve to emphasise the mass and height of an already
very tall and high-profile building. It was questionable whether the
suggested colour graduation of the two-dimensional finish would achieve
the object of lightening the top of the building, or whether it could work
in practice, there being a risk that abrupt rather than gradual changes in
colour would be apparent. The glass curtain walling system that had been
used in the B&W tower was an example of where the previous visual
impact had been reduced from the base to the top, to give the impression
of it “dissolving into the sky”. Whilst the council would not have imposed
such a system on the claimant if an application had been made, it was
reasonable to assume that a similar finish would have been
acceptable.
Conclusions
60. It is clear that
the nature of the re-cladding was not a specific issue at the time the
acquiring authority produced its amended reply to the amended statement of
case. The issue was only touched upon briefly in Mr Napier’s main report,
and not at all in his rebuttal. He expanded upon the nature and visual
effect of the proposed cladding in examination in chief and
cross-examination, and produced the images that had only been passed to Mr
Orr two weeks previously. In the light of the late production of this
evidence we think it is understandable that Mr Orr changed his mind over
the effects that these undoubtedly cost-driven proposals would have upon
an application for planning consent. At our request
Mr |
||
|
|
||
|
22 |
||
|
|
||
|
|
||
|
Napier handed in some further CGI
drawings, showing a higher glazing to render ratio, later during the
hearing. Mr Wallace (the claimant’s costs expert) said in his evidence
that increasing the glazing element to 75%, rather than 50% in the
original proposals, would only add about £350,000 to the costs. Despite
the claimant’s further attempts to come up with an acceptable solution, Mr
Orr was still not to be swayed. Whilst it was evident that he did, indeed,
seem to have a strong personal aversion to the use of render, we are not
surprised that his views, based upon the evidence that had been provided,
were expressed as strongly as they were in respect of the proposed use of
the Marmorit system on Tollgate Tower – even where the glazing percentage
was increased.
61. In order to form
a clear view as to the effect and impact that the use of Marmorit has in
the construction or refurbishment of large buildings, we inspected Ocean
Views, Portland, in the company of Mr Wallace and Mr Orr on 10 November
2008. Although, as Mr Napier had pointed out, Ocean Views has full width
projecting balconies to each floor, with glazed balustrading that tends to
break up the visual impact of the elevations to a considerable degree, the
westernmost section of the main block (facing the new Portland Marina) was
incomplete. Although the balcony structures were in place the green tinted
glazed panels had not been installed. This enabled us to draw a close
comparison with how such a finish might impact in visual terms on a tower
that would be more than twice the height even though the percentage of
glass to windows and patio doors to rendered finishes appeared less than
was stated to be the case at Tollgate Tower. We are satisfied that Mr
Orr’s concerns were well founded and that the use of through colour render
of the type proposed, even with a higher glazing ratio, would be wholly
inappropriate on the subject property. Our views were reinforced following
our site visit to Bristol. From adjacent to the site of the former
Tollgate Tower, looking northwards along Newfoundland Street towards the
M32, three very tall blocks of flats are visible in the distance. One of
these is of brick construction, but the other two (one of which is
Lansdowne House and is 17 storeys high), are rendered and colour washed.
Even though the slenderness ratio is much better, and the glazing to
render ratio is apparently less than that proposed for Tollgate, those
blocks enabled us to form a clear picture of the effect such a finish
would have on Tollgate Tower.
62. The subject
property’s location, strategically placed as it was at a major focal point
on one of the principal routes into Bristol city centre demanded, in our
judgment, materials of high quality that would help to soften its former
bleak and drab appearance, and reduce its then existing heavy and stark
visual impact. During the course of the hearing we asked the claimant if
it was able to produce details of any other development or refurbishment
schemes of similarly tall buildings where Marmorit or a similar
proprietary material had been used. No such evidence was forthcoming, and
this reinforces our views that it is not suitable for conversions of the
type proposed at Tollgate Tower. On inspecting Ocean Views, we have to say
that we both shared the concerns expressed by Mr Orr concerning the
effects of weathering and atmospheric pollution on rendered
finishes.
63. We agree that
treatment with materials of a similar nature to those used on the B&W
tower (which we also viewed) would serve to make a much more significant
statement bearing in mind its position, and would help to reduce the
impact on the adjacent conservation area. The claimant’s proposed
materials would not achieve the level of architectural excellence that the
planning policies required. We fully accept that the specific type of
finish used on the |
||
|
|
||
|
23 |
||
|
|
||
|
|
||
|
B&W tower may have been
appropriate for the particular kind of use to which it was to be put, but
in such a landmark position as Tollgate Tower occupied, a similarly
impressive standard of finish would be entirely justified. We do not agree
with the claimant’s suggestion that the council’s attitude was
prescriptive, and are satisfied that, when considering the relevant
sections of policies B5 and B6 of the Local Plan and SPD 1 in particular,
the council would be perfectly justified in insisting upon materials that
were more appropriate to a building of this size and scale. We are also of
the view that English Heritage, CABE and other consultees would be likely
to voice strong objections to the use of Marmorit.
64. It follows,
therefore, that we are satisfied that if an application had been made in
2005, the local planning authority would, in our judgment, have been fully
justified in refusing consent on the grounds of the inappropriate type and
use of cladding materials, and that the proposals did not comply with the
council’s policy requirements.
Affordable housing
65. The parties
agreed that, faced with a planning application for any of the 3 schemes in
2005, Bristol City Council would have sought, and achieved, a social
housing provision that represented approximately 30% of the total number
of residential units proposed. In the case of the baseline scheme 88 of
the 295 units would be allocated to affordable housing (29.8%), and in the
Bristol scheme affordable housing would account for 70 of the 236 units
(29.7%). The dispute, in planning terms, related solely to the tenure mix
within the affordable element. The claimant sought (in approximate terms)
70% shared ownership and 30% social rented, whereas the council took
precisely the opposite stance. The question of the price to be paid by the
Registered Social Landlord (RSL) was also in issue, and will be considered
later in this decision.
66. Mr Napier said
it was common ground that at the valuation date local planning policy on
the provision of affordable housing was encompassed in policy H9 of the
Bristol Local Plan and Policy Advice Note (PAN) 12 “Affordable Housing”.
They reflected the national planning policy guidance in Circular 6/98 and
PPG 3. On the question of tenure mix, he said that the Local Plan defined
affordable housing as “tenure neutral”, thereby allowing for a number of
options eg, dwellings for rent, shared ownership or outright purchase, and
there was no prescription in it for the assessment of percentages of
tenure mix. Similarly, PAN 12 was not prescriptive other than in respect
of the amount of affordable housing as a percentage of the total number of
dwellings proposed (to be negotiated between 10% and 30% dependent upon
the degree of local need, suitability of the site and the economics of its
provision).
67. In the “Key
Elements of PAN 12” (paragraph 12B) it is explained that local need is
established by:
(i) Local Needs
Assessment
(ii) Local Property Prices,
and
(iii) Local Supply of Affordable
Housing |
||
|
|
||
|
24 |
||
|
|
||
|
|
||
|
Section 12C states that a
“...variety of alternative types of affordable housing may be considered,
such as rented accommodation or shared ownership.” It goes on to say: “The
council will promote the option which best reflects local need as
established by the City Council’s Housing and Neighbourhood Services
Department and will further the establishment of ‘well balanced
communities’ and address the barriers to social exclusion.” It was clear
from the policies, Mr Napier said, that flexibility was the key and the
appropriate mix would be a matter for negotiation between the parties. The
percentage of social rented units to be provided, and which it was
accepted would be larger, 3 bedroomed flats, would to a great extent
depend upon the proposed configuration of the site. For instance, it would
not be appropriate for any of the social rented units to be located, as
the council had suggested, within the main tower. There were questions of
social integration (the importance of which the policies were at pains to
stress) and the service charge levels that would apply in that building.
In that regard, it was a fact that RSLs would not countenance
accommodation in high-rise properties due to likely high service charges
(see PAN 12, paragraph 12 H); the occupiers of the private sector
accommodation would have to bear higher costs – which would be
unacceptable and affect sales. By providing for 30% social rented
accommodation in the baseline scheme, as the claimant proposed, all of
that could be accommodated in the new build block adjacent to the main
tower. All of the shared ownership units would be 1 and 2 bedroom flats
occupying the lower floors of the tower. Paragraph 17.12 of PAN 12,
referring to shared ownership housing, says:
“This type of accommodation is
becoming increasingly popular in Bristol and there is significant demand
from young couples and low income workers who are unable to compete on the
open housing market.”
68. Mr Napier said that there was
no specific local housing needs assessment relating to this particular
location at the relevant time (meaning this particular part of Bristol as
against city-wide needs). The most up to date information on affordable
housing need covered by the relevant policies at the valuation date
remained, he said, the 2001 update of the Bristol Housing Needs
Affordability Model. That stated a requirement of 905 affordable housing
units per year. The 2005 research document “West of England Sub-region
Housing Need and Affordability Assessment” produced by Professor Glen
Bramley and published by Heriot-Watt University, Edinburgh, forecast 935
units for 2006. These assessments, Mr Napier said, could not be used for
calculating tenant mix. They were assessments of city-wide housing need
set within a sub-regional study and did not purport to provide the basis
for action under section 7 of PAN 12 which said, at 7.1:
“... However, the type and form
of affordable housing may be adjusted to suit the particular needs of a
locality. For example, in an area of predominantly family sized rented
accommodation it may be more appropriate to seek an element of shared
ownership or low cost market housing/or discounted market housing
available in perpetuity.”
However, Mr Napier said, this
location was not well suited to family accommodation, particularly in
respect of the tight configuration of the site and lack of nearby public
open spaces. In cross-examination, and in response to the suggestion that
Model Legal Agreement 1 annexed to PAN 12 contemplated provisions for
specifying the split between shared ownership and social rented
accommodation, Mr Napier said that reference to type was to property
rather than type of tenure. As to Professor Bramley’s report in 2005, the
splits between rented and |
||
|
|
||
|
25 |
||
|
|
||
|
|
||
|
shared ownership recommended at
Table 8.9 (showing 83/17% and the overall recommendation that 25% of net
need could be provided by shared ownership), Mr Napier stressed that this
was an overall requirement, and did not reflect specific local needs or
suitabilities. There was no policy basis for the council to insist upon
the splits that they were now arguing for. It was his view that the
claimant’s proposals fully met the policy requirements, but accepted that
the residential developments at Stenner’s Yard and Jewson’s Yard provided
social rented levels of 75% and 69% respectively. He also accepted that
there was evidence, shown in a letter regarding Tollgate House from
Sovereign Housing, an RSL, that social rented accommodation would have
been considered in the main high-rise block at Tollgate House.
Nevertheless, the integration problems and questions of service charges
would militate against it.
69. Mr Hewetson is a
chartered surveyor, and is national valuation partner with Matthews and
Goodman, Property Advisors, based in their London SW1 office. Although he
dealt primarily with valuation issues, he said that, as far as the
planning arguments for tenure mix in respect of the affordable housing
were concerned, it would be undesirable, in terms of integration, to mix
social rented and private market units within the same development. That
would have to occur in the Bristol scheme, whatever the eventually agreed
mix, and may even require social rented and shared ownership to be
intermingled at least on one floor, according, he said, to the council’s
suggestions. However, no integration issues would arise where shared
ownership and private market units alone shared the same block, as in the
baseline scheme. No developer, he said, would willingly consent to a
scheme where there was such a high proportion of social rented units that
they effectively spilled over from the separate new-build block into the
main tower. Strenuous efforts would be made to agree either an off-site
provision, a commuted payment or, indeed, a reduced percentage of social
rented units.
70. Mr Orr said that
in general terms, bearing in mind the location of the property in the
Lawrence Hill Ward and adjacent to the St Pauls area of Bristol, the
council would have been, at the valuation date, keen to promote an
increase in the provision of affordable family dwellings. It was a
fundamental tenet of the council’s housing policy to create more family
units, and to discourage the provision of single person accommodation in
the area. In the council’s view, the predominance of smaller 1 and 2
bedroom units, often occupied by single people, served to exacerbate the
problems of a transient population and prevent the creation of stable,
cohesive and balanced communities. These aims, he said, were reflected in
the Development Plan Policy, namely the Joint Replacement Structure Plan
Policy 33 and Alteration to the Bristol Local Plan 2003, Policy H6A.
Significant weight would be attached to these and it was likely, he said,
that the council would seek approximately 20% of all future residential
dwellings to have at least 3 bedrooms. Family units are more applicable to
social rented housing, and bearing in mind the citywide demand it would be
reasonable to expect the council to insist upon a much higher proportion
of social rented to shared ownership.
71. However, the
parties had agreed to a 30% affordable housing provision on the proposed
development, together with the mixes of 1, 2 and 3 bedroom flats to be
incorporated within it, and it was accepted that that provision satisfied
the provisions of policy H9 and PAN 12, in those terms. It was also
accepted that the policies were not prescriptive in terms of adjusting the
balance between tenures of house/dwelling types, and that there was an
absence of a precise neighbourhood housing needs and aspirations survey
for this particular location. In this |
||
|
|
||
|
26 |
||
|
|
||
|
|
||
|
regard, Mr Orr said that the
council would have relied heavily upon the citywide housing needs
identified in the West of England Affordable Housing Needs Assessment
published in 2005 (the assessment), which Professor Bramley had updated
from the 2001 Bristol assessment. Since the 2005 assessment was published,
escalating property prices in Bristol had made affordable housing demand
even more acute, and Mr Orr said he would have expected the council to
negotiate the appropriate mix in accordance with the overall citywide
needs that it demonstrated. In his view policy H6A encompassed both the
percentage of affordable housing and the tenure mix aspects, and it could
have been anticipated that the council would seek through negotiation to
provide a mix that reflected the city’s social and housing needs –
demonstrated as 77% social rented and 23% shared equity. The evidence from
the s.106 agreements that were completed on similar developments (which
often left final agreement on tenure, percentages and mix to be the
subject of later written approval), showed those levels being achieved.
For instance, the s.106 Agreement relating to the Linden Homes scheme at
Jewson’s Yard had finally negotiated percentages of 69% social rented, and
31% shared equity, the Barratt scheme at Stenner’s Yard, Bedminster
achieved a ratio of 3:1 social rented vs shared equity, and Linden Homes
at Radnor Road, Bishopston provided 60% social rented, and 40% shared
equity.
72. In
cross-examination, Mr Orr insisted that Professor Bramley’s 2005
assessment was a document upon which the council could, and would, have
relied in assessing the appropriate split between social rented and shared
equity. It was described in the introduction as: “a form of ‘local housing
needs study’ such as many local authorities undertake at regular intervals
to support ...Local Plan policies...for affordable housing.” He did not
accept that this study was quite different from that described in PAN 12,
an example of which was the David Couttie Associates St Pauls Housing
Needs and Aspirations Survey. Following the Bramley assessment, he said,
the council had been negotiating s.106 agreements to secure 3 bedroom
rented housing to address specific needs that had been identified within
it. However, he accepted that there was no comparable survey or assessment
for the area in which Tollgate Tower was located, and acknowledged that
such an approach would not have been possible in the absence of a precise
local housing needs survey. Nevertheless, Mr Orr did not accept the
suggestion that the claimant, in its tenure mix proposals, would be
contributing up to two-thirds of the net social rented requirement for
Bristol City as a whole, and at precisely the sizes required, by
incorporating 20, 3 bedroom units in the new-build block. He said that, if
that were the case, there was no need for such a large percentage of
shared equity units.
Submissions
73. The claimant
submitted that the provision of social rented units within a separate,
newly built, block and shared ownership units in the tower would enable
successful integration and avoid any risk to affordability on account of
prevailing service charge levels. Having to provide such a high percentage
of social housing units that some of them needed to be accommodated in the
main tower would create major problems. It was a fact that neither
paragraphs 7.1 or 7.2 of PAN 12 suggested that the council would adopt a
prescriptive approach to the precise mix of tenures within any particular
development scheme. Its purport was to base requirements on local housing
needs assessments, but the document upon which Mr Orr had relied
(Professor Bramley’s 2005 study) was not such a document. At most, it
provided an assessment of citywide needs set within a sub-regional study;
paragraph 8.7 and |
||
|
|
||
|
27 |
||
|
|
||
|
|
||
|
table 8.9 to which Mr Orr
referred, and upon which he had based his opinions, focused upon relative
needs for different unit sizes rather than needs for different types of
tenure. Indeed, if table 8.9 were relied upon (showing a need for 29 units
of 3 bedroom accommodation in the social rented sector in Bristol Inner
East area), then the claimant was offering two thirds of that need in one
development. No evidence had been produced that could substantiate a
refusal of planning consent on the grounds that the claimant’s proposed
tenure split was unreasonable – on the contrary, both the baseline and
claim schemes had been designed to accommodate the maximum percentage of
affordable housing units in a mixture of accommodation sizes and in a
manner that would accord with local policy and secure the planning
objective of mixed and balanced communities. As to Mr Orr’s reliance upon
the tenure splits that had been negotiated by other developers within the
city, it was submitted that it was not for the Tribunal to judge the
matters that motivated such arrangements. The relevant question was not
whether the council would have sought similar arrangements on Tollgate
House, but whether a reasonable planning authority could have justified
refusing consent in the event that the applicant declined to move from his
preferred tenure split arrangements.
74. For the council,
it was submitted that whilst Policy H9 did not prescribe either any
particular quantum of affordable housing, or the expected tenure mix, it
did say that “the precise number of units would reflect demonstrable
need...” It was clear, they said, that in implementing Policy H9, section
7 of PAN 12 plainly refers to “type”, and is concerned with the split
between social rented and shared ownership housing. Similarly, in section
12C it was stated that the council will “accept that a variety of
alternative types of affordable housing may be considered, such as rented
accommodation or shared ownership”, and in that context “will promote the
option that best reflects local need.” Again, the Model Agreement included
within PAN 12 referred to (inter alia) the type of housing units
within a development and to “the agreed split (if any) between affordable
housing units available for rent and those available for shared
ownership.” The 2001 update to the Bristol Housing Needs &
Affordability Model (which was first set up by Professor Bramley) was
carried out by officers of the council and was published at the same time
as PAN 12. That showed a net citywide need for 905 affordable housing
units. This was updated to 935 units in the 2005 West of England sub
regional Study, which was clearly also a local housing needs
assessment.
75. Table 8.9 of the
2005 study was headed “Size Mix of Net Social Rented Need and Intermediate
Sector Need in 2006” and indicated a split of 82.4% to 17.6% in favour of
the former. It was on this basis, it was submitted, that Mr Orr said the
council in its negotiations with developers had sought to achieve a tenure
split of 77:23 in favour of social rented, with a minimum of 70:30. The
claimant was seeking a split of 70:30 in favour of shared equity housing,
which was precisely the opposite and it was notable, they said, that Mr
Napier had not produced any evidence showing agreements with developers
that were anything other than in line with what the council had been
seeking. Mr Baldwin (the council’s expert on residential values) had also
given examples in his evidence in chief of where social rented and private
market housing had been mixed within the same building, so the integration
argument was unsustainable. There was also the indication given to Mr
Baldwin by Sovereign Housing that they would have been interested in
purchasing 70 affordable housing units in a 70:30 split in favour of
social rented in the Tollgate House development in 2005, if they had been
offered to them. In summary, it was evident, the council said, that the
local planning authority would have had solid grounds for refusing an
application submitted on the basis of the claimant’s proposed tenure
split. |
||
|
|
||
|
28 |
||
|
|
||
|
|
||
|
Conclusions |
||
|
|
||
|
76. It seems to us
that the council, through its expert, has taken an unrealistically
inflexible stance in respect of what might have eventually been negotiated
in terms of tenure mix. The key issue, we think, is not so much immediate
local need (and it was agreed that there was no specific local needs
assessment for that particular area), but more the potential problems of
integration. We agree that in a block such as Tollgate Tower, it would be
inappropriate to have mixed social rented units with private market
housing. It was proposed that there would be three lifts serving the
residential accommodation in the tower, and one of those would be
dedicated to the first few floors, with the other two serving only the
private units. In our view that is all very well in theory, but problems
would occur when the ‘social rented’ lift broke down.
77. Then there is
the question of service charge caps that would be demanded by the RSL. It
would be unrealistic to expect the private market to ‘pick up the tab’ for
any shortfall on service charge contributions. The open market flats
(apart from the penthouse units) would, it was acknowledged, appeal to
single people and couples. It would be important in marketing terms, we
think, for budgeted service charge contributions to be competitive in
comparison with other available units within the city, and anything that
served to increase them to a level whereby they might become uncompetitive
could seriously affect affordability and thus sales.
78. Whilst, on
balance, we conclude that it would have been reasonable to expect the
council to have taken Professor Bramley’s 2005 study into account, we are
satisfied that the proposal to locate all the social rented units in a
separate new-build block thereby leaving the main tower for a mix of
private and shared equity units was a sufficiently strong argument in
favour of the tenure split percentages that were being proposed by the
claimant. Furthermore, the fact was that the claimant was offering the
full 30% affordable housing ratio that the council could demand whereas in
all of the other developments that had been referred to in the evidence,
those percentages had been agreed at, in some cases, very much lower
figures. We also take into account the fact that, on the claimant’s
baseline scheme proposal, the provision of 20, 3 bedroom units in the new
block would satisfy two thirds of the citywide requirement for social
rented family accommodation and this would, in our judgment, be a very
strong negotiating tool when it came to the question of tenure split. The
requirements of Policy H9 and PAN 12 were certainly not, in our
interpretation of them, prescriptive in terms of tenure mix and we think
that there would have been a reasonable likelihood of the local planning
authority accepting the claimant’s proposals. We also note that Mr Orr had
not consulted planning officers on this issue.
79. In any event,
although the point was not covered in any detail in the evidence, there
could well, in our view, have been the opportunity for the parties to
negotiate some form of commuted payment to reflect the ratio of shared
equity housing that was higher than the council would ideally have wished
for. It follows that we do not think that a reasonable planning authority,
acting in accordance with the relevant, non-prescriptive, policies would
have been in a position to sustain a refusal of planning consent on this
particular issue. In terms of the price to be paid by the RSL we will,
therefore, be basing our determination for the baseline scheme on the
tenure mix proposed by the claimant. |
||
|
|
||
|
29 |
||
|
|
||
|
|
||
|
80. Regarding the
Bristol scheme, Mr Hewetson in his rebuttal statement (which was produced
before the parties agreed a 30% affordable housing provision across all
three schemes) made a number of salient points, especially on the question
of integration, that militated against such a high percentage if that
scheme were adopted. However, when it comes to looking at the TCI versus
matrix arguments, whether or not we agree with him, we are now constrained
to base costings upon the 30% provision.
Planning obligations/section 106
contributions
81. Although the
contributions had been agreed between the parties under a number of
relevant heads, issues remained in terms of public realm, highways and
travel plan. Mr Orr accepted that he had not made a separate allowance for
a contribution to legible city and, in respect of the claim and baseline
schemes, had included any sum due within the public realm and highway
infrastructure payments that were required. It was agreed that the draft
Supplementary Planning Document (SPD) 4, published in January 2005, set
out the full range of s.106 contribution requirements that could be
considered applicable to any relevant development scheme in
Bristol.
82. Mr Napier said
that when it came to the section 106 contributions the final overall
figure would be a negotiated amount. Although it was possible to calculate
payments under some of the heads by way of precise mathematical formula
(these having been agreed by the parties), there were areas (including the
three that were in issue) where final sums could only be arrived at by
negotiation. Indeed, he said, even those that could be calculated were
capable of adjustment, as the inconsistency evident from s.106 Agreements
on other local developments clearly showed. The final deal would reflect,
and take into account, the significant contribution that the development
would be making to the city’s regeneration objectives in terms of bringing
a redundant office building back into beneficial use. Major planning
benefits would include the creation of an active street frontage,
improvements to the appearance of the building, the increase in vitality
to this peripheral city-centre area created by the additional residents
and the contribution to the city’s affordable housing needs. It was
thought that the council would accept these benefits as an offset to the
full s.106 requirement calculated in accordance with SPD4.
83. In any event, Mr
Napier said, as far as highways, public realm and travel plan were
concerned, he had taken on board Mr Wallace’s statement that any
contributions that might be due had been accounted for elsewhere in his
costings, and to accept Mr Orr’s proposed figures against these heads
would amount to double-counting. However, he accepted that Mr Wallace had
been unable to identify specific figures, or where they were included in
the overall costs analysis. He pointed out that Mr Orr had concluded that
the claimant’s proposals would not adversely impact upon local traffic
conditions, and therefore the proposed contribution of £50,000 in respect
of highway infrastructure was unnecessary. No evidence had been produced,
and nobody from the highways department had been called, to suggest that
any such works would be required. As to Mr Orr’s inclusion of £200,000
towards a travel plan, Mr Napier said that the location was such that it
was already well served by public transport, and a contribution of this
magnitude would also be unnecessary. If there were to be any contribution
under this head, such as for the provision of showers for cyclists in the
employment generating areas (offices), this would be subject to a planning
condition rather than contribution, and built |
||
|
|
||
|
30 |
||
|
|
||
|
|
||
|
into the construction costs.
Finally, on public realm, where Mr Orr had allowed £150,000, he pointed
out that SPD4 identified that obligations under this head would normally
be required in conjunction with development adjacent to those routes in
the Local Plan Proposals Map that related to policies CC7 (Pedestrian
Route Proposals) and CC8 (Streets for People). Tollgate House did not fall
within such an area, and therefore no contribution could be demanded. It
was also pertinent to note, he said, that there had been no explanation as
to the derivation of Mr Orr’s proposed figures.
84. Mr Napier said
that, as far as he was concerned, the figure of £1,310,709 that had been
agreed under the other heads (for the claim scheme) would be full the
amount that a developer could have expected to pay in respect of s.106
contributions, there being no justification for the additional £400,000
being sought by the acquiring authority under the 3 disputed heads. He
produced examples of other local developments where no such payments had
been specified in the relevant agreements.
85. Mr Orr said that
there was no good reason to assume that the local planning authority would
accept a lower s.106 contribution figure than that which he had proposed,
and if the claimant failed to agree, that would be ample justification for
a refusal of planning consent. SPD 4 provided guidance on the thresholds
where applicable, the formulae used to calculate the appropriate level of
obligations, and the range of topics to be considered. Where specific
obligations for on-site facilities were impractical or undesirable, the
council would seek financial contributions towards providing facilities at
appropriate alternative locations. Contributions, he said, were negotiated
on a site-by-site basis, different types of obligations may be prioritised
depending upon the particular development, and a balanced judgement would
be made that reflected (a) the need for the contribution in relation to
the development and its impact, (b) the site’s specific characteristics,
needs and constraints and (c) the overall economic viability of the
proposed scheme. He said it was agreed that the last point was not in
issue.
86. Commenting upon
Mr Napier’s reliance on the s.106 agreements drawn up in respect of other
city-centre developments, Mr Orr said that not only were the summaries
that he had provided incomplete and therefore misleading, but only one
(the Bristol Brewery scheme), was negotiated after the publication of the
draft SPD4. He produced corrected schedules. Although he had considered
the s.106 agreements applicable to these other schemes himself, he
accepted that circumstances differ, and that in producing his own
assessments of the appropriate sums on the 3 disputed heads he had “taken
a view”. In his opinion the figures, whilst not scientifically produced,
were “reasonable”, and £400,000 for the 3 heads in issue was the
appropriate sum. Mr Orr said that the council would be bound to insist
upon the full contribution calculated under each head, and there was no
justification, as Mr Napier had suggested, for allowing any form of
“discount.”
87. In respect of
travel plan initiatives, Mr Orr acknowledged that they were mainly
connected with commercial developments (which this was, in part), but the
‘trigger for obligation’ set out in section (v) of SPD4 stated that
“...major residential developments may also be required to enter into
obligations...”. Contributions to public transport and provision of public
cycle routes and walkways could be anticipated, especially bearing in mind
the number of residential occupiers that there would be and, even though
the subject property was close to |
||
|
|
||
|
31 |
||
|
|
||
|
|
||
|
the town centre, some
improvements to access would be required. His assessment of a contribution
of £200,000 against this head was, he said, based upon other developments
and was no more scientific than that. In cross-examination, he accepted
that the ball would be in the council’s court to justify any amount
sought, and that it would need to demonstrate that there was an actual
need.
88. The highway
infrastructure requirement would be triggered under SPD4 (vii) where
“there is a requirement to improve existing or construct new highway
infrastructure in order to access the development in a safe and accessible
manner.” On a development of this size that included offices, leisure
facilities and a considerable residential element, Mr Orr said, the
traffic profile would be changed (from what it was previously) and it
could be anticipated that off-site works, such as re-aligning footways and
re-phasing local traffic lights would be needed. He estimated a
contribution of £50,000 in this regard. On public realm, although he had
allowed £150,000 in respect of the baseline scheme, Mr Orr accepted in
cross-examination that the Tollgate House site did not fall within an area
covered by SPD4 (x), and that a case would need to be made by the council
to justify an exception.
Conclusions
89. Dealing firstly
with public realm, it is clear that the subject property was not located
adjacent to routes as defined in policies CC7 and CC8, and there was no
evidence given to support a conclusion that the council might be able to
make an exception, even if this provision allowed for such to be made
(which in our view it does not). In the section of SPD4 (x) that covers
the triggers for the obligation, it says: “The determining factor is
location and those development proposals adjacent to a CC7 or CC8 route
will be expected to provide the appropriate section of the route and
dedicate it as an area of Public Realm.” Nowhere is it mentioned that
developments outside the specified area would be expected to contribute,
and we therefore conclude that a demand for £150,000 under this head could
not be substantiated.
90. As to a travel
plan, we prefer Mr Napier’s evidence in this regard. Bearing in mind the
location of the subject property so close to the city-centre, and the fact
that the provision is aimed at commercial rather than residential
development (of which, in this case, the commercial element only comprises
a relatively small part), we consider the suggestion that £200,000 would
be demanded to be unrealistic. Nevertheless, we do think that some form of
contribution might be justified. Bearing in mind that Mr Orr admitted that
the non-formulaic parts of any s.106 contributions would be a matter for
negotiation, and his own figures were based purely on his own professional
opinion and “levels that had been agreed on other schemes” (which, of
course, all differed in material respects from what was proposed for
Tollgate House), we have formed the view that a figure of £50,000 would be
more appropriate.
91. The one area
where we think Mr Orr’s arguments were fully justified was that relating
to highways. Although the claimant argued that no off-site highway
infrastructure works would be required, we suspect that, in reality, there
would be some need and we accept Mr Orr’s evidence on this point. £50,000
does not seem to us to be an unreasonable sum. We therefore conclude that,
on top of the agreed s.106 items, a further £100,000 could have expected
to have been negotiated, and a prospective developer would realistically
have budgeted the total sum of |
||
|
|
||
|
32 |
||
|
|
||
|
|
||
|
£1,410,709 under this head – say
£1,410,000 for the baseline scheme. Similarly, £100,000 will need to be
added to the agreed section 106 costs for the Bristol scheme (£1,026,707)
giving £1,126,707 – say £1,126,000.
Development Costs
Preamble
92. It was common
ground that the appropriate basis of valuation in this instance is the
residual method. In that respect, it is necessary to establish the total
development costs that the developer would expect to incur in undertaking
his favoured development project. This sum, when deducted from the
anticipated sales revenue and allowing for the desired profit return,
leaves a balance, which is the amount the purchaser can afford to pay for
the land. As a result of the failure, over a substantial period of time,
to reach agreement on the costs that would be incurred by a developer in
completing either of its proposed schemes, the parties had gone to
considerable (and, we suspect, very costly) lengths to “prove” their
figures and assessments. Additional advice and comprehensive reports had
been obtained on both sides. Examples are the Davis Langdon costs schedule
for the council, and Mr Wallace’s own costing exercise accomplished
through an extensive, time consuming and detailed trawl through Comer
Group’s invoices relating to earlier projects, and the reports from
Collado Collins and Dr Smith on building height for the
claimant.
93. As we said on a
number of occasions during the hearing, and explained in paragraphs 45-47
above, a prospective purchaser would not have had the time, budget or
inclination to go into that much detail. A prudent developer would, in our
view, (and as the council said in closing submissions) “take a relatively
cautious and broad-brush approach to costs in order to avoid a serious
underestimate.” He would, we think (as propounded by the claimant) rely
heavily upon known costs incurred under relevant and straightforward heads
in other similar and recent development projects, adjusted to reflect
inflation over time, so long as that historical information was in readily
accessible and understandable form. These would be tested by reference to
published price books such as Spons, and the BCIS indices, the more so in
complex areas of construction and those where past costs history is not of
assistance. In any specialist or unusual areas of construction (such as
the underground car parking in the baseline and claim schemes), he would
be likely to obtain budget costings from specialist contractors, or
specific quotations. In arriving at his conclusions on costs, the
prospective purchaser would undoubtedly be mindful of the fact that that
he was in a competitive bidding situation, and that, normally, it is the
highest price offered that secures the purchase. In adopting and applying
figures to each of the cost heads used in the traditional valuation model,
therefore, he would need to be sure that the right balance was struck to
ensure that neither did he overestimate, and thus potentially lose out to
a higher bidder, or seriously underestimate and risk compromising his
required profit.
94. It is against
this background that we deal with each of the subject heads remaining in
issue and make no apology, therefore, for not documenting every piece of
evidence that was before us, especially in respect of items where the
differences were small. Inevitably, in some areas, we have had to “take a
view” on the conflicting evidence that was before us, as we think a
developer would do when faced with alternative costs. Having said all
that, we do |
||
|
|
||
|
33 |
||
|
|
||
|
|
||
|
acknowledge the points made in
the acquiring authority’s submissions. They said that the reason their
experts were “driven” to produce the level of detail that they did was
because in their view the claimant’s expert had seriously underestimated
the complexity of the project and thus its cost, particularly in respect
of the underground car park, M&E and procurement costs. He had also,
they said, used an approach that no prudent developer would take and for
these reasons, it was important to prove the point, because otherwise,
effectively, the landowning vendor would be handed many millions of pounds
to which he was not realistically entitled. The underestimate, they said,
was so great that the costs that would actually be incurred would eat up
the proposed contingencies ten times over.
Cost estimates – valuation date or commencement of
development
95. Before turning
to specific costs, it is necessary to establish the appropriate date upon
which they should be assessed. It was the claimant’s case that they should
be those applying at the valuation date, September 2005, and it was
submitted that not only was it inappropriate to forecast possible
increases in costs, but even the acquiring authority’s own valuer had
assessed costs relating to preliminaries without reflecting the passage of
time. The acquiring authority’s costs expert had assessed them some 9
months later, June 2006, which was the date by which it was anticipated
that construction would actually commence.
96. Mr Wallace is
managing director of Kingfisher Associates (Consultancy) Ltd of
Teignmouth, Devon, a practice specialising in the provision of expert
witness and dispute management services, principally to the construction
and engineering industries. His particular expertise relates to the
preparation and forensic analysis of cost plans, both pre and post
contract, in connection with inter-party disputes. He said that whilst
having no previous involvement with the claimant company, he had acted,
and continued to act, as a consultant to Opecprime Ltd, one of the other
companies within the Comer Group. He said that in his build up of costs he
had, where information was available and it was appropriate to do so,
considered actual out-turn costs from other developments within the Comer
Group (from which such things as unit costs for flats on a £ per sq ft
basis could be established) and adjusted them “significantly upwards” to
reflect the effluxion of time - to September 2005 - and other relevant
factors. When challenged over the use of that date, he said that the
buffer he had applied was so generous that it did not matter that the
appropriate date might be 9 months hence. As to those factors for which
such historic information was not available, and where he had used price
books or actual quotes, these were those appropriate at the valuation
date.
97. Mr Martin, the
acquiring authority’s costs expert, is a partner in Drivers Jonas LLP and
is head of their technical due diligence team. He has been involved with
Bristol City Council’s Broadmead Expansion Project since July 2005
providing, as a chartered engineer and chartered surveyor specialising in
acquisition, construction and procurement matters, advice in connection
with the acquisition of Tollgate House and a number of retail properties
affected by the scheme. His instructions were to assess the claimant’s
various schemes (and the council’s alternative scheme), to review and cost
as required the detailed proposals submitted by the claimant and to
comment upon Mr Wallace’s approach. He explained that from the date of
acquisition, it could be anticipated that it would take at least 9 months
(to June 2006) before construction could commence. This would allow
sufficient time for the preparation of detailed design and construction
drawings and specifications, completion of the requisite tender
and |
||
|
|
||
|
34 |
||
|
|
||
|
|
||
|
award processes, and enabling
works such as asbestos removal, site set up and soft strip. It was
unrealistic, therefore, for costs to be assessed at the valuation date. He
gave an example in respect of the costs that Mr Wallace had estimated for
the construction of the separate office block using the BCIS index of
similar schemes. Using the Q3 2005 figures, Mr Wallace had estimated £906
per sq m (against his own estimate of £945 per sq m). Given that the
contract date would be in the region of Q2 2006, the figure would increase
(using a tender price inflation index) to £936 per sq m. Taken across the
whole project, such an exercise would inevitably lead to a serious
underestimate of costs and result in a bid price for the site
substantially higher than the its actual value.
98. As to what
material would have been available to a purchaser in September 2005, Mr
Martin said that SPONS price book for 2006 (with forecast figures) was
available at the time. Wherever possible, he said he would base his
estimates on appropriate predictions from material available in September
2005, but where it was not, he rebased the figures back from 2008 prices
in the light of actual increases that had occurred.
Conclusions
99. The answer to
this is, we think, simple. In our judgment a prospective purchaser of the
property for redevelopment, assuming (as is required for the purposes of
this exercise) that it was being sold with full planning permission in
place, would be aware that there was a considerable amount of preparatory
work to be done prior to the formal contract being awarded, and works
being commenced. The contractors invited to tender would build up their
costings and base their estimates on forecasted costs of labour and
materials at the date they expect the contract to commence. In that regard
we accept Mr Martin’s arguments, and think that Mr Wallace was wrong to
base his costings (where he did so from reference material) on figures
that were applicable at the valuation date. Wherever possible therefore,
from the evidence relating to specific costs, we have attempted to extract
and apply the figures that reflected the position as it would have been in
June (Q2) 2006 and, resulting from our findings in respect of planning,
have principally concentrated upon the baseline scheme. But we draw a
distinction between the use at the valuation date of SPONS price book for
2006 (which contained forecast costs) and Mr Martin’s rebasing of 2008
prices in the light of actual cost increases. We consider the former to be
useful evidence but we are cautious about accepting the latter
approach.
100. We are required to
assess the open market value of the subject property at the valuation date
(in this case by using the residual method). As the Law Commission stated
in its Final Report “Towards a Compulsory Purchase Code: (1) Compensation”
at paragraph 3.26:
“Market value, by implication, is
based on the knowledge which the market would have at the valuation date.
The market does not have a crystal ball. This strict market value approach
can be defended as appropriate where the object is to fix the price at
which the authority are to be taken as acquiring the land at a certain
date. Changes in circumstances after that date do not affect the vendor’s
interest, since he no longer owns the land.” |
||
|
|
||
|
35 |
||
|
|
||
|
|
||
|
This situation contrasts with
that in respect of claims for disturbance or for compensation under
section 7 of the Compulsory Purchase Act 1965 where this Tribunal has held
that hindsight may be used, following the judgment of the House of Lords
in Bwllfa and Merthyr Dare Steam Collieries Ltd v Pontypridd Waterworks
Co [1903] AC 426. This is not a case to which the principles of
Bwllfa can be applied.
101. Also, Section 5A(2) of
the Land Compensation Act 1961 states that “No adjustment is to be made to
the valuation in respect of anything which happens after the relevant
valuation date”, which in this case is 13 September 2005.
102. Mr Mould notes that
the acquiring authority criticises Mr Wallace’s adjustment to the
valuation date of costs contained in the 2009 edition of Spons when
estimating the costs of curtain wall cladding (see for instance paragraphs
162, 163 and 165 below). However, the claimant says that the acquiring
authority, through Davis Langdon, adopts a similar approach when adjusting
prices from the 2008 edition of Spons.
103. Davis Langdon explain
their approach in the cost plan appended to Mr Martin’s expert
report:
“The cost plan is based on
current [2008] rates with a deflationary adjustment to the summary of the
cost plan using actual indices to reflect rates at June 2006. At this
stage a reconciliation exercise was undertaken to establish what the
impact on the cost plan would be to have estimated in October 2005 for
rates to be applicable for works starting in June 2006, using forecast
indices available at that time. Because of the lack of cost data available
now (or being unable to market test in October 2005) we sampled a basket
of the more expensive and sensitive items. We have then used Davis Langdon
Forecast Tender Price Indices published in July 2005 to calculate the
forecast inflationary uplift to reflect a start on site in June 2006. The
cumulative effect of these percentage adjustments is a net minus 12.13% to
be applied to the cost plan and benchmark data. (See Appendix
3)”
104. Appendix 3 gives
further details of Davis Langdon’s approach. They compare the actual cost
rates at October 2005 of 28 items with the actual rates of the same items
as at February 2008. The former amount to 85.66% of the latter. This
percentage is then increased by 2.58% in line with Davis Langdon’s July
2005 forecast inflationary adjustment for construction starts in June
2006, giving a total adjustment factor of 87.87% (or minus 12.13%). This
factor is then used to adjust all other 2008 cost items to June 2006
values. We are satisfied that this form of calibration, based as it is
upon a representative sample of actual 2005 prices and their forecast
increase until June 2006, may be usefully employed without being rejected
for relying solely upon hindsight.
105. We also note that no
evidence was adduced to suggest that, on a long contract such as this, the
contractor might further adjust his initial figures to reflect continuing
anticipated price inflation for those parts of the development programmed
for later into the project. In our view, this possibility if anything
lends further support to Mr Martin’s approach, and his methodology
(subject to what we say about historic evidence), to which we now
turn. |
||
|
|
||
|
36 |
||
|
|
||
|
|
||
|
Basis of/ approach to costs
estimation |
||
|
|
||
|
106. Mr Wallace approached
the issue of costs on the premise that where a developer had experience of
the type of project that he was contemplating, his first port of call
would be to revisit actual costs incurred on past developments, making
suitable adjustments for time. He said that an experienced developer would
know what his average out-turn costs were to build or convert a flat, for
example, and what the unit costs were likely to be in terms of price per
sq ft. Similarly, historic construction costs for standard offices,
leisure facilities or, for that matter, retail units would be available to
him. He would then make adjustments to reflect any unusual factors (“value
engineering” as he described it). For any area where his past experience
was limited or non-existent (for instance, the construction of the
basement car park around the perimeter of the Tollgate Tower footprint),
he would approach a suitable contractor (such as groundwork specialists),
who would be able to give indicative prices.
107. He said that it would
be unlikely for a developer to build costs up on an elemental basis where
his historic costs were known. Price books and indices were the least
satisfactory option as they were general and unspecific, although they
could be used for reference or as a check so long as the results were
treated with suitable caution. In this instance, he thought the Comer
Group (Ridgeland’s parent company) was a good proxy for the type of
purchaser who would be in the market for Tollgate House, although in
cross-examination he did accept that it did not appear the Comer Group had
ever previously attempted a project of this complexity. Their previous
developments at Comer House, Barnet, Herts, an 8 storey former office
block, and Northampton House, Wellington Street, Northampton, a 1960s 13
storey former office block that also had a leisure complex, were the most
appropriate examples for comparison purposes. He said he had also
considered developments at Tower Point, Enfield and Maritime House,
Woolwich as cross-checks.
108. Mr Wallace said that
Opecprime had recorded all costs associated with the Northampton and Comer
House developments, but not in a summary format. He had therefore
undertaken a detailed costs analysis, over “many hundreds of hours”, by
trawling through 12 lever arch files of invoices, day books and costs
information that had been retained by the company following the completion
of those developments. The information was then incorporated into
spreadsheet schedules and mathematically analysed to give costs for
individual items on a square footage or per apartment basis. That
information, adjusted as necessary for time and location, formed the basis
for cost assessments for the relevant items in Tollgate
House.
109. The parties had, at
the request of the Tribunal, produced a Scott Schedule setting out their
respective figures under all individual heads, and Mr Wallace indicated
which basis he had used for the costs build up of each item. Where
comparison with past developments was inappropriate, or as a result of the
ongoing failure to agree figures with the acquiring authority, he had
relied upon the 2005 SPONS cost book (Q3), BCIS tables and, where
appropriate quotations or estimates (including for the underground car
park). He accepted that the exercise that had been undertaken to extract
relevant costs from past developments was time consuming and cumbersome,
and in normal circumstances he would have expected developers to have
their own business models and databases upon which they could rely. Mr
Wallace said in cross-examination that he considered it perfectly in order
to take averages on individual costs over two or more developments, even
where they were substantially different – in one
case |
||
|
|
||
|
37 |
||
|
|
||
|
|
||
|
47% apart, so long as the correct
adjustments were made to reflect the particular scheme that was being
costed. He pointed out that BCIS was based on averages, although he
acknowledged that the sample size ran into the hundreds rather than two or
three.
110. Mr Martin said that
whilst he did not disagree with the principle that it was in order to take
into account outturn costs from previous developments (and in fact, the
BCIS indices were precisely that, spread over many developments), they
would have to be comparable with the proposed project. His criticism of Mr
Wallace’s reliance on previous Comer Group projects was that they were
simply not comparable - that being evidenced particularly by the huge
divergence in costs between Northampton House and Comer House, under the
same item heads. There was also no evidence to demonstrate that Opecprime,
or any of the other related Comer Group companies had any experience of a
building with the complexities of Tollgate House. It would be preferable,
therefore, to cost the scheme as closely as possible. As a result of the
serious concerns over the claimant’s proposed costings, which were thought
to have been underestimated to a significant degree (hence the very high
residual land value), and the fact that the information in Mr Wallace’s
report was insufficient for the costing exercise required (and did not in
any event tie up with the figures used in Mr Hewetson’s residual
valuation), the acquiring authority had assembled a large team of
consultants to provide specific technical advice and to analyse the
claimant’s costs in detail. Mr Martin said that he had been appointed as
project manager to co-ordinate the team which included external
architects, structural engineers, cladding consultants, building and
environmental surveyors, other specialists as appropriate and construction
cost consultants (Davis Langdon).
111. Davis Langdon had (by
the date of the hearing) used a common measure to provide detailed
costings for each of the claimant’s final claim and baseline proposals,
and the council’s alternative Bristol Scheme. It was notable, Mr Martin
said, that Davis Langdon was one of the contributing editors to SPONS. In
building up his costs analysis for the principal components of the
schemes, he had relied upon their “detailed measure and application of
published data (SPONS and BCIS) and their own unit rates”. As to the
offices, leisure facilities and separate new build residential complex, he
said he used “benchmark rates from similar schemes and published costs
data”. He accepted that, in principle, the approach and technique he was
adopting was the same as the exercise undertaken by Mr Wallace, but
stressed that his own figures were derived from a much broader base that
was more reliable and more accurately reflected likely actual outturn
costs. He did acknowledge that the exercise that the council had been
obliged to undertake was far more detailed than that which a prospective
purchaser would have carried out, but said that it was important to prove
that the figures Mr Wallace had provided were so low as to have created a
false residual value for the land.
Conclusions
112. We refer, where
appropriate, to individual approaches taken by the experts under the
specific costs headings that remain in dispute. However, as to the general
approach, we agree that where a prospective purchaser holds readily
accessible and incontrovertible evidence of costs relating to previous
developments of a very similar nature, it is entirely reasonable to rely
upon them. If those costs reflect a particular developer’s specialism, and
the costs savings that may be achieved against other organisations as a
result, they should, of course, be taken into account. However, the
acquiring authority’s concerns were that all of Comer Group’s
previous |
||
|
|
||
|
38 |
||
|
|
||
|
|
||
|
developments were sufficiently
different (and smaller scale) to warrant extreme caution when relying upon
historic cost data. Furthermore, they said, the source of the data relied
upon by Mr Wallace in relation to Northampton House and Comer House was
potentially dangerously unreliable and, in many instances, individual
costs had not been clearly allocated to specific heads.
113. We agree. The exercise
that Mr Wallace undertook to trawl through historic invoices for the
purposes of proving that the claimant could do things much cheaper than
anyone else, left it vulnerable, in our view, to misallocation and
underestimation. No developer would, in a bid situation, undertake an
exercise of this magnitude – for a start, he would not have the time – and
we find therefore that except in some limited areas, we can attach little
weight to the analyses derived by this method. If the information upon
which Mr Wallace sought to rely had been readily available in database
form, it might have been a different matter. We agree with both experts
who held to the view that the skill is to identify the most appropriate
and reliable source of information to the specific project being costed,
and to apply adjustments for time, particular site complications and other
factors as necessary. We do not agree with Mr Wallace that SPONS/BCIS is
inappropriate. It is simply a question of degree. As we have said, the
correct approach is to consider the lengths to which a developer would
reasonably go in identifying what it would cost him to undertake the
project, building in as he would, sufficient contingencies to reflect
risks and unknowns, and this is what we have attempted to do in our
following conclusions.
Procurement
114. Mr Wallace assumed
that the hypothetical purchaser would be either the Comer Group (more
particularly its subsidiary company Opecprime) or another small, highly
entrepreneurial developer operating the same business model as the
claimant. The modus operandi of the Comer Group was to use its in-house
site management team to run the construction works and to employ sub
contractors directly. Mr Wallace said that this model offered a reliable
proxy for what would have happened at Tollgate House, citing Northampton
House and Comer House as his main comparables. The in-house team would
comprise a project manager in overall control (part time, estimated at
50%), an on-site supervisor, a quantity surveyor (part time, 60%), a
planner/health and safety surveyor (part time, 25%) and a locally
recruited trade and general foreman. There would be an in-house structural
engineer and external architects. The trade contractors would carry out
other areas of specialist design such as M&E whilst the fitting out of
the completed units was well within the experience and capacity of the
claimant or similar developer.
115. Mr Wallace said that
the claimant had not previously constructed a basement car park similar to
that proposed at Tollgate House and he recognised, given the scope of the
works required, the need to employ a specialist lump sum contractor to
undertake the car park package. Opecprime’s in-house structural engineer,
Mr Sheppard, had therefore produced some in principle designs of a
basement car park, the construction methodology of which was checked by Mr
Osborne of Matthew Consultants (part of the Walsh Group) and was then
costed by Mr Philip Little, a former Opecprime employee who was now a
freelance project manager. Mr Little was experienced in ground excavation
and structural works of this kind and was familiar with the location of
Tollgate House. Subsequently Mr Wallace obtained |
||
|
|
||
|
39 |
||
|
|
||
|
|
||
|
further (and higher) estimates
from two specialist contractors; Lancsville Construction Ltd and MPB
Structures Ltd. Mr Wallace averaged these two estimates in arriving at the
figure that he used in his evidence.
116. A major benefit of
undertaking the construction in-house was that the developer retained
flexibility and responsiveness, enabling it to value-engineer at all
levels in order to save money. The risk of specialist works, such as the
basement car park, would be passed on to sub-contractors. The alternative
of using a main contractor for all the works meant that these advantages
would be lost; in theory they were traded for certainty about costs from
the start. However, Mr Wallace said that it was difficult to achieve such
certainty in practice because of unforeseen variations and the requirement
to have a long lead in time. It was the sub-ground works where certainty
was important; the developer would require flexibility when it came to the
layout, size and fit out of the flats. It would be very difficult and
expensive to achieve this by employing a main contractor. He felt that his
procurement method would be cheaper and more appropriate.
117. Mr Mould submitted
that the acquiring authority had overstated the complexity of the claim
and baseline schemes. Mr Wallace had consistently acknowledged that the
Tollgate House proposals were not comparable to either Northampton House
or Comer House in respect of the car park element and he accepted that
this more complex construction element would be let out on a design and
build contract. There was no issue between the parties as to the
feasibility of the engineering works to construct the basement car park
and Mr Wallace’s evidence about design and methodology had been
substantially agreed. The specialist contractors approached by the
claimant did not view the proposals as presenting any particular
engineering challenge, risk or uncertainty. The acquiring authority had
not produced any technical evidence to the contrary.
118. The need for proper
liaison between the car park contractor and the other contractors on site
was acknowledged. Such management issues were normal on major construction
projects and would not present insurmountable problems. The use of a main
contractor would be unnecessarily expensive due to its failure to
distinguish between the more complex aspects of the work that required a
more cautious approach to preliminaries, fees, risk and uncertainty, and
those aspects of repetitive and straightforward work, such as fitting out,
where a lower allowance could safely be made. It was neither necessary nor
appropriate to overload the costs of the whole project by focusing upon
the complex construction elements. The acquiring authority had been over
cautious in this respect and had increased the costs unnecessarily by
insisting that a main contractor would be employed.
119. Mr Martin said that
the hypothetical purchaser would procure the Tollgate House development by
means of a main contractor arrangement and would not seek to “ring fence”
the complex engineering aspects of the project. This was a fundamental
issue because the success of the project depended upon the right method of
procurement at the outset. A developer would want to set up the project
correctly and minimise any changes that would lead to increased costs,
time overruns or non-compliance. It would go to a major contractor to
carry out the works using a pre-qualification questionnaire and having
examined the contractor’s track record. Tollgate House was a large and
complex scheme with a two storey underground car park, an existing tower
that needed to be supported and cores that had to be
extended |
||
|
|
||
|
40 |
||
|
|
||
|
|
||
|
downwards; there were two tunnels
at two levels into these cores. Freestanding offices, a health club and
residential units had to be built on top of the deck over the car park. It
was a complex and unusual engineering challenge with a straight-line cost
average that exceeded £1m per month throughout the life of the project.
The Comer Group had not demonstrated the necessary experience or expertise
to meet such a challenge.
120. A developer would be
very ill advised to let out the car park works under a separate contract.
They were integral with the scheme as a whole and overlapped in
construction phasing with other works being undertaken in the tower above.
For instance, they could not be separated from the design and execution of
the new offices and residential block which were to be constructed on the
deck; the removal of the cladding and works to the core would impinge upon
the car park area, as would the erection of cranes and scaffolding. The
coordination problems would be legion making direct procurement of the
individual works intractably difficult. Mr Martin’s experience suggested
that such a division of labour would be potentially disastrous, leading to
delays and cost overruns. The appointment of a main contractor would have
the major advantage of passing on these significant risks.
121. Mr Martin also queried
whether the comparable Comer Group schemes relied on by Mr Wallace were in
fact in-house developments. He said that only Comer House was an example
of direct in-house procurement. That was a small (50 apartments)
residential scheme involving the conversion and fitting out of a building
and the renewal of its cladding. Although it did not require major
engineering works, and despite its small size, it still took 24 months to
complete, which Mr Martin said reflected the procurement method. The other
main comparable used by Mr Wallace was Northampton House. This project was
carried out on a tendered lump sum basis by outside contractors, Finchley
Construction Management Ltd, whom Mr Wallace acknowledged had been
responsible for everything, including on site management, health and
safety and procuring individual trade packages. The project, which took 49
months to complete, involved the conversion of a 1970s office building
into 187 apartments on 11 floors together with the addition of balconies.
Re-cladding and major engineering works were not required.
122. Mr Wallace had used
two further comparables, Towerpoint, Enfield and Maritime House, Woolwich,
as cross-checks. Mr Martin said that neither of these projects could
fairly be described as having been carried out in-house. Towerpoint was
let on a similar contract to Northampton House to a contractor called
Trident Construction whilst Maritime House was let on a tendered fixed
price lump sum to GEC Construction. In both cases the involvement of
Opecprime was minimal and the contractors took responsibility for delivery
and budget. It took 6 years to complete the first phase of Towerpoint (the
conversion of an 11-storey 1970s office block into 93 apartments, the
addition of a lightweight steel structure roof extension to create
penthouses and the conversion of low level podium offices into leisure
use) at a cost of £12.6m. Maritime House was a late 1960s 8-storey office
block with an adjacent podium building. The tower was converted into 93
apartments including a roof extension providing penthouse duplex
accommodation. The existing cladding was replaced and balconies were
installed on two elevations. The project took about 40 months and cost
£9m. None of the projects cited by Mr Wallace were comparable to the size,
complexity or cost of Tollgate House and only one of them had been managed
in-house. Mr Martin also considered that the |
||
|
|
||
|
41 |
||
|
|
||
|
|
||
|
size and composition of Mr
Wallace’s proposed in-house team was inadequate for the current
project.
123. Mr King submitted that
Mr Martin’s evidence was to be preferred on this issue. He was a qualified
and experienced engineer and project manager whose business was to advise
developers and funders about proposed cost plans during the procurement
phases of large construction projects Mr Wallace’s expertise on the other
hand lay in providing short-term assistance to clients in the building
industry when they had a dispute. He was not a quantity surveyor and had
no engineering or project management qualifications. Nor had he been
involved in the procurement of any of the schemes about which he gave
evidence. Furthermore, Mr Martin had exercised independent expert
judgement in this case, unlike Mr Wallace who had been instructed to
assume that the characteristics of the hypothetical purchaser would be
those of the Comer Group. But during cross-examination Mr Wallace had
conceded that there would be other hypothetical purchasers in the market
other than the Comer Group, some of whom would adopt a main contractor
approach.
124. The claimant’s final
position on procurement, which differed from its initial view, was that
there was a meaningful distinction in risk between different parts of the
project that would have influenced the hypothetical developer in making
his bid. Mr Martin had explained why such a distinction was potentially
disastrous for the project. It was not possible to make a clear
distinction between the refit of the tower and the rest of the project as
the claimant had suggested. The size of the site was limited, there were
very significant ground works all around the tower, there was an overlap
in the building elements and the sheer complexity of the basement
construction meant that it was impossible to try and control risk
differentially by notionally separating different parts of the scheme.
Tollgate House was an order of magnitude larger in terms of cost and
complexity than anything that the claimant had undertaken in the past; it
was wholly unrealistic to assume that it would have managed it in-house
rather than let it out to a main contractor (as they had effectively done
on three of the four comparable schemes relied upon by Mr Wallace). In
this instance the facts required that the claimant would have placed
certainty above flexibility as its development priority.
Conclusions
125. Tollgate House is a
large, complex and costly redevelopment project. It is significantly
larger in scale than any of the four comparable Comer Group developments
which Mr Wallace relies upon to support his preferred method of
procurement. We are not satisfied that those comparables lend weight to an
in-house approach to the redevelopment of Tollgate House and a direct,
separate, letting of the car park construction contract. Only the
comparable at Comer House is a true in-house project, the others being, in
effect if not in name, building contracts with main contractors. The
in-house team proposed by Mr Wallace appears to us to be inadequate for
this size of project. We share Mr Martin’s view that a full time project
manager would be required together with appropriate contract management
and design coordination resources.
126. The size and layout of
the site and its relationship with the existing tower (which must be
retained, supported and its core extended downwards) would act as a major
constraint in the |
||
|
|
||
|
42 |
||
|
|
||
|
|
||
|
planning and coordination of the
redevelopment, which is correctly described, in our view, by Mr King as a
logistical minefield. We do not underestimate the benefits that the
hypothetical purchaser might gain in flexibility and responsiveness by
running the project in-house, but we consider that these are outweighed by
the need to maximise certainty for the project as a whole and to offload
the risk of a major specialised structural engineering task onto a main
contractor. The hybrid solution suggested by the claimant, whereby the
more complex basement car park works would be made the subject of a
separate contract, is only superficially attractive. We foresee that in
practice it would be extremely difficult to manage, coordinate and
integrate the development in this way, especially with the limited and, in
some instances part time, resources proposed by Mr Wallace. It is not a
procurement method that was used in the comparables which he relies
upon.
127. Mr Wallace was
instructed to assume that the hypothetical purchaser would be similar to
the claimant (in undertaking an in-house development), and started his
analysis on that assumption. However, he said that he considered it to be
a credible (although not the only) approach. Whilst we acknowledge the
considerable care and effort that Mr Wallace has put into his cost
analysis, and feel that he has tried to assist the Tribunal, we find that
Mr Martin has more relevant experience and expertise upon which to base
his judgement on this issue and that he was not constrained by any prior
assumptions about the identity of the purchaser or the procurement
method.
128. We conclude that the
baseline scheme would have been procured by means of a main contract and
we have examined the detailed costs on this basis. We do not consider the
claim scheme further in terms of its costs since we have rejected it on
planning grounds. The Bristol scheme does not involve the construction of
an underground car park but it is still a major development project being
carried out on a difficult and restricted city centre site. As Mr Mould
says in his closing submissions:
“It is also to be borne in mind
that the BCC [Bristol] scheme itself involves a significant element of
structural engineering work, including reducing and then adding back
height to the top of the tower, recladding the exterior of the tower and
constructing a multi storey car park”
Although Mr King in his closing
submissions says that the Bristol scheme would have been nothing like as
complex as the other two schemes, in our opinion it was sufficiently large
and challenging that a developer would procure its construction by means
of a main contract.
Preliminaries, demolition and enabling
works
129. Mr Wallace estimated
the cost of preliminaries for the baseline scheme (including insurance and
supervisory costs) to be £1,961,026 and the cost of site clearance and
enabling works to be £551,270 (the costs of soft stripping the existing
building and removing/disposing the existing cladding being included
within his fit out costs).
130. The figure taken for
preliminaries was £5.22 per sq ft, which was the average of the costs for
Comer House (£6.21 per sq ft) and Northampton House (£4.22 per sq ft),
adjusted for time |
||
|
|
||
|
43 |
||
|
|
||
|
|
||
|
and location. The preliminaries
for the car park were costed separately, as part of the estimates produced
by Lancsville Construction Ltd and MPB Structures Ltd. The average
allowance for car park preliminaries was £392,956 (adjusted for time and
location). Mr Wallace said that his allowance for preliminaries (excluding
those for the car park) were approximately 8.2% of the total scheme costs.
He said that this was at the bottom end of the range of 6.5 - 25% that Mr
Martin had taken from the Building Cost Information Service (BCIS). Mr
Martin had relied upon an average of an average by taking a figure of
14.5% for preliminaries, which was the median of the BCIS figures. This
figure was unrelated to the baseline scheme and Mr Wallace said that he
doubted that he would use the BCIS data, even as a check. Despite these
reservations he produced two extracts from BCIS, one of which was a large
development of 223 flats (with basement car parking) in Manchester where
the preliminaries had been 6% of cost based upon a JCT management
contract. (The other example was a small scheme of 20 flats in Glasgow
where the preliminaries were taken at 10% on a JCT 1998 standard building
form.)
131. Mr Wallace said that
Mr Martin’s figure of 14.5% excluded some additional items of preliminary
expenditure that had not been identified as such in his summary sheet. If
these were included then the figure rose to 16%, which Mr Wallace felt was
unrealistic. He said that his own figures were taken from comparable
developments undertaken by the Comer Group. They were to be preferred. He
acknowledged that the construction of the underground car park, the core
extension and pile jacking were more complex activities than had been
found at either Comer House or Northampton House, but these ground
operations were self-contained and had been separately allowed
for.
132. Mr Wallace was
criticised in cross-examination for having himself relied upon the average
of the preliminary costs at Comer House and Northampton House, which
differed by 47%. He said that his prime position was that the hypothetical
purchaser would know the average cost of these works, having undertaken
similar schemes previously. The figures differed but the nature of the
work was the same.
133. The cost of demolition
(the existing roof and the top three floors) was put at £125,000. Mr
Wallace explained that he had derived this figure from discussions and
correspondence with a Northern Ireland firm called Engineering &
Construction Projects which had done similar work for the Comer Group at
Comer House and Maritime House. Structural alterations were costed at
£126,270 and related mainly to the removal of a lift shaft that required
the removal of a wall at each floor level and filling in the hole. Mr
Wallace said that it did not involve a lot of work. The largest item of
site clearance and enabling works was in respect of asbestos removal. The
acquiring authority had commissioned an asbestos survey by Safeguard
Environmental that had revealed the prevalence of chrysotile; a material
that Mr Wallace said barely merited describing as asbestos. He argued that
much of the expenditure on this item was due to vandalism that would not
have taken place in the absence of the compulsory purchase, and estimated
the cost of asbestos removal at £300,000. The cost allowances for soft
stripping and the removal/disposal of cladding were included in the fit
out costs and had not been separately identified. Mr Wallace explained
that his analysis of the claimant’s costs records had revealed unallocated
expenditure for day labour that he had put under the heading of fit out on
the basis of a global allocation. |
||
|
|
||
|
44 |
||
|
|
||
|
|
||
|
134. Mr Mould submitted
that Mr Wallace’s figure for preliminaries was based upon actual
developments by the claimant. He had shown how an entrepreneurial
purchaser would be able to limit preliminary costs, whatever the actual
procurement route that was chosen. By contrast Mr Martin had relied upon
the median of a range of costs to be found in BCIS data. This bore no
relationship to the main contract procurement method that he advocated.
Although he had taken 14.5% for preliminaries, Mr Wallace had demonstrated
that this was actually 16%, a figure that sat very uncomfortably with the
actual figure of 7% for Mr Wallace’s comparables.
135. The estimate for
demolition was based on a quotation from an experienced engineering
company, that had worked for the claimant on several schemes but which the
acquiring authority had tried to dismiss by reference to its website
appearing to show the Comer Group as its only client and to a lack of
demolition experience. Mr Wallace had quite reasonably used this
quotation; it was relevant and, as Mr Mould described it, “galvanized the
reliability of the evidence”. It gave details of the specific cost of the
works involved and there was no reason not to use it.
136. The acquiring
authority had not produced the quotation for asbestos removal upon which
Mr Martin relied. The provenance of the acquiring authority’s evidence on
this point was unclear and Mr Wallace’s estimate, whilst not exact, was
reasonable and should be accepted, particularly in view of the relatively
benign nature of the material found on site.
137. The difference between
the parties in respect of soft stripping and the removal and disposal of
cladding was due to the fact that Mr Wallace had made a substantial
allowance for these items under the heading of fit out. Mr Martin by
contrast had made a specific total allowance of £658,586. Mr Mould noted
that Mr Wallace’s figure for fit out was higher than Mr Martin’s (by an
eventual figure of £347,498), which he submitted supported Mr Wallace’s
explanation of how he had allowed for these items.
138. Mr Martin estimated
the cost of preliminaries for the baseline scheme (including insurance and
supervisory costs) to be £4,618,090 and the cost of site clearance and
enabling works to be £1,507,674.
139. Mr Martin explained
that the acquiring authority had engaged a team of consultants to provide
specific technical advice about the proposed redevelopment of Tollgate
House. His role was that of project manager with responsibility for
directing, managing and coordinating the activities of the consultants.
The construction cost consultant was Davis Langdon LLP. They had produced
cost plans for the baseline scheme in September 2008. They allowed 14.5%
of the construction cost (including the car park) for main contractor
preliminaries, a figure that Mr Martin adopted. He supported this approach
by reference to a study of preliminary percentages undertaken by BCIS. For
the second quarter of 2006 this showed that the mean preliminary
percentage was 15.7% and the median 14.4%. There was a good sample size
(123 projects) and the percentages had been consistent over the period
2003 to 2008. Mr Martin said that he had been fairly conservative by
taking the median and that he could have taken a higher figure given the
characteristics of the site which was confined and busy with more than one
building and limited working space. There would be a need for
off-site |
||
|
|
||
|
45 |
||
|
|
||
|
|
||
|
accommodation, the movement of
the site establishment as the work proceeded, double handling and working
at height, all of which would increase the allowance for
preliminaries.
140. Mr Wallace’s figures
were exceptionally low. His comparables at Comer House and Northampton
House showed a large disparity in the allowance for preliminaries and Mr
Martin did not think that it was appropriate to average them without a
detailed analysis of the quality of the data. These were very different
projects to that at Tollgate House.
141. Mr Martin said that
the claimant’s cost of demolition (reduced from £181,185, or £5 per sq ft,
to £125,000 during the course of the hearing) was wholly unrealistic. The
demolition of the upper floors was a complex operation involving
considerable temporary works, such as crash decks and craneage for the
removal of the existing cladding panels, as well as material sorting and
concrete crushing facilities. Mr Wallace had allowed for the removal and
disposal of the cladding as part of the fit out works but taking the
cladding off Tollgate House was a very different task to stripping the
brick cladding off Comer House. The latter could be done using general
labour and the salvaged material used as hardcore. Tollgate House on the
other hand was clad in pre-cast concrete panels that needed to be released
by burning through steel fixings and then lifted off by
crane.
142. The steel reinforcing
bars then needed to be removed and disposed off. The whole operation was
more involved, more skilled and more costly.
143. The acquiring
authority allowed £263,610 for demolition and £658,586 for soft stripping
and the removal and disposal of the cladding. It costed the structural
alterations at £214,930. Its allowance of £370,548 for asbestos removal
was based upon an a survey that was carried out in November 2005 by
Safeguard Environmental Consultants Ltd and adjusted for June 2006
prices.
144. Mr King submitted that
the claimant had consistently underestimated the costs of the Tollgate
House scheme by constantly referring to the Comer Group’s other
developments, especially those at Comer House and Northampton House, and
by assuming that the Tollgate House project would be run in-house. Those
erroneous assumptions meant that Mr Wallace had made an unrealistic
assessment of the preliminaries that would be required. Those costs
covered site management and personnel, site labour and accommodation,
security, hoardings, scaffolding, craneage, site water, power and general
waste disposal. He had taken them as being 8.2% of total costs, a figure
that was at or around the lower decile of the BCIS data. It had been
derived from information that Mr Wallace had laboriously extracted from
the claimant’s opaque records about Comer House and Northampton House. But
the figures for the two projects were themselves 47% apart and neither of
them, let alone an average of the two, could be said to be representative.
Mr Wallace’s allowance was unrealistically low for a scheme of this size
and complexity. Mr Martin has chosen a figure of 14.5%, which was the
median of the BCIS data and which he explained was conservative and could
well have been higher. Mr Martin’s conclusions were backed by years of
relevant experience and were founded on the type of robust publicly
available information to which the hypothetical purchaser would have
regard. |
||
|
|
||
|
46 |
||
|
|
||
|
|
||
|
145. Little weight could be
given to Mr Wallace’s evidence about soft strip and cladding
removal/disposal costs because he had produced no separate figures in
respect of them, saying that these costs were included within fit out
costs. This was unsatisfactory because those costs were not particularised
and related to buildings whose structure did not resemble that of Tollgate
House. There was not much between the parties on the cost of asbestos
removal but Mr Martin had derived his estimate from an actual survey
undertaken at the time of demolition whereas Mr Wallace had made an ad hoc
upward adjustment of £50,000 to the figure of £250,000 that had been given
to him by Mr Lees of the Comer Group. This was no more than guesswork and
Mr Martin’s figure should be preferred.
146. Demolition costs had
been costed by Mr Martin whilst Mr Wallace relied upon a quotation from
Engineering and Construction Products, a company about which the Tribunal
had been told nothing. No evidence was produced to illustrate that
company’s experience in demolition projects and Mr King submitted that the
Tribunal should prefer Mr Martin’s evidence on the point.
Conclusions
147. Before we can compare
the parties’ allowance for preliminaries it is necessary to ensure that
they are on a consistent basis. Mr Wallace deals with preliminaries in two
ways; firstly, as a project wide cost (which we take to include
Opecprime’s supervision costs); and, secondly, as a separate car park cost
(which both Lancsville and MPB identified in their quotations). However,
he does not isolate the car park preliminaries from the other car park
costs in the agreed Scott Schedule. The total of Mr Wallace’s two figures
for preliminaries is £2,353,982, or 10% of his total construction cost
(before fees). Mr Martin produces a single figure of £4,618,090 for the
project as a whole, which is 14.5% of his total construction cost (before
fees), including the car park.
148. Mr Wallace says that
Mr Martin’s figure of 14.5% excludes a number of items in the Davis
Langdon cost plan that have been separately identified as preliminaries
and that if these are taken into account his true percentage is 16%. We
have examined the latest version of the cost plan that was submitted to us
in respect of the baseline scheme (document BCC 7) and we agree with Mr
Wallace that such separate allowances have been made. In that document we
found seven entries for preliminaries, all of which relate to mechanical,
electrical and public health installations, five of which are in respect
of internal fit out works (totalling £480,300) and two in respect of the
landlord’s central M&E installations (shell and core) (totalling
£239,700). The total allowance of £720,000 forms part of the net
construction costs to which preliminaries are then added at 14.5%. Mr
Martin therefore appears to have double counted by taking preliminaries on
preliminaries.
149. Mr Martin relies upon
the Davis Langdon cost plan, the BCIS data and his own experience. Mr
Wallace relies mainly upon the data abstracted from the claimant’s daybook
records from the Comer House and Northampton House redevelopments. He
acknowledges that he does not have direct experience of setting up such
projects. Both sources of evidence have their problems as we have
highlighted when discussing the respective approaches above. On balance we
prefer Mr Martin’s evidence. We consider that it fairly reflects the
complexity |
||
|
|
||
|
47 |
||
|
|
||
|
|
||
|
of the proposals and the main
contractor procurement method that we favour, whilst being supported by
objective, albeit generalised, data from BCIS. Mr Wallace is dependent
upon his analysis of two schemes that he says are comparable but which in
fact can be distinguished from Tollgate House. That analysis gives widely
different results for the two comparables and we are not satisfied that a
simple average of the two produces a robust result capable of use at
Tollgate House. We conclude that preliminaries should be taken at 14.5% of
the total construction cost (before fees), but avoiding the double
counting referred to above. This figure is inclusive of insurance and
supervisory costs.
150. We do not know what
figure Mr Wallace has allowed for soft stripping and the removal and
disposal of the existing cladding. These costs are embedded in the figure
for fit out costs and are not separately identified. It may be, as Mr
Mould suggests, that there is not a great deal between the parties on the
point but the acquiring authority’s approach has the benefit of being
explicit and based upon documents to which we have ready access rather
than the daybook extracts and summaries that Mr Wallace refers us to and
which he invites us to consider “in the round”. The acquiring authority’s
figure for soft stripping (including the removal of M&E services) is
found in Davis Langdon’s latest cost plan where each item of works is set
out and costed. The total is £551,000, which when adjusted to June 2006
values using Mr Martin’s assumptions (ie by reducing this figure by
12.13%) gives £484,164. We consider the costs to be reasonable and we
accept Mr Martin’s figure.
151. We find Mr Martin’s
arguments about the difference between Tollgate House and Comer House in
terms of the difficulty of removing the cladding to be persuasive. We do
not accept Mr Wallace’s suggestion that this cost can properly be
reflected as part of the general labour costs absorbed within the overall
fit out costs. He accepted during cross-examination that it might be
insufficient to allow for it in this way. We accept that the removal of
the cladding at Tollgate would require craneage. The acquiring authority
allows £160,000 for removing and disposing the cladding panels and £38,500
for removing and disposing the existing windows, glazing and curtain
walling, making a total of £198,500. When adjusted for time to June 2006
values this gives a figure of £174,422, which we accept.
152. The claimant’s figure
for structural alterations is £126,270, being in respect of works on the
shear walls, including foundation piles. The cost of infilling openings is
separately shown under superstructure works in the sum of £73,562. The
acquiring authority includes infilling works within its figure for
structural alterations, which totals £214,930. We consider a sum of
£200,000, including infilling costs, to be appropriate.
153. Mr Wallace’s allowance
of £300,000 for the removal of asbestos was not based upon the claimant’s
own survey but upon a critique of the survey and report prepared for the
acquiring authority in November 2005 by Safeguard Environmental
Consultants Ltd. That report was not submitted as evidence by either party
but Mr Wallace says that it was disclosed to him. He argues that the
acquiring authority’s allowance for this item is too high for two reasons;
firstly, because the type of asbestos found, chrysotile, was low risk and,
secondly, because the cost of removal has been increased due to the
exposure of the asbestos by vandalism which, he says, was due to the
scheme. Whilst we have not had the benefit of reading the said report we
have been given no reason why its costings did not reflect the type of
material actually found. With regard to the effects of vandalism we refer
to the statement of the President of the Tribunal, V |
||
|
|
||
|
48 |
||
|
|
||
|
|
||
|
G Wellings QC, in Gateley v
Central Lancashire New Town Development Corporation [1984] 1 EGLR 195
at 196K:
“The general rule is clear: the
risk of loss or destruction of property acquired compulsorily is on the
owner and does not pass to the acquiring authority until entry or the date
of determination of compensation (if that event precedes
entry)…
While that is the principle, an
acquiring authority is, in my view, not entitled to increase the risk
borne by the owner.” (References omitted).
There is no evidence before us
that, by their actions, the acquiring authority increased the risk of
vandalism, the existence of which is not disputed. Unlike in Gateley
the acquiring authority does not concede the point and it rests on the
simple assertion of Mr Wallace. We consider that an allowance of £350,000
is reasonable for the cost of asbestos removal.
154. Mr Wallace bases his
demolition costs on a quotation from Engineering and Construction Products
(ECP) in a letter dated 9 September 2008. It is not clear whether the
costs provided in that letter are as at the valuation date or the date of
writing. The total cost is £174,250 but Mr Wallace excludes the insurance
allowance of £50,000 which he says is included elsewhere, giving a rounded
figure of £125,000. Mr Martin’s time adjusted figure of £263,610 is based
upon Davis Langdon’s latest cost plan which in turn is taken from advice
received from the “Broadmead Development Consultant” involved with the
demolition of Tollgate House. The total costs of demolition are said to be
£1.75m of which 30% is in respect of the top two floors, giving £525,000.
Davis Langdon says that this is not supported by (unspecified) published
data and that an allowance (before time adjustment) of £300,000 is
appropriate. We have been told little about ECP other than they have acted
for the Comer Group in the past. Equally the acquiring authority has not
given any details of the consultant Davis Langdon relies upon and whose
conclusions are not accepted by them but instead require a downward
adjustment of over 40%. We consider that Mr Wallace’s figure is too low
for a building of this height and size and we allow a sum of £225,000 for
demolition.
Cost of cladding the residential
tower
155. We have rejected the
claimant’s argument that Marmorit would be a satisfactory form of cladding
for the residential tower for the reasons given in paragraphs 60 to 64
above. What remains to be determined is the most suitable type of glass
curtain walling and its cost. The difference in the cost estimate of the
parties is substantial; the claimants say the cost of a curtain walling
system for the baseline scheme would be £3,735,174 whilst the acquiring
authority says that it would be £7,268,273, a difference of over
£3.5m.
156. The parties disagreed
about the type of glass curtain walling that would be appropriate. Mr
Wallace maintained that a stick system would be used, this being a simpler
and cheaper system to the unitised system favoured by Mr Martin. Mr
Wallace said that he knew of no residential schemes where a unitised
cladding system had been used. He described it as a Rolls Royce approach
that was extremely expensive and probably at the very top end of both
price and quality. He thought that the curtain walling proposed by Mr
Martin was disproportionate |
||
|
|
||
|
49 |
||
|
|
||
|
|
||
|
to the market that the flats were
aimed at, namely first time buyers and affordable and social
housing.
157. Mr Wallace said that
he had estimated the cost of a stick curtain wall system for the baseline
scheme at £380 per sq m by using the 2009 edition of Spons and then
adjusting for time (to the valuation date) and location. The system was
described in Spons as “Stick curtain walling with double glazed units;
aluminium structural framing and spandrel rails. Standard colour powder
coated.” This represented the upper end of the cost range for such a
system and compared with the adjusted cost of an equivalent unitised
system of £605 per sq m (also at the top end of the range). Mr Wallace
also provided further extracts from Spons but apparently did not rely upon
these in the estimation of the cladding cost.
158. Mr Martin favoured a
unitised curtain walling system. He said that this was a better build
quality than the stick system. It was important in a high, exposed
residential building such as this that good quality cladding was used in
order to avoid water ingress. The unitised system would take less time to
install and would not require scaffolding, an advantage because the
basement car park works came right up to the tower. In their cost plan
Davis Langdon had taken a (2008) figure of £750 per sq m for the cost of
such a system. Mr Martin adjusted this using Davis Langdon’s adjustment
factor of minus 12.13% to give an equivalent 2006 figure of £659 per sq
m.
159. He checked this figure
by comparing it with the prices shown in the 2006 edition of Spons. He
took as his starting point a medium quality curtain walling system with a
price range of £433 to £721 per sq m and adopted a figure of £550 per sq
m. He then made an addition of £70 per sq m for high performance glass,
opening lights and fire/acoustic seals, giving a total of £620 per sq m.
He explained that this check figure was for a stick system whilst Davis
Langdon’s figure was for a unitised system. He accepted that there was
nothing in this part of his evidence (regarding the check costs) that
dealt with a unitised system or with residential, as opposed to
commercial, office or leisure buildings.
160. He criticised Mr
Wallace’s figure as being too low. He said that it did not allow for the
increased thermal insulation requirements under the Building Regulations
that were introduced in 2006 and were based on general figures for curtain
walling that were not representative of a residential tower. It was based
on a flat system with no openings, a commercial grid spacing of 1.5m
rather than a residential module of 0.9 - 1m and low quality
glass.
161. Mr Mould submitted
that the use of a unitised system was inappropriate for the conversion of
an office building to residential units and that no evidence had been
adduced of its use on residential schemes in Bristol or elsewhere. A
developer would not over specify the materials required and would act
reasonably in pursuit of his commercial objectives. He said that this was
not a scheme to produce a headquarters building for a FTSE 100 company and
the use of the highest quality cladding solution was not essential to the
success of the development. Mr Martin had chosen a unitised over a stick
system “on balance” which was an unsustainable basis for making such a
choice considering the cost consequences of doing so. Mr Orr had not
argued that any particular curtain wall system was required on planning
grounds and a prospective purchaser would choose the most economical
system. |
||
|
|
||
|
50 |
||
|
|
||
|
|
||
|
162. Mr Martin had taken
the cost of the unitised system, in 2008 values, at £750 per sq m, a
figure provided by Davis Langdon. There was nothing to support this
figure; Mr Martin believed that it was taken from Davis Langdon’s own
information and published data. Mr Mould noted that Mr Wallace’s extracts
from the 2009 edition of Spons showed that £750 per sq m was the highest
figure for any curtain walling system, being a bespoke unitised solution.
Mr Martin’s check of Davis Langdon’s figure was based on the 2006 edition
of Spons. This contained no information about the cost of curtain walling
systems used in residential developments, which supported Mr Wallace’s
view that such a cladding system was normally inappropriate for
residential buildings. Furthermore Mr Martin’s check did not compare like
with like. He had compared the adjusted mid-point cost of a stick system
with Davis Langdon’s cost of a unitised system. There was no way of
knowing whether the two systems were truly equivalent.
163. Mr King
submitted that Mr Martin’s evidence about curtain walling costs had the
benefit of being corroborated by information that was available at the
valuation date, whereas Mr Wallace’s evidence on the point was derived
solely from the 2009 edition of Spons. Mr Martin relied upon the adjusted
figure of £659 per sq m provided by Davis Langdon and had checked this
against the data in the 2006 edition of Spons in respect of a medium
quality stick system. He had made reasonable adjustments to his base
figure of £550 per sq m to allow for a range of additional items. These
brought the cost up to £620 per sq m. It was not suggested to Mr Martin
that these additions would be excluded from the design of a residential
tower such as Tollgate House.
164. Mr King said that none
of the data from the 2009 edition of Spons that Mr Wallace relied upon was
comparable to Tollgate House. It related to different geographical areas,
mixed brickwork and curtain walling schemes, old (2004) projects,
commercial rather than residential uses and did not allow for ventilation,
fire/acoustic seals or adequate thermal insulation. In short, Mr Wallace’s
evidence did not assist the Tribunal.
Conclusions
165. Mr Martin does not
convince us that a unitised curtain walling system would be a requirement
of the hypothetical purchaser. He gave no evidence of the 2006-outturn
prices for such a system in any actual residential schemes and checked the
cost figure for Davis Langdon’s unitised system against a medium quality
stick system. The decision to use a unitised form of curtain walling was
his alone and not that of the acquiring authority’s core team. The
acquiring authority’s closing submissions record this decision “on
balance” as being “likely to be preferred”. It was not a clear-cut choice.
Nor was it a planning requirement put forward by Mr Orr and, in our
opinion, would in any event have been too prescriptive in terms of
materials. We acknowledge the several advantages that a unitised system
may have with regard to its quality and ease of fitting but we conclude
that a prospective purchaser at the valuation date would have been
particularly conscious of the sensitivity of the valuation to the cost of
cladding and we consider that it would have based its bid upon a medium
quality stick system of the kind described and costed by both
experts. |
||
|
|
||
|
51 |
||
|
|
||
|
|
||
|
166. We explained above
that we are prepared to consider the adjustments applied by Davis Langdon
to convert 2008 costs into 2006 values because the method they use
calibrates the former costs against actual, specified 2005 costs and then
increases the result to reflect the expectations for future cost increases
as they existed at the valuation date. However, no such calibration exists
in Mr Wallace’s calculations. He takes the 2009 edition of Spons and
adjusts the figures it contains backwards to the valuation date by a
general index factor of 0.7 to allow for differences in time and location.
Mr Martin challenges the accuracy of that adjustment and in our opinion Mr
Wallace’s methodology depends upon the type of hindsight that we have
already said should not be used.
167. Mr Martin bases his check estimate on a system
described in Spons as:
“6 mm Clear float glass double
glazed polyester powder coated aluminium site constructed ‘stick’ medium
quality standard curtain walling system including opaque insulated
spandrel panels”
The cost range for this system is
£433 to £721 per sq m. Mr Martin adopts a figure of £550 per sq m and
adjusts it by an additional £70 per sq m to allow for high performance
glass, opening lights, vents and fire/acoustic seals, giving a total
figure of £620 per sq m. However, despite this analysis, he still adopts
Davis Langdon’s adjusted figure of £659 per sq m for a unitised
system.
168. It is not clear from
the Spons 2006 extract submitted in evidence which, if any, of the
‘extras’ listed under the previous entry for an ‘economical quality
standard curtain walling system’ are included within the cost of the
‘medium quality’ system adopted by Mr Martin. In his closing submissions
Mr King says in a footnote that Mr Martin has allowed £35 per sq m for
high performance glass, £50 per sq m for opening lights (purge
ventilation), £10 per sq m for trickle ventilation and £10 per sq m for
acoustic and fire breaks, making an additional £105 per sq m. Added to the
base figure of £550 per sq m this gives a total of £655 per sq m which Mr
King says “factored to Bristol at September 2005 came to £620 psm” Of
those figures only that for high performance glass is readily discernable
from Spons, the others either not being referred to at all (trickle
ventilation and fire/acoustic breaks) or else are dependent upon the
actual area of the opening windows (not stated in Mr Martin’s
evidence).
169. We do not understand
Mr King’s reference to factoring back to September 2005 prices. We
understood Mr Martin’s evidence to be that £620 per sq m was the cost as
at 2006 prices, in accordance with his view that a prospective purchaser
would estimate the cost as at June 2006 when undertaking a valuation in
September 2005. That is what he said in his evidence in chief. We do not
think that Mr Martin’s check estimate resulted in a figure of £655 per sq
m compared with the Davis Langdon figure of £659 per sq m as at 2006
prices. We understood his evidence to be that although his check produced
a figure of £620 per sq m in 2006 prices he nevertheless relied upon Davis
Langdon’s 2006 figure of £659 per sq m, which had been included within the
Scott Schedule placed before the Tribunal.
170. We think that Mr
Martin was reasonable in choosing a medium quality stick system and
adopting a figure of £550 per sq m, which is somewhat less than halfway
(£577) within the stated cost range. However, we are not satisfied that
the cost of the further adjustments has |
||
|
|
||
|
52 |
||
|
|
||
|
|
||
|
been adequately established by
reference to Spons or otherwise and we think, considering all of the
evidence before us, that an addition of 10%, or £55 per sq m, should be
made to the base cost to reflect the factors described by Mr Martin and
which were not challenged in principle by the claimant. We therefore take
the cost of the curtain wall cladding at £605 per sq m, or approximately
92% of the figure taken by Davis Langdon for a unitised system at the same
date.
171. There is a slight
disagreement between the parties about the area of the external walls to
be clad under the baseline scheme. It appears that Mr Wallace took 9,577
sq m whilst Mr Martin took 9,874 sq m. We have taken the average of the
two figures, namely 9,725 sq m. Applying our determined rate of £605 per
sq m to this figure gives a total cost of £5,883,625.
Car Park
172. Mr Wallace relied upon
a tender approach to assess the cost of the basement car park since he had
no comparable evidence. An engineering solution was prepared by Mr
Sheppard of Opecprime and checked by Mr Osborne of Matthew Consultants,
part of the Walsh Group, before being given to Mr Philip Little of
Interface Management Limited, who prepared projected costs and a method
statement. The total costs were estimated as £2,717,187 (£2,425,283 as at
September 2005), a figure that was updated to £3,112,213 in Mr Wallace’s
rebuttal report and rebased to the valuation date in the sum of
£2,777,650.
173. In response to
criticisms of this approach from Mr Martin, Mr Wallace subsequently
obtained competitive estimates from two contractors experienced in this
type of work, Lancsville Construction Limited and MPB Structures Limited.
These estimates were based on September 2008 and September 2005 prices
respectively. They both included preliminaries but excluded M&E
services. Mr Wallace allowed for M&E costs in two ways. Firstly, he
obtained an estimate for the ventilation of the cark park from SPA
Systems, who in turn consulted Fire Design Solutions. This (undated)
estimate was £115,000. Mr Wallace increased this by £5,000 to allow for
builders work in connection therewith (BWIC), giving a total of £120,000.
This figure was rebased to 2005 prices by reducing it by 10.75% for “time
and location”, giving an adjusted total of £107,100. Secondly, he allowed
£219,000 for lighting and emergency lighting, making an overall allowance
of £326,100 for M&E. Mr Wallace added this amount to both the
Lancsville and the MPB estimates. He adjusted Lancsville’s estimate to
September 2005 prices by reducing the total cost by 10.75%. Having made
these adjustments Mr Wallace then took the average of the Lancsville and
MPB estimates to give his finally adopted figure of £3,952,215. In
cross-examination Mr Wallace accepted that this estimate did not include
any allowance for fitting out the car park.
174. Mr Mould submitted
that Mr Wallace’s approach was clear, realistic and responsive to
criticism and new information. Mr Wallace’s approach was difficult to
fault. The acquiring authority had not challenged the competence of the
two contractors whose estimates he had ultimately relied upon, the design
solution prepared by the claimant was not significantly questioned and the
quotations obtained were full and consistent with each other, adding
confidence in their completeness and reliability. The acquiring authority
raised a number of criticisms of the quotations from MPB and Lancsville
but these were neither significant nor |
||
|
|
||
|
53 |
||
|
|
||
|
|
||
|
supported. Both these contractors
were experienced in this type of work and it was reasonable for them to
assume slightly different methodologies to those specified by the
claimant. It mattered not in practice, for instance, whether they used a
waling beam or a berm as a means of temporary support. Mr Martin had not
sought any quotation from a competent contractor based upon an agreed car
park specification but instead relied upon an estimate by Davis Langdon,
the details of which had not been provided.
175. Similarly, Mr Wallace
relied upon a competent company to provide an estimate of the cost of
ventilation. The acquiring authority had not substantiated its implicit
criticism of SPA Systems and gave no evidence to support its assertion
that their estimate was inadequate.
176. Mr Martin said that
the cost of the car park in 2008 was £7,348,400 (basement) and £241,600
(surface). These figures were supplied by Davis Langdon and were based
upon a cost plan that Mr Martin directed and managed, with input from
himself and a number of consultants. Rebasing the figures to June 2006
gave costs of £6,457,022 and £212,267 respectively, and a total of
£6,669,289 (excluding preliminaries). Davis Langdon based their estimate
upon detailed measurements and the application of both their own and
published unit rates. The results were compared with Davis Langdon’s own
and other published benchmark rates for underground car parks. (In his
final valuation Mr Owen for the acquiring authority adopts a figure of
£6,239,060 as the cost of the baseline scheme car park. The provenance of
this figure is not explained but it appears to be the average cost of each
of the 310 car parking spaces, £21,513, multiplied by 290, being the total
number of underground spaces. Mr Owen does not appear to have allowed
anything elsewhere in his valuation for the cost of the remaining 20
office/surface spaces.)
177. Mr Martin said that Mr
Wallace had revised his cost estimate following criticism of it by the
acquiring authority. However, the revised figure still did not allow for
all the relevant construction items. For instance the downstand beams
between columns, that had to take the weight of the office, leisure and
affordable housing development above, were missing. Mr Wallace had assumed
the use of sheet piles and it was necessary to provide sufficient
stiffeners at both mid-height and the top of the structure. The claimant
had not allowed for sufficient walers. Furthermore Mr Wallace had not
allowed for joint isolation between the tower and the car park, or for
breaking out rock and hard surfaces or for pile testing. Mr Martin denied
that such items were just differences of methodology and said that they
were omissions from the scheme that should be included. He said that Mr
Wallace had also failed to allow for the fitting out of the car park which
Mr Martin costed at £300,000. Finally, Mr Martin argued that the
claimant’s allowance for ventilating the car park was too small and lacked
detailed analysis. The car park was divided into three areas for the
purposes of ventilation for smoke extraction and would need twelve
penetrations through the ground floor slab and six to the lower floor
slab. He estimated that this would cost in the region of
£400,000.
178. In cross-examination
Mr Martin confirmed that he had not received independent advice about fire
systems and that he had commented on Mr Wallace’s method statement rather
than produce one of his own. He also accepted that he had not sought to
obtain quotations from firms working in this field. |
||
|
|
||
|
54 |
||
|
|
||
|
|
||
|
179. Mr King submitted that
the car park was crucial to the smooth running of the project as a whole
and as such its cost would be carefully analysed by a prospective
purchaser. Mr Martin had considered this item in the context of the
programme for the project as a whole and he had been right to consider it
in detail given the claimant’s understatement of the cost. Davis Langdon’s
costings were robust and were based upon an agreed engineering
specification and published data. The claimant on the other hand had
changed its approach when it realised it had underestimated the complexity
of the car park structure. The claimant’s revised cost was derived from
two quotations, one of which, that from MPB, was too brief to be of much
assistance. The other quotation, from Lancsville, did not appear to have
costed the specification since they had only priced the structural work.
They had omitted important elements such as fitting out costs and M&E,
the details of which Mr Martin had identified in his evidence. Mr Wallace
described Lancsville’s quotation as a “mock tender”, but they had not
allowed for risk or expressed any qualifications.
180. Mr Wallace’s
explanation that these points were merely a “difference in methodology”
did not meet Mr Martin’s criticisms. The omissions were significant. Mr
Wallace conceded that he had omitted the fitting out costs for the car
park. The allowance for “vent shafts” and “opening the slab” had contained
no useful detail and had been defended by Mr Wallace as being the type of
solution used before by the Comer Group. But that group had not previously
provided a multi-level underground car park. It was obvious that an
allowance of £115,000 for this item was inadequate and Mr Wallace could
not answer detailed questions on the point, being wholly dependent upon
the letter that he had procured from SPA Systems.
181. Mr Martin’s evidence
should be preferred because it was based on a thorough costing exercise
undertaken by Davis Langdon that was not was not criticised in
cross-examination. Mr Wallace on the other hand did not rely upon a
verifiable cost build-up but instead gave evidence that contained admitted
omissions and relied upon quotations that did not reflect the engineering
specification or the self-evident ventilation requirements. This was a
highly specialised and expensive item which Mr Martin had approached
reasonably and carefully. His evidence on the point should be accorded
substantial weight.
Conclusions
182. There is no
significant dispute between the parties about the specification for the
car park prepared by the claimant. The parties differ in how that
specification should be costed and how fitting out costs and M&E
should be allowed for. Mr Wallace decided to obtain quotations from
companies that specialise in this type of work and relied initially upon
an estimate from one of the claimant’s former employees, Mr Philip Little.
After criticism of this estimate from the acquiring authority Mr Wallace
relied instead upon the average of two subsequent quotations from
Lancsville and MPB. These quotations did not allow for either fitting out
costs or M&E costs. The former were excluded altogether but Mr Wallace
allowed £326,100 for M&E as described in paragraph 172 above. This
figure had already been adjusted for time, but Mr Wallace added it to the
quotation from Lancsville before adjusting the total amount back to the
valuation date. The result is that he has applied his discount for time
twice on the M&E estimate in relation to the Lancsville quotation.
Correcting for this error gives an average for the two quotations of
£3,969,743 adjusted to the valuation date |
||
|
|
||
|
55 |
||
|
|
||
|
|
||
|
(including preliminaries). That
is an increase of more than 63% above the claimant’s original
figure.
183. Mr Martin asked Davis
Langdon to price a cost plan. This resulted in a level of detail that the
hypothetical purchaser is unlikely to have contemplated, a fact
acknowledged by Mr Martin in cross-examination but justified by him
because of the “huge cost discrepancy in some areas” which meant that he
had to try and break down the costs due to the lack of agreement on the
main items. Mr Martin’s time adjusted estimate of £6,669,289 (excluding
preliminaries) substantially exceeds the claimant’s figure. The main
differences in those items which both parties included in their estimates
are in the cost of the three reinforced concrete basement/ground floor
slabs, the excavation of the basement and the sheet piling. The
differences in the latter two items are especially pronounced, with the
claimant’s costs being less than half those of the acquiring authority.
There are also a number of items where Mr Martin says that the acquiring
authority has omitted important structural elements, such as downstand
beams and walers, which cannot be explained by differences in engineering
methodology. Finally, Mr Martin points out that the two contractors asked
to quote did not price for either fitting out or M&E
services.
184. We think that there is
merit in asking contractors that are involved in this area of work to
submit quotes against a given specification and we prefer this approach to
that of the acquiring authority which relies upon an analysis of star
rates based upon the National Cost Database, Spons and other published
source material rather than direct, practical construction experience. The
acquiring authority did not contest the expertise of the companies
involved, although it dismissed the MPB quote as lacking detail. But we
think that the amount of information provided by the contractors is
representative of the level of detail that a prospective purchaser is
likely to have gone into when making a bid at the valuation date. We do
not believe it is realistic to suppose that a purchaser would have gone
into the precise detail contained in the cost plan priced by Davis
Langdon.
185. However, we accept Mr
Martin’s criticism of the claimant’s quotations for not having conformed
in certain respects with the specification provided and we agree that
there are missing items that should be costed and which cannot be
dismissed as differences of approach. We also agree with the acquiring
authority that there should be an adequate provision for both fitting out
costs and M&E services. Mr Wallace’s approach to the latter seems to
us to be unsatisfactory and we are not persuaded that the letter from SPA
Systems and Mr Wallace’s own analysis of lighting costs is a reasonable or
reliable basis upon which to calculate the cost of such services. A total
allowance of £326,100 is, in our opinion, wholly inadequate for a project
of this size and complexity. It is also clear that an allowance must be
made for fitting out the car park and Mr Wallace accepted that his figures
do not include this.
186. Our starting point for
the assessment of the car park cost is the average of the quotations from
Lancsville and MPB, excluding preliminaries and adjusted to 2006 prices
using the Davis Langdon adjustment factors. This gives a (rounded) figure
of £3,265,000. We then allow for the cost of downstand reinforced concrete
beams, the cost of waler support, for the breaking out of hard surfaces
and for other items referred to by Mr Martin in his evidence. Doing the
best we can with the evidence available we have taken the total 2006 cost
of such items as £570,000. The cost of fitting out is said by Mr Martin to
be approximately £300,000 |
||
|
|
||
|
56 |
||
|
|
||
|
|
||
|
(£265,000 at 2006 prices) and we
accept this figure. Finally, it is necessary to allow for the cost of
M&E services. Mr Martin said that the approximate cost of the
necessary ventilation was £400,000 and we adopt this figure, which adjusts
to £350,000 (rounded) at 2006 prices. The acquiring authority have allowed
for a sprinkler system. In its 2008 letter to the claimant SPA Systems
says that it is not necessary to provide sprinklers for any of the
apartments but it is silent about sprinklers to the car park. We think
that they should be included and we have allowed £200,000 at 2006 prices.
Davis Langdon allow over £1m for electrical installations. We have
examined the items included within this estimate and generally consider
them to be reasonable although in our opinion the level of detail exceeds
that which a prospective purchaser would adopt. We allow a total of
£750,000 for electrical installations as at 2006. We also allow a total of
£300,000 at 2006 prices in respect of a building management system, a lift
to serve the car park from the affordable housing complex and sundry
items. The total cost of the car park as at 2006 is therefore determined
in the sum of £5,700,000, excluding preliminaries.
M&E services
187. Mr Wallace estimated
the cost of M&E services to the apartments by analysing the equivalent
figures at Comer House and Northampton House and adjusting the results for
both time and location. The resultant cost per flat was similar, £15,718
at Comer House and £15,610 at Northampton House, in both cases excluding
the cost of the lifts. Mr Wallace decided to use the higher figure for
Tollgate House, which gave a total cost, when applied to the agreed figure
of 275 flats in the tower, of £4,322,390. He also submitted an elemental
M&E cost plan prepared by Consol Associates based upon Spons costs and
which he said had been undertaken “late on to support my figure”. This
gave a figure per flat of between £12,391 (affordable) and £12,937
(private). In cross-examination he acknowledged that the Consol figures
excluded M&E services to the shell and core of the building and also
statutory charges. This explained the difference of some £3,000 between
the Consol analysis and his figure. Mr Wallace explained that he did not
assume the use of centralised plant which he said would save £600,000. He
said that the M&E costs of the separate affordable housing block were
included in their build rate.
188. Mr Wallace estimated
the cost of the lifts by using the Comer Group development at Mast Quay,
Woolwich as a comparable. This was a 15-storey new build development that
provided a total of four, 8-person lifts. The total contract sum was just
over £262,000 and Mr Wallace increased this to £300,000 for the larger
baseline scheme at Tollgate House. He did not think it was necessary to
provide 13-person lifts and considered that four 8-person lifts would be
sufficient for the baseline scheme.
189. Mr Mould submitted
that Mr Wallace’s approach was robust and clearly supported by the
analysis undertaken by Consol Associates. He had put forward a convincing
rationale why Comer House and Northampton House were good comparables.
Both involved the conversion of offices to flats with the attendant
installation of residential M&E services. Mr Wallace, unlike Mr
Martin, had visited these properties and provided evidence about the
nature and standard of the units they contained. There was no reason to
suppose that those at Tollgate House would be any different. Whilst Mr
Martin had made unsubstantiated assertions about fire protection, Mr
Wallace had consulted SPA Systems and had reasonably relied upon
their |
||
|
|
||
|
57 |
||
|
|
||
|
|
||
|
advice in this respect. The
acquiring authority’s reliance upon the costings produced by Davis Langdon
was misplaced since there was no evidence to support the unit prices that
they adopted and no reason to suppose that they were reliable or
correct.
190. Mr Martin relied upon
cost estimates prepared by Davis Langdon. These totalled £7,299,976 as at
2006 prices with a further £554,460 in respect of four 13-person lifts.
The main difference between the parties was in respect of Mr Martin’s
allowance for the cost of the landlord’s M&E installations
(£2,316,429) and for statutory charges (£341,111). He said that he could
find no allowance in Mr Wallace’s figures for the latter and that he had
been unable to identify anything in Mr Wallace’s general building costs
for the former. Mr Martin was very cautious about Mr Wallace’s reliance
upon Comer House as a comparable because there was no specification for it
and it was not clear what items had been included. He said that there were
differences between Comer House and the high rise Tollgate House. Traffic
pollution was a problem on the Newfoundland Street elevation and would
require the installation of carbon filters, the fire fighter’s lift was
20m from a staircase which meant that either sprinklers or fire
ventilation would be needed (he had assumed the latter) and a back up for
the wet riser was necessary. Mr Martin disputed that the figure of £15,718
per flat adopted by Mr Wallace was adequate. There was not a sufficient
difference between that figure and the cost per flat identified by Consol
Associates to account for the landlord’s installations. For instance he
said that the claimant had not allowed for rainwater installations or
electrical mains switchgear or cabling containment.
191. Mr King submitted that
Mr Martin’s analysis fairly represented the approach that a prospective
purchaser would take, namely to use measured quantities at published
costs. This approach had not been substantively criticised by the claimant
other than in respect of Mr Martin’s assumption of centralised plant. But
Mr Wallace had not demonstrated that the comparable Comer Group
developments justified a different type of plant. Indeed those comparables
were neither similar to Tollgate House nor transparent in terms of their
detailed specification and in any event would not be available to a
prospective purchaser. For instance it was not clear whether any
pre-existing M&E services had been re-used at Comer House. The
daybooks upon which Mr Wallace relied were unhelpful on the point. Those
daybooks did not necessarily contain details of all the M&E invoices.
The cost of the statutory connections was unlikely to be included because
that cost was met directly by Opecprime rather than the sub-contractor. Mr
Martin had identified clear differences in scale and kind between Comer
House and Tollgate House. The work that Consol Associates had done
following earlier criticisms by the acquiring authority of Mr Wallace’s
analysis was not helpful. It was unclear what specification had been given
to them; they had omitted all costs associated with the shell and core
services; and they had included nothing for statutory charges. The
claimants had wrongly assumed that 8 person lifts would be sufficient. But
these costs were based upon the development at Mast Quay, each block of
which only served 79 flats. The Tollgate House lifts had more floors and
flats to serve and the development would require larger, 13 person, lifts.
Mr King concluded that Mr Martin’s evidence on the cost of lifts and
M&E services in general should be preferred. |
||
|
|
||
|
58 |
||
|
|
||
|
|
||
|
Conclusions |
||
|
|
||
|
192. We are not satisfied
that Mr Wallace’s reliance upon the Comer House M&E costs as a
comparable is justified. They lack detail, refer to a building that is
different in size and kind to the subject property and exclude statutory
charges. We prefer the acquiring authority’s approach, although we have
reservations about the use of centralised plant and the works of fire
protection. The evidence on these points does not seem to us to be
conclusive. We also note that Davis Langdon have allowed for preliminaries
at 10% on the cost of mechanical, public health and electrical
installations for all of the flats and the ground floor reception area.
This amounts to £480,300 for the flats themselves and a further £239,700
for landlord’s central (shell and core) installations, in both cases at
2008 values. For the reasons explained at paragraph 147 above we believe
that to include this would double count the allowance for preliminaries
and we therefore deduct these amounts from the acquiring authority’s costs
under this heading. This gives a revised cost, as at 2006 prices, of
£4,220,396 for the flats and £2,105,805 for the landlord’s installations,
making a total (once statutory charges of £341,111 are included) of
£6,667,312 or £24,245 per flat. This compares with the equivalent figure
for the claimant of £15,718 per flat. But that figure excludes any
allowance for statutory charges and, in our opinion, an inadequate
allowance for landlord’s installations. In the light of all the evidence
we have adopted a robust figure for M&E costs of £22,500 per flat,
including statutory charges and landlord’s installations, which gives a
total cost of £6,187,500.
193. We do not accept that
the provision of 8 person lifts will be adequate at Tollgate House as
suggested by Mr Lees, who, as the acquiring authority point out, is
neither an engineer nor a lift/M&E expert. The property at Mast Quay
is not as substantial as Tollgate House and we think the lifts should be
larger, as they were when it was an office building. We accept the
acquiring authority’s figure of £554,460 which we think is reasonable. Our
total allowance for M&E costs is therefore £6,741,960. The parties
have agreed that the cost of the M&E services for the separate block
of affordable housing is included in the build rate.
Other disputed cost items
Superstructure
194. Apart from the
cladding of the building, which we have dealt with above (and the sum of
£177,500 that we have allowed under the heading of superstructure for a
cleaning cradle and automatic doors at ground floor level), there are four
further disputed items relating to the cost of the superstructure. We deal
with each of these in turn.
195. Balconies. Mr
Wallace estimated the total cost of the balconies at £630,000 and that of
the balustrades at £169,907. Mr Martin said the cost of external balconies
was £675,017, the cost of internal balconies was £113,880 and the cost of
balustrades was £395,679, making a total difference between the parties of
£384,669.
196. Mr Wallace based his
figures upon the development at Northampton House, which he said had a
similar form of balcony construction to that proposed at Tollgate House
(although |
||
|
|
||
|
59 |
||
|
|
||
|
|
||
|
the balconies at Northampton
House were larger). His analysis of the costs at Northampton House showed
a cost per balcony of £7,135, which he increased to £7,500, the same rate
as that taken by Davis Langdon when costing the balconies for the
acquiring authority (at 2006 prices). He accepted that the agreed design
Option G meant that the balconies would be longer than originally
envisaged but they were still smaller than those at Northampton House and
Mr Mould submitted that this was a robust figure. Mr Wallace said that the
figure also allowed for the internal balconies because the method of
construction was the same as that at Northampton House and included the
newly created internal areas. The claimant allowed for the construction of
84 balconies. Mr Wallace’s estimate for the balustrade included the
terrace balustrade to floors 16 and 17 (penthouse), privacy screens and
waterproofing to the 16th floor terrace.
197. Mr Martin relied upon
estimates produced by Davis Langdon. Like the claimant they used a cost
per balcony of £7,500 but applied this to 90 flats rather than 84. Their
figure also excluded the cost of internal balconies which they estimated
separately at £113,880 using rates derived from their national cost
database and Spons. Mr Martin’s allowance for the balustrade was made up
of £115,300 for the 16th floor terrace and £335,000 for the
penthouse on what Davis Langdon described as floors 17 and 18. In both
cases the costs were developed on an elemental basis and included a paving
finish to the terrace, glazed stainless steel balustrades and dividing
walls. The cost was then adjusted to 2006 values to give a total of
£395,679. Mr King submitted that the figure of £7,500 per balcony had been
agreed by the parties before the finalisation of the preferred Option G
layout and that as a consequence the longer balconies contained in that
option would need to be taken into account. Mr Martin had done this
proportionately but Mr Wallace had made no such adjustment. Nor had he
allowed for the internal balconies which were significant additional
components of the design.
198. Conclusion. We
have found the evidence on this issue difficult to interpret. We
understand from the plans and accommodation schedules of Option G that
each of the four floors of affordable housing has a total external balcony
area of 58.7 sq m which serves six flats. The balconies are of different
size, ranging from 6.8 sq m to 12.7 sq m. The external balcony area on
each of the twelve floors of private sector housing is slightly smaller,
at 52.5 sq m which serves five flats. The range of balcony size is 6.8 sq
m to 13.8 sq m. The difference is explained by the fact that flat 6 on the
private housing floors is a three bedroom unit with two external balconies
separated by what we assume to be an internal balcony, whereas the
equivalent unit on the affordable housing floors is divided into two one
bedroom flats each with its own external balcony. In total we calculate
that there are 84 flats which have external balconies under Option G. We
assume that the figure of £7,500 that both parties have used is an average
cost per external balcony. It is not clear to us how Mr Martin has allowed
for the longer balconies under Option G. Mr King says that he has done so
proportionately but no details are given. The acquiring authority has
assumed 90 flats rather than 84, but we think that this is incorrect on
the interpretation of the evidence that we have outlined above. Using a
figure of 84 units we calculate that the cost of the external balconies is
£630,000 at 2006 prices.
199. The arrangement of
balconies has changed from the previous versions of the baseline scheme.
We have the plans that accompanied the November 2007 scheme and from these
we note that the area of the external balconies was less, and the area of
(what we assume to be) the |
||
|
|
||
|
60 |
||
|
|
||
|
|
||
|
internal balconies apparently
three times larger, than under Option G. Mr Martin has allowed separately
for internal balconies (described in the August 2008 Davis Langdon report
as “New internal area adjacent balconies 1-15 (based on Option G – 3
no.)”). It is not certain that Davis Langdon were costing the same version
of scheme G as that subsequently agreed between the parties, namely Option
G1 (formerly Option H) for the private sector housing and Option G2
(formerly Option F) for the affordable housing. Mr Wallace says that the
cost of the internal balconies is already included in the unit figure of
£7,500. Given the opaqueness of the elemental cost approach on this point,
the fact that the statement of agreed facts does not distinguish between
internal and external balconies, and the fact that there appears to be a
smaller area of internal balconies than under previous versions of the
baseline scheme, we accept Mr Wallace’s view and make no addition for
internal balconies.
200. There is a substantial
difference between the parties about the cost of what is described in the
Scott Schedule as “Terrace waterproof balustrade”. Mr Wallace does not
appear to have allowed for this item in his original report but has
subsequently included a cost of £169,907 for “Balustrades etc to
penthouses”. This comprises a total of £89,696 for the sixteenth floor,
£74,461 for the seventeenth floor and £5,750 for privacy screens. Mr
Martin, relying upon the elemental analysis provided by Davis Langdon,
allows £101,314 in respect of the terrace to the sixteenth floor and a
further £294,365 in respect of floors 17 and 18. The notes which accompany
this part of Davis Langdon’s cost schedule are wrong and appear to have
been incorrectly transposed from a previous version relating to the
November 2007 scheme. As far as we can tell, however, the cost of two
major items, the rain screen cladding and the glazed balustrade, have been
reduced since the earlier scheme was costed. Nevertheless we think that
the acquiring authority’s allowance is still too high and that it is too
reliant upon a detailed elemental cost analysis that a prospective
purchaser would be unlikely to conduct. We therefore allow £300,000 for
this item.
201. Lift cores. Mr
Wallace allowed £73,562 for infilling two of the six lift shafts. He
explained that the work involved was not great, requiring only the removal
of a wall at each floor and the infilling of the hole that was left. He
had prepared a detailed cost estimate based on the works designed by the
Walsh Group. The claimant accepted that Mr Wallace’s costs had not made a
specific allowance for the demolition of the said wall but Mr Mould
submitted that the figure proposed by the acquiring authority was not
justified. Mr Martin’s figure for structural works to the lift and stair
cores was £468,159. He explained that because these lift shafts provided
support to the surrounding building it was necessary to reinstate a
structure that would continue to fulfil this function. He had consulted
Waterman Structures who had advised him that four reinforced concrete
columns should be provided from the ground floor to level 17.
202. We accept Mr Martin’s
evidence that the works required as a result of the removal of the lifts
are not as simple as suggested by Mr Wallace and that new structural
support will be required, including additional shear walls to the central
core. (Mr Wallace allowed the sum of £126,270 in respect of shear walls
and foundations under an alternative heading; see paragraph 151 above). We
agree that this is an item that would require specialist advice and that
it is site specific. However, there are no details of the input from
Waterman Structures and, taking a robust view of the evidence, we allow
£375,000 for this item. |
||
|
|
||
|
61 |
||
|
|
||
|
|
||
|
203. Floor plate
extension. Mr Wallace provided details prepared by Walsh Associates
showing the works required to extend the floor plate of each floor 0.5m
beyond the existing column line. The acquiring authority agreed these. He
then gave a detailed analysis of how much each element of the agreed
solution would cost based upon Spons prices. Adjusting for time and
location gave a total price of £189,166. Mr Martin criticised Mr Wallace’s
figures for not reflecting the agreed design solution, in particular for
using timber formwork rather than a permanent steel plate. He costed the
agreed specification using Davis Langdon’s rate of £277pm and a total
floor length of 1974m to give a total cost of £546,800, which adjusted to
£480,473 at 2006 prices.
204. The estimate prepared
by Davis Langdon gives no details about the provenance of the cost of
£277pm and Mr Martin agreed in cross-examination that there was nothing in
evidence that threw light on its origin. We also note that the parties use
different lengths for the floor extension. In view of this lack of
information and agreement of detail, and also the fact that, unlike Mr
Martin, Mr Wallace has direct, relevant experience of steel fabrication
that he has been able to bring to bear on this item of costing, we do not
accept the acquiring authority’s figure. But we concur with Mr Martin that
Mr Wallace has not priced the agreed specification for this item and has
therefore underestimated its cost. Once again we have taken a robust view
of the evidence in the light of the likely approach that a prospective
purchaser would take to this matter and we assess the likely cost at
£350,000.
205. Suspended slab
Holorib. Mr Wallace allowed a cost of £145,563 for this item whilst Mr
Martin allowed £210,624, a difference of £65,061. The figures were not the
subject of cross-examination. It appears that Mr Wallace has taken the
cost of a “Ribdeck” type floor at £50 psm and Mr Martin, based upon
figures provided by Davis Langdon, at £75 psm. In the absence of any other
evidence we have averaged these two figures and adjusted back to 2006
prices. Using Mr Wallace’s floor area of 3107 sqm this gives a total cost
of, say, £170,000.
Fit out
206. Mr Wallace based his
internal fit out rate upon an analysis of the equivalent costs at Comer
House and Northampton House. He did not differentiate between the
penthouses, private apartments or affordable housing. He took an average
of the two properties and adjusted for time and location to give a figure
for Tollgate House of £238.02 psm. He then applied this to an overall area
of 21,046 sq m to give a total cost of fitting out of £5,009,369. However,
Mr Wallace explained that this figure also included labour costs that had
not been allocated within site clearance and enabling costs (see
paragraphs 137 and 149 above). Mr Wallace accepted that it was impossible
to tell how much had been included in the fit out figure for such labour
costs.
207. Mr Martin said that
the total fit out costs were £4,661,871, a figure that he obtained from
Davis Langdon. They had prepared the costs on an elemental basis and
included allowances for internal partitions, internal doors, wall
finishes, floor finishes and ceiling finishes. They considered the private
and affordable flats under one heading but made different allowances for
some items in respect of the penthouses and the ground floor
reception/landlord areas. |
||
|
|
||
|
62 |
||
|
|
||
|
|
||
|
208. Mr Wallace criticised
Davis Langdon’s work and said that he had specifically checked certain
elements which he considered were costed excessively, eg the cost of door
fitting. He said that Davis Langdon had used costs in the range of
£700-1400 per door which he described as a staggering sum. He produced an
appendix which demonstrated how the developer could save a million pounds
on this item alone by adopting the claimant’s door fitting rate of £160
each.
209. Conclusion. We
find it impossible to say how much, if any, of Mr Wallace’s figure
represents labour costs for stripping out the existing building. His total
fit out figure is calculated by multiplying the adjusted average cost of
fitting out Comer House and Northampton House by an area of 21,046 sq m
(an area that was apparently accepted by the acquiring authority, albeit
implicitly, when agreeing the cost of fittings and furnishings). So unless
the cost of stripping out Comer House and Northampton House is included
within the fit out costs for those buildings it seems to us that no
allowance for such labour costs has in fact been made. Mr Wallace provided
us with elemental cost summaries for the fit out costs at both Comer House
and Northampton House. There is no explicit allowance for labour costs in
the Northampton House summary. The Comer House analysis shows a cost for
“Labour for fit out of apartment and offices” of £14.74 psf, which is 61%
of Mr Wallace’s fit out cost figure for that property. There is nothing to
suggest that this includes an allowance for stripping out costs. We find
Mr Wallace’s use of these average figures, which vary greatly between the
two properties chosen, to be unreliable. Nor do they clarify the position
with respect to the costs of stripping out the existing building at
Tollgate House. We therefore place no weight upon this part of Mr
Wallace’s evidence.
210. Mr Martin’s
figures have been criticised as being excessive. But Mr Wallace’s
criticisms are based upon Davis Langdon’s cost plan for the November 2007
scheme that they prepared in June 2008 rather than Document BCC 7 which is
the cost plan for the baseline scheme that was submitted at the hearing
and which was prepared in September 2008. It is the latter cost plan upon
which Mr Martin relies. Looking at BCC 7 it is apparent that Davis Langdon
have substantially reduced the cost of the doors. The range of prices is
now £370 to £975 per door, with 70% of all the doors being at the bottom
price. The total cost of the doors is now £832,800 (before adjustment), a
reduction of approximately half from the figure upon which Mr Wallace
based his criticism of Mr Martin’s approach.
211. Although we find the
detail of Mr Wallace’s criticism to be exaggerated following the revisions
made to the fit out costs by Davis Langdon we consider that a prospective
purchaser would not undertake the extremely detailed analysis that they
have done but instead would take an informed, overall view of this cost
heading. Taking this approach we allow £4,000,000 for the cost of fitting
out works.
Offices
212. The parties have
agreed that the gross internal area of the offices is 1,712 sq m and that
it would be constructed to a category A specification. Mr Wallace said
that the construction cost of these offices would be £1,396,573 whilst Mr
Martin took a figure, based upon Davis Langdon’s analysis, of £1,617,159.
The difference is £220,586. |
||
|
|
||
|
63 |
||
|
|
||
|
|
||
|
213. Mr Wallace based his
cost upon the construction costs for new build offices calculated using
rates and prices issued by BCIS and rebased for location and to Q3 2005
values. He used four comparables and averaged their component costs,
excluding the substructure rate which he said had already been allowed for
within the basement and lower ground floor car park construction costs.
This gave an average rate of £906.40 psm from which he deducted 10% for
contractor’s overheads and profit to give an adopted rate, excluding
preliminaries, of £815.76 psm.
214. Davis Langdon followed
a similar approach and based their costs upon benchmarked rates from
comparable schemes and published cost data. They took a selection of eight
projects from BCIS data, excluding preliminaries, overheads and profit and
substructure. The resultant costs were then adjusted for location and
inflated to 2008 prices before being adjusted back to 2006 values. Taking
the average of the eight comparables gave a cost figure of £944
psm.
215. Conclusion. In
our opinion there is little in the evidence upon which we can base a
preference for either figure. The approach of the parties is the same and
the only difference is in the identity and number of the comparables
chosen, none of which are common between them. The acquiring authority
have chosen a larger sample size and have included within it two
properties that are within Bristol. The average gross area of offices
selected by the claimant is 2013 sq m and that of the acquiring authority
is 1,407 sq m, these two figures being almost exactly the same difference
from the area of the subject offices (1712 sq m). In the light of these
facts we have determined the cost of the offices by taking the average of
all twelve comparables, having first adjusted those used by Mr Wallace to
allow for 5% rather than 10% for overheads and profit and expressing them
at 2006 prices. This gives a figure of £923.97 psm which when applied to
the agreed gross internal area gives a total cost of £1,582,000
(rounded).
Leisure facility (health and fitness club)
216. The parties agreed
that the health and fitness club would be finished to a shell and core
with incoming services. The gross area was 2,480 sq m. Mr Wallace
estimated the cost of the facility to be £761,178 (£307 psm) whilst Mr
Martin said that it was £1,013,725 (£465 psm).
217. Mr Wallace submitted a
cost plan with an elemental build up. He said that the ground floor slabs
would be provided largely by either the existing structure under the
retained building or as part of the car park works. He therefore made no
allowance for any substructure construction. Mr Martin relied upon a cost
figure of £465 psm. This figure was not supported by any explanatory
evidence apart from a cost breakdown prepared (it is assumed) by Davis
Langdon in respect of the November 2007 scheme which showed a cost of
£366.08 psm as at 2006. At that time a larger leisure facility of 3,700 sq
m was proposed. Mr Martin criticised Mr Wallace for not having included an
allowance for the provision of services into the unit. However, Mr
Martin’s cost included an allowance for substructure that Mr Wallace
argued was unnecessary. |
||
|
|
||
|
64 |
||
|
|
||
|
|
||
|
218. Conclusion. We
agree with Mr Martin that an allowance for incoming services should be
made. On the other hand we accept Mr Wallace’s argument that it is not
necessary to allow for substructure works. Davis Langdon allowed £35 psm
(2006 prices) for this item in their analysis of the November 2007 scheme.
We are not satisfied that the acquiring authority’s figure of £465 psm is
supported by evidence and we do not accept it. Looking at the evidence as
a whole we consider that an appropriate build cost rate for the leisure
facility is £335 psm giving a rounded total cost of £830,000.
External works – landscaping and
paving
219. Mr Wallace initially
undertook an analysis of the costs that had been incurred at Comer House
and adjusted them for date and location. He said that due to the
configuration of the site, the landscaping requirements would be
relatively small, being concentrated around the new build residential
block, to the “lid” of the underground car park and to the roof of the
leisure complex. Following discussions with Mr Martin he undertook a
detailed costs build up from Spons, which produced a revised figure of
£162,845. He said the figures included some ‘value engineering’ as, for
instance, he had allowed for Saxon reconstituted paving slabs rather than,
as Mr Martin had done, York stone paving. The same figures were adopted
for each scheme.
220. Mr Martin approached
these costs by measuring the external work on the site (as scheduled in
the Davis Langdon costings) and adopting the Spons 2008 figures, suitably
adjusted. He said that the incoming services to the site had been included
within these costings, and was of the view that Mr Wallace’s reliance upon
the Comer House costs had been inappropriate. There was a much greater
degree of landscaping required to Tollgate House. He said that the Davis
Langdon costings were appropriate to the site, and were not, as Mr Wallace
had suggested, of too high a quality. Mr Martin’s figure, in his final
analysis, became £422,353.
Conclusions
221. A detailed analysis of
the costs build up undertaken by both parties in respect of this item
would take many more pages of text, and would, in our view, serve little
constructive purpose in the overall scheme of things. We tend to agree
that Mr Wallace’s costs may be somewhat understated, but on the other hand
we agree with him that Mr Martin’s figures seem exceptionally high. We are
mindful of the fact that, in reality, Tollgate house occupies quite a
small site, and the overall landscaping requirement will be limited.
Taking, therefore, a robust approach, we conclude that a fair figure to be
allowed would be £300,000, whichever scheme were to be
adopted.
Agreed cost items
222. The parties have
helpfully agreed a number of cost items, in respect of the baseline
scheme, which we list below: |
||
|
|
||
|
65 |
||
|
|
||
|
|
||
|
Superstructure (i) Frame:
£364,948 (ii) Roof: £125,730 (iii) Stairs: £82,615
Fittings and furnishings:
£2,205,410 Separate affordable housing block: £1,438,922
The phasing of the development
223. Mr Hewetson gave the
main evidence for the claimant on this issue. He submitted a revised
phasing programme for the baseline scheme at the hearing which assumed a
total development period of 40 months commencing at the valuation date in
September 2005. He said that there were five phases of construction. Phase
1 commenced at the valuation date. It was assumed that planning permission
had been granted and that 6 months would be required for site clearance,
pre-construction works, preliminaries (spread over the whole construction
period) and tendering. Mr Hewetson had increased this period from 3 months
in his original report, saying that he had discussed and agreed the
revision with Mr Wallace. This phase also included the construction of the
car park which would commence in March 2006 and last for 9 months. The
second phase comprised work on the superstructure which would start in
April 2006 and last 15 months. Phase 3 included the construction of the
health and fitness club, the offices and the social rented housing block.
These would be completed in the 12-month period starting in December 2006.
The health club would be open in time for the marketing of the flats and
the remaining commercial elements would be let and income producing by the
end of the development. This phase also included the fit out of the
penthouses and the flats in floors 16 down to 13. Mr Hewetson assumed a
top down approach to fitting out and sales, beginning with the penthouses
and working down the tower. It would take 3 months to fit out the
penthouses, starting in December 2006, ie before work on the
superstructure was completed, and 15 months to sell them, with marketing
commencing in October 2007. Once the penthouses were finished Mr Hewetson
assumed that it would take a month per floor to fit out the flats on
floors 16 to 13. Sales of the flats would commence during the last month
of the fitting out period and would take four months. Phase 4 included the
fitting out of the flats on the next four floors (12 to 9). This would
again last for 4 months. However, Mr Hewetson assumed that it would take 6
months to sell these flats. The final phase included the fit out of floors
8 to 5, which would start in October 2007 but would take two months per
floor rather than one and would also take 8 months to sell. Finally in
this phase, floors 4 to 1 (the affordable, shared ownership, housing)
would take 8 months to fit out, finishing in November 2008 with a sale of
the completed units one month later.
224. Mr Hewetson thought
that 6 months would be quite long enough for an experienced developer to
prepare the site and satisfy all the preconditions under the planning
permission. He explained that the increase in the time assumed to sell the
flats was due to his allowance for pre-sales in the earlier phases. The
fit out rate was then adjusted in line with the sales rate. He said that
purchasers would move into the building while fitting out work continued,
although he assumed that there would be no occupancy of flats less than
two floors above the works. He was unable to give an example of another
site where the Comer Group had sold all the flats |
||
|
|
||
|
66 |
||
|
|
||
|
|
||
|
within one month of completion.
In making his assumptions about the sales rate Mr Hewetson assumed that
there would be some regeneration of the surrounding area in the no scheme
world and that policy area CC1 would have been redeveloped alongside
Tollgate House, although he could not say how likely this was to proceed
without compulsory purchase powers.
225. Mr Wallace said that
the total project period for the baseline scheme would be 30 months.
Whilst he thought that this was possible Mr Hewetson said that his
programme was longer in order to match the speed of fitting out with that
of sales. Mr Hewetson said that the acquiring authority’s “bottom up”
approach was unsatisfactory because it meant that construction works were
scheduled as a single phase with a 12-month void after practical
completion to finalise sales. The developer was thereby obliged to pay
interest on the full cost of construction for up to a year through the
sales void.
226. Mr Martin said that
his approach was to adopt a two-stage tender on a design and build basis
(with some of the initial design work being carried out by consultants to
the developer). He allowed 9 months for design, preparation of tender
documents, two-stage tendering, site investigation and enabling works. The
main contract would then commence in June 2006 and run for a period of 30
months, making a total project length of 39 months. This was longer than
Mr Wallace’s estimate but in line with that of Mr Hewetson. Mr Martin
foresaw difficulties if a “top down” approach were used due to the height
of the tower and the significant other construction activity around it. He
said that occupation of one or more floors of the tower would require the
use of the central lift core for access and the wing staircases for a
means of escape. That would mean that construction access would then have
to be from external hoists and staircases. But he acknowledged that the
developer would require early access and he estimated that, with careful
programming, this might be achieved 6 to 9 months before his estimated
completion date for the construction works.
227. Mr Baldwin is a
partner in the residential department of Drivers Jonas, having joined the
practice in 1993. He became involved with Tollgate House in 2003 when he
was instructed to advise the council upon residential matters relating to
the property. His report addressed the market and demand for residential
flats in Bristol (including analyses of comparable developments) at and
around the valuation date, appropriate sizes and types of units for
inclusion within the tower, likely timescale for sales, values and
anticipated marketing costs. Mr Baldwin assumed a project length of 55
months. He agreed with Mr Martin’s estimate of 9 months for initial
design, tendering and site preparation and with his total construction
period of 39 months. He assumed that the construction and fitting out of
the car park would take 15 months during which time a number of other
works could also take place, such as the demolition of the top of the
tower and the erection of the penthouse frame, cladding removal, core
strengthening and the erection of scaffolding. Following the installation
of the new cladding and the provision of statutory services, fitting out
works would begin in month 24 and last for 15 months. During that time the
health and fitness club, ground floor car park, offices and the separate
affordable housing block would also be completed. The external works would
be finished in month 39 at which time the affordable units would be sold.
Marketing of the private flats would start in month 33 (6 months before
practical completion) and last for 21 months. He assumed a sales rate of 9
units per month based upon his research of comparables. The marketing of
the penthouses would commence a little later, at month 37 (two months
before practical completion), and would take 8 months to complete at a
rate of two per month. |
||
|
|
||
|
67 |
||
|
|
||
|
|
||
|
He assumed both the health club
and the offices would be sold in month 40. Finally, the ground rents would
be sold in month 55.
228. Mr Baldwin agreed that
he had not looked at the construction programme from the point of view of
a “top down” approach and that the acquiring authority had said nothing
about Mr Hewetson’s phasing and sales assumptions. However, he noted that
Mr Hewetson had assumed that sales would start before the substructure was
finished. Mr Baldwin thought that this was unrealistic as the most
valuable flats were being offered for sale at a time when the works were
still going on. He was not aware of other schemes where occupation had
taken place before practical completion.
229. Mr Owen said that Mr
Martin and Mr Baldwin were the principal authors of the construction
programme but that he was happy with their conclusions. He explained that
the main effect of the difference between the parties about the length of
the programme was on finance costs, which were eventually offset by the
receipt of sales income.
230. Mr Mould submitted
that, on the assumption that planning permission had already been granted
and that the developer had an incentive to act expeditiously, the adoption
of a 6-month period for preparatory works was reasonable. Mr Hewetson’s
programme was longer than that of Mr Wallace but had been prepared on the
logical assumption that there had to be a balance between the early sale
of the flats and the requirement not to inconvenience the new occupiers by
continued construction work. The construction period was therefore geared
towards the pace of sales, allowing for a buffer zone of two floors
between residents and the construction work. Mr Mould noted that the
acquiring authority did not dispute the capability of a developer to adopt
a “top down” approach and argued that the prospective purchaser would
choose this in order to maximise his return since it enabled the developer
to sell flats early. The acquiring authority’s “bottom up” approach caused
unnecessary delay before the flats could be sold. Nor did the acquiring
authority’s experts offer any opinion on the construction rate or sales
programme under the top down approach and therefore Mr Hewetson’s
programme on these points should be accepted.
231. Mr King submitted
that, given the extent of the pre-construction works, it was much more
realistic to allow 9 months rather than 6 after the valuation date before
the development could begin. There was disagreement between Mr Wallace and
Mr Hewetson about the length of the construction works. Although Mr
Hewetson had taken a longer period it was not clear which elements of
construction he had decided to extend. A critical element was the date by
which services through the core of the building were to be provided but in
his evidence Mr Hewetson did not demonstrate that his assumptions on this
point were feasible. His sales programme was also unrealistic, relying as
it did upon the erroneous assumption that the surrounding area would have
been redeveloped without compulsory purchase powers in the no scheme
world. Mr Hewetson assumed that every flat would be sold (not just that
deposits on them would have been taken) within one month of practical
completion. That was unrealistic. His assumed sales rate was adopted as a
matter of mathematical convenience rather than being founded, like Mr
Baldwin’s evidence, upon an analysis of sales actually achieved in other
developments in Bristol. The “top down” approach assumed by the claimant
meant that the most valuable units were being sold while the lower parts
of the building were still being re-clad and the area around the tower was
still a functioning building site. That too was |
||
|
|
||
|
68 |
||
|
|
||
|
|
||
|
unrealistic. The “bottom up”
approach meant that sales of the cheapest flats could begin 6 months
before practical completion and work up the building towards the most
valuable units. This was an achievable method and Mr Baldwin’s approach
should be preferred.
Conclusions
232. We reject Mr Wallace’s
construction programme of 30 months, including the preparatory works, as
being unrealistically short. Mr Hewetson does not adopt it but prefers
instead a total programme of 40 months. His programme allows 6 months for
the preparatory works, having increased it by 3 months at the hearing. We
think that this is still too short a period. There are a significant
number of preconditions to be satisfied on the planning permission,
working drawings would need to be prepared, the tender for a main
contractor completed and the enabling works undertaken. We agree with the
acquiring authority that a period of 9 months for these preparatory items
would be realistic.
233. The main difference
between the parties in respect of the programme is in their approach to
fitting out and sales. It is agreed by the parties that the developer
would want to maximise his returns and to sell the completed units as soon
as possible. On the face of it a top down method would achieve this best,
with the private flats on floors 16 to 13 being released once they are
fitted out (with a buffer of two floors being left between them and the
building works on floors below) and further floors being released as the
fit out progresses. The penthouses would not be marketed until month 26,
by which time most of the construction work will have been completed. But
we see problems with this approach. As the acquiring authority points out
the most valuable properties would be marketed at a time when either the
construction or fitting out works were continuing and, in our opinion,
this would not only create practical problems for both the occupiers and
the contractors, but would also diminish the attractiveness of the units
that were being sold. Mr Hewetson says that the fit out works will be
geared to the rate of sales. This means that, compared to the acquiring
authority’s approach, there will be an extended fit out period (24 months
compared to 15 months).
234. The main problem with
the bottom up approach adopted by the acquiring authority is that there is
little overlap between the construction/fit out phases and the marketing
of the flats and penthouses. This means that the development programme is
extended and the cost of finance is increased due to the developer having
to carry the burden of the construction costs during the whole of the
sales phase (albeit on a diminishing basis). Mr Baldwin proposes that the
sale of the private flats will not begin until month 33, which is the date
by when all shell and core services will be finished. At that time there
will still be a further 6 months of fitting out, neither the health club
nor the affordable housing block will be finished and the external works
will not have been started. By comparison, and assuming a period of 9
months for design, tendering and site set up, the claimant’s say that
sales could commence in month 24, nine months earlier than the acquiring
authority.
235. On balance we prefer
the bottom up approach. We accept the acquiring authority’s argument that
to market the private flats, and later the penthouses, while the fitting
out of half (or more) of the building remains incomplete will have adverse
consequences for both the logistics of construction and upon the rate and
price of the sales. But we consider that savings |
||
|
|
||
|
69 |
||
|
|
||
|
|
||
|
can be made on the acquiring
authority’s 55-month programme. We have carefully considered the revised
programmes submitted by Mr Hewetson and Mr Baldwin and have concluded that
the development would take 45 months to complete, including the initial
set up period of 9 months. In reaching this determination we have
concluded, inter alia, that the car park will take 12 months to construct
and fit out; the sequential process of demolishing the top of the tower,
removing the cladding, scaffolding works and installing the new cladding
will take 18 months; the installation of statutory services and services
to shell and core will take 16 months; the fit out works will take 13
months and the marketing of the private flats will commence 9 months,
rather than 6 months, before contract completion, this being within the
period specified by Mr Martin in his rebuttal report. (It should be noted
that these timesavings are not necessarily cumulative since not all of the
activities are on the same critical pathway.) We have assumed a rate of
sales for the private flats of 10 per month (19 months total sales
period), which is rather less than Mr Hewetson’s peak figure of 16 per
month (his average figure being approximately 11 per month) but slightly
higher than Mr Baldwin’s figure of 9 per month. We accept Mr Baldwin’s
sales rate of 2 penthouses per month, sales of which would not commence
until after contract completion.
Affordable housing – valuation by reference to TCI or
Bristol Matrix
236. The claimant’s case
was that, in calculating the revenue to be derived from the sale of the
affordable housing units (the numbers and sizes of which had been agreed
for each of the alternative schemes, whilst the split between shared
ownership and social rented had not), to an RSL, the developer would be
most likely to have had regard to the Housing Corporation’s Total Cost
Indicator (TCI) matrix. Mr Napier said that it was accepted that the
Housing Corporation had phased out the TCI in 2004/05, that there was no
evidence that the council was still using it at the valuation date, and
thus that there was no specific database from which to extract appropriate
figures at the valuation date. However, he said that the general
presumption at the time would have been for the council and the developer
to rely upon the
2004 figures,
applying an uplift for inflation to the relevant date, and other relevant
adjustments. Mr Hewetson said he had accepted Mr Napier’s advice that this
was the appropriate benchmark by which prices would have been negotiated
in Bristol at the time. He said that the unit sizes within the proposed
development would all fall within the TCI size bands, and it was therefore
relatively easy to assess appropriate values. Another option used by
developers, he said, would be by reference to a “rule of thumb” percentage
of market value, blended between rates for social rented (50%) and shared
ownership (70%), giving overall rates amounting to 60 – 65% of market
value.
237. Adopting the TCI for
the 68 shared ownership units located in the tower (in the baseline
scheme), he took the 2004 base figures and applied an uplift of 9% to take
them to September
2005 values. He then applied
a multiplier of 1.102, being a premium to reflect specific benefits such
as “off the shelf new build” and new lifts. From that, he deducted a 12%
on-cost to cover the acquisition related cost items referred to in the TCI
statement. The resulting overall figure was £7,296,972 which represented
54.86% of open market value for those units. As to the 20, 3 bedroom
social rented units proposed to be constructed in a brand new block, he
again uplifted the base figures by 9%, but applied a multiplier of 1.07
and an on-cost of 8% to give a total of £3,250,800. The agreed overall
area for the new build social rented units was 20,400 sq ft and, having
agreed the open market value of all the flats with Mr Baldwin (the
acquiring |
||
|
|
||
|
70 |
||
|
|
||
|
|
||
|
authority’s residential valuation
expert) during the hearing, based upon the “benchmark seventh floor” in
the tower at £310 per sq ft, the breakdown of the adjusted TCI figure
became £159.35 per sq ft, which was just over the 50% of the OMV
benchmark. The overall figure to be paid by an RSL would therefore have
been £10,547,772.
238. Mr Hewetson said that,
with the overall figure coming in at less than 55% of the open market
value, his calculations could be seen to be highly conservative set
against the rule of thumb basis he had outlined as an alternative. In
cross-examination, he accepted that by his calculations, the unit price to
be paid for the social rented flats was significantly higher than that for
the shared equity ones. He agreed that this was not how it should work
out, and said it was the treatment of multipliers and on costs that
created the anomaly.
239. As to the Bristol
scheme, he produced a number of alternative valuations that were appended
to his rebuttal report, only one of which assumed affordable housing at
30% (because his overall view was that if all of it were to be provided
within the tower, that percentage would be far too high – 10% being more
appropriate). There were also other factors that led him to the overall
conclusion that the Bristol scheme as proposed by the council was not
economically viable, but with suitable adjustments it could be made so. In
the 30% affordable housing example he assumed a 50/50 split between shared
ownership and social rented. He then took an income of £100 per sq ft for
29,472 sq ft of social rented and £200 per sq ft for the shared ownership
units giving a total to be paid by the RSL of £8,841,600. By the time the
final revised valuations were received following the hearing, his
assessment of the affordable housing element had become social rented on
1st to 3rd floors of the tower at a total of
£4,694,034 with shared accommodation on the 4th and 5th floors
totalling £3,107,960 – a grand total of £7,801,994.
240. Mr Orr said that as
the Housing Association’s TCI system was phased out, Bristol City Council
issued its own affordable housing matrix (the matrix), which was made
widely available to developers, landlords and the general public. It had
been produced by the council’s “Enabling Team Strategic Services”, and was
incorporated into a document entitled “S.106 Procedure Guide Working
Document.” He produced a schedule from it for the relevant postcode area
that showed the prices that developers could expect to achieve in terms of
social rented units. He said that this matrix had been used to calculate
the figures to be entered into a s.106 agreement by the developers of
Stenners Yard (24 May 2005), Jewsons Yard (30 June 2005), Radnor Road (17
February 2005) and the Bristol and West development (11 July 2005).
Further evidence of its use was clear in a letter from Sovereign Housing
Association stating that had it been approached in 2005, the prices it
would have paid would have been calculated in accordance with the matrix.
The suggestion made in cross-examination, therefore, that a developer
would not necessarily have known about the document, and would have relied
upon an adjusted TCI was, he said, unsustainable. He accepted however,
that the matrix was not a part of PAN 12 and that it was the TCI that was
referred to in the draft legal agreement contained within it. Furthermore,
no formal evidence had been adduced as to the provenance of the matrix; it
was not part of the statutory local plan and was not included within any
formal planning guidance. Nevertheless, he said, it was a tool used by the
council and the Tribunal should thus attribute appropriate weight to this
evidence, although he acknowledged that in planning terms, a developer
would have been justified in relying upon an adjusted
TCI. |
||
|
|
||
|
71 |
||
|
|
||
|
|
||
|
241. Mr Orr said it was
agreed that an RSL would pay up to a maximum of 50% of open market value
for the shared ownership units, so realistically it was just the
calculation of the price payable for the social rented elements upon which
the parties remained seriously at odds.
242. Mr Baldwin also
considered the value of the affordable housing units, as he had over 15
years experience of negotiating with RSLs in respect of affordable
housing. He said that his overall conclusions influenced the design of the
scheme that the council had adopted for valuation purposes – the Bristol
Scheme, and fed into Mr Owen’s residual calculations. He said that he had
adopted Mr Orr’s advice that the matrix was the appropriate vehicle for
calculating the price to be allowed for the social rented units, but
acknowledged in cross-examination that whilst Bristol City Council were
encouraging its use, the TCI had been intended to be used for the period
up to and including the valuation date, it still being extant at that
time. He also accepted that Mr Napier and Mr Hewetson had been justified
in adopting that approach, and that it would have been reasonable for a
vendor to be guided by the published policy guidance. Nevertheless, he
said he would have expected the vendor to have spoken to the Housing
Enabling Officer who would have advised him about the matrix, and the fact
that it was by then being used. It was also published on the council’s
website.
243. In respect of the
Bristol scheme, Mr Baldwin originally adopted the figures from the
schedule that was provided as part of Mr Orr’s evidence (Bundle 5, page
324) and applied them on a pro-rata basis to reflect the slightly smaller
floor areas of the flats within the lower floors of the tower in
comparison with those shown on the matrix schedule. This gave an average
price of £73.02 per sq ft for a 1 bedroom flat, £66.14 per sq ft for the
two bedroom units, and £55.11 per sq ft for the 3 bedroom units proposed
to be accommodated in the tower in the Bristol scheme. This gave a gross
development value of c. £2.032 million (£67.97 per sq ft) for the 50
social rented units he had allowed for, on Mr Orr’s advice. As to the
shared ownership housing, Mr Baldwin took 50% of market value for the 20
units, giving £2.021 million (on the basis of the agreed full open market
value of £310 per sq ft). Thus the total to be paid by the RSL in respect
of the Bristol scheme amounted to some £4.054 million, and that was the
figure that was adopted by Mr Owen in his final appraisal. Mr Baldwin went
on to say (at paragraphs 7.20 and 7.21 of his report), that on the basis
of these figures, a 30% affordable housing provision “reduces the
viability of the [Bristol] scheme to a point where it is at best
marginal.” He said that a developer (or prospective vendor at the
pre-planning stage) might reasonably assume there would be some
flexibility on the part of the RSL in negotiations on the pricing
structure, as in his experience they were often prepared to pay more to
secure units that were attractive in size, number and type. To allow for
this, he adopted £100 psf for the social rented units, and £200 psf for
the shared ownership units, giving a total of £5,543,000. However, we note
that those figures did not find their way into Mr Owen’s final Bristol
scheme valuation.
244. Regarding the baseline
scheme, based upon Mr Orr’s advice as to mix, the price to be paid by the
RSL for the social rented units would be £1.124 million (£55 per sq ft for
the new build units – all 3 bedroom) and £1.713 million (£70 per sq ft for
those in the tower) making £2.837 million. For the shared ownership units,
he calculated £2.415 million making a grand total of £5.252 million. These
figures were also adopted by Mr Owen in his final residual calculations
for the baseline scheme. |
||
|
|
||
|
72 |
||
|
|
||
|
|
||
|
Conclusions |
||
|
|
||
|
245. In our view, there
were equally cogent arguments advanced for the use of either the TCI or
the matrix in respect of the social rented units, and it has been
difficult to establish, on the evidence, precisely which route would have
been taken. On the one hand, it was acknowledged that the discussions with
the council over how much an RSL should pay would have been undertaken by
the vendor, prior to the planning application for the redevelopment
proposals being considered, and thus prior to the sale of the building to
a developer It was agreed that the affordable housing arrangements would
be subject to a section 106 agreement, and that the usual model was for an
applicant to enter into an obligation prior to the grant of planning
permission. This puts the date back to some extent, supporting the
argument that it may have been reasonable to expect the TCI to have been
used. On the other hand, it is a fact that the claimant produced no
evidence to show that an adjusted TCI had been used at or around the
valuation date, but the council produced evidence confirming that the
matrix had been adopted in a number of other Bristol developments during
2005. It is reasonable, in our view, to assume that those arrangements
would also have been entered into at the pre-planning stage, and we are
satisfied therefore that, in terms of social rented housing, the matrix is
the appropriate benchmark upon which to rely. Whilst we acknowledge the
argument that it was the TCI which was referred to in all the relevant
documentation and policy guidance, we can see no reason to conclude that
it would still have been used (in what appeared to be an arbitrarily
adjusted form) when negotiations with developers of other large schemes
were conducted upon the Bristol matrix model. We were also somewhat
concerned, in connection with Mr Hewetson’s calculations, that the value
of the social rented units came out higher, pro rata, than the shared
ownership ones, and accept Mr Baldwin’s statement that in his universal
experience, the prices RSLs pay for shared ownership are always
higher.
246. On the basis of our
findings in connection with mix, and that the only social rented units
will be 3 bedroom flats in the new-build block in the baseline scheme, we
determine that (and noting that Mr Baldwin and Mr Hewetson had agreed the
matrix based calculations, if that was the route taken by the tribunal),
the agreed 20,400 sq ft at £55 per sq ft amounts to £1,122,000. The shared
ownership accommodation on the first to fourth floors of the tower,
amounting to a total of 39,650 sq ft net, at an agreed 50% of open market
value (£155 psf) produces £6,145,750. Thus, the total amount that we
conclude would be agreed as the contribution to be made by the nominated
RSL is £7,267,750.
247. In terms of the
Bristol scheme, were we to adopt it as that which produced the highest
residualised land value, we agree (as we have indicated before) that if
all the affordable housing had to be provided within the tower, there
could be difficulties over access especially if, as appears to be the
case, shared ownership and social rented units had to be accommodated on
the same floor, as was the case with Mr Baldwin’s proposals. As pointed
out by Mr Hewetson, such a mixture would be unlikely to meet an RSL’s
approval, and in his view, the acquiring authority’s proposals had been
conceived and designed with no proper thought as to the commercial
realities of development in the real world. Indeed, he said, Mr Baldwin
had clearly accepted that a 30% affordable housing element would not be
economically viable, but the council had not devised an alternative scheme
that was. |
||
|
|
||
|
73 |
||
|
|
||
|
|
||
|
248. Nevertheless, in the
statement of agreed facts the parties say that there will be 50 social
rented flats (71% of the affordable housing) and 20 shared ownership flats
(29%) in the BCC scheme. The former are said to be on floors 1 to 3 and
part of floor 4, whilst the latter are on part of floor 4 and the whole of
floor 5. This arrangement is reflected in Mr Owen’s final valuation but
not in Mr Hewetson’s, who, despite the agreed statement, assumes that
shared ownership housing takes up the whole of the fourth floor. Our own
analysis of the floor areas is slightly different to that of Mr Owen but
the total net floorspace is the same. Taking the social rented housing at
£67.99 per sq ft (the average of the appropriate figures for the 1, 2 and
3 bedroom units used in the calculation above) and the shared ownership at
£155 per sq ft produces the following values:
Social rented
30,593 sq ft @ £67.99
£2,080,018
Shared ownership 12,377 sq ft @
£155
£1,918,435
Total that RSL would pay in
respect of Bristol scheme
£3,998,453
Contingencies
249. Mr Hewetson, in his
original report, made a variety of allowances for cost overruns and
unforeseen eventualities on an elemental basis. He only applied
contingency sums to those elements of the development process where he
felt there was some risk, such as the underground car park (10%),
superstructure works (5%) and fit out costs in phase 3 - lifts (1%). In
all other cost areas, he was of the view that the project was relatively
straightforward and repetitive, and admitted of limited scope for
surprise. The allowances amounted to approximately 2.1% of the overall
projected development costs in the baseline scheme. In cross-examination
he accepted that the convention was to apply a single percentage figure to
the whole development cost – as Mr Owen had done, but he did not accept
his figures of 5% for the Bristol scheme, or 10% for the baseline scheme,
due to its “substantially increased complexity”. In this case, he said,
there was significantly more costs information to go on than would
normally be the case, and the inherent risks were therefore considerably
less. For instance, he said, it should be borne in mind that the car park
costs were based upon a formal quotation. He did, however, accept that the
claimant’s original car park figure was very substantially less than the
final one adopted, and further that if there were significant delays or
cost overruns on that early element of the construction process, it could
have a knock on effect upon the rest of the development programme, and
ultimate costs. However, Mr Hewetson said that a developer would know
where the risks lay, and it was appropriate to apply figures to only the
most sensitive areas.
250. Nevertheless, in
response to the criticisms made by Mr Martin, in his final appraisal of
the baseline scheme he revised his contingencies to 10% each for the car
park and superstructure costs, 3% for some elements of M&E and fit
out, and 2% for others. The sum allowed amounted to 4.6% of the overall
construction costs for that scheme. His final appraisal of the Bristol
scheme with contingency costs built up on the same elemental basis, came
to 3.7%. It was submitted that the availability of information in the cost
build-ups for all three schemes under consideration was equal, and it was
thus ludicrous for the council to double the contingency for the more
complex claim and baseline schemes. Technical complexity should not be
confused with uncertainty and risk, and Mr Wallace, upon whose costs Mr
Hewetson |
||
|
|
||
|
74 |
||
|
|
||
|
|
||
|
was relying, had produced a level
of detail that was considerably more informative than that which Mr Martin
had provided. He had been able to test the reliability of the information
and technical advice upon which he had based his original costs, and
adjust them accordingly. To then add a very substantial contingency would
in effect therefore, amount to double counting, and a prospective
purchaser would not risk losing out in his bid for being over cautious.
There being no justification for applying different levels of contingency
between the schemes, it was submitted that if the Tribunal found for the
alleged conventional approach, Mr Hewetson’s 4.6% was close to that used
by Mr Owen in his Bristol scheme appraisal, and a total not exceeding 5%
should be determined.
251. Mr Martin accepted
that in respect of contingency planning, it would have been reasonable to
assume that at the point at which the prospective developer’s bid was
formulated, only limited design work would have been undertaken,
sufficient for obtaining a planning consent. The design and tender
documentation would not have been prepared or advanced at that stage and
formal quotations or tenders would not have been received. Estimates of
construction cost would therefore have been budget figures and, with no
contracts yet in place, the developer would, at that stage, be carrying
the full design and construction risk. Whilst he acknowledged that there
would be varying levels of risk relating to different aspects of the
construction process, and that the fit out was likely to carry the least
risk, he did not accept Mr Hewetson’s view that no contingency at all was
required in that area. Whilst 10% would undoubtedly be high for that
element, it may well not be enough for high-risk items such as the
underground car park, core deepening and other subterranean works. On
balance, therefore, he was of the view that a developer would have built
in an overall 10% contingency for the claim or baseline
schemes.
252. Mr Owen said that he
had adopted 10% for the claim and baseline schemes due to their
considerable complexity. He was aware of other schemes containing similar
constructional or development risks where developers had applied that
percentage or even higher. Due to the relative simplicity of the council’s
alternative Bristol scheme (in comparison), Mr Owen said he applied a 5%
contingency. Although this was lower than might normally be included in
such an appraisal, he said it reflected the fact that very detailed design
and costings exercises had been carried out in this case, compared with a
normal bidding situation. It would be wrong, he said, to build up
contingency costs, as Mr Hewetson had done, on an elemental basis because
it was impossible, at that stage, to predict precisely where problems may
arise.
253. It was submitted that
a developer looking to purchase the site would apply a single contingency
allowance to all of the costs. It would not only have to cover the risks
anticipated in respect of individual items, but unseen or unanticipated
problems such as potential delays or abnormal ground conditions. The
developer would want to ensure that his forecast profit was not eaten into
by unforeseen extra development costs for which he had made insufficient
allowance in his appraisal – that would effectively be handing some of his
profit to the vendor. On the other hand, if the whole of the contingency
were not spent, then that would serve to create some additional
profit. |
||
|
|
||
|
75 |
||
|
|
||
|
|
||
|
Conclusions |
||
|
|
||
|
254. We have earlier
concluded that the claim and baseline schemes were larger and more complex
projects than the Comer Group had previously undertaken, and it is thus in
our view appropriate that a robust, overall contingency should, and would,
have been applied. The majority of Mr Hewetson’s argument for elemental
and selective contingencies was predicated upon the availability of
information that was before the Tribunal. We have already made much of the
question of what a prospective purchaser would have done in a real bidding
situation, and do not intend to repeat it here. Suffice to say that he
would most certainly not have had to hand anything like the amount of
detail that was before us, and would not have had the benefit of the
detailed costing exercises that have been undertaken by both Mr Wallace
and Davis Langdon.
255. Whilst he may have
gone somewhat further in the budget costings exercise in respect of the
car park and other unusual elements (for example the superstructure for
the additional floors in the claim scheme), he would in our judgment, and
as argued by the acquiring authority, have wanted to ensure that the
potential knock on effects of any problems or delays in those areas were
adequately covered within the overall construction costs figure. The
“conventional” approach also has the attraction of simplicity, and we are
satisfied that an overall percentage figure is the route that would have
been taken. We do, however, agree that whilst the baseline scheme (or the
claim scheme which we are no longer considering) is more technically
complex than the Bristol scheme, and thus would be seen to carry more
risk, we cannot see any justification in Mr Owen’s argument that the
contingency should be double. In the circumstances, we accept his figure
for the Bristol scheme (5%), but in respect of the baseline scheme, we
conclude that an overall 7.5% of the total construction costs would be
appropriate to reflect the additional complexity and risk.
Professional fees
256. Mr Wallace said he
considered the manner in which previous Opecprime projects had been
managed, specifically looking at Northampton House and Comer House,
together with three other projects, and the professional fees element of
these ranged from 1.18% to 1.8%. He also spoke to Mark Lees, Comer Group’s
in house architect and designer and took soundings from representatives of
Walsh Group and Barratt Homes. The general consensus appeared to be that
fees for external professional advice would be allowed in the range 1.25%
to 1.5%. However, in his view, this would be an insufficient allowance to
reflect the more complex nature of the Tollgate House development, and the
longer construction period. It was accepted that whilst it is to be
assumed that full planning consent had been obtained, and the vendor would
therefore have borne the professional fees associated with that, there
would still be a need for full working drawings, contract documentation
and schedules to be produced. Nevertheless, the fact that much of the
work, once the project was underway, would be repetitive and
straightforward also had to be factored in. On balance, he thought that
£870,000 was the appropriate figure for professional fees for the baseline
scheme, and said that this represented around 2.8% of the construction
cost. He subsequently discussed this figure with Mr Hewetson, who had
initially looked at professional fees on an elemental basis, and agreed
that £870,000 was the appropriate figure to use. |
||
|
|
||
|
76 |
||
|
|
||
|
|
||
|
257. He calculated the
in-house management and supervision costs at £406,562 for the baseline
scheme. Taken together, the resulting £1,276,562 represented 5% of
construction costs. In his view this was far more credible than Mr
Martin’s 14%, which was for professional fees only, with an additional
allowance for supervision costs being included in his figure for
preliminaries.
258. Mr Hewetson had
originally (at the time the statement of case was prepared), taken an
elemental approach to the build up of professional fees, which amounted to
about 10.75% of construction costs. He said that following discussions
with Mr Wallace, these were reduced due to the fact it was evident much of
the work would be undertaken and managed in-house, and some of his
allowances had already been covered under in-house supervision costs. The
elemental approach was thus eventually abandoned, Mr Hewetson adopting, in
the final baseline scheme appraisal under the heading “professional fees”,
£870,000 for design fees. Also, under this head, he added £150,000 as fees
for the bank’s quantity surveyor and £487,875 for on-site supervision
costs. This latter figure was, in fact, incorrect as it had been
transposed from Mr Wallace’s figure for the claim scheme (including
insurance) (from appendix L of his report). The correct figure should have
been £369,062 which, with £37,500 insurance added, becomes £406,562. Our
conclusions in respect of supervisory costs and insurance are dealt with
elsewhere in this decision under preliminaries.
259. In respect of the
Bristol scheme, Mr Hewetson applied the £150,000 QS cost, £475,624 for
“design and consultant engineers etc”, and £480,000 for on-site
supervision costs totalling £1,105,624 or 6% of construction cost in
total.
260. Mr Martin said that,
based upon his experience of projects of the size and complexity of the
claim and baseline schemes, a figure of 14% of the construction cost to
include Project Manager and Employer’s Agent, Architect and
Structural/Civil Engineering professionals was appropriate. This figure
was in line, he said, with the allowance made in the BCIS tables for
professional fees in respect of fire insurance valuations (15%), and
amounted to £5,732,843 for the baseline scheme. These fees would be in
addition to the on-site supervision staff that the scheme would require
(and which he had allowed for under preliminaries). For the Bristol
scheme, which, he said, was altogether more straightforward and less
complex, he allowed 10%, or £2,535,837.
261. It was submitted by
the claimant that it was surprising that, having acknowledged that the
main planning consent exercise had been completed, and apart from the
areas of complexity that had been well rehearsed between the parties, the
main scheme was relatively straightforward and repetitive, the acquiring
authority should be suggesting over £5 million in external professional
fees. This was on top of over £4.5 million that had been allocated by them
for preliminaries and supervision costs. The acquiring authority said that
Mr Hewetson had acknowledged that it was conventional to allow a
percentage rate of total construction costs for each main professional
discipline, and even if it were so that some fees could have been avoided
by employing in-house staff, it was appropriate to allow them at
commercial rates. |
||
|
|
||
|
77 |
||
|
|
||
|
|
||
|
Conclusions |
||
|
|
||
|
262. Mr Martin’s
methodology had the attraction of being straightforward and simple, being
a specific percentage of the construction costs (14% on the baseline
scheme, and 10% for the Bristol scheme). It is also, we think, the
approach that a prospective purchaser would have taken when building up
the costs during the bid formulation process. Mr Hewetson had initially
considered an elemental build up that produced approximately 10% for fees
but, in the valuation attached to his original expert witness report, this
was reduced. He applied elemental figures that reflected Mr Wallace’s view
that an increase on the figures that he had extracted from the Comer
Group’s records of past developments was appropriate. The £870,000 that
they proposed for external professional fees amounted to about 3.7% which
is more than the 2.8% he referred to in evidence and in his report. This
figure was exclusive of the addition for in-house supervision costs).
However, in the final valuation (where construction costs had risen to
£25,758,689), an additional £150,000 was applied to cover “the bank’s
quantity surveyor”. Thus, external professional fees amounted to
£1,020,000 or just under 4% of construction costs in the baseline scheme,
in the final appraisal.
263. There was, therefore,
a very significant 10% difference between the parties. We are satisfied
that the claimant’s figures, even at 4%, are too low and, as we have said
elsewhere in this decision, we have concerns regarding the accuracy and
reliability of the information that has been extracted from Comer Group’s
past records. The percentages quoted for previous developments seem to us
to be exceptionally low, even where a large proportion of the work has
been undertaken in house. Whilst it is accepted that a very significant
proportion of the architect’s work (and possibly to some extent the
initial work of engineers), are to be excluded from this exercise, there
would remain the need for significant input into working drawings and
plans, and the need for external professionals’ continuing input
throughout the course of the development, especially in relation to the
more complex areas. Notwithstanding, we do acknowledge that large elements
of the scheme are relatively straightforward, especially as regards the
new build offices, flats and leisure complex and the fit out of individual
floors in the main tower.
264. In our view, Mr
Martin’s figures at 14% and 10% for the baseline and Bristol schemes
respectively are too high, and he produced no concrete evidence to support
the use of those figures. We also accept the argument advanced in the
claimant’s submissions where they said that by basing the distinction
particularly on the more complex nature of the baseline (and claim)
schemes, this had the effect of raising the costs by 4% even on the most
straightforward elements. We think that a developer would apply the same
percentage for external professional fees on each of the alternative
schemes, and doing the best that we can on the evidence before us conclude
that an appropriate figure would be 7.5%. This is, for the sake of
clarity, the figure to be applied to external professional fees only; the
question of supervision costs having, as we have said, been included under
preliminaries.
Profit
265. The parties agreed
that 15% was an appropriate allowance for profit in respect of the Bristol
scheme. However, it was the acquiring authority’s case that due to the
inherently more |
||
|
|
||
|
78 |
||
|
|
||
|
|
||
|
risky baseline (and claim)
schemes, together with their longer development period, a return of 20% on
cost would have been required for those. Mr Owen said that in a residual
valuation it was prudent to look at the total return that the required
profit figure and the (if unspent) contingency allowance would provide.
This was because if any of the principal assumptions had been optimistic
the developer would only have the cushion of those two sums before he
moved into a loss-making situation. In the case of the Bristol scheme,
where he had allowed a 5% contingency, the total potential buffer would
therefore be 20%. For the baseline scheme, 20% profit and 10% contingency
produced 30%.
266. Mr Hewetson said that
it was assumed that, whichever scheme was adopted, detailed planning
consent would have been achieved, and that was normally one of the
greatest elements of risk. Whilst it was accepted that, with the
additional storeys, the claim scheme was quite significantly more risky
than the baseline scheme, the baseline project was only marginally more
complex or risky than the Bristol scheme. A 15% profit return was the
“market norm” for relatively straightforward and marginally risky
developments, and it would only be in exceptional cases, or where the
developer was unaware of the extent of risks involved, that a higher
percentage – say 20% may be required.
Conclusions
In our view, the right place to
reflect the more risky nature of the development is in the contingency
allowance, and it would have to be a project of exceptional risk or
complexity that warranted a requirement for profit on cost that was
anything other than the norm. We have allowed an additional 2.5%
contingency for the baseline scheme and do not consider it appropriate to
make any increase over the figure that the parties clearly agreed was
normal, and should indeed apply to the Bristol scheme. We therefore adopt
15% profit on cost on both schemes.
Hope value
267. It was the claimant’s
case that, assuming planning consent had been obtained for the baseline
scheme following the refusal of an application for the claim scheme, a
prospective purchaser would build into his bid an element of hope value on
the assumption that he stood a good chance of achieving an enhanced
consent – such as for an additional 3 or 4 storeys rather than the eight
originally sought. In Mr Hewetson’s view, a developer would be prepared to
speculate between 25% and 33% of the estimated additional development
value that such an improved permission would create and although no formal
costings had been undertaken, he said that a further £2,000,000 would be
an appropriate allowance. In cross-examination he accepted that a
purchaser would be unlikely to “sit-on” the site once it had been
purchased whilst a new planning application process was undertaken, but
said that if the enhancements did not significantly affect the principal
scheme, that exercise could proceed while the initial development
programme was being worked up.
268. It was submitted that
the council’s approach was consistent with that of Mr Hewetson, although
it was accepted that Mr Owen was referring to the prospects of a
developer |
||
|
|
||
|
79 |
||
|
|
||
|
|
||
|
anticipating being able to
negotiate a more favourable planning agreement in respect of the
affordable housing element. Thus, Mr Mould said, it was clear that the
principle of allowing for hope value was in no way
misconceived.
269. Mr Owen said in his
rebuttal of Mr Hewetson’s report that he could see no logical basis for
the addition of any sum to reflect the perceived possibility that a more
valuable planning consent may be forthcoming. The value that the Lands
Tribunal was charged with assessing was that of a development site, with
planning permission in place, and ready for development. That permission
would reflect the optimum use of the land, it being assumed that the
vendor will have sought to obtain the consent that gave the land its
highest value. Even if, Mr Owen said, there were to be a prospect of a
future higher value, it would not necessarily make the land more valuable
to the purchaser. In order to obtain that enhanced permission, he would
have to defer implementation of the permission that was assumed to be in
place, thereby incurring additional interest and holding costs, together
with the not insubstantial costs of going through another planning
exercise. He would also run the not inconsiderable risk that the further
application would be unsuccessful, with the result that the predicted
profit from implementing the scheme for which permission existed, would be
seriously compromised.
Conclusions
270. As to Mr Owen’s
reference to the question of hope value in his main report, mentioned by
Mr Hewetson, it is clear to us that he was referring to something entirely
different to the question of obtaining an enhanced planning consent, and
we note also that, on the subject of negotiations over the affordable
housing element he said in his main report:
“Of course, this approach can
only be justified in circumstances where the viability of the scheme is
such that the developer can successfully argue that it is not economic to
deliver the full 30% provision at the prescribed values.” (Paragraph
7.35).
271. As Mr Owen said in
cross-examination, it was agreed that the full 30% affordable housing
element could be provided in the baseline scheme, and in any event, the
principle postulated by Mr Hewetson was entirely different to the question
of making minor alterations to the scheme for which planning consent was
assumed to have been obtained. We agree, and accept Mr Owen’s opinion
under this head in its entirety. No evidence was produced to support the
claimant’s contention that a more limited increase in height to the main
tower might find favour with the local planning authority, and on the
basis of our findings on the question of height, we consider it most
unlikely that a prospective purchaser would foresee any prospect of
improving on the permission that was in place. Furthermore, we agree that
the costs of holding the site whilst a potentially long-winded further
planning exercise was undertaken (which might well be unsuccessful) would
not be economically attractive. Thus, we conclude that this entirely
speculative element of value proposed by the claimant is unwarranted and
that there should therefore be no addition for hope
value. |
||
|
|
||
|
80 |
||
|
|
||
|
|
||
|
Summary |
||
|
|
||
|
272. Having dealt at length with
the issues remaining in dispute, we briefly summarise our conclusions as
they affect the inputs to the valuation model in respect of the baseline
scheme, having concluded that the claim scheme would not have achieved
planning permission:
General
1.
Marmorit cladding would not have been acceptable. The
building would have been clad with a stick system of glass curtain
walling.
2.
Affordable housing would constitute 30% of the total number
of dwellings (88 out of 295).
3.
The total allowance in respect of planning obligations is
£1,410,000. Costs
1.
Costs are taken at June 2006 prices.
2.
The baseline scheme would have been procured under a main
contract.
3.
Preliminaries are taken at 14.5% of the total construction
cost before fees.
4.
The total cost of site clearance and enabling works is
£1,433,586.
5.
The cost of the cladding is £5,883,625.
6. The cost of the
car park is £5,700,000.
7. The total cost of
the M&E services, including lifts, is £6,741,960.
8.
The total superstructure costs, including the agreed items
but excluding the cladding, is £2,575,793.
9. The cost of
fitting out works is £4,000,000.
10. The agreed cost of
fittings and furnishings is £2,205,410.
11.
The total cost of the offices, the health club and the separate
affordable housing block is £3,850,922.
12.
The cost of the external works is £300,000. Valuation
issues
1.
There is no addition for hope value.
2.
The construction programme is taken at 45 months, including
a 9-month set up period, and a bottom-up approach is assumed for fitting
out and sales.
3.
Contingencies are taken at 7.5% of the total construction
costs.
4.
Profit is taken at 15% on cost.
5.
External professional fees are taken at 7.5% of the
construction costs.
6.
The amount payable by the nominated RSL for the affordable
housing is £7,267,750. |
||
|
|
||
|
81 |
||
|
|
||
|
|
||
|
Valuation of the baseline scheme
273. Our valuation of the
baseline scheme is attached at Appendix 1, and amounts to £3,242,363, say
£3,250,000.
The Bristol scheme
274. Having determined that
planning permission would have been granted for the baseline scheme at the
valuation date, and that it was a viable project (subject to our
conclusions on the various disputed issues), we now turn to the Bristol
scheme. It is necessary to undertake a valuation to establish whether or
not that proposal was capable of creating a residual land value of more
than £3,250,000. However, we are conscious of the fact that such a scheme
was not proposed by the claimant, having been produced by the council as
an alternative to both the baseline and claim schemes and which was
promoted as being the only one which would not only have achieved consent,
but also would have produced a positive value.
275. We do however find
ourselves in some difficulty, as there are some areas where there was
little evidence or argument, particularly from the claimant. Indeed, the
claimant’s experts did not even consider the Bristol scheme in the early
stages of preparing their evidence (understandably so), and an appraisal
was not produced until much later. Furthermore, it is clear from close
scrutiny of both parties’ final appraisals that despite agreement on a
number of issues the figures incorporated do not always reflect what was
said, or what was included in the valuation Scott schedule, eg the parties
agree in that schedule that acquisition costs should be 6% and yet they
adopt 5.5% (as per the baseline scheme) in their residual valuations. In
any areas where we have found difficulty in translating the evidence, or
where the figures do not marry up with what was said to be agreed, we have
“taken a view” based to a large extent upon our overall conclusions in
respect of the baseline scheme.
276. We note that there are
four main differences between the baseline and the Bristol schemes.
Firstly, there is no underground car park; instead there is a separate
multi-storey block. Secondly, there is no separate affordable housing
block. The affordable housing in the Bristol scheme is all contained
within the tower. Thirdly, there are no internal or external balconies,
and, lastly, there is no floor plate extension. Apart from the
consequences of these changes on costs and values there is also an effect
upon the programme. For reasons that are not clearly explained, Mr
Hewetson increases the programme from 40 to 45 months for the Bristol
scheme. Mr Owen adopts a considerably shorter phasing of 42 months for the
Bristol scheme compared with 54 months under the baseline scheme. The
Bristol scheme does not require the complex civil engineering tasks
associated with the underground car park and is slightly smaller in scale
than the baseline scheme. We do not accept Mr Hewetson’s view that it
should have a longer programme. But neither do we accept Mr Owen’s
argument that the programme can be reduced by 12 months. In our opinion
the reduced scale of works will shorten the programme by 6 months, which
on our timescale means that the Bristol scheme would take 39 months to
complete. |
||
|
|
||
|
82 |
||
|
|
||
|
|
||
|
277. There is significant
agreement between the parties about the value of the Bristol scheme.
Firstly, as to residential development values, the valuers agreed the
private housing element at £37,173,125, to which we add our figure for the
affordable housing of £3,998,453 (see paragraph 247 above) and the agreed
figure of £935,000 for car parking to give £42,106,578. As to ground rent
income, Mr Hewetson and Mr Owen agreed £150 per unit for the private
residential and shared ownership units. It will be seen from our
conclusions on how the income relating to the affordable housing should be
split, that we chose to calculate its value on the basis of net floor
areas rather than the number of units, but it was agreed at the outset
that of the 236 residential units in total, 70 would be affordable. The
parties have also agreed that, in this scheme, the “split” will be 50
social rented units and 20 shared ownership. We have therefore added these
20 units to the 166 private flats and penthouses to give 186 units at the
agreed £150 per unit. That amounts to £27,900 pa and capitalises to
£398,571 at the agreed yield. The capital values of the offices and health
club are agreed at £2,602,154 and £1,923,167 respectively. Thus the gross
development value we adopt is £47,030,470 from which we deduct 5.75%
purchaser’s costs leaving £46,737,740 as the net development
value.
278. Turning to
construction costs we note that the Scott schedule is incomplete in
several respects with no costs being identified by the claimant for the
car park, offices or leisure facility. However, in Mr Hewetson’s final
residual valuation the amount entered for these items is the same as that
adopted by the council and we therefore take the council’s figures as
agreed. Both parties adopt the same costs for site clearance and enabling
works that they used in the baseline scheme and we therefore do the
same.
279. There is a difference
of some £4.5m between the parties regarding the cost of the superstructure
works, most of which is due to the difference in the experts’ opinions
about the cost of the curtain wall cladding. We have expressed our views
on such costs in paragraphs 164 to 170 above. Davis Langdon adopt a
slightly higher area for the cladding under the Bristol scheme and we have
similarly increased our adopted area of 9,725 sq m to 9,840 sq m which we
then cost at our previous figure of £605 psm to give a total of
£5,953,200.
280. Mr Wallace makes no
allowance for a waterproof balustrade to the penthouses under the Bristol
scheme. We can see no reason for this omission and none was given. We have
reduced our figure for this item by broadly the same proportion as is
represented by Davis Langdon’s analysis of the cost of the balustrades
under the two schemes. This gives a rounded figure of £75,000. We have
taken a similar approach to the costing of the structural work to the lift
cores and have reduced the cost by 12% being the percentage reduction
represented by Davis Langdon’s costing of the two schemes. This gives a
figure of £330,000. (Mr Wallace takes the same figure for both schemes
which we do not consider to be reasonable.)
281. Under the baseline
scheme Mr Martin accepted the claimant’s figure for the cost of the
penthouse frame which was some £100,000 more than his own figure. Under
the Bristol scheme the claimant has reduced its figure by just over 10%
but Mr Martin has reverted to his original figure under the baseline
scheme. We can see no justification for this and we adopt the claimant’s
figure of £327,478. |
||
|
|
||
|
83 |
||
|
|
||
|
|
||
|
282. Mr Martin also keeps
the same figure for the cost of the suspended slab Holorib whereas Mr
Wallace reduces the cost by just over 10% in the Bristol scheme. We prefer
the claimant’s approach and we have reduced our costs by 10% to, say,
£155,000.
283. Mr Wallace increases
the cost of the roof for the Bristol scheme by over 25% but no explanation
is given. Mr Martin accepted the claimant’s figure of £125,730 for the
baseline scheme but, under the Bristol scheme, reverts to the figure he
first put forward under the baseline scheme of £138,922. We can see no
justification for this increase or that made by Mr Wallace and we retain
the previously agreed cost of £125,730.
284. Mr Martin accepted Mr
Wallace’s figure of £82,615 for the cost of stairs under the baseline
scheme. However for the Bristol scheme Mr Martin reverts to the figure of
£70,296 that he supported under the baseline scheme before reaching
agreement. Mr Wallace reduces the cost to £74,133 and we prefer this
figure.
285. Under the baseline
scheme we allowed £177,500 for a cleaning cradle and automatic doors. We
have increased this amount to £195,000 under the Bristol scheme to allow
for a second set of automatic doors.
286. With regard to fit out
costs Mr Wallace reduces his figure by 8% compared with the baseline
scheme whilst Mr Martin reduces his figure by 14%. We did not rely upon Mr
Wallace’s figure for the baseline scheme because it contained unknown
stripping out costs. We prefer Mr Martin’s approach and we have reduced
our figure for fit out costs by 15% to £3,400,000.
287. In the baseline scheme
Mr Martin accepted Mr Wallace’s figure for fittings and furnishings but he
does not do so for the Bristol scheme. We prefer Mr Wallace’s approach on
this item and we adopt his cost of £2,025,800.
288. We have used the same
average figure per flat for services as we used for the baseline scheme,
namely £22,500. Applying this to a total of 236 units gives a cost of
£5,310,000. So far as the cost of lifts is concerned we previously adopted
Mr Martin’s figure and we do so again for the Bristol scheme. He takes
£521,948, which gives us an overall figure for M&E work of
£5,831,948.
289. As we stated in
paragraph 220 above we have adopted a figure of £300,000 for external
works for both the baseline and Bristol schemes. The parties have agreed a
total of £1,026,707 in respect of section 106 obligations for education,
recreation, park and ride, library and public art. They disagree about the
contributions for highways, travel plan and public realm. We take an
overall figure of £100,000 for these items as explained in paragraphs 89
to 91 above, giving a total section 106 figure of £1,126,707, which we
round to £1,126,000.
290. Most of the valuation
variables have been agreed between the parties, but differences remain
about the figures to be taken for contingencies and professional fees.
(For the Bristol |
||
|
|
||
|
84 |
||
|
|
||
|
|
||
|
scheme the parties have agreed
that the appropriate profit would be 15% on cost.) We accepted above (see
paragraphs 248 to 254) that there should be a reduction to the contingency
allowance to reflect the less complex civil engineering works under the
Bristol scheme, but we did not agree with Mr Owen that the allowance
should be halved. We consider that the contingency allowance should be
reduced from 7.5% to 5%. Mr Owen has reduced his figure for fees from 14%
to 10% whilst Mr Hewetson adopts an overall figure of 6%. We are not
persuaded that there should be a reduction in the fees allowance and we
maintain the figure of 7.5% that we adopted for the baseline scheme (see
paragraphs 261 to 263).
Valuation of the Bristol scheme
291. Our valuation of the
Bristol scheme is attached as Appendix 2 and amounts to £4,508,847, say
£4,500,000.
Conclusions
292. We have found that the
value of the Bristol scheme is £1.25m more than that of the baseline
scheme. We therefore agree with Mr Owen that the Bristol scheme is the
most viable, although we disagree with him that the baseline scheme shows
a negative value. This is a significant difference and, in our opinion,
the extra value attaches to a scheme which is inherently less risky as
well as being cheaper and quicker to build. Given these figures we do not
believe that a developer would have based his bid upon the baseline scheme
specification as at the valuation date. The claimant did not devote much
evidence to the assessment of the value of the Bristol scheme but we are
satisfied, having had to examine the baseline scheme in exhaustive, and at
times minute, detail that our conclusion is based upon a rigorous and
complete analysis of all the available evidence.
293. Finally we would draw
the parties’ attention, as we did several times during the hearing, to the
need to consider pragmatically and sensibly how much information a
developer would expect and require in order to formulate an open market
bid at the valuation date using the residual method of valuation. This
Tribunal has repeatedly stressed its reluctance to use this valuation
method. Its enforced use in this reference does not mean that its faults
are any the less; it remains a valuation method of last resort which is
inherently very sensitive to even small changes in the input variables. We
have therefore had to spend what we consider to be a disproportionate
amount of time in assessing the detail of the parties’ arguments in order
to ensure the robustness of our decision. We have acknowledged the reasons
why the parties felt it was necessary to go into such detail (see for
instance paragraphs 47 and 94 above), but we were not helped in our task
by the seeming inability of the parties to agree upon a common approach to
some aspects of the costing and valuation processes; for example Mr
Hewetson valued each scheme by capitalising the residential element either
as units (penthouses) or as floors (flats) whilst Mr Owen valued it by
reference to area. Such differences were time consuming to check and were,
in our opinion, unnecessary. On future occasions we would hope that the
respective experts of all disciplines in a reference such as this will be
able to agree upon a larger number of variables at an earlier stage
without, as here, pursuing an attritional battle of detail which descended
to the farcical level of the council specifying the cost of, inter alia,
shaver sockets on a scheme costing over £40m. We understand that
the |
||
|
|
||
|
85 |
||
|
|
||
|
|
||
|
President has it in mind to issue
practice guidance designed to ensure that, in future, disproportionate
demands are not placed upon the Tribunal’s resources in cases such as
this.
294. We determine the
compensation payable in the sum of £4,500,000. The parties are now invited
to make submissions on costs, and a letter relating to this accompanies
this decision, which will only become final when the question of costs has
been determined.
Dated 3 June 2009 |
||
|
|
||
|
PR Francis FRICS |
||
|
|
||
|
AJ Trott FRICS |
||
|
|
||
|
86 |
||
|
|
||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
PRAISAL
SUMMARY |
LANDS TRIBUNAL |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Appendix 1: Lands Tribunal
Valuation: Baseline Scheme
Appraisal Summary for Part
1
REVENUE |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
File: C:\Users\COMER-L
T6\Desktop\Valuations\Lands Tribunal\Lands Tribunal Baseline Scheme
Appraisal Version 2.wcf Circle Version: 3.00.003 |
Date: 31/5/2009 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
87 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
APPRAISAL SUMMARY |
LANDS TRIBUNAL |
|||||||||||||||||||||||||||||||||||||||||||
|
Appendix 1: Lands Tribunal Valuation: Baseline
Scheme
Preliminaries
1 unit at
Totals
Health club
Offices
Social rented: new
build
Totals
Contingency
Section 106 Costs
Section 106
PROFESSIONAL FEES
AIl professional fees
MARKETING & LETTING
Marketing:
Commercial element Marketing:
Residential (penthouses) Marketing: Residential (prvt flats) Letting Agent
Fee Letting Legal Fee
DISPOSAL FEES
Sales Agent Fee Sales Legal
Fee
Additional Costs
Arrangement Fee |
£4,740,238 |
|||||||||||||||||||||||||||||||||||||||||||
|
4,740,238
33.580.562 |
||||||||||||||||||||||||||||||||||||||||||||
|
37,431,484
2,807,361 1,410,000
2,807,361 |
|||||||||||||||||||||||||||||||||||||||||||
|
7.50% |
2,807,361 |
|||||||||||||||||||||||||||||||||||||||||||
|
7.50% |
1,410,000 |
|||||||||||||||||||||||||||||||||||||||||||
|
2,807,361 |
||||||||||||||||||||||||||||||||||||||||||||
|
1,524,929 |
|||||||||||||||||||||||||||||||||||||||||||
|
984,368 |
||||||||||||||||||||||||||||||||||||||||||||
|
265,000 |
||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
265,000 |
||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
FINANCE
Multiple Finance Rates Used (See
Assumptions)
Land
Construction
Total Finance
Cost |
912,435
3,283,767 |
4,196,201 |
||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
TOTAL COSTS |
54,847,398 |
|||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
PROFIT
Performance
Measures
Profit on Cost% Profit on GDV%
Profit on NDV% Development Yield% (on Rent) Equivalent Yield% (Nominal)
Equivalent Yield% (True) Gross Initial Yield% Net Initial
Yield%
IRR
Rent Cover
Profit Erosion (finance rate
6.500%) |
15.00% 12.95% 13.04% 0.91% 6.29%
6.55% 6.29% 6.29%
16.61% 16 yrs 5 mths 2yrs 2
mths |
8,227,121 |
||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
File: C:\Users\COMER-LT6\Desktop\Valuations\Lands
Tribunal\Lands Tribunal Baseline Scheme Appraisal Version
2.wcf
Circle Version: 3.00.003
Date:
31/5/2009 |
||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
88 |
||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
APPRAISAL SUMMARY |
LANDS TRIBUNAL |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Tollgate House
Appendix 2: Lands Tribunal Valuation: Bristol
scheme
Appraisal Summary for Part 1
REVENUE |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
42,106,577 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
4,756,834 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
File: C:\Users\COMER-L
T6\Desktop\ Valuations\Lands Tribunal\L T BCC Scheme Appraisal.wcf Circle
Version: 3.00.003 |
Date: 31/5/2009 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
89 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
APPRAISAL SUMMARY |
LANDS TRIBUNAL |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Tolgate House
Appendix 2: Lands Tribunal Valuation: Bristol
scheme |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Car park
Preliminaries
Totals
Offices Health club
Totals
Contingency
Section 106 Costs
Section 106
PROFESSIONAL FEES
All professional fees |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
MARKETING &
LETTING
Marketing: Commercial element
Marketing: Residential (penthouses) Marketing: Residential (pvte flats)
Letting Agent Fee Letting Legal Fee
DISPOSAL FEES
Sales Agent Fee Sales Legal
Fee
Additional Costs
Arrangement Fee
FINANCE
Multiple Finance Rates Used (See
Assumptions)
Land
Construction
Total Finance Cost
TOTAL COSTS |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
728,972 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
200,000 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1,047,502
1,467,732 |
200,000 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2,515,235
40,663,249 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
PROFIT
Performance
Measures
Profit on Cost%
profit on GDV%
Profit on NDV%
Development
Yield% (on Rent) Equivalent
Yield%
(Nominal) Equivalent Yield%
(True)
Gross Initial Yield%
Net Initial Yield%
IRR
Rent Cover
Profit Erosion (finance rate
6.500%) |
15.00% 12.97% 13.04% 0.77% 6.35%
6.61% 6.35% 6.35%
18.72% 19 yrs 6 mths 2 2 yrs 2
mths |
6,099,491 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
File: C;\Users\COMER-L
T6\Desktop\Valuations\Lands Tribunal\LT BCC Scheme Appraisal.wcf Circle
Version: 3.00.003 |
Date:31/5/2009 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
90 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||
|
91 |
||
|
|
||