ADD2676 Wembley Regeneration: Overage assessment

1.1.    The Wembley Regeneration scheme has been in development since 2004 when a development agreement was signed between the London Development Agency (LDA), Quintain Estates and Development Plc. (“Quintain”) and Wembley (London) Limited (a “Quintain” subsidiary). 

1.2.    The development agreement seeks to deliver nearly 900 homes including 30 per cent affordable housing across the Regeneration Land. The land was assembled by the LDA and transferred to Quintain as part of the agreement.

1.3.    Detailed in the development agreement is an overage mechanism which establishes that any surplus income above an Internal Rate of Return (“IRR”) threshold of 12.5 per cent is split equally between GLAP and Quintain. This overage calculation was activated in June 2022 due to the time elapsed since the last transfer of land. Since then, officers have been gathering evidence from the counterparty (Quintain) to establish the overage position. 

1.4.    The counterparty is required to provide full records on an open book basis, however some elements of the calculation require an independent valuation of retained investment assets, as well as independent advice on common practice in accounting for transactions and their timing for the purposes of IRR calculation. Appointing a consultant with full duty of care to GLAP will provide qualified professional advice on the items which are subject to such calculations. The consultant will be sourced from the TfL Property and Development Framework. 
 

2.1.    The main objectives of the valuation are:

•    to review and verify supporting evidence of income/expenditure and accounting principles of the counterparty;

•    to ensure compliance with the existing development agreement and good practice principles in the development industry.

•    to evaluate and finalise the overage position.
 

3.1.    Under section 149 of the Equality Act 2010 (the “Equality Act”), as a public authority, the GLA must have ‘due regard’ to the need to eliminate unlawful discrimination, harassment, and victimisation, and to advance equality of opportunity and foster good relations between people who share a protected characteristic and those who do not. Protected characteristics under the Equality Act comprise age, disability, gender re-assignment, pregnancy and maternity, race, religion or belief, sex, sexual orientation and marriage or civil partnership status.

3.2.    Given its context, there are no equality comments directly related to the standalone decision, however, those captured below relate to the overall scheme, and its impact on equality, diversity and inclusion.

3.3.    The housing shortage in London disproportionately affects people with certain protected characteristics. Indeed, Black, Asian and other minority ethnic Londoners are more likely to live in poverty (defined as having an income below 60 per cent of the national median) and more likely to be affected by London’s high housing costs. Increasing the supply of housing, and in particular affordable housing, through this scheme will help to achieve positive impacts that align with the ‘three needs’ outlined above. 

3.4.    The scheme aligns with objectives 1 of the Mayor’s Equality, Diversity and Inclusion Strategy Objectives (2022) by increasing the provision of genuinely affordable homes for the benefit of those groups and communities that are most likely to live in overcrowded, poor quality or unaffordable housing.
 

Links to mayoral priorities

4.1.    This calculation is part of the delivery of the Wembley regeneration scheme; a development which has secured 30 per cent affordable homes.

4.2.    Ensuring the overage calculation is complete and evidenced supports the objective of obtaining best value for public land.

Risks

4.3.    There are several risks associated with this commission. These are outlined in the table below with suggested mitigations:

4.4.    There are no known conflicts of interest from those involved in the drafting or clearance of this decision form.

5.1.    Receipt from overage forms a significant part of GLAP’s business income. The proposed spend of £25,000 although not budgeted, is necessary to assess the amount of overage recoverable from “Quintain”. 

5.2.    The team had earlier put forward a forecast request for the same amount which although pending approval, the proposed forecast is intended to cover the £25,000 expected spend on this overage evaluation which would be beneficial to GLAP on completion of the evaluation. 

5.3.    The overall risk of the spend is therefore assessed to be low on the company’s finances. 
 

6.1.    The contract will be directly managed by a Senior Development Manager from the Land and Development team.
6.2.    Progress will be monitored against an agreed programme.