As well as generating money for frontline public services, the move lets the council influence what good quality place-shaping, infrastructure and design look like
- Project: Property Development through a strategic joint venture
- Objectives: Optimise opportunities from our assets to generate new long term financial returns; Deliver a greater total financial return to the council than previously; Drive the pace of development; Create a quality brand for the developments; Build a long-term strategic relationship with a partner
- Timescale: Contract length is 15 years, with potential to extend for a further five
- Cost to authority: Initial investment in external expertise cost roughly £400,000, added to the time and commitment from council officers, particularly the project management and procurement teams to co-ordinate a major procurement exercise
- Number of staff working on project: Close engagement took place between councillors and senior officers supported by inputs from legal, finance, procurement, project management and HR teams
- Outcomes: A major contribution to the government’s objective of house building; an improved pace of delivery; direct engagement in the ongoing debate about what good growth looks like, including place shaping, and quality and sustainability in design; infrastructure funding; and realising a wide range of financial and operational benefits
- Officer contact details: Owen Mapley, director of resources, Hertfordshire CC
In common with many other authorities, councillors and officers at Hertfordshire CC have been looking at opportunities to act more commercially and generate new sources of income to protect front
line public services. As part of this work, during 2016 we started exploring the potential for the council to make better use of its surplus land.
In the past if we had surplus or unused sites we would typically seek best consideration by selling them on the open market, usually to property developers, after securing optimal planning permission for the site.
But this time we recognised that if we developed the sites ourselves we could generate significant new income streams. In addition, our councillors saw this as an important opportunity to influence what good quality design and development look like in our communities.
We took time to research what options were open to us, and what risks and rewards these entailed. We also considered what other councils were doing as part of our work to develop a potential model to take forward.
Analysis of our assets identified that we could develop over 6,000 houses from surplus and available landholdings. But we also realised early that at this scale of development we didn’t have the capacity or expertise within the council to do this independently.
Therefore, in early 2017, Hertfordshire CC’s cabinet approved an OJEU procurement exercise to seek a third party for a joint venture partnership to pursue this scale of development.
This was a major procurement exercise. It was important to gauge the resources needed to maintain good dialogue with the bidders, and to show rigour throughout the process, reducing the risk of challenge from the bidders who would ultimately be unsuccessful.
While this procurement was underway in the summer of 2017, cabinet also approved setting up Herts Living Ltd, a new company wholly-owned by the council, to lead our development activities. We also recruited as managing director Steve Faber, who has extensive experience in private sector property development and investment management.
Acting through a wholly-owned property company allows us to focus activity and specialist expertise, while providing sufficient scope to act quickly and with entrepreneurial drive. Appropriate political oversight is maintained through a ‘member advisory group’ that will retain decision making authority for important strategic matters.
In April 2018 the council announced that Morgan Sindall Investments Ltd was the successful bidder from our procurement for a joint venture partner. Morgan Sindall set up a subsidiary, Community Solutions for Regeneration (Hertfordshire) Limited, which has entered into a 50:50 partnership with Herts Living Limited, creating the joint venture entity known as Chalkdene Developments.
Chalkdene’s work will focus on an initial tranche of 12 sites, seeing around 500 properties built. We have set up the contract for 15 years, with the potential to extend for a further five. Our potential pipeline includes around 40 sites, ranging from small plots of a few units up to large urban extensions, with a total gross development value of up to £2bn.
Although most of these are likely to be housing-led schemes, we are also exploring the potential to provide commercial space and address frontline service needs. These include supporting our adult social care services through specialist accommodation with different tenure types, including extra care, residential care and bungalows offering supported living.
We structured the procurement and the subsequent contract to allow work with our partners across the Hertfordshire Property Partnership, the group of public services pursuing the government’s One Public Estate initiative in Hertfordshire. This lets Chalkdene work with or on behalf of other public sector authorities in the county, including the district and borough councils, and police and health organisations.
Enhancing our approach to developing surplus land has been a priority for councillors in recent years and they set out a clear strategic direction for this work. We made extensive efforts to keep members engaged throughout, providing regular updates progress reports, and presentations.
We were also pleased to receive positive feedback from several of the bidders – including those that were unsuccessful – who thought the procurement was well run and were grateful for the dialogue we maintained with them.
Keep the pace
Our challenge to the joint venture now is to show pace, moving through the necessary planning and promotion work to start building, so it is good to see that work will start on site later this year.
The combined totals of the local plans being developed by the ten district and borough councils in Hertfordshire will see around 100,000 homes being built in the county over the next 15 years.
By becoming a major developer, we provided significant financial returns to aid frontline public services in Hertfordshire, and can positively influence the debate about what good quality place-shaping, infrastructure and design look like. Growth is coming – we want to help ensure that it is ‘good’.
Owen Mapley, director of resources, Hertfordshire CC