Councils are increasingly seeking to bring in private sector investment to get regeneration and development projects off the ground. As part of our special focus on the issue LGC spoke to two experts about what makes for a succesful partnership.
Deborah McLaughlin, managing director - real estate projects, Capita: “Investors are looking for a number of key factors: population growth; high demand for retail; a resilient economy; great transport connectivity; and proactive civic leadership.
“Investors want either a mayor or a leader who is willing to engage with private sector partners and give consistency of approach. Often development takes year and years and developers and investors don’t want a weak or inconsistent approach.
“How easy is it to do business with your place? You need a responsive planning system and a willingness to step in. You’ve got to be prepared, if it’s not going as well as hoped, to step in, take a lease or be a joint funder with a partner. There’s that backstop position where local authorities will step in when they need to.
“How does a local authority present itself to the market? How do they pull together propositions so the market can receive them? Sometimes [investors] will say, ‘it looks like an opportunity but it’s not clearly defined, the local authority is not telling us their strengths, they are not showing they are willing to collaborate’.”
Laura Mason, managing director of investments, Legal & General: “In Bracknell [see analysis] there was no formal arrangement; it was genuine collaboration. The council was very involved in our project meetings, so it had input on a regular basis. It was instrumental in the whole of the process. It made sure we understood what was needed. That can only happen if the council is willing to do so and commit the time.
“We have a legal joint venture with Newcastle City Council, which owns some land with Newcastle University. We have entered into a joint venture with both, with L&G bringing in the funding for the first commercial scheme.
“The local authority didn’t just want to sell the land and let it be developed in any way the purchaser wanted. [The development will include] office buildings, teaching space, residential units for people in the offices and university buildings. We have agreed to work together to bring phases of the scheme forward and have an agile way of approaching that, so it can evolve as the scheme evolves.
“The council has agreed to take a long-lease on the first office at below-market rates, so they can get an income profit on the rental when it’s let for commercial use.
“In both these schemes, the local authorities have been very commercial and realised their involvement is quite key. [They have] the confidence to put forward these schemes where not much has happened or it has been difficult from a local perspective. [They have helped] us understand what we need to do to get it through their executives.”
What investors want from local government