Meeting of the

CABINET
__________________________________

Wednesday, 1 July 2009 at 5.30 p.m.

_______________________________________

SUPPLEMENTAL AGENDA
______________________________________

PAGE WARD(S)
NUMBER AFFECTED

6 .1 Blackwall Reach Regeneration (CAB 007/090) - To 1 - 32 Blackwall &

Follow Cubitt Town

6 .2 Ocean Estate Regeneration (CAB 008/090) - To Follow 33 - 62 Limehouse;

Mile End &
Globe Town;
St Dunstan's
& Stepney
Green;

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 Agenda Item 6.1
Committee: Date: Classification: Report No: Agenda
Item:
Cabinet 1 July 2009 Unrestricted

Report of: Title:

Corporate Director Development and Blackwall Reach Regeneration Project

Renewal
Wards Affected: Blackwall and Cubitt Town
Originating officer(s) Aman Dalvi

1. SUMMARY

The purpose of this report is to update Cabinet on Blackwall Reach Regeneration

project progress and seeks decisions that will help take the project forward to the
development stage.

2. RECOMMENDATIONS

Cabinet is recommended to:

2.1 Note the project milestones set out in section 4.4 progress against which is
dependent on Cabinet agreeing the remaining recommendations set out below.

2.2 Agree that £13m capital resources be provided over a three year period to fund
the leaseholders/freeholders buybacks programme; purchase of the Woolmore St
Health Centre land interest; and Tenants’ Home Loss and disturbance payments
to facilitate the Blackwall Reach project on the basis of commencing decanting
and the main buyback programme in Autumn 2010.

2.3 Agree a revised baseline capacity of 1,600 homes of which a minimum of 35% of
the accommodation by habitable room numbers will be affordable, with 45% of
the social rented units to be provided as accommodation that is three bedroomed
or greater and that officers work with the HCA (Housing and Communities
Agency) to establish the additional level of housing which can be accommodated
on the site in a sustainable fashion, subject to detailed design assessment and
also review the business plan to re-assess planning obligations that can be
generated from the revised housing totals.

2.4 Authorise the Corporate Director of Development and Renewal, Assistant Chief
Executive (Legal Services) and Director of Resources after consultation with the
Chief Executive and Lead Member Housing and Development to agree the

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 detailed terms of the Collaboration Agreement with the HCA and the
Procurement Strategy including Phase 1A and 1B and approach to future
phases.

2.5 Note progress made on community consultation with residents living on the
Blackwall Reach site and delegate to the Director of Development and Renewal
in consultation with the Lead Member Housing and Development authority to
finalise the community charter and utilise this document to support the
procurement process.

2.6 Note that the Corporate Director Children’s Services will need to review
education and S106 (planning obligation) supported provision originally
anticipated in the Development Framework in view of the proposed lower density
scheme and note that should the Council wish to pursue the development of a
three form entry school additional capital resources will need to be identified.

2.7 Approve the approach set out in clause 11 to facilitate vacant possession of all
land interests, subject to the decision made in 2.2 above

2.8 Agree that right to buy leaseholders/freeholders interests will continue to be

acquired, to meet contractual commitments that have been made by the Council.
The estimated additional cost (net of the £1.5m income from the sale of the St
Matthias Site) is £570,000 which will require provision in the Capital Programme
and a Revised Capital Estimate.

2.9 Agree that an additional £1.3m will need to be provided to meet ‘hardship’ cases
which are to be limited to five in number, with criteria and process to be agreed
by the Corporate Director of Development and Renewal after consultation with
the Assistant Chief Executive (Legal Services).

2.10 Agree that decant status for tenants and further proactive buy back of RTB
(Right to Buy) properties will continue to be suspended until Autumn 2010.

2.11 Authorise the Corporate Director of Development and Renewal after

consultation with the Assistant Chief Executive (Legal Services) in consultation
with the Lead Member Housing and Development authority to negotiate and
agree the public sector Collaboration Agreement with the HCA (Homes and
Communities Agency).

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3. BACKGROUND

3.1 The Blackwall Reach Regeneration Project is a key priority for the Council. The
proposed scheme as described in the Council adopted Development Framework,
approved in March 2008, was planned to lead to the following:

• 2,500-3,000 homes for the site

• 2 hectares of open space
• 10,000-15,000 sqm commercial space
• 1,500 sqm community & health
• 4,000 sqm education
• 1,000 sqm leisure space

3.2 The original programme indicated a start on site for the scheme in early 2009
with completion by 2016. A key recent development has been the acquisition by
the Homes and Communities Agency of the private developer Ballymore’s
interest in the site. In addition, DCMS has now confirmed the issue of a
Certificate of Immunity which will enable the eventual preferred developer to
demolish the Robin Hood Gardens element of the site. Specific decisions are to
be sought from Cabinet on 1 July 2009 in order to progress the project. The
decision areas (which include issues for Cabinet to note) are as follows:

• Milestone Programme (Project Plan)

• Business Plan and Funding
• Planning and Residential Density Issues
• Affordable Housing Strategy
• Procurement Strategy
• Consultation and Community issues
• Education Infrastructure
• Land Assembly
• Decant Strategy
• Draft Heads of Terms for the Collaboration Agreement with the Homes
and Communities Agency

4. PROJECT PLAN

4.1 With the announcement on Certificate of Immunity, a number of key actions

during the next twelve months will need to be taken, principally
agreement/finalisation on/of the:

• The Procurement Strategy and procurement of a development partner for

Phases 1A and 1B
• Business Plan modelling
• Scheme design
• Housing Needs Survey

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 • Resident engagement on relocation options
• Finalisation of the Community Charter
• Signage on site describing the project and timelines

4.2 The above work will be necessary to achieve the start of the construction phase
of the development in late 2010 which is scheduled to eventually complete in
Early 2018. The relatively early start of the project is due to the St Matthias Site
(Phase 1A) and the former Ballymore Site (Phase 1B) both being in HCA
freehold ownership, however there are some outstanding leasehold/tenancy
issues to be resolved on the former Ballymore site. Phases 1A and 1B of the
scheme are intended to yield approximately 100 social rented homes during the
second half of 2012 which will become key for relocation purposes to achieving
vacant possession of the remaining tenanted units by Early 2013.

4.3 These issues and a later decision on the requirement for a CPO (closer to when
a developer is appointed the developer and a planning consent in place) will
need to be considered and agreed by Cabinet. Intensive preparatory activity will
be required in 2009/10 (ie, up to March 2010) will be required to achieve a start
on site in late 2010. Key activities will

4.4 The remaining phases of the development – Phases 2, 3, and 4 – are all
scheduled to begin in Late 2012/Early 2013. The overall programme can be
illustrated as follows:

Start Completion

Phase 1A & 1B Late 2010 Mid 2014

Phase 2 and School Late 2012 Early 2016
Phase 3 Early 2013 Mid 2016
Phase 4 Early 2013 Early 2018

4.5 Achieving these timelines will be dependent on Cabinet agreeing the

recommendations set out in this report. Specifically, the development partner
procurement process for the Phases 1A and 1B will need to begin in the Summer
2009 in order to begin the construction process in Late 2010.

5. BUSINESS PLAN AND FUNDING

5.1 The original project was predicated on development value on completion of the
project generating a surplus for all development partners and that the affordable
housing component could be funded without recourse to affordable housing
grant.

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5.2 The latest iterations of the business plans, based on c 1,600 homes with a 35%
affordable housing component, an overall scheme deficit of c £40m. £13m of
additional capital resources are required to purchase leasehold and freehold right
to buy buybacks; acquiring the Woolmore St Health Facility land interest; and
budgetary provision for home loss and disturbance for tenants. The Council has
agreed terms for the re-purchase of nine properties acquired under the RTB
(totalling £2.1m inclusive of Home Loss and Disturbance) on the Blackwall Reach
site, which will exceed the £1.5m budget available from the St Matthias Site.
This additional sum will need to be met from within the £13m identified to fund
the necessary acquisitions at para 14.3. The Council is now at a point where
there are insufficient capital resources to proceed with further purchases.

5.3 The HCA has invested £10m of its own resources in purchasing the Ballymore
land interests, there is now an requirement from them that the Council is
requested to identify resources from its own capital programme to resource the
buyback programme. Early discussions have been held with HCA housing
investment officers on possible future gap funding, but the scheme is in a
relatively early stage of development to be seeking firm commitments of funding.
There may be some merit in the Council seeking a Collaboration Agreement with
the housing arm of the Government’s Homes and Communities Agency similar to
that proposed for the Ocean Estate.

5.4 Given that the present decant programme is currently planned to take place
during 2009/12, it is likely that the capital spend and necessary resources should
be spread over the same period, with the peaks in expenditure during the first
and third years of the programme. On average, the capital resources required will
be £4.3m per annum during 2009/12 financial years. Other sources of funding
can be explored, but with the changes in housing funding arrangements (with the
merging of the Housing Corporation and English Partnerships into HCA) there
are few options for external funding.

6. PLANNING AND RESIDENTIAL DENSITY ISSUES

6.1 The Blackwall Reach Development Framework (March 2008) adopted by Cabinet
is the Council’s Draft Interim Planning Guidance for the site. Since the adoption
of the Framework, a number of issues have emerged which has required the
Council and its partners revisit the residential unit numbers proposed for the site.
Specifically:

• The developable area of the site will be reduced due to the prohibitive
engineering costs associated with building a platform over the Blackwall
Tunnel Approach Road meaning there is less area available for housing

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 • The Council’s Local Development Framework has progressed to Options
and Alternative Stage providing additional planning guidance for the
Blackwall area
• Demand for private market flats has fallen considerably since the
Framework was adopted.
• The site is now entirely under public ownership and therefore commercial
development pressures have been reduced

6.2 Officers are confident that the baseline number of homes at 1,600 can be
successfully accommodated on the site. There may be scope for this baseline to
be increased through the design process whilst meeting LBTH and Mayoral
planning policies but it is likely that the final number of units will be significantly
less than the illustrative proposals in the Development Framework given the
factors detailed above. This will need to be discussed in detail with HCA and their
consultants, although it should be noted that they are content to be working with
these figures for business planning purposes, but have indicated that they wish
to retain the option of a scheme with higher numbers in the event of demand for
market housing returning in the near future.

6.3 This will have a ‘knock on’ impact on S106 requirements which need to be fully
explored as this will have an impact on the economic viability of the project.

6.4 A revised baseline capacity of 1,600 homes of which a minimum of 35% of the
accommodation by habitable room numbers will be affordable, with 45% of the
social rented units to be provided as accommodation that is three bedroomed or
greater. It is also proposed that officers work with the HCA to establish the
additional level of housing which can be accommodated on the site in a
sustainable fashion, subject to detailed design assessment and also review the
business plan to re-assess planning obligations that can be generated from the
revised housing totals.

7. AFFORDABLE HOUSING STRATEGY

7.1 The current proposals for the affordable housing on Blackwall Reach involves a
substantial housing association new build development. The original proposition
was for the St Matthias site to be brought forward by HCA to facilitate a quantum
of the decant requirements from the estate. With the acquisition of Ballymore
land, a further phase of the development is planned to be brought forward, albeit
with a small component of affordable housing.

7.2 Resident representatives have expressed a desire to retain their ‘secure tenancy’
status despite the proposed switch to a housing association owned and managed
housing. A report was commissioned from Ikon consultants to consider how a
Local Housing Company (LHC) might ‘host’ secure tenancies for future tenants.
The LHC report established that the company option would not achieve the

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 outcome sought as only a local authority landlord can issue a secure tenancy.
Tenants wishing to retain secure tenancy will have to relocate to a Tower
Hamlets Homes managed property located elsewhere in the immediate area or
wider locality.

7.3 The situation has been further complicated by the Government’s announcement
that it wishes to see local authorities build council housing again. Guidance has
just been issued by CLG on how the new initiative will work – including releasing
a funding pot of £100m nationally for local authorities to bid against, although
HCA has been asked to work with Councils to identify sites in local authority
ownership to bring forward on a pilot basis. However, this bidding guidance
anticipates half the funding will be in grant form, the balance involving prudential
borrowing. It is unlikely the income stream from these new homes alone would
cover such borrowing, so countervailing savings would be needed elsewhere
from within the HRA to support any new Council housing. Land is expected to be
provided at no cost which may prove problematic in this case as the initial
development sites are both within HCA’s development arm’s ownership.

7.4 A start on site is preferred this financial year which would be difficult to achieve
given the embryonic stage of our proposals and completion of all homes would
need to be achieved by March 2011 which means the current planned timetable
towards commencement would be impractical.

7.5 The terms of the Government’s bid round do not present a good fit for our
proposals for the regeneration of Blackwall Reach/Robin Hood Gardens. The
Council is currently exploring other, smaller sites that would be suitable for the
HCA initiative.

8. PROCUREMENT STRATEGY

8.1 The procurement milestones for the key development sites are set out in Annex
A. It has been agreed by Cabinet that the St Matthias Site (Phase 1A) be
marketed by HCA, and any decision to include Phase 1B in the procurement
process would need to be agreed by Cabinet. The decisions relating to
procurement of development partners for the later phases – 2, 3 and 4 – will be
decided by the Project Board, which will also require decisions on resourcing the
respective processes.

8.2 A ‘Draft Heads of Terms for Collaboration Agreement’ (see section 13 below)
are under negotiation with HCA. These will set out the agreement in respect of
outcomes and funding between the public sector (HCA and LBTH) and the
governance arrangements under which the project will be managed. It is
proposed that the current Project Board/Steering Group arrangements be
continued, and that the Project Procurement Strategy should be endorsed by the
Project board.

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9. CONSULTATION AND COMMUNITY ISSUES

9.1 A first stage of extensive community consultation preceded the adoption of the
Development Framework by Cabinet in March 2008. Cabinet required that
community engagement be continued on the proposals in the Development
Framework, as outline design work progressed and on the re-housing strategy
and decant process.

9.2 An estate-wide event launched the re-housing needs survey process in May
2008 and specific sessions were held with a new voluntary representative forum -
the Local Voices Group (LVG) – addressing tenants’ concerns about changes in
tenure and home owners’ demands for a 100% stake in a replacement home.
The subsequent hiatus arising from the COI issue and the necessary suspension
of decant status from Autumn ‘08 have disrupted the second consultation stage.

9.3 The delay has been met with periodic bulletins to the community, the opening of
the project shop and specific work with residents’ delegates to develop the
housing chapter of a residents’ charter. Officers are responding over a series of
sessions to residents’ key concerns. The re-housing needs survey has also
progressed steadily with visits to tenants and waiting list cases and this is more
than 60% complete.

9.4 In March 2009 the Tenants’ and Residents’ Association reformed its executive
committee, apparently in frustration at perceived delays. This has disrupted
positive discussions on the Community Charter: officers have convened refresher
meetings in May with new delegates and hope to pick up on the good progress
made previously to retain continuity.

9.5 The main consultation and engagement activities in 2009/10 will be:

• Re-housing needs survey - completion in May ‘09 and ongoing surgeries at the
project shop.

• close working with Residents’ Regeneration Group (RRG) on the Community

Charter for update to the wider Local Voices Group, including:-

o completion of housing chapter by Summer 2009 for further consultation

with the LVG
o work on the design related chapter during Summer 2009
o general community consultation on design in the late Summer / Autumn
2009

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 • bi-monthly newsletters / bulletins, dedicated drop-ins at project shop and low-
level engagement activity like door-knocking, to monitor views and information
needs, and surgeries at the local school;

• facilitation of a delegated residents’ procurement panel, following the Ocean

model, to help set the qualitative brief for the RSL/developer partner, and
evaluate bids;

• periodic LVG meetings (3-4 during late Summer / Autumn) to present the Charter
and ongoing design /public realm issues to a wider forum and receive updates
from residents’ sub-groups covering other matters like socio-economic
regeneration;

• estate-wide event prior to outline planning submission - January 2010

10. EDUCATION INFRASTRUCTURE

10.1 The expansion of Woolmore Primary School to a three form entry school is a
planned outcome of the project and officers from Children’s Services and
Development and Renewal continue to plan on this basis. This is programmed
as part of Phase 2 of the project, planned to begin in late 2012 and complete
early in 2016 (see section 4.4).

10.2 Since the inception of this project, Children's Services have been working on the
basis of expanding the existing school from one form of entry to three forms of
entry (i.e. from 210 places to 630 places, plus nursery classes) and that this
would be substantially funded from the s. 106 envelope. The expansion of the
school was predicated on both a need to increase school provision as a result of
the scheme, but also increase provision for the wider area. A reduced scheme
affects both the demand for school places and the ability to fund this and
Children's Services will first want to consider other additional funding before
reducing the size of the enlarged school. The expanded school has always been
viewed as part of Children's Services borough-wide strategy for increasing school
places, not just to meet the needs associated with Blackwall itself. This needs to
be clearly understood in the context of future S106 negotiations and any
additional options appraisal work that may arise.

11. LAND ASSEMBLY

11.1 The large majority of the site is now in freehold ownership by the Council and the
HCA. Ballymore’s interest in the site was sold to the HCA on 31 March 2009,
complementing HCA’s land interest in the St Matthias Site.

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11.2 On the former Ballymore site, there are still some small parcels to be brought in,
including a 42 year lease on a works yard; a squatted flat in a building adjacent
to the LLiC Building; two small freehold interests in Naval Row.

11.3 There also remains some unregistered title in the bus turning area and Cotam Rd
which requires further research and resolution. Other key land issues are:

• Local Labour in Construction (LLiC) – LBTH owned site and use to be

relocated
• TfL Tunnel Controls of Depot Area - Agreement to be reached with TfL on
use of area around the mouth of the depot
• Health Centre – temporary and permanent location to be identified
• Mosque discussions are proceeding on the basis of moving this building
from the South East corner of St Matthias site to the slightly larger site on
the North East. This would be is achieved through a straight swap of
reversionary freehold and leases. The freehold interest in the new site
being currently held by the Council and the intermediate leasehold interest
by HCA. The Mosque presently holds the freehold interest in its existing
site. They will through the swap hold the freehold interest for their new
site and on their former site the Council will receive the freehold interest
and HCA a long leasehold interest consistent with the rest of the St
Matthias site.
• Millennium Green a meeting is being arranged with the Trustees to
discuss the development
• Woolmore School – to be expanded from a one form entry to a three form
entry primary school.

11.4 It is expected that a CPO will be required in due course when planning
permission has been obtained to ensure that vacant possession of the whole site
(including residential leaseholders and freeholders) is achieved by the target date
to facilitate the development of the scheme.

11.5 The Certificate of Immunity Notice has been issued by the Secretary of State for
Culture, Media and Sport (Appendix 1)

12. DECANT STRATEGY

12.1 The following blocks comprise the residential components of the Blackwall Reach
Project and are required for vacant possession by January 2013. The individual
blocks have the following characteristics.

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 Block Name No of Units Vacant*
Anderson House 22 (16 LBTH / 6 RTB) 1
Mackrow Walk 11 (5 LBTH / 6 RTB) 1
Woolmore St 5 (1 LBTH / 4 RTB) 0
Robin Hood Gardens (W Block –Nos 104 (88 LBTH / 16 RTB) 3
1-104)
Robin Hood Gardens (E Block – Nos 110 ( 100 LBTH / 10 RTB) 1
105 – 214)
Total 252 (210 LBTH / 42 RTB) 6

* Vacant either empty property or short term let

12.2 The blocks are also characterised by a third of the rented properties which are
three and four bedroom properties whose households are also likely to suffer
from overcrowding, thereby making decant requirements quite difficult.

12.3 In summary, the total number of residential units on the estate is 252, of which 42
homes (17%) are owned by freeholders or leaseholders originally purchased
under the right to buy. Of the 252 total, 6 homes (2%) are voids.

12.4 To date, the Council has repurchased three homes from

leaseholders/freeholders at an approximate cost of £610,000 (inclusive of Home
Loss and associated fees). Formal offers have been made to a further five
leaseholders on the estate which is expected to cost a further £1,460,000
(inclusive of Home Loss and associated fees). Therefore meeting existing
obligations will total £2,070,000.

12.5 Home owner buybacks at this stage will be prioritised on a hardship basis only.
To meet hardship cases it is proposed that a budget for five homes to be
repurchased is set which at an average value of £225,000 would total
£1,300,000. This is where the owner can demonstrate an essential need to
relocate from the area. The full buy-back programme will commence in tandem
with the tenants’ decant programme. This will allow time for more detailed
discussions with owners about their aspirations, specifically whether they require
a new replacement home on Blackwall Reach which more than likely be provided
by the RSL developer.

12.6 The total estimated cost of repurchases is expected to be £3,370,000, of which

£1,500,000 will be met by the capital receipt generated from the sale of the St
Matthias Site. Therefore the additional capital programme commitment to meet
existing commitments and hardship cases will be £1,870,000, this will be a first
call upon the £13m of additional capital resources sought within this report.

12.7 The total cost associated with the repurchases of land interests on Blackwall
Reach is £13m as previously stated, comprising £12m for right to buy
repurchases and £1m for the purchase of the Medical Centre in Woolmore St.

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12.8 Given that the Certificate of Immunity has now been issued by the Government,
the position on this strategy is to deliver vacant possession of the tenanted part
of the estate needs to be considered. Concerns have already been expressed
about the impact of ‘community drain’ and specifically the current absence of new
housing in the locality that residents can move to as a community grouping.
There are still substantive issues on design, community charter, and the wider
relocation offer that need to be worked through with the community. By
reinstating decant status at this moment in time, the opportunity to engage with
the community on these issues will be undermined.

12.9 The Council remains committed to the principles and detail of the re-housing
strategy set out in the March 2008 Report to Cabinet, creating options for tenants
and homeowners (leaseholders and freeholders) to return to housing in the new
development.

12.9 Interests will continue to be acquired, to meet contractual commitments that have
been made by the Council. The estimated additional cost (net of the £1.5m
income from the sale of the St Matthias Site) is £570,000 which will require
provision in the Capital Programme and a Revised Capital Estimate. £1.3m will
need to be provided to meet ‘hardship’ cases which are to be limited to five in
number, with criteria and process to be agreed by the Director of Development
and Renewal and the Assistant Chief Executive (Legal Services). Decant status
for tenants and further proactive buy back of RTB properties will continue to be
suspended until Autumn 2010. The additional £13m resources requested in
recommendation 2.2 includes the sums identified above, in addition the £1.5m
already programmed and committed.

13. HEADS OF TERMS FOR THE COLLABORATION AGREEMENT WITH THE

HOMES AND COMMUNITIES AGENCY

13.1 In order to progress the project further, the HCA and LBTH need to formally
agree roles and responsibilities in order to maximise available resources to the
two organisations and ensure there is no duplication of effort. Reference is made
earlier in this document to the Procurement Strategy which will also feature in the
Collaboration Agreement. Other key elements of the agreement are as follows:

13.2 Outline Planning Application – LBTH and HCA to submit a joint planning
application for the site based on the planning principles set out in the
Development Framework. The parties will also jointly submit a detailed planning
application for Sites 1A and 1B (both in the ownership of HCA).

13.3 Affordable Housing Provision – The scheme to provide a minimum of 35%

affordable housing provision, with a minimum of that provision to be 80% social

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 rent with the remaining amount to be shared ownership. This provision is
caveated by the need for the overall scheme to be commercially viable.

13.4 Land Acquisitions – Whilst the HCA and LBTH are the freehold owners of the
large proportion of the site, a number of leases and occupiers exist that will
require concerted action both separately and jointly to achieve eventual and
timely vacant possession of the entire site.

13.5 Project Board Role and Membership – The Project Board is proposed to
comprise three members each form Tower Hamlets and the Homes and
Communities Agency with additional members recruited subject to agreement by
both parties..

13.6 Capital Funding – The HCA will be seeking to recoup £1.7m already spent on
the Development Framework from the development on a “first charge” basis. The
HCA is also intending (subject to HCA Board Approval) to spend further
unspecified sums on the project that will need to be clarified during the Heads of
Terms negotiation process. These additional sums are proposed to be recovered
on a “first charge” basis from the outputs of the Business Case. Reference is also
made in the document to LBTH’s existing budget of £1.5m for RTB leasehold
acquisitions and reference to a further £13m for land acquisitions. Reference is
made to professional fees incurred by the Council being reimbursed when the
development agreement for the Southern site is unconditional.

13.7 Compulsory Purchase - It is expected that the Council will need to utilise its
compulsory purchase order powers once an outline scheme is ready for
consideration to acquire any third party land interests and consequently will
secure the necessary Cabinet authority in due course. HCA will pay for the
inquiry costs: LBTH will pay for acquisitions north of Poplar High St and the
selected developer will pay for acquisitions south of Poplar High St.

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14. COMMENTS OF THE CHIEF FINANCIAL OFFICER

14. COMMENTS OF THE CHIEF FINANCIAL OFFICER

14.1 Recommendation 2.2 of the report seeks consideration of the way forward with
regard to immediate scheme progression. This proposes £13million should be
identified to facilitate the buy back of the Right to Buy; other properties on the
estate; tenants’ home loss and disturbance costs – to be phased over 3 years.
Officers have assessed how this could be funded in the context of very limited
resources, and Cabinet’s previous decision to adopt a prudent approach to the
allocation of future capital receipts for investment, as agreed in February 2009.

14.2. It is necessary to identify funding at this stage to cover this risk in order to be
sure of being able to complete the Blackwall Reach scheme, based on current
costings, and, it is believed, to satisfy the HCA that the Council is able to fund
this obligation. However it is hoped that a partial recovery in the housing market
will mean that not all the funding is required for this purpose, and at that stage
can be made available to other priorities.

14.3 The £13m buyback programme; decant costs; and the purchase of the Woolmore
Street Medical Centre could be funded as follows. This anticipates capital
receipts in 2009/10 from recent asset sales. These are contracted payments,
and there is relatively little risk that they will not be received, but there is a small
residual risk. As reported to Cabinet at the time the capital programme for
2009/10 was set, the funding of the Local Priorities Capital Programme for
2010/11 will be largely dependent upon further asset sales.

Available Capital Receipts £5.574m

Anticipated contracted capital receipts in 2009/10 £3.426m

Section 106 - affordable housing and associated income £1.500m

Available capital element of Housing & Planning

Delivery Grant £0.500m

Mainstream Housing Capital Programme £2.000m

£13.000m

14.4 Should this not be agreed the Council would have to defer the decant and
buyback process until a development partner has been selected, except in a
limited number of cases. In this regard members will note that the current capital

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 estimate for buy-backs is £1.5m and this is fully committed, and resources do still
need to be identified for the recommended limited scheme. It must be noted that
there is no guarantee that this process will deliver any additional resources to
continue the programme. Whilst a delay may improve the viability of the
business plan as the market for house sales begins to improve, it could also
impact on the valuation and purchase process. It is also likely to
present difficulties for HCA in progressing the underwriting of the procurement
process.

14.5 Officers’ initial assessment, as outlined in paragraph 7 of the report is that the
Government’s recently announced initiative to release funding for the build of
new council housing, matched through prudential borrowing is not deemed
suitable for this scheme because of the cost to the HRA and the timescales for
the bidding process

14.6 Paragraph 10 of the report sets out the current position with regard to the
planned expansion of Woolmore School as part of the overall redevelopment, in
light of current business plan projections associated both with the reduced
density and economic outlook. At this stage the business plan whilst providing
part of the resources to support any school expansion, this is likely to be
insufficient to meet the full cost of the project. The capital needs will require
further assessment as part of the overall review of the Council’s capital strategy.
Furthermore paragraph 11 highlights a number of other issues requiring
resolution, as part of development of the scheme, which have potential financial
implications. These must all be seen in the context of very limited, if any,
resources available.

14.7 Ongoing revenue costs associated with the early development of the scheme are
predominantly project staff and consultation costs and will be contained within
available Development and Renewal budgets.

15. CONCURRENT REPORT OF THE ASSISTANT CHIEF EXECUTIVE (LEGAL)

15.1 The Council has the power under section 111 of the Local Government Act 1972
to enter into the Collaboration Agreement with the HCA. The next step will be to
procure one or more developers for the scheme. This will be done under the
Public Procurement Regulations in line with European Procurement Law. All
buybacks and other compensation to vacate the properties will be carried out in
line with appropriate policy under the Housing Act 1980.

16. ONE TOWER HAMLETS CONSIDERATIONS

16.1 This scheme will contribute to One Tower Hamlets objectives. The three
objectives are to reduce inequalities; ensure community cohesion; and,
strengthen community leadership.

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16.2 On reducing inequalities, the new scheme proposed will lead to a significant
increase in affordable housing on the site. Currently there are 210 social rented
homes and 42 homes owned by leaseholders and freeholders. If the baseline
1,600 homes are developed, this will lead to over 500 affordable homes
developed and associated socio-economic infrastructure which will help facilitate
the creation of a sustainable community. The quality of the new housing, and the
broader living environment, will be a significant improvement on what is currently
sub-standard housing and a generally unattractive built environment. Expansion
of Woolmore St School will also help improve educational attainment and
consequently improve employment access for children from households on low,
often benefit dependent, incomes

16.3 On ensuring community cohesion, the Council is working closely with the
community to facilitate an inclusive and effective decanting process that helps
preserves the ‘social capital’ that exists amongst the residents of Robin Hood
Gardens and associated blocks. In addition to the intensive consultation process
that has been undertaken to date, the recommendation in this report to delay
decant status until Autumn 2010 will stop the ‘community drain’ impact that has
characterised previous decant processes, and help create opportunities for
residents to stay in the locality by taking advantage of social rent tenancies that
become available from the eventual development of Phases 1A and 1B.

16.4 On strengthening community leadership, the Council continues to work

closely with the Tenants and Residents Association and is also working closely
(in partnership with the Homes and Communities Agency) with the local Mosque
which has relocation requirements which are planned to be met on the St
Matthias former school site. The Council will continue to work with the community
to ensure that an effective and inclusive consultation process helps to ensure
that community views are clearly understood and taken into account when key
decisions are required to be made.

17. SUSTAINABLE ACTION FOR A GREENER ENVIRONMENT

17.1 There are three key sustainability benefits to this project. Firstly, it is planned that
all the new residential development will meet a minimum standard of Code for
Sustainable Homes Level 4. Whilst the Council will seek to achieve a higher
(zero carbon) standard, Level 4 is higher than that currently required by the
Homes and Communities Agency for affordable housing. The Government’s
target for all housing to be zero carbon (CSH Level 5/6) is currently 2016, so it
may be that the last phase of the development will be impacted. This will be
dependent on the necessary technology and available finance to achieve.

17.2 Secondly, a key element of the sustainability agenda is using land in urban
environments to maximum effect. This both maximises the value of the land itself

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 and in strategic planning terms, reduces pressure to build on Greenfield sites.
There are currently 252 homes on the Blackwall Reach site. The new scheme will
lead to a minimum of 1,600 homes being developed; an expanded school; and
retail, health, community and leisure facilities. This scheme will also make
maximum use of the available transport infrastructure (Blackwall DLR Station and
the adjacent bus stops), thereby optimising the use of transport nodes to
maximise housing development in line with national, regional and local planning
policy.

17.3 Thirdly, the scheme will maintain a significant amount of greenspace, which is
planned to be a significant improvement on the area currently known as
Millennium Green.

18. RISK MANAGEMENT IMPLICATIONS

18.1 The comments on risk associated with this project have been divided into three
broad areas: finance; process; and community. Overall there are high risks
associated with this project and set out below is the Council’s approach to
addressing and reducing them.

18.2 Since the Blackwall Reach Development Framework was considered and
approved by Cabinet in March 2008, the housing market has been negatively
impacted by the ‘credit crunch’ arising from financial turmoil in the national and
international financial markets. The impacts have been characterised by a
reduction in demand for market housing for sale; reduction in mortgage finance
for purchasers; and reduction in private finance available for developers. This
has contributed to an overall lack of confidence in the housing market which has
had a considerable impact on large projects of this nature. This has required both
the Council and its partner, the Homes and Communities Agency, to commit
additional resources to the project than was originally envisaged.

18.3 Finance - The project business plan was originally intended to generate a
surplus for landowners – originally the Council, English Partnerships (now
succeeded by the Homes and Communities Agency) and Ballymore Properties (a
private developer). As the text in Section 5 of this report describes, the project is
now dependent on additional financial support from both the Homes and
Communities Agency and the Council.

18.4 A significant reduction in the risk associated with this project has been the
acquisition by the Homes and Communities Agency of Ballymore’s interest in the
Blackwall Reach site. The benefits of this intervention are twofold: firstly, it
demonstrates the HCA’s commitment to supporting this project. Secondly, it
means that the freehold ‘footprint’ of the overall site is largely in freehold
ownership of the public sector. Given that the HCA and the Council are the key

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 statutory and funding stakeholders in this project, it is clearly beneficial that they
are also the key landowners as well.

18.5 The comments of the Chief Financial Officer in Section 14 of the report
highlighted the risks associated with identification of additional Council resources
required for this project. An additional risk is the necessary finance required from
the Homes and Communities Agency to support the development of the
affordable housing itself (in addition to the support they have given for land
acquisitions and financing the Development Framework. Given the HCA is a key
stakeholder in the project, it can be expected that the HCA will be supportive ‘in
principle’ of any funding application that is submitted by a future housing
development partner. However, future applications are likely to be in a financial
climate where public sector funding is being curtailed.

18.6 A broader, strategic change in the way that HCA affordable housing resources
are applied in the future is likely to emerge following the publication of the HCA’s
Single Conversation Guidance in May 2009. This will require local authorities
(with the HCA) to develop Local Investment Plans which highlight strategic
priorities for the area and plan for their investment. This is beneficial for Tower
Hamlets as it has significant development capacity and has highlighted its
strategic sites in the 2009/12 Housing Strategy, which includes Blackwall Reach.

18.7 Process – The Project Plan and the associated milestones is set out in Section 4
of this report. The start on site of the first phases are anticipated in late 2010 and
scheduled to complete in mid 2014, with the final phase of the project scheduled
to complete in early 2018. Whilst the project is medium to long term in
development activity, there is significant work that continues to be undertaken in
the short term to ensure that the first phases commence. The need for a defined
and resourced project management structure will help ensure that this happens.

18.8 The Council and the HCA already has a project management structure for
Blackwall Reach. Project Board meetings are held monthly, steering group
meetings held fortnightly; and sub groups are convened to address specific
issues relating to this project. A project risk register is regularly updated by the
Steering Group. The Council and the HCA intends to continue with this structure
as it is engendering good working relationships between the two organisations
and contributing to positive outcomes, most recently the Certificate of Immunity
and the acquisition by the HCA of Ballymore’s land interest.

18.9 On the Certificate of Immunity issue, this has caused a delay to the project’s
progress, due to architectural interest in the site, which has led to the
involvement of English Heritage and the Department for Culture, Media and
Sport (DCMS) as described in Section 11 of this report. However, this blockage
to project progress has now been removed following the issue by the Secretary
of State of the Certificate of Immunity. This now allows the Council and HCA to
proceed with a redevelopment, rather than refurbishment, project. There is a

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 small risk that this decision is the subject of an appeal and the decision is
reversed.

18.10 A risk which requires an intensive management approach relates to squatting of

empty properties. Tower Hamlets is experiencing considerable squatting
problems on blocks that are either empty or in the process of being vacated
elsewhere in the borough. Once the decant process is restarted (in Autumn
2010) the Council is likely to let newly vacant large accommodation to
households on ‘non-secure’ tenancies. Smaller accommodation is likely to be
empty for some time and may be vulnerable to squatting attempts. For the next
year or so, this will not be an issue. However, once the number of empty
properties begins to escalate, the Council will need to ensure that long term
empty homes are rendered uninhabitable and that security measures are put in
place to prevent casual or organised attempts at squatting. The Council has
sufficient time to address this risk when it begins to arise.

18.11 Community – A third key area of risk relates to ensuring there is an effective and
inclusive community consultation process underpinning the project. Sections 9,
11 and 12 of the report cover community consultation; land assembly; and
decant strategy issues respectively. The finance and process risk areas identified
above are in relative terms easy to manage. Risks associated with community
stakeholders, ie, tenants, leaseholders, businesses, education and health
stakeholders need to be carefully managed in order to ensure that the disruption
associated with the relocation and development process is minimised.

18.12 In terms of the residential community, a key risk that the Council has identified
relates to ‘community drain’. This is where residents voluntarily decant from the
estate (through choice based lettings) in the absence of a developed proposal
that will help them remain on the site if they so wish. The proposal to suspend
tenants’ decants status until Autumn 2010 underpin this approach.

18.13 A broader risk relates to tenants aspirations to remain council (secure) tenants
rather than housing association (assured) tenants. Whilst tenants will have from
Autumn 2010 the opportunity to bid for council homes in the vicinity and
elsewhere in the borough, it is not planned to develop new council homes on the
Blackwall Reach site itself.

18.14 A high risk relates to leaseholders and third party owners (as well as social
housing tenants) who are unwilling to move from the site for various reasons. It is
likely that the Council with support from the HCA will need a Compulsory
Purchase Order to ensure that vacant possession of the respective sites is
eventually achieved. This risk features in the project plan.

18.15 In conclusion, there are a number of high risks associated with this project.
However, the Council believes that these risks are clearly recognised and has

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 already demonstrated it is able mitigate negative impacts and ensure project
progress continues to be achieved in difficult economic circumstances.

19. EFFICIENCY STATEMENT

19.1 Facilitating the regeneration of the Blackwall Reach area will assist with
efficiency improvements in the Council. The rationale for taking forward this
project on efficiency grounds can be demonstrated on the following grounds.

19.2 The Robin Hood Gardens blocks are considered to be uneconomic to repair. In
the event the housing were repaired, this would not address the generally poor
and remote state of the wider environment which the proposed scheme intends
to address.

19.3 The issue of efficiency in land use that will be achieved by this project has
already been covered under the sustainable action heading, but it is worth re-
emphasising the point that the use of land will be considerably enhanced in an
area which is in considerable need of regeneration. It will also represent a key
element in bringing forward the wider regeneration of the South Poplar area,
creating better linkages with Canary Wharf and in anticipation of the Crossrail
Station that will be developed.

19.4 In housing terms, the new housing will meet Code for Sustainable Homes Level
4. As part of delivering the CSH standard, issues such as recycling; renewable
energy; and waste collection will all be effectively addressed through the new
development in an integrated fashion. In addition, Council with the Homes and
Communities Agency wish to explore approaches to integrated management for
the whole site to ensure that services for all users are under a single umbrella
organisation.

19.5 Given the poor state of the current housing on Blackwall Reach, it is expected
that short, medium and long term savings will be made on the management and
maintenance of the stock, if the housing continued to remain. Whilst the stock
continues to be habitable, only major investment will ensure that the stock is both
‘decent’ and safe to inhabit.

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20. APPENDICES

20.1 Appendix 1 – Certificate of Immunity Letter from the Secretary of State,

Department for Culture, Media and Sport.

20.2 Appendix 2 – Blackwall Reach Site Location with Proposed Development

Phases.

Local Government Act, 1972 Section 100D (As amended)

List of “Background Papers” used in the preparation of this report

Brief description of “back ground papers” Name and telephone number of holder
and address where open to inspection.

Blackwall Reach Regeneration Project Aaron Cahill, Development and Renewal,

Business Plan Review of the Scheme LB Tower Hamlets, Anchorage House,
Options Clove Crescent, London E14 1BY.
Extension 3482

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Page 32
 Agenda Item 6.2

Committee: Date: Classification: Report No. Agenda

Cabinet 1 July 2009 Item No.
UNRESTRICTED

Report Of: Title:

Corporate Director Development & Renewal
Ocean Estate Regeneration
Wards Affected: St Dunstans and Stepney
Originating Officer:
Green
Aman Dalvi

1. SUMMARY

1.1 The purpose of this report is to update Cabinet on Ocean Estate

Regeneration project progress and seek approval for specific
recommendations set out below that will assist in taking this project
forward. .

2. RECOMMENDATIONS

Cabinet is Recommended to:

2.1 Authorise the expenditure of up to £1.6 million by the Corporate

Director Development & Renewal from the Capital Estimate to engage
technical advisers to progress the scheme to outline design including
the cost of appropriate technical surveys necessary for the scheme.

2.2 Authorise the Corporate Director of Development & Renewal to engage

a new technical advisory team to support the procurement process in
finance and other areas to be paid from the Capital Estimate.

2.3 Agree that the tender for Housing Management and Repairs (LOT 2)
set out in clause 11 of the report be formally withdrawn and cancelled
and that the management of the estate shall remain with Tower
Hamlets Homes.

2.4 Approve demolition and site clearance of Urban Blocks E and F; 85

Harford St (partial demolition); Essian St; and the Lifra site; and
authorise the Corporate Director of Development and Renewal after
consultation with the Assistant Chief Executive (Legal) to complete
contracts to effect such work.

2.5 Note the increase in affordable housing provision in the proposed

scheme from that reported to Cabinet on 4 April 2007 and approve the
proposed proportions of affordable and market housing and the
proposed size of the housing units as set out in Annex A of this report.

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2.6 Authorise the Corporate Director of Development and Renewal in
consultation with the Assistant Chief Executive (Legal Services) to
ensure value for money is secured and enter into the pilot contract to
internally improve up to 200 homes on the Ocean Estate in the sum of
up to £3.45m to be funded from within the overall Capital estimate. . .

2.7 Note the proposals relating to relocating some of the retailers/traders

on Ben Jonson Rd (located at the base of Marmora House) and note
the summary of the Retail Strategy attached as Annex C.

2.8 Authorise the Corporate Director Development & Renewal to negotiate

a long lease of part of the Harford St facility for community purposes
and to approve the capital expenditure from the Capital Estimate for ‘fit
out’ of the Harford St Facility in order to relocate the Limehouse Project
from the LIFRA Site and create office space for the Ocean
Regeneration Trust.

2.9 Note and endorse the developing role of Ocean Regeneration Trust
(ORT) as set out in Annex B; approve the establishment of ORT on a
permanent basis.

3. BACKGROUND

3.1 The Ocean Regeneration Project is the Council’s New Deal for
Communities Pathfinder project, and is the single highest single
regeneration investment priority for the Council. Whilst having a
significant housing component, the scheme is seeking to achieve
transformational change in one of the most disadvantaged areas of the
borough. The key outputs of the project include:

• Demolition of 342 homes on Urban Blocks E and F

• Construction of 777 new market and affordable homes
• External refurbishment of 1229 properties internal refurbishment
to Decent Homes plus standard of 781 social rented properties
• Creation of a new town centre with new retail and community
facilities
• Estate environmental improvements

3.2 The table below shows an approximate comparison of the present

numbers of Council-owned homes with the projected new homes
included in the scheme proposals.

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 Demolish New homes Refurbish
Urban block E & F ( Note: The re-provision of 342 affordable homes more
includes allowance for re-housing of 39 leaseholders ) than
40 Council
blocks
Rented Leasehold For Rent and For sale on Urban For sale on the RentedLeasehold
shared Blocks E & F Feeder Sites
ownership /equity
on Urban Blocks
E&F
303 39 406 258 113 781 448

3.3 The project is expected to cost over £200m. Over £13m of New Deal
for Communities money is still dedicated to this project as are Council
Housing capital resources. The Council has written to the Homes and
Communities Agency requesting £43m of funding support for the
project. Whilst the estate continues to be managed by Tower Hamlets
Homes, investment for decent homes works is not currently being
sought as part of the future Council bid for CLG resources. Additional
resources from the development partner, principally private finance, will
also be generated.

3.4 In terms of ‘key milestones’ that can be achieved by March 2010

Officers are proposing that:

• At least three blocks on Urban Block E are vacated and demolished

• An Outline Planning Application is submitted in January 2010
• A pilot internal refurbishment contract is commissioned and onsite

3.5 The longer term programme to completely redevelop Urban Blocks E

and F and the three feeder sites identified on Annex A is dependent on
continued progress in the Competitive Dialogue process with the East
Thames Consortium. The key milestones to be achieved during the
next twelve plus months are as follows:

• Best and Final Offer submitted - Late October 2009

• Appointment of Preferred Developer* - Mid December 2009
• Outline Planning Application Submitted - Early January 2010
• Outline Planning Approval - Early July 2010

* The contract will be subject to Planning Approval of the scheme

which is not expected until July 2010 and Homes and Communities
Agency (HCA) financial support.

3.6 Achieving the milestones identified above, will create the platform
needed to deliver the much delayed physical and social regeneration
needed for the estate. Short to medium term objectives can be
achieved, such as delivering development on the three feeder sites;
relocating local health and community facilities to new accommodation;

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 ensuring any separate development on the Dame Colet/Haileybury Site
complement the Ocean Regeneration proposals. However, delivery of
the highlighted milestones are key to the longer term project objective
who achieving transformational change on the Ocean Estate.

3.7 In seeking to achieve that longer term objective, a number of decisions

need to be made by Cabinet . This report is structured along the
following themes, each of which will set out, where necessary, a
decision (or decisions) required from Cabinet to expedite project
progress:

• Project Financing
• Procurement Approach
• Affordable Housing Provision
• Refurbishment Pilot
• Achieving Vacant Possession of Urban Blocks E and F and the
three feeder sites
• Retail and Traders Strategy
• Community Facility Provision
• Lot 2 Housing Management Contract
• Ocean Regeneration Trust
• Delegation of Decision-Making Authority to the Director of
Development and Renewal, Assistant Chief Executive (Legal) and
the Lead Member for Housing and Planning

4. PROJECT FINANCING

4.1 The financial value of the Ocean Regeneration project is over £200m.
The Council is making a major land, financial and officer resources
commitment to delivering the overall project.

4.2 The Capital Estimate adopted at the 4 April 2007 Cabinet meeting was
in the sum of £33.45m, comprising £19.2m NDC Grant and £14.25m
from the housing capital programme.

4.3 The amount of resources available for this project is now approximately
£28.7m comprising £16.2m NDC Grant and £12.5m from the housing
capital programme. This is reflected in the NDC 2009/10 Delivery Plan
report elsewhere on the Cabinet agenda.

4.4 Cabinet authority for this project has enabled a number of enabling
activities to be undertaken. However, new authority is required to:

• Recruit a new project management and cost consultancy team

• Approve the costs associated with the Outline Planning Application
• Authorise demolition for three blocks on the estate

4.5 There is funding within the monies set out in 4.3 above to meet the
costs of paying for each of the new items identified above as well as
the costs that continue to be incurred under the most recent capital

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 estimate adoption on 4 April 2007. The cost of demolishing individual
blocks is estimated to range between £160,000 and £190,000,
although identification of asbestos is likely to increase such estimates.
A Director’s Action Report is currently being processed to procure a
contractor and adopt a capital estimate to demolish Aden House.

4.6 The private housing component of the project has been reduced and
the affordable housing component increased in line with the original
report on this project in 2007 and planning requirements. The market
downturn has necessitated an approach to the Homes and
Communities Agency (the successor body to the Housing Corporation
and English Partnerships) for financial support for the project. The
additional sums earmarked from the Homes and Communities Agency
total £43.6m and are the subject of ongoing discussions between HCA
and Council officers. The HCA to date have been very positive about
supporting the project, but until an affordable housing development
partner has been appointed and a detailed planning consent has been
granted, the HCA may not be in position to give absolute confirmation
of grant funding at this stage.

The Capital Estimate adopted by Cabinet on 4 April 2007 of £33.45m,

comprising £19.2m NDC Grant and £14.25m from the housing capital
programme. This was intended to provide for the capital costs arising
from the development and delivery of a housing regeneration
programme for the Ocean Estate and associated decants. Costs that
have and will be met from this capital estimate include tenant decants;
leaseholder buybacks; future costs of Compulsory Purchase Order(s)
(which may include No 90 Duckett St identified below); and wider costs
associated with the procurement of a development partner for the
project.

Specific new items that Cabinet is being asked to approve that will be
met from this capital estimate are the related technical planning and
other consultancy costs associated with the scheme proposals
appointment of a new project management and cost consultancy team
to advise the council on the negotiation process with the East Thames
Consortium and costs associated with acquiring the land interest at No
90 Duckett St.

5. PROCUREMENT APPROACH

5.1 After discussions with HCA at the end of 2008 and early 2009, the
Council on 8 May 2009 resumed the Competitive Dialogue (CD)
process with the East Thames Consortium, whose members comprise
the East Thames Housing Group; First Base; and, Bellway Homes with
Wates as a sub contractor.

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5.2 The current process is anticipated to lead to signing the Principal
Development Agreement in the last quarter of 2009/10 and outline
planning consent in July 2010. Whilst there is a strong imperative to
reach an agreement with a preferred development partner, the Council
is still obliged to seek best consideration for the plots of land it is
offering to the Consortium to both help regenerate the sites concerned
and this will be done with a viability test to establish market value only
when each site is ready to develop when the market rises.

5.3 One key action that the officers consider will help the timetable would
be to review the arrangements involving the consortium in
commissioning activities previously planned to be led by the Council.
The ITSOP [Invitation to submit outline proposals] envisaged that at
this stage there would be multiple tenderers and the council would
need to directly commission a range of surveys and design activities to
support the bidders in preparing their submissions. With a single bidder
only involved in the final processes towards BAFO [Best and Final
Offer] it makes sense to involve the bidding consortia more closely in
certain of these activities and for them to lead to ensure there is a close
match to the information to be provided and the final scheme
requirements. The Ocean NDC will therefore arrange the
commissioning of these activities and in the event of the project
ultimate failing for unforeseen reasons will provide for the intellectual
copyright and rights of use to be transferred to either the Council or the
Ocean regeneration Trust. This will include a range of surveys,
preparation of plans and related activities.

5.4 This is in effect bringing forward a component of expenditure of up to

£1.6m to be met from NDC grant funding and funds from the capital
estimate. This is not additional unbudgeted expenditure, but represents
expenditure the Council would have incurred in meeting its obligations
under the ITSOP to outline consent or expenditure that the Consortia
would have incurred in developing their scheme. There will be a clear
separation of costs to be reimbursed with only those that the Council
would have incurred being reimbursed prior to BAFO and scheme
acceptance. The balance of the costs would become payable post
acceptance of the proposals, and on entry into the conditional contract.
There are risks associated with this approach that if the Development
contract does not become unconditional the funding for the outline
planning will be redundant. However, this approach will bring forward
the timetable which is important if we are to both take up NDC funds
and secure HCA [Homes and Communities agency] funding. If the
scheme did not proceed the Council could use the outline consent to
market the vacant sites at a later date to developers with a clearer
view of their development potential and value. Officers will closely
project manage the development of the scheme proposals to ensure
that there is support from planners, Councillors and residents as it
progresses.

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5.5 Council Officers are in the process of recruiting a new client technical
team to advise officers on their competitive dialogue negotiations with
the East Thames Consortium. This will involve ‘standing down’ the
current technical team and recruiting a new technical team using the
Homes and Communities Agency’s Consultants Framework Panel. The
key services required will be related to project management,
architectural advice and cost consultancy.

6. DESIGN ISSUES AND AFFORDABLE HOUSING PROVISION

6.1 The revised Masterplan for the regeneration of the Ocean Estate now
includes an increased proportion of affordable housing within the new
build element. Affordable Housing is now proposed at 52% of the
overall new build numbers. The proposed market and affordable
housing mix is set out in Annex C to this report.

6.2 The features of the revised Masterplan involve perimeter buildings

around garden courtyards. The proposal to the northern side of Ben
Jonson Road includes retail provision strengthening the current retail
offer. The majority of the new dwellings will be served by new
Combined Heat and Power installation. The project aim is still
concerned with the substantial building refurbishment programme
complimented by improved external works to all retained existing
housing stock. The ‘March 2009 Scheme Proposals’ formed part of the
second stage Competitive Dialogue (CD) tender invitation and were
supported in principle by the Council’s Planning Team.

6.3 East Thames Consortium have moved to the next stage of the dialogue
and are currently embarking on a refinement of the design based on
the current Masterplan proposals which will be developed by ETC, in
conjunction with LB Tower Hamlets, through the second stage of the
CD process. Design development through CD will be subject to
continuous independent verification by the borough’s Planning
Department and the GLA. The Council’s duties as Planning Authority
are required to be separate from the CD procurement route.

7. REFURBISHMENT PILOT

7.1 The Council is acutely aware that there is an impatience for physical
progress on the regeneration project. Beyond demolishing blocks on
Urban Blocks E and F and progressing site clearance works on one or
more of the Feeder Sites, no refurbishment works would start on the
Estate until late March 2010 at the earliest. Officers are therefore
proposing that the Council develops proposals and enters into contract
with a contractor capable of delivering an element of the works to act
as a pilot and show case for our overall proposals for the refurbishment
of the estate. This will help the Council bring early regeneration
benefits to residents of the Estate. The cost will be met from the

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 Capital estimate within the NDC programme that the Council has set
aside for the project in 2009/10 but that may otherwise be lost. The
proposals are to undertake internal refurbishment works to tenanted
units only, this will also act as a catalyst for wider consultation and
engagement across the estate, meet tenants expectations to see a
start on the refurbishment programme and boost confidence in the
regeneration process. By undertaking internal refurbishment works
only, the Council is not required to undertake consultation with
leaseholders (as they will not be receiving internal refurbishment
works). This does not require planning permission. This approach will
allow the Council also to gain early experience of undertaking what will
be resource-intensive liaison work with residents who will be in situ for
the duration of the works.

7.2 It is proposed to progress this work on a single tender basis ensuring

that value for money is secured by benchmarking costs on market
information and recent tenders. It is proposed that we should utilise a
firm/contractor with experience and a strong track record of delivering
this type of work in other authorities and housing associations housing.
The Council will undertake appropriate ‘due diligence’ before entering
into a contractual arrangement. It is proposed to use Wates
Construction, their costs can be bench marked against the East
Thames Consortium ITSOP submission, as well as other RSL and
Council tenders.

7.3 The pilot contract internally improve up to 200 homes on the Ocean
Estate as part of the original capital estimate adopted in April 2007 in
the sum of up to £3.45m to be funded from within the overall Capital
estimate (section 2.2).

8. ACHIEVING VACANT POSSESSION OF URBAN BLOCKS E AND F

AND THE THREE FEEDER SITES

8.1 Key to facilitating the overall scheme is the delivery of vacant

possession of Urban Blocks E and F and the three feeder sites. This
involves ensuring that all tenants; leaseholders; freeholders;
community facility occupiers; retail/traders; and illegal occupiers are
moved off the site in a timely and fair manner. The current state of play
is described below:

Table 1 Breakdown of tenures across Urban Blocks E and F

URBAN BLOCK E
(235 Units, 230 Properties)
Bengal Aden Flores Taranto Riga Darien Caspian TOTAL
Leasehold 3 0 2 1 5 1 3 15
Council Owned 90 19 21 23 18 23 21 215
Secure Tenants 2 1 2 1 1 3 0 10
Non-Secure
5 0 0 1 0 5 2 13
Tenants
Squatters 21 16 9 18 10 5 7 86

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Voids/Other 62 2* 10 3 7 10 12 106
TOTAL 93 19 23 24 23 24 24 230

URBAN BLOCK F
(107 Units, 107 Properties)
Andaman Atlantic Marmora Ben Johnson TOTAL
Leasehold 4 3 4 3 14
Council Owned 32 33 22 6 93
Secure Tenants 14 15 13 2 44
Non-Secure
9 15 4 2 30
Tenants
Squatters 3 1 0 0 4
Voids/Other 6 2 5 2 15
TOTAL 36 36 26 9 107

8.2 The early priority is to achieve vacant possession of Urban Block E. As

can be seen from the tables above, the Council has made significant
progress in moving legitimate occupiers – tenants and leaseholders –
from the site. Just over 10% of the site is used by such occupiers. The
downside of this success has been a recent wave of illegal occupation
on the site which is continuing to cause serious anti-social and
reportedly criminal behaviour. Tower Hamlets Homes Lettings officers
are continuing to work closely with the ten remaining secure tenants on
Urban Block E to re-house them appropriately. In terms of the broader
decanting strategy, no change has been made to the original
commitments relating to the terms on which residents (tenants and
leaseholders) are decanted from the estate and the terms on which
they can return, if they so wished.

8.3 The Council is adopting an incremental approach to achieving vacant

possession to this site by seeking full vacant possession of Aden
House by June 2009. Other blocks are planned to follow soon after,
subject to successful voluntary buyback negotiations. In order to
ensure that the buildings when becoming vacant are not squatted (or
re-squatted) Officers are recommending that blocks are demolished as
soon as is reasonably practicable. This will involve incurring costs
towards an asbestos survey work that needs to be undertaken; security
for the site (24 hours if deemed required); specifying the demolition
works; procuring a demolition contractor; and, executing the works.
Additional works may be commissioned to clear the feeder sites,
principally the LIFRA site when the Limehouse Project is eventually
relocated to the Harford St facility.

9. RETAIL AND TRADERS STRATEGY

9.1 The Ocean Regeneration Project will have a major impact on the retail
offer on the estate, principally on the north side of Ben Jonson Rd. The
retail units under Marmora House will be demolished as part of the

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 scheme with new retail units being developed in their stead. The key
short term impacts of this will involve the need to:

• relocate existing traders if this is what they require, or

alternatively to negotiate an arrangement to allow the business to
be extinguished to release the shop unit
• maintain a viable trading centre during the regeneration period
• maintain positive and effective working relationships with the
trading community
• plan for a potentially expanded retail centre and to create the
optimum trading environment that meets the needs of the local
community
• adopt the annexed retail strategy for the estate, based on market
research

9.2 Preparatory work has taken place between the Regeneration Team,
Property and Legal services to position the Council to commence
negotiations.

9.3 The Ocean Business Association (a local traders association), has

reformed with a new management committee and is aiming to
represent the interests of the traders that will be directly affected by
decanting.

9.4 It is anticipated that the Ocean Regeneration Trust will hold a leasehold
interest in the shops to be developed on the site and will receive the
income towards managing the commercial property and public realm.

9.5 The current project plan shows that Marmora House needs to be
decanted by June 2011 in order to provide vacant possession of the
site to the developer partner to facilitate demolition and re-build.

9.6 While this seems a long time, there is much work to be done in order to
facilitate a successful decant process which will require strenuous
efforts to secure voluntary arrangements, being clear that if this
process is not offering sufficient success, the Council will need to either
revert to actions under the Landlord and Tenant Act or establish and
implement suitable CPO processes.

10. COMMUNITY FACILITY PROVISION

10.1 The Ocean Estate benefits from a number of community facilities which
helps deliver socio-economic benefits for residents both on the estate
and outside it. All of the community facilities identified below require
relocating and key to facilitating this process is the Harford St facility.
This was developed by East Thames Group (independent of the Ocean
Regeneration Project) which comprises a ‘shell and core’ has been
developed, but not internally fitted out. This facility is intended to
accommodate the PCT Health Facility currently located on the corner

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 of Harford St and Ben Jonson Rd; the Limehouse Project (currently
located on the LIFRA Site); housing office accommodation for East
Thames Group; office accommodation for the Ocean Regeneration
Trust. The sections below set out the state of play on the relocation
process.

10.2 Limehouse Project (LHP)

10.3 Meetings have been held with Corporate Property Services to establish
the most effective way forward in agreeing suitable terms with LHP for
their location into Harford Street. It is proposed that this element of the
scheme takes up approximately a third of the facility with the remaining
two thirds taken up by the PCT Health Facility (which will be met from
their own funding).

10.4 A design freeze has been agreed between all partners (East Thames,
PCT, and the Council). East Thames has now provided indicative cost
of approx £230,000 of the remaining design cost which the Council
have agreed to cover the community space proportion, of approx
£60,000.

10.5 Initial discussions regarding the Council purchasing a long term lease
of the community space on the Harford Street site are progressing
positively.

10.6 Each party would pay actual costs of fit out relating to their space plus
a fair proportion of communal costs. East Thames will manage the fit
out of the community space on behalf of the Council for a project
management fee of 5% of fit-out costs. Fit out costs are to be
confirmed, and the programme is currently showing completion in
Spring 2010.

10.7 The cost of internal fit out has now been produced and the initial figure
for the Council proportion of the building is over £1.7 million, which is
more than the current available budget. Presently, the Ocean Business
Plan budget is under some considerable pressure and Council officers
will be working with East Thames to ensure the Harford St scheme is
both affordable and deliverable. There is an additional ‘shell and core’
lease cost which will need to be met from elsewhere in the Ocean
Business Plan.

10.8 An updated version of the programme has also been released for the
Harford Street scheme, which indicates a slip in the completion of the
programme of work from the 2009/10 financial year to 2010/11.

10.9 City Gateway has been officially informed that there is no available
space for the organisation in the Harford Street building as the
Council’s priority is to relocate existing, and not provide for new,
community facilities on the site.

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10.10 Ocean Women’s Association (OWA)

10.11 OWA is currently accommodated in a ground floor residential unit in

Aden House, which is the Council’s current decant priority as set out in
Section 8 above. OWA is keen to relocate as soon as suitable and
reasonable alternative accommodation can be made available. A
ground floor unit has been identified elsewhere on the estate which is
to be used on a temporary basis for OWA and Officers are making
arrangements for the unit to be refurbished up to a reasonable
standard for occupation.

10.12 Dame Colet House / Haileybury Site

10.13 This site was originally designated as a ‘feeder’ site for the housing
programme. Subsequently, Cabinet decided to make the site the
subject of a bid to the My Place programme for a health/youth facility
funded by the Department for Children, Schools and Families. This
funding bid failed and a new ‘Co-location’ Bid was submitted in Early
April 2009 which failed and a new ‘My Place’ bid is being submitted.

10.14 For the time being, this project in financial and planning terms, will sit
outside the Ocean Estate Regeneration proposals, but Council officers
from respective directorates will ensure that the schemes are
complementary and add maximum socio-economic value to the wider
area. However there is no funding identified in the regeneration
scheme for further community facilities and therefore if this site were
returned careful consideration would have to be given to its use and
future funding.

11. LOT 2 HOUSING MANAGEMENT AND MAINTENANCE CONTRACT

11.1 As conceived the Ocean NDC's succession arrangements for the future
management of the Councils retained stock on the estate, were to have
involved a parallel 'Housing Management and Repairs Contract''
specifically for the 1229 local authority managed units. This meant that
on the estate we would have had the new affordable and intermediate
tenure units managed by an RSL and a separate contract that might
have involved the same RSL or another body providing similar services
for the Councils tenants and leaseholders for its respective parts of the
overall estate.

11.2 Whilst work has been undertaken towards preparing a separate

invitation to tender including establishing the services we would be
seeking, this has not actually been finalised and offered to potential
providers for them to price and develop their service delivery
proposals. Initial interest has resulted in the Councils regeneration
team short listing three potential bidders, however, no further
commitments regarding tendering have been made. Given progress on
developing the physical regeneration proposals for the estate and the

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 timetable towards entering into contract for the main works based
scheme, there is an opportunity to review whether our former plans
represent a good fit for the Estates needs.

11.3 With the establishment and development of Tower Hamlets Homes

[THH], the Councils Arms Length Management
Organisation, consistency and improvements in service levels are
being achieved. The Shadow Ocean Regeneration Trust who had in
the past been mooted as potentially playing a significant role in
overseeing both the 'Housing Management and Maintenance Contract'
and the 'Estates Regeneration' have indicated that their focus will be
towards ‘Community Regeneration’ activities, rather than perhaps
becoming an additional layer in the management chain that would have
ultimately have needed to resort to the Council for support in the event
of failures or disputes. Given the preceding, it is proposed that work
upon securing a separate Housing Management and Maintenance
Contractor ceases, and that management of the estate instead of being
placed as a temporary arrangement with THH, remains with THH for
the life of their agreement with the Council.

11.4 This should not affect THH's plans to deliver Decent Homes as the
arrangements for the Ocean estate, would remain for the proposed
transformation of the estate through the overall regeneration
scheme which includes achieving Decent Homes for the Councils
tenanted units. It will also not prevent residents exploring establishing
local service delivery options including either the establishment of a
Tenant Management Organisation or an Estate Management Board in
the future. The partially developed tender material might assist them to
this end if required.

12. OCEAN REGENERATION TRUST

12.1 At its April and June 2007 meetings Cabinet approved the setting up of
the Ocean Regeneration Trust (ORT) as the then intended special
purpose vehicle for delivery of the future regeneration of the Ocean
Estate. The model adopted is that of a Community Interest Company.

12.2 Originally, ORT would have become fully established in early 2009/10
with resources amounting to over £1.5m in its first year from a
combination of:-

• final year revenue funding from the 2009/10 NDC programme

(some £660k),
• a “dowry” contribution from the appointed developer partner for the
main regeneration scheme (equivalent to £400,000 pa over the first
5 years of its operation, £2m in total)
• income from the Council (circa £500k) to undertake various contact
monitoring and management roles in relation to the new build,

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 refurbishment and ongoing management and maintenance of the
new and refurbished public sector stock.
12.3 The other key element in the model for ORT was that it would be
granted an intermediate lease by the Council on newly built residential,
retail and community facilities, the ground rents from which would have
built up over time and given it a long term income steam.

12.4 ORT is now established as an interim Board, and is meeting regularly

and developing its role, with more detail on progress set out in Annex
B. In particular, it has taken on responsibility for the commissioning of
new projects utilising the remaining uncommitted NDC revenue funds
from 2009/10. It is also beginning to engage more proactively with the
main regeneration scheme. However, the delays on the main
regeneration scheme have meant that ORT will have to wait a further
year until the funding streams envisaged under this model become
available (i.e. until both a preferred developer is appointed and
planning consent for the scheme is achieved – summer 2010 on
current timetable).

12.5 The ORT Board is keen to develop their role and capacity over the
coming 12 months, but will need resources to do so. In particular, they
wish to:-

• Become permanently established as a legal entity

• Recruit to the two remaining specialist vacancies on the Board
• Engage more proactively with the main scheme
• Develop a long term vision, socio economic strategy and funding
strategy including maintaining public realm on the Estate after
redevelopment using ground rents
• Develop some local presence in the area and to start to engage
with stakeholders and the community.

12.6 Resources will need to be identified to support the development of the

ORT role. Earlier expectations that ORT would take on a
housing/regeneration contract management monitoring role are unlikely
to be fully realised, partly because the housing management contract
role is now proposed to be retained with Tower Hamlets Homes and
the amount of resources required to continue managing the delivery of
the project requires that this role will need to be retained with the
Council at least up until Early Summer 2010 when the situation can be
reviewed.

12.7 In terms of local presence, and in line with the original intention for
ORT to hold assets, negotiations are continuing over the possibility of
giving ORT a long lease on the community space in East Thames’
Harford Street premises. The funding implications of this are dealt with
elsewhere in the report. However, some certainty is needed over
ORT’s short and longer term roles for this is to be a viable proposition.

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13. COMMENTS OF THE CHIEF FINANCIAL OFFICER

13.1 In April 2007 Cabinet approved the Ocean Estate housing and
community regeneration programme, following the rapid review of the
New Deal for Communities (NDC) by Communities and Local
Government. A capital estimate to the value of £33.45million was
adopted, which comprised £19.2million New Deal for Communities
Grant and £14.25million from the Council’s mainstream housing capital
programme. The NDC funding was dependent on the Council re-
affirming its financial commitment to the redevelopment following the
rejection of the stock transfer option by local residents.

13.2 The allocation of housing capital resources, along with the disposal at
nil value of a number of feeder sites represented the Council’s
contribution to what was estimated at the time to be a £200million
regeneration programme.

13.3 This report will provide an update for Cabinet, following progress of the
preferred partner procurement, the significant changes in economic
circumstances and amendments to the proposed masterplan.
Consideration of a number of recommendations is sought to enable the
scheme to progress and minimise risk of grant loss.

13.4 Since April 2007 spend has been incurred on development of the
scheme and land assembly, leaving a balance of approximately
£28.7million from the agreed capital estimate. That is made up of
£16.2 million NDC grant and £12.5 million mainstream housing
resources. The NDC grant is strictly time-limited. £11.2m must be
defrayed during this financial year (2009/10) and £5million in 2010/11.
This must be seen in the context of the current funding profile outlined
in paragraph 4 of the report, and the need for significant additional
financial support from the Homes and Communities Agency. In this
regard Members should note that decisions to progress the scheme
must be taken in the absence of formal funding approval from the HCA,
and there is a risk that any approval may be significantly less than what
is currently sought. Further funding from the HCA will require delivery
of outcomes in accordance with their current housing grant conditions.

13.5 Further consideration of the profiling of the £12.5million Council

mainstream housing capital programme resources between 2010 and
2015 is required and must now be scheduled into the housing
investment programme

13.6 A condition of the NDC funding is that it contributes to the delivery of

transformational change – it cannot be utilised to support a purely
decent homes refurbishment package. Failure to deliver a scheme
which is compatible with Government aspirations could result in claw
back of some or the entire capital grant.

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13.7 There are significant additional financial and programme risks including
the ability to decant leaseholders and tenants within required
timescales and consequential potential CPO costs.

13.8 Given the constraints set out in paragraphs 13.5 and 13.6 above
Cabinet’s approval will be sought to undertake a series of interventions
which will offset costs normally incurred by the developer, but financed
through the overall mix of public and private programme financing set
out in the business plan. These are not new costs, but represent a re-
profiling of expenditure to maximise the NDC grant.

13.9 With regard to the planned pilot refurbishment project, authority is

sought to waive procurement rules and enter into a negotiated contract
with Wates Construction, who are a member of the East Thames led
consortium currently involved in the competitive dialogue process.
Delivery of value for money must be a key consideration in the absence
of a formal competitive tender process, particularly given the scale of
the proposed works. This will be assessed through detailed
benchmarking. It is also proposed to utilise the HCA’s Consultants
Framework Panel to procure project management, architectural and
cost consultancy services required to support the Council’s technical
client functions. There is a risk of abortive costs being incurred, but
must be weighted against the time limited nature of funding streams.

13.10 Members are asked to note that resources available to fund fit out of
community facilities outlined in paragraph 10.7 of the report. Any
additional costs would have to be incurred at the cost of the users or at
the expense of other aspects of the regeneration programme.

14. CONCURRENT REPORT OF THE ASSISTANT CHIEF EXECUTIVE

(LEGAL SERVICES

14.1 The Council is continuing the competitive dialogue process with East
Thames Consortium in accordance with procurement procedures. The
value of land in the Business Plan will be at market value on draw
down with a share of overage in respect of the market for sale
properties. The final outcome of negotiations will be reported back
once the best and final offer is received.

14.2 The NDC subject to appraisal can grant fund certain planning and
technical consultants’ costs and directly fund works as set out in the
report from the Capital Estimate. Grant funding will not exceed the de
minimis level in respect of State Aid Regulations.

14.3 The Council can enter into a contract for the demolition works and the
pilot refurbishment scheme directly on a single tender basis subject to
establishing value for money by benchmarking costs as all contracts
procured will be under the threshold for the Public Procurement
Regulations (OJEU).

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15. ONE TOWER HAMLETS CONSIDERATIONS

15.1 This scheme will contribute to One Tower Hamlets objectives. The
three objectives are to reduce inequalities; ensure community
cohesion; and, strengthen community leadership.

15.2 On reducing inequalities, the new scheme proposed will lead to an

increase in affordable housing on the site. The scheme will also lead to
new socio economic infrastructure for the area, ie, new health,
community and retail facilities that will improve community well-being
for local residents.

15.3 On ensuring community cohesion, the Council is working with

community representatives to facilitate the regeneration project, and
minimise disruption. The new scheme is intended to achieve
transformational change as part of the broader objective of the New
Deal for Communities Programme which is now entering its final year.
The Council is also supporting the development of the Ocean
Regeneration Trust which will help sustain the legacy of the NDC
funding that will have spent over the ten year lifetime of the project.

15.4 On strengthening community leadership, the Council continues to

work closely with the Ocean Tenants and Leaseholders Association as
well as stakeholders involved with the New Deal for Communities
partnership. The successful regeneration of the Ocean Estate is
predicated on continuing successful engagement with residents and
other local stakeholders and the Council will continue to work with
residents on that basis.

16. Risk Management Implications

16.1 The comments on risk associated with this project have been divided
into three broad areas: finance; process; and community. Overall there
are high risks associated with this project and set out below is the
Council’s approach to addressing and reducing them.

16.2 On financial risks, since Cabinet considered this Project in April 2007,
the housing market has been negatively impacted by the ‘credit crunch’
arising from financial turmoil in the national and international financial
markets. The impacts have been characterised by a reduction in
demand for market housing for sale; reduction in mortgage finance for
purchasers; and reduction in private finance available for developers.
This has contributed to an overall lack of confidence in the housing
market which has had a considerable impact on large projects of this
nature. This has required the Council to approach the Homes and
Communities Agency to commit new resources to support the project.

16.3 The Council is currently engaged in a Competitive Dialogue process

with the East Thames Consortium (ETC). As set out in Section 3.5 of

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 this report, a tight timetable exists to achieve the appointment of the
developed and a successful outline planning in the next twelve months.

16.4 A major risk is associated with the business plan which is dependent
on subsidy of £43.6m from the Homes and Communities Agency.
Common with many other schemes of this type, the scope for
generating cross subsidy from private market housing to support
affordable housing has become limited. Similarly, housing associations
are proving to be more risk averse, consequently being less willing to
use financial reserves and available private finance to fund tendering
processes and development activities. To address this risk, discussions
have been held with the HCA on funding the Ocean Estate project
which to date have been positive and the Council is confident that
when resources are sought, funding will be forthcoming.

16.5 A broader, strategic change in the way that HCA affordable housing
resources are applied in the future is likely to emerge following the
publication of the HCA’s Single Conversation Guidance in May 2009.
This will require local authorities (with the HCA) to develop Local
Investment Plans which highlight strategic priorities for the area and
plan for their investment. This is beneficial for Tower Hamlets as it has
significant development capacity and has highlighted its strategic sites
in the 2009/12 Housing Strategy, which includes Ocean Estate.

16.6 In connection with this, the obvious risk associated with this project
relates to successfully concluding the competitive dialogue process
with the Consortium on terms acceptable to the Council. The Council is
confident that this can be achieved through careful management of the
competitive dialogue process and early identification and resolution of
critical issues. In terms of a proactive approach to risk mitigation on
design, the Council intends that the Consortium lead the development
of the Outline Planning Application (rather than the Council) to ensure
effective ownership of the development proposals which the
Consortium can both fund and deliver.

16.7 On process, The Council is currently engaged in a Competitive

Dialogue process with the East Thames Consortium which has a
number of workstreams underpinning that process which focus on
design; community; legal and other issues. This process will continue
to be carefully managed, however there is a risk that the process will
be disrupted due to the likely changeover of client technical advisory
teams (Section 5 of the report) in early Summer 2009. This risk has
been identified and will be managed accordingly.

16.8 The Council already has in place a management structure for this
project. A Project Board meets monthly and steering group meets
fortnightly. Project planning and risk management issues regularly
feature as agenda items at these meetings.

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16.9 A risk, the negative consequences of which are already being
experienced, relates to squatting and associated anti-social behaviour.
Blocks on the estate, particularly on Block E which is the first major
phase, are being targeted by an organised approach

16.10 On community, the Ocean Estate is a New Deal for Communities

(NDC) Pathfinder project which is in its last year. A significant element
of the funding is to be applied to the housing element of the project
which is intended to bring about transformational change to the area.
The NDC regeneration approach is predicated on community
engagement through a range of mechanisms. The Council is keen to
ensure that the regeneration proposals are influenced by the
community stakeholders. A key risk therefore is where the Council and
the East Thames Consortium fails to maintain an effective and
inclusive relationship with residents, creating a situation whereby the
eventual development proposals are not supported. A particular issue
relates to the proposed refurbishment pilot which will require intensive
consultation with individual households, many of whom will be living in
overcrowded conditions. This risk will be managed through intensive
community consultation primarily by the Consortium but with support
from the council.

16.11 A related high risk relates to achieving vacant possession of Site E by

Summer 2010, ensuring that all tenancy, leasehold and freehold
interests in the site are secured. There are related risks associated with
gaining vacant possession of the three feeder sites and Site F which
have impacts on residents; community facility occupiers and users;
health providers; and traders. Allowance has been made in the Project
Plan for a Compulsory Purchase Order.

16.12 These risks are fully identified and the Council continues to work with
these community stakeholders to ensure that negative impacts are
mitigated and a proactive approach is adopted to ensure future risks
are avoided.

16.13 In conclusion, there are a number of high risks associated with this
project. However, the Council believes that these risks are clearly
recognised and has already demonstrated it is able mitigate negative
impacts and ensure project progress continues to be achieved.

17. Efficiency Statement

17.1 Facilitating the regeneration of the Ocean Estate will assist with
efficiency improvements in the Council. The rationale for taking forward
this project on efficiency grounds can be demonstrated on the following
grounds.

17.2 The regeneration of the estate involves the redevelopment of five sites,
two of which – Urban Blocks E and F – involve the demolition of council
blocks that are in a poor condition, and refurbishment of the remaining

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 blocks on the estate. By undertaking this work, the Council will be
making efficiency savings by not having to carry out day to day repairs
and maintenance to housing stock that is either past its economic life
or is in need of major internal and external refurbishment. Key to
sustaining the value of any future investment, whether new build or
refurbishment, is an effective asset management strategy.

17.3 The redevelopment of Urban Blocks E and F will lead to the demolition
of 342 social rented and leaseholder homes which will be replaced by
664 new homes. A further 113 are proposed to be developed on the
three feeder sites. This will lead to a more efficient use of available
land which helps deliver more market and affordable homes, but also
helps to reduce pressure to develop new housing on greenfield sites.

17.4 The new housing will meet Code for Sustainable Homes Level 4. As
part of delivering the CSH standard, issues such as recycling;
renewable energy; and waste collection will all be effectively addressed
through the new development in an integrated fashion.

18. SUSTAINABLE ACTION FOR A GREENER ENVIRONMENT

18.1 There are three key sustainability benefits to this project. Firstly, it is
planned that all the new residential development will meet a minimum
standard of Code for Sustainable Homes Level 4, which is higher (and
better) than the standard being delivered elsewhere in London. There
may be scope to deliver a higher standard in the latter stages of the
project. Overall, the scheme will also seek to facilitate better
approaches to energy conservation and recycling of waste.

18.2 Secondly, a key element of the sustainability agenda is using land in

urban environments to maximum effect. This both maximises the value
of the land itself and in strategic planning terms, reduces pressure to
build on greenfield sites. Issues relating to the effective use of land are
set out in the efficiency statement.

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Annex B (Extract from 16 December 2009 ORT Board Report)

APPENDIX 3 – Proposed Core Role and Structure of ORT 1

Objectives:

1. Promote the socio-economic regeneration of the area

2. Promote community involvement in initiatives to regenerate the area

3. Hold assets and receive income for the benefit of the community

4. Manage the uncommitted NDC 2009/10 programme funds, and

5. Generate additional funding streams for the benefit of the community

Financial Structure:

6. Receive unallocated 2009/10 NDC funds

7. Receive £2m endowment from the Developer consortium

8. Receive ground rents from all dwellings on the redevelopment sites

9. Receive income from new retail/commercial units

10. Receive income from any community space which is surplus to ORT’s
own requirements

11. Receive from the Council any overage accrued in accordance with the
terms of the Preferred Developer Agreement

Legal Structure:

12. A Community Interest Company with a board of 12 (3 residents; 5

independent specialists; 2 council reps; and 2 reps from the
development consortium

13. Enter into an agreement with the Council for the receipt of the
intermediate lease of the redevelopment sites

14. Enter into a long lease with the Council for the new community facilities
and the retail/commercial units and have the right to sub-let these
facilities.

1
At an appropriate time, ORT will formally consider the development of an
extended role which might include formal contracts with the Council to monitor
or manage contracts on its behalf. The take on of such roles would be
dependent on a clear business case and rationale for doing so.

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Annex B (cont/…)

ORT Role – Story Board – March 2009 (Final)

Approved by the ORT Interim Board 3 March 2009

A new organisation, a new role

Ocean Regeneration Trust has been established to make a difference on the Ocean
Estate by holding assets on behalf of the community and working closely with local
people and other agencies to improve conditions for local people. The ORT Board
has agreed a number of objectives to guide its short term development over the next
year, and its longer term development as an organisation committed to making a
difference on the estate over time.

The 5 objectives are:-

1) Promote the socio-economic regeneration of the area

2) Hold assets and receive income for the benefit of the community

3) Promote community involvement in initiatives to regenerate the area

4) Manage the uncommitted NDC 2009/10 programme funds, and

5) Generate additional funding streams for the benefit of the community

Promoting the socio-economic regeneration of the area

This is our overarching long term aim and priority.

In the short term, we will work to achieve this by:-

Taking on responsibility for the remaining monies that are available from the
NDC programme in 2009/10, and to use these to fund new project initiatives

Working with key stakeholders to achieve a successful outcome to the

development partner selection process for the main regeneration scheme

Securing some initial assets for the benefit of the community

In the longer term, we will develop our role and range of activities within the context
of a “neighbourhood regeneration strategy”. This will help us attract new funding
and investment in the area. We aim to produce this strategy by June 2009.

Hold assets and receive income for the benefit of the community

One of the key reasons for creating ORT is that it should hold assets on behalf of the
community and use the income streams from those assets to ensure they are
properly managed and maintained and that any surplus funds are used for the
benefit of the community.

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The Ocean Regeneration Scheme, once in place, will mean that ORT will take on the
leases for the new residential units once they are completed as well as the new shop
units. Our aim also is to become the nucleus of a new community hub – able to
provide community space for a range of activities. This role will take time to develop,
with the first step being a decision by the Council to appoint a development partner.

Promoting community involvement in initiatives to regenerate the area

As a new organisation in the area, ORT is committed to working with existing

organisations which serve the Ocean Estate in order to bring lasting improvements
to the area and improve the quality of life for those who live and work in the area.
The ORT Board is clear that it needs to be seen to add value in what it does rather
than duplicate what others do, or could do better.

In particular, it aims to work with, and help support and strengthen, existing
residents’ groups and consultation and engagement processes.

An early priority is to engage with the residents already involved in the development
partner selection process, and with those involved in the process of developing the
specification for a provider to undertake the ongoing management and maintenance
of refurbished units on the estate.

Ultimately ORT’s aim is to increase the numbers of people in the area who make an
active contribution to making the area a better place to live, work and visit.

Manage the uncommitted NDC 2009/10 programme funds, and

There is new funding available for the estate under the government’s NDC
programme. However, this is the last year of funding under this programme.

We will invite bids for this remaining funding, which has to be spent by 31 March
2010, and will ring fence some of the funding to a Community Chest programme for
smaller projects (up to £5,000); the rest we will use for larger projects.

Our aim over the year will be to generate new sources of income so that we can
continue to fund new projects in future years.

Generate additional funding streams for the benefit of the community

As we become established as a new organisation, and have the asset base and
track record of success to make us attractive to funding bodies, we will aim to
develop our capability to attract new funding to the area – whether in the form of
grants or new investment.

We will do this in the context of the long term regeneration strategy that we have
said we will produce. This will look at both needs and opportunities in the area,
including the opportunities for ongoing partnership working to maximise our impact
and chances of success.

Once the strategy is adopted, we will develop a promotional “prospectus” aimed at

potential funders and investors and set ourselves funding targets.

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Annex C – Retail Strategy Summary

Summary

This summary note sets out the position with retailers who are directly
affected by the Ocean Estate Regeneration project, and the approach of
the Council in dealing with the issues that are arising from the
regeneration process.

Background

The retail area in Ben Jonson Road will be affected by the Ocean Estate
regeneration proposals because the retail units under Marmora House
will be demolished as part of the scheme. Marmora House is part of
Urban Block F and is the second large phase of the project after the
redevelopment of Urban Block E has begun. There is likely to be a
period of more than four years between the demise of the existing retail
units under Marmora House and the provision of new premises. The key
impacts of the redevelopment on retailers are requiring the Council to
consider the need to:

• Relocate existing traders where possible if this is what they

require. Alternatively, if relocation is not required, to negotiate an
arrangement to allow the business to be extinguished to secure
vacant possession of the retail unit
• Maintain a viable trading centre during the regeneration period
• Maintain positive and effective working relationships with the
trading community
• Plan for a potentially expanded retail centre and to create the
optimum trading environment that meets the needs of the local
community

This process will be challenging and much work with retailers has
already been undertaken. The Council’s over-riding objective will be to
secure vacant possession of the retail units at the base of Marmora
House in order to facilitate the redevelopment of the site. Based on the
bullet point items listed above, the Council will seek to mitigate the
negative impacts of the process. However, it is likely to prove difficult to
meet all traders’ requirements and aspirations.

Work to Date

The Council has ensured that traders are kept aware of the proposals for
the regeneration project by providing newsletters and having regular
meetings with the Ocean Business Association (OBA). In recent months,
the Council commissioned Strategic Urban Futures to undertake a more
detailed analysis of the local trading environment to determine:

• The use of the local community made of the retail area

• The viability of the trading environment

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 • Establish what would encourage residents to make greater use of
the retail area
This report has been very helpful in planning for a potentially expanded
retail area based on the desire of local residents to see an improved
retail area. The Council now also has a better understanding of the
viability of the local trading environment and what needs to be put in
place to achieve an improved retail environment.

Further Work

Further detailed work needs to take place with each trader that will need
to be relocated. This will be to determine what their aspirations are in
terms of relocation i.e., location, duration, private sector options, etc, or
to establish whether they do not wish to relocate but to bring their
business to an end. The process will involve maximum co-operation on
the part of individual traders and disclosure of relevant information to
held with the process. If agreement cannot be reached, then the Council
may need to use compulsory purchase order powers to gain vacant
possession required to facilitate the redevelopment of Urban Site F.

Local Government Act, 1972 Section 100D (As amended)

List of “Background Papers” used in the preparation of this report

Brief description of “back ground papers” Name and telephone number of holder

and address where open to inspection.

Letter to Homes and Communities Agency Aaron Cahill, Development and Renewal, LB
(13 March 2009) and Associated Annexes Tower Hamlets, Anchorage House, Clove
Crescent, London E14 1BY. Extension 3482

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 OCEAN ESTATE REGENERATION - DRAFT
New Building Scheme Proposals - Accommodation Schedule

HOUSING:

SUMMARY OF PROJECT BRIEF PROPOSED SCHEME WHEELCHAIR DWELLINGS

Existing Affordable dwellings to be New Dwelling Tenure Bedsize Size (m²) LBTH Dwellings Type Feeder Site Feeder Feeder Feeder Urban Urban Overall Wheelchair Dwellings
Dwellings
demolished on Urban Blocks E and Planning (as 10% of all tenures)
Required
/Person required 1 (N/A) Site 2 Site 3 Site 4 (inc. Block E Block F Total
F Policy (%) conversion)
Rent 303 Rent 294 1B/2P 47.5 20 59 Flat 0 0 0 0 42 23 65 8% 7
2B/4P 73.5 35 103 Flat 0 0 0 0 70 30 100 13% 10
3B/5P 82.5 Flat 0 0 0 0 64 21
30 88 88 11% 9
Total 303 3B/5P 85.5 Maisonette 0 0 0 0 3 0
4B/6P 96 10 29 Maisonette 0 0 0 0 16 12 28 4% 3
5B/7P 111.5 5 15 Maisonette 0 0 0 0 11 4 15 2% 2
294 294 0 0 0 0 206 90 296 30
Intermediate 110 1B/2P 47.5 25 28 Flat 0 0 0 0 13 15 28 4% 3
2B/4P 73.5 50 54 Flat 0 0 0 0 30 24 54 7% 5
3B/5P 82.5 25 28 Flat 0 0 0 0 13 15 28 4% 3
110 110 0 0 0 0 56 54 110 11
Private 1B/2P 47.5 Flat 0 13 20 9 20 30
(Number of dwellings determined 1B/2P 53 25 as policy Flat (conversion) 0 0 0 3 0 0 97 12% 10
by building envelope) 1B/2P 56 Flat (conversion) 0 0 0 2 0 0
2B/3P 65 Flat 0 4 21 5 64 87
2B/3P 59 50 as policy Flat (conversion) 0 0 0 3 0 0 186 24% 19
2B/4P 74 Flat (conversion) 0 0 0 2 0 0
3B/5P 85 Maisonette 0 0 0 0 0 0
25 as policy 88 11% 9
3B/5P 80 Flat 0 7 22 2 29 28
see site totals 0 24 63 26 113 145 371 37
Page 59

% Dwelling Tenure Split across Affordable 52% Site Area (ha) 0.00 0.08 0.14 0.19 1.83 1.15 3.39
the New Build sites
Private 48%
Number of Dwellings 0 24 63 26 375 289 777 78
Affordable Dwellings % split Rent 73%
across the New Build sites
Intermediate 27% Residential Density (HR/ha) 0 825 1364 347 727 827 768

OTHER ACCOMMODATION:

Location Type Size (m²) Size (ft²)

Urban Block E and F Double Height Energy Centre 1,000 10,764
Urban Block F Retail (ground floor) 1,300 13,993

ASSUMPTIONS AND COMMENTS:

The totals for the project brief are based on figures provided by LBTH and Frost Associates on 3 December 2008. The capacity is based on the indicative building mass drawings in the Revised ITSOP document (March 09)
Feeder sites have 100% private dwellings. Feeder Site 2 has been treated as private for affordable (like for like) for the purpose of this exercise. Feeder Site 2 totals based on the ITSOP scheme
Feeder Site 1 has been omitted from this schedule
Provision for 250m² (GIA) double height Energy Centre (therefore 500m²) to each new build Urban Block
Provision of 1,300 m² (GIA) ground floor retail (2 residential storeys) to Urban Block F
MOE on Urban Block E and F and Feeder Site 2 to be based on a Fire Engineered solution
The capacity does not include for houses
Habitable room and density calculations for each site could be subject to change due to detailed internal dwelling layouts and orientation (dual or single aspect).

Date: 4 March 2009

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