Paul Norman's Olympics Blog

Olympics land and debt deal: the winners and losers

2010-03-17T09:51:03Z

So the deal has been done and, from what I am picking up, all sides are pretty content with the end result.

It appears that since two weeks ago when there was significant concern about the time it was taking to reach agreement, the mayor, central government and the LDA have all made a concerted effort to get something over the line.

The timing was important. It was clearly good for the Olympic Park Legacy Company to be able to go to MIPIM, the annual property jamboree in Cannes, with an unfettered hand, ready for business with the private sector.

More importantly, the deal, in principle, has been signed off before all sides enter the purdah of a General Election period and the potential for a new administration and a new view on things.

So now I have had more of the details, who are the winners and losers?

]]> The OPLC has clearly got exactly what it has wanted - the LDA land within the Olympic Park and some of the Three Mills Studios land unencumbered by debt. As I have written before, the Three Mills land could prove useful in masterplanning with London Thames Gateway Development Corporation a significant regeneration scheme that links into the Olympic Park. It could also provide a significant tenant for the media centre in nearby Hackney Wick.

The OPLC will also no doubt be happy that the ownership structure of the vehicle - a 50/50 split between government and the mayor - has been retained.

Baroness Ford says of the deal "we could not have hoped for a better outcome" and I think we should accept this at face value.

Perhaps the LDA Board may still quibble over the terms however, and they do still need to sign it off.

A month ago the LDA was suggesting it wanted a figure of £500m for the land and to help with the £936m it has spent on land assembly and remediation for the Olympic Park.

Under the deal government will fund OPLC with £138m so they can purchase the LDA's land holdings in the Olympic Park and at Three Mills.

To reflect the level of debt taken out by the LDA in acquiring the site, the agency will also be relieved of its commitment to pay £300m to the ODA.

That comes to a £438m deal from central government by my reckoning. However, the LDA has previously said that it has retained a significant but undisclosed amount of land bought when acquiring sites for the Olympics, so perhaps this resolves the missing £60m or so from its initial position.

A new memorandum of understanding about future proceeds from the land (of which more later) agrees that the LDA "will be able to keep the receipts from sales of other Olympic land outside the Park and the Three Mills site that is not transferred to the OPLC". It would be useful to know exactly what this land is and I know the London Assembly is already questioning this.

But what of the outstanding debt? The LDA will repay £369m of debt between 2011 and 2014 without the need to take out any further loans over the same period the CLG release says.

This figure presumably is accounted for by land receipts and the London taxpayer.

The MoU, which will be drafted to reflect a new arrange for sharing of proceeds from the Olympic Park, breaks down like this:

The Government will receive 85% of the first £650m of proceeds, the remainder going to the Greater London Authority;

From the next £1.3bn, the GLA will get 15%, the National Lottery will receive £675m and the remainder will go to the government;

From any further proceeds, the GLA will get 50%, the remainder going to government

Under this arrangement, the National Lottery will retain the same entitlements to the net proceeds from the Olympic Park as set out in the 2007 Memorandum of Understanding.

The LDA will be able to keep the receipts from sales of other Olympic land outside the Park and the Three Mills site that is not transferred to the OPLC. In addition, the GLA will gain a share of the Olympic Village receipts, after all ODA costs have been paid, and this will be recycled back into supporting OPLC.

The LDA will also transfer LDA staff and the LDA Olympic programme budget to OPLC. The Mayor has also committed to meet £10m per year of the OPLC running costs.

The Government and the GLA will have an equal say in all decision making. This will be set out in published Framework Document and will include approving the OPLC's Corporate Plan and Annual Budget.

All I will say about this, is that an awful lot of money is expected back from the development of the Olympic Park. There will need to be a slightly different property market than the one we currently have if these aspirations are to be met.

Clearly though it is great news for legacy ambitions for the East End that a resolution has been found for what was looking like increasingly problematic negotiations. I shall have to find something else to write about ...

West Ham's Olympics flirtation unlocks major development site

2010-03-16T18:00:48Z

It would appear that West Ham United's flirtation with a move to the Olympic Stadium has unlocked a significant east London development opportunity.

]]> The London Development Agency will tomorrow use the London stand at MIPIM in Cannes to unveil plans to find a development partner for Stephenson Street, a 32.6 acre site to the north of West Ham tube station that was once principally Parcelforce's depot in the area.
The site was for some time earmarked by West Ham as a suitable location for a new stadium. It seems West Ham's new owners are far more serious about the Olympic Park though and the LDA has been equally serious in taking the message to heart.

Questions begin about Olympic land and debt deal

2010-03-16T16:05:43Z

I have had a first press release through on the Olympic land and debt agreement from the Mayor's office now. A more detailed release from CLG will be sent out later I am assured - which would be helpful, as there are still some issues outstanding.
Not least among these is the fact that the press release talks of "heralding" rather than completing a major step forward in reaching agreement with the Government to "secure a lasting legacy for the 2012 Games".

]]> It adds that "following complex negotiations, a decision has been made to transfer Olympic Park land owned by the London Development Agency to the Olympic Park Legacy Company (OPLC)". I thought that principle had already been agreed, it was just that the government and City Hall were unable to agree on financial and structural matters.
In the release Johnson does confirm that the OPLC will remain equally owned by government and City Hall: "This has been a long and complex negotiation, but I am delighted to say we have now reached agreement with government on all the issues under discussion. The next step will be to carry through the land transfer to the Legacy Company. This is a good deal for London and for legacy.
"We have preserved the principle that the company should be an equal partnership between the Mayor and government and ensured that the financial arrangements will protect the LDA and its other important programmes in London."
But LDA chief Sir Peter Rogers' quote leaves some uncertainty.
"This deal will give the legacy from 2012 every chance of success. Our negotiations with Government have produced a good deal for London, with a significant benefit for the London Development Agency, which gives the certainty that will allow us to plan our future investments for Londoners in a period of tight public finances. I believe the proposals should be acceptable to our Board."
Ah, so the LDA Board has not signed it off yet. I will update on the details of the deal and how likely it is to find favour with the LDA Board when CLG publishes its statement in about an hour.

City Hall and govt complete land and debt deal

2010-03-16T15:35:43Z

I've just revealed on our web site that the Olympic land and debt deal that was proving so difficult to agree has been signed off.
I understand a detailed release and statement will be made later today by the mayor's office at which stage we shall see what sort of deal the LDA secured. Will keep you posted.
Here's the story:

]]> A crucial agreement between City Hall and central government enabling the regeneration of the Olympic Games site after the event in 2012 has been signed off, EGi News has learnt.

Later today an announcement will be made by London mayor Boris Johnson at MIPIM confirming the London Development Agency and the government have reached agreement over control of the London Olympic Park and its £800m debt pile.

The deal is vital to the formation of the new Olympic Park Legacy Company, the vehicle tasked with working up plans for as many as 12,000 homes at the 500-acre Olympic Park, as well as to the creation of a sustainable legacy for both the £350m Olympics media centre in Hackney Wick and the Olympic Stadium.

Resolution is also important if the LDA is to finalise its budget programme for the coming year.

The LDA has been in negotiations to transfer the Olympic Park, and the debt accumulated assembling the site, to the Treasury since May of last year. The LDA has said it will only accept a deal that creates a "no detriment" position for the agency.

The OPLC will now be responsible for securing the future of the site.

Who decided football and athletics can't mix?

2010-03-16T09:40:27Z

Any suggestion that the Olympic Stadium will not include an athletics running track when it is redeveloped post Games seems to have been finally snuffed out. It emerged this morning that London is on a shortlist of three to host the 2015 World Athletics Championships with the Olympic Stadium the core of the bid. The IAAF, the sport's governing body, will make its final decision in November. ]]> If London wins the 2015 event, The Independent writes that a temporary ring of 12,000 seats would be added to the basic 28,000 seats the stadium would be cut back to if it was just used for athletics.
West Ham I think will have to get used to an athletics track if they want to go there. Increasingly, though I begin to wonder where this idea that a football stadium is unpalatable with an athletics track around the pitch comes from.
Baroness Ford at the London Assembly last week was certainly made aware and is clearly already aware that other stadia built for athletics events have successfully been turned into football stadiums with athletic tracks, most notably Rome's Stadio Olimpico (pictured) which is shared by Lazio and AS Roma.

London Assembly disappoints at OPLC grilling

2010-03-10T12:14:51Z

The London Assembly were on bewilderingly disappointing form this morning as they quizzed the Olympic Park Legacy Company about the progress the body is making.
After a number of questions revisiting old ground about the Olympic Stadium [did the Assembly expect Baroness Ford and Andrew Altman to concede that the stadium should not be used for Athletics post Games?], the various other landowners at the site, and the £400,000 (?!) of extra financing the LDA has suggested the OPLC will need to transform the Park post Games - "it's actually £450m I'm afraid" a clearly bemused Margaret Ford pointed out - the crucial topic of when and if the Olympic Park site and associated £600m of debt would ever transfer to central government from the LDA's balance sheet was at last addressed.

]]> After Altman said the OPLC remained optimistic there would be a resolution, Baroness Ford again said failure to reach conclusion would have a dramatic impact on ambitions to build family housing across the site.
And then an alliance of London Assembly members including Richard Tracey and Jenny Jones took the debate off on a tangent about vegetation and whether fruit trees would survive on the site.
Actually the topic of remediation is clearly a significant one, but a clear opportunity to get the typically candid Ford and Altman to open up about the increasingly worrying paralysis over who controls the Olympic Park and debt was missed.
On the topic of remediation, Ford again referred to the fact that the OPLC's aspirations to build more family housing on the site meant that the ODA's current work remediating the site would have to be improved in some areas, and clearly this could prove costly.
Ford said: "There are different types of remediation for residential. We will need to look at what more needs to be done on a case by case basis.
"We are choosing to change the masterplan to provide a much stronger family housing offer and that will mean we will want to do additional remediation from the LDA ... We are relatively comfortable that land has been well remediated for the uses initially proposed - commercial use, apartment style buildings - but we will need to go a bit further on family housing plots."
It's no wonder that Ford and Altman are keen to keep the issue of financing work on site post Games in the mind of the government and the mayor - they simply can't afford to let this slip off the agenda in what Ford describes as a "tight fiscal environment".
Ford described this potential for central government to lose its appetite for investment in the 25-year build project after the Games as the major risk facing the body alongside concerns that the residential and commercial property markets will not have returned by 2013 and 2014.
The sad thing about this morning is Ford and Altman seemed happy to answer difficult questions. It's a shame the Assembly didn't ask them.

OPLC looks to youth from outset

2010-03-08T16:10:55Z

The Olympic Park Legacy Company has launched an initiative to get young people involved in the design and development of the Olympic Park in Stratford.

The OPLC's Legacy Youth Panel is made up of 22 young local people aged between 13 and 21 who over the next five months will visit the Olympic site, tell planners what they would like to see as well as visiting local schools to see what children want to see on the park post Games.

Well there is nothing wrong with that. Clearly, young people in and around Stratford should be asked what they would like to see and I'm hopeful that a couple of the volunteers will guest blog here about their experiences - Andreas and Sarita, if you are reading!

Chief Executive of the Olympic Park Legacy Company, Andrew Altman, explains: "We want young people to feel a sense of ownership towards the Olympic Park because they will be the generation that will most experience the change to east London over the next 25 years.

"The Legacy Youth Panel is a fantastic opportunity to capture the imagination of young people and galvanize others into getting involved.

Boris Johnson and Tessa Jowell are equally supportive.

Details of City Hall/govt Olympic power struggle emerge

2010-03-04T12:05:06Z

Neale Coleman, the mayor's adviser on London 2012, and Peter Bishop, deputy chief executive of the London Development Agency, went before the London Assembly's Budget and Performance Committee this morning to primarily face questions about the Olympic Park Legacy Company and the continued wrangling over who controls the Olympic Park and the liability the LDA took on to assemble it.
There was much of interest discussed.
For the first time to my knowledge, apart from in the pages of Estates Gazette and on this blog, there was a frank admission that a key sticking point has been central government's desire to have greater control of the OPLC than the current 50:50 position shared with City Hall.
Here is what I wrote about this a month ago here and here.
Coleman today said "good progress" was being made in this area but he wasn't hugely convincing.
He said that a sticking point was "around issues to do with governance and how [the OPLC] is run in the future. The mayor's position is very much it should be an equal partnership between GLA and central government as we want to make sure the company is driven primarily by creating the best possible legacy for east London and not just narrow financial situations affecting central government."

]]> But Coleman also put the government's position: "Again clearly one might say if you were on the other side if we reached agreement that shifted the balance of the risk in terms of the future outcomes of the company essentially with the LDA settling its position now in terms of its financial position, one might want to argue that that should be reflected in decisions about governance. We argue that the risk should be shared between government and GLA, particularly as the GLA and LDA continue to retain very substantial financial commitments."
Peter Bishop elsewhere said that the position over governance was less of an issue than the finance, or the figure the LDA agrees to accept for the Olympic Park.
He said it was important that the deal did not "penalise London financially".
However Bishop said the idea that it was as simple as saying the government was offering substantially less than the £500m settlement figure the LDA has previously suggested it wanted was something of a red herring.
"This is not just a deal about a single one off payment. It revolves around LDA's finances as a whole and the future receipts for the land. There are a whole range of issues we need to conclude for this deal."
Worryingly Coleman said agreement would have to be reached within a matter or weeks if the whole issue was not to be pushed to one side by the General Election, leaving the LDA with mounting difficulties in working out its capital requirements and budgets.
Bishop added: "We don't want to see this drifting into mid-term as this would see us struggle to sort out our business strategy."
With regards to the OPLC itself Coleman said there was no immediate danger of the vehicle being "paralysed" by the impasse. But he added: "In a period when it wants to actively pursue bringing in private investors and partners than we would need to be absolutely clear about who owns the land and its liabilities."
Two other significant issues emerged.
Firstly the LDA will not be transferring over all of the land it acquired for the Olympics to the OPLC.
Bishops conceded: "The LDA will retain some of the land acquired. There is an estate outside of the Olympic Park and we are beginning to release this for development to recoup money."
It would be useful to have a rundown of this land.
Finally Bishop said that it could not be ruled out that certain parts of the Olympics site would need further remediation work depending on the development proposed post-Games.
The OPLC will certainly want this issue to be resolved quickly so it can work out how much more it will need to spend on remediation if it is to develop housing on the Olympic Park.

OPLC: land and debt problem has to be resolved ... doesn't it?

2010-03-03T16:17:08Z

Baroness Ford was in typically straight-talking mood this morning at the Department for Culture Media and Sport Select Committee meeting.
I point this out because it cannot be easy sounding candid and lucid when the subject turns to Olympics budgets and in particular the "great matter" of who is politically in charge of the regeneration of the Olympics site post Games.
As with Henry VIII's great matter I think it will take several years before we see a victor, and at present I'm not sure if Boris is going to turn out to be Anne Boleyn (pictured) or Catherine of Aragon.

]]> The most interesting news to emerge was the fact that the OPLC is in the process of verifying how much more public sector money the vehicle will need to secure to "transform" the park post Games. The LDA forecasts a figure of £450m. Baroness Ford does not say this will necessarily be the case but says it will be "a lot of money". It certainly makes recent stories emanating from the ODA about the Games coming in under the £9.3bn budget seem a little, well, premature.
Equally interesting was Ford and Andrew Altman's update on the Olympic land and debt negotiations.
Ford professed to being "optimistic" that a resolution would be found fairly shortly despite much prodding and cajoling in a bid to make her suggest she was worried about the impasse. However, her optimism came with a fairly major caveat. It has to be resolved she said because the OPLC can't function properly if it is not.
Ford said: "The resolution is not clear. Negotiations between mayor and central government continue and we expect a positive outcome. But we are not worried because [all parties are aware] ... the project cannot operate properly without a resolution."
Ford was clear that where a lack of resolution would have most impact would be on the type of development, in particular of housing.
"The key issue in terms of debt is the type of housing in the park. We want to create best value for people who live there by building a quality development that is attractive to the market and to social housing. The bulk of this will be family housing."
Here's hoping Ford and Altman's optimism and sang-froid today is rewarded with a resolution from City Hall and government.

OPLC identifies £450m Olympic Park budget shortfall

2010-03-03T14:25:34Z

The Olympic Park Legacy Company has this morning warned that as much as £450m more than budgeted for will be required to "transform" the Olympic Park post Games.

Speaking at a Select Committee meeting in front of the Department for Culture Media and Sport at the Houses of Parliament, Baroness Ford, chairman of the OPLC, and Andrew Altman, chief executive, confirmed that current Olympic Delivery Authority budgets for work on dismantling and preparing the 500-acre park in Stratford east London after the Games came in at £350m.

But Ford and Altman said the London Development Agency had separately estimated that a further £450m would need to be found by government to ready the site for use post Games.

It's clearly a significant development in terms of the "legacy" development of the park.

]]> Ford and Altman said the OPLC was now working to verify the exact figure. Work identified is for "important tasks" including adaption of roads, utilities and establishing buildings for visitors.
Ford said: "We are in the process of going through on a line by basis to see if the LDA's figures are correct ... as we work out the capital requirements for the OPLC."
A calm Ford batted away questions about the sheer size of funding required from the public sector admitting just that the budget shortfall for "transformation" was likely to be a "large amount of money" and would need to come from the public sector.
"We anticipate it will come from one of our shareholders, either CLG or from the mayor or a mixture of the two. At this stage it iss not clear how much will be needed to reinstate the Park."
It will be interesting to hear what central government has to say about it.
Back in July of last year Olympics minister Tessa Jowell was adamant that the £350m allocated within the £9.3bn budget to transform the park for post-games use would be sufficient.
"Of course there will be a sense of anti-climax when the games have ended," she said. "That's when the excitement of recasting this park as a national destination for sport, leisure, culture and business starts. We have already anticipated the legacy needs in a way no other Olympic city has."
That's what she said here anyway.

Silvertown set for Olympics position

2010-03-02T11:31:19Z

I've just written another piece about a scheme I have been following in some depth for Estates Gazette - the beleaguered Silvertown Quays project in Royal Docks. The London Development Agency has now lodged papers in the high court seeking an "urgent" termination of its agreement with its development partner for the £1.5bn project. You can read all of the gory details here. But what is the Olympics connection you may well ask? ]]> Well the LDA wants a quick decision from the high court so it can crack on with building a "pontoon" bridge across the Docks connecting the site to the ExCeL centre.
The LDA wants to use the site for events and exhibitions during the Olympics as the majority of the medal ceremonies will be held at the adjacent ExCeL.
At last it seems some life is going to be brought to this key east London regeneration site, if only temporarily.

Olympics media centre latest images

2010-02-25T12:32:57Z

The Olympic Delivery Authority has unveiled fresh images today showing the completed cladding on the International Broadcast Centre, and the Main Press Centre reaching its full height.

You can see the latest images and a webcam at the below links Images: http://mm.gettyimages.com/mm/nicePath/locog?nav=pr133749623
MPC: http://www.london2012.com/plans/olympic-park/webcams/main-press-centre.php
IBC: http://www.london2012.com/webcams/international-broadcast-centre.php

]]> Just to say, the NAO's latest report into progress on the Olympics site will be published tomorrow. I've had a glimpse and while embargoes prevent me from going into detail, do not expect too much to frighten the horses, or the Olympic powers that be for that matter.

Treasury must not sell off Olympic crown jewels, says Boris

2010-02-24T12:54:53Z

The Mayor updated on the ongoing wrangling between Treasury and City Hall over who takes on the Olympic land and debt at mayoral question time, providing a further insight into the politics holding up agreement.

Boris suggested that the nub of the row was the need for cast-iron guarantees that Treasury did not take to great a control of the Olympic Park - something that I have already written about on several occasions.

]]> His comments are repeated below. I don't see this resolving itself until after the General Election.

Mayor Johnson: "There is an interesting discussion about the location of debt that goes with the Olympic land. Whatever happens with that land and site we want to ensure that it delivers the maximum possible legacy benefits for London ... (and) not a firesale of assets by the Treasury. We don't want crown jewels sold off by Treasury as that is not in the interests of London."

Olympics site film

2010-02-24T11:47:32Z

My colleague Laura McBride has made a short film of current progress on the Olympics site.

Olympics Community Land Trust gathering momentum

2010-02-24T11:04:56Z

Mayoral Question Time this morning has again promoted the idea of introducing Community Land Trust's at the Olympic Park.

The Trusts are non-profit making property trusts, popular in the US and Scandinavia, which aim to benefit the surrounding community by ensuring the long-term availability of affordable housing.

Andrew Boff asked the mayor whether he supported Baroness Ford's interest in the idea of installing a Community Land Trust at the Olympic Park.

The mayor was clearly supportive of the initiative but accepted Boff's warning that there was a danger that they could produce closed communities if managed poorly.

Johnson added: "We want to encourage CLTs for the community with a wide range of family housing and the rest of it."

]]> There is clearly momentum behind the idea of using the Olympic Park as a kind of test-bed for CLTs in the UK although of course Ford and Johnson have been promoting the idea for some time.

Here they are talking in June 2009 at a London Assembly meeting:

Margaret Ford: I would like particularly to pick up the point about community land trusts. I am very interested in the concept of community land trusts. I spent two or three years some time ago working with two or three different organisations at that time, predominantly rural organisations, who are very keen that affordable housing stayed in that sector and that houses that were once affordable did not then get lost to people who needed to access affordable housing. So if, at the end of the evening, the lady who mentioned that would like to talk to me about it, I would be very keen to talk about the opportunity to try and do a community land trust or some element of that on the park.

Boris Johnson: I would just add to what Margaret said. I also share her enthusiasm for the community land trust model because it seems to me that in all the evidence from where it has been tried in America and Scandinavia, it produces a real sense of community, people's sense of obligation to the neighbourhood, and there is a real noticeable impact in terms of the upkeep of houses and, of course, they have been better looked after; the neighbourhood looks better and it is safer to live in. I just say one thing about the affordable component of the Olympic village: people should realise that these would be very good looking buildings, designed and built to a very, very high specification. But there will also be a high proportion of family-sized units with 3 or 4 bedrooms. It is absolutely vital we have a very high proportion of family sized units in the Olympic village.