Green Party Bulk ward Cllr Tim Hamilton-Cox has been looking at the the property deals that have been taking place in recent years in the Canal Quarter.
Land Registry records show that Lanmara Developments Ltd. paid £4.9m for Mitchell Brewery's former land and property in the Canal Quarter in November 2018, when it purchased British Land's interest. That is more than three times what British Land had paid 6 years before. The land-holding is broadly enclosed by St.Leonardgate, Lodge St. Edward St. and the rear of buildings on Moor Lane.
Cllr Tim Hamilton-Cox said:
"Lanmara is linked to Marcus Worthington Ltd based near Garstang but has a mystery majority shareholder based in Jersey called KH IV Estates 823 Limited. British Land had also used a Jersey company to hold its interest in the Canal Quarter. Developers and landowners need to get the message that offshore ownership and management may be legal but it's simply not socially acceptable.
Even more than the unsavoury sniff of tax avoidance, that price worries me: what kind of scheme is Lanmara going to want to develop in order to get a return on nearly £5m of investment? If it were more student accommodation (and there's another 400-plus-bed scheme on the quayside just starting construction) that would go against the idea of creating a mixed community in the city centre. I'm calling on Lanmara to work with the ideas that come out of the consultation events being held between now and the summer.”
As regular readers know, the City Council finally changed its mind on the grandiose scheme for the Canal Corridor (now called “the Canal Quarter”).
They are promoting a new approach and are currently setting out key principles. HOWEVER, there are limitations with the consultation exercise
and it is worthwhile writing as much as you can in the comments sections to make your views clear.
You can do this at
Green Councillors will be proposing a series of amendments to the recommendations for the new Canal Quarter scheme. Two of these are that the public should be properly consulted before final plans are drawn up and that the steering group for the canal corridor scheme should be made up of councillors from all parties.
Bulk Ward green councillor Tim Hamilton-Cox said:
“It is extremely important that local people are involved at an early stage. We don’t want consultation to be left until after the shape of a scheme has already virtually been decided upon. Winchester City Council has taken a refreshingly open approach to its city-centre brownfield regeneration opportunity and there is a lot that we can learn from them on how to properly engage the public.”
Green Castle Ward and city centre councillor Nick Wilkinson said:
“There are a wide range of skills across the parties on the City Council. It is vital that the new proposals are not solely controlled by the Labour group and that we use abilities from all parts of the Council.”
The Canal Corridor Action Group has been formed for concerned locals to get involved in creating their own vision for the land. You can find out more
and sign up to their Facebook group at http://canalcorridor.uk/
This is an informal community group with no political allegiances.
Commenting on the decision this week by the Labour Group to abandon the existing canal corridor scheme with British Land, Green group leader Jon Barry said:
"Abandoning the scheme with British Land is the right decision. The Green Party has been calling for a mixed-use scheme for the last 13 years and we are delighted that the Labour group and Council officers are now on board."
"Whilst I am pleased with the new direction for the canal corridor, the decision should have been made much earlier. It was clear to us 18 months ago that this scheme was far too risky for the taxpayer - but our protests were not listened to. As a consequence, in this financial year alone, the City Council has spent £283,000 on consultants for the negotiations with British Land."
"The scheme with British Land was done with no public consultation or
involvement. It is very important that the public is able to comment and be
involved in any new plans. After all, it is their city and their money."
A public meeting attended by around 70 people at the Gregson Centre on Tuesday, 13th March was told by Green Party speakers that the proposed scheme by British Land was full of financial and environmental risks – and so the Council needed to take control by introducing its own Community-led scheme. Bulk Ward Councillor Tim Hamilton-Cox, who was one of two speakers at the meeting, said: “The proposals put to councillors in October last year included the Council being locked into 25- or 30-year leases for the arts hub and underground car park where the Council would be on the hook for paying the rents to British Land regardless of the income earned by both. This is exactly the same situation as with Lancaster market and ended up with the Council incurring big six-figure losses each year - as the rents from market stalls declined - and having to buy itself out of the lease. British Land is 'de-risking' the scheme for itself by transferring risk to the taxpayer.”
The full presentation by City Cllr Tiim Hamilton-Cox, about the background and risks involved in the British Land plan for the site, is available as a PDF here.
Nick Wilkinson presented an alternative approach at the meeting – which has already been successfully adopted by Winchester City Council in a similar scheme: “The Council owns 50% of the land and is in a strong position to drive this development – instead of letting British Land make all of the running. We envisage a phased approach where the Council would start by commissioning a mix of private and social housing by the canal. This would then give it revenue to pump-prime a development of an arts quarter with restaurants and other leisure facilities. The former Mitchell’s Brewery would make an excellent venue for housing or small business units and retail units.”
The full presentation about an indicative alternative council-led plan for the site, by City Cllr Nick Wilkinson, is available as a PDF here.
Green group leader Jon Barry said: “The Council-led approach that we are suggesting would remove many of the risks to the Council associated with British Land’s scheme. These risks include the need for the Council to gain 7% income per year on the Council’s £25m input into the project and having to pay upwards of £1.5m rent for the car park and arts hub. We need to end our association with British Land as the main developer. It would then be fantastic if all the political groups on the Council would work together for a scheme without these risks that would truly benefit local citizens.”
The council-led phased-scheme proposal:
This report is an assessment of the scheme as proposed to Council on October 31st 2017. This report was exempt, which means that councillors are not supposed to release details to the public. However, given that the City Council released some details of the scheme in early December 2017 (https://www.lancasterguardian.co.uk/news/business/250m-lancaster-development-gets-green-light-from-councillors-1-8834704), North Lancashire Green Party feels that it is morally obliged to release some of the alternative arguments.
This report does not contain all the detailed financial information – thus, we do not believe that any of the information below is commercially sensitive. The scheme will be considered again by Full Council in 2018 before a final decision is taken. We recognise, of course, that the proposals in the scheme may change from those that were in existance on October 31st 2017.
Cllr Jon Barry said: “If the City Council is to invest such a large amount of public money into the canal corridor scheme then there should be a public debate as to whether this is the right thing to do and whether the risks are acceptable to taxpayers. We will not be gagged any longer – the public has a right to know what is being done with their money.” “My view is that rather than relying on a company with many of its assets controlled by off-shore companies, the City Council could easily and quickly develop a public-led development of the canal corridor. This would have much less risk for the Council and would result in a scheme with real financial and social benefits for the city.” The scheme currently proposed includes the following
The City Council is currently set to invest £25m into the scheme. To do this, it intends to borrow £19.5m over 50 years and then pay interest at an assumed rate of 3.5%. The Council is assuming that it will generate 7% profit from the scheme for the next 50 years. This is to offset risks with the car park and the arts hub. If this profit level of 7% is not achieved then taxpayers will have to pay any defecits.
The two riskiest parts of the scheme are the underground car park and the arts hub. The City Council has been persuaded by British Land to take the risks associated with both elements. The City Council will have to undertake to pay rent for the car park over 30 years. This rent is expected to rise on an inflation-linked upward-only rent review. If the car park is under-used then the City Council will still have to pay the rent. This is an exactly analogous situation as occurred with the indoor market. The City Council rented back the building from the developer and was stuck in a 99-year lease. By the end, the City Council was losing hundreds of thousands of pounds per year. (see below for more detail on the indoor market debacle.)
The financial situation with the arts hub situation is similar to the underground car park. The City Council will have to agree to pay rent back to the developers, again expected to increase each year on an inflation-linked upward-only rent review. The Council will have to hope that the organisations within the arts hub generate this amount of profit. Currently both the Dukes and Ludus rely on significant grants from Arts Council England and the city council to break even.
The combined rent envisaged for the arts hub and the car park is £1.5m per year.
Risks to artistic integrity
The arts hub is an extremely attractive proposition for a city the size of Lancaster – its scope, design and canal-side location present captivating possibilities. But aside from the financial risks, the danger in terms of the arts is that the City Council will seek to commercialise the arts hub to try to generate more revenue. This means that the ethos of organisations such as The Dukes and Ludus will be compromised. In short, they will be dancing to the tune of revenue rather than artistic content.
The arts hub also poses a big danger to the Grand Theatre – as major players in the theatre itself have declared. If the arts hub commercialises its operations, it will bring in acts that would have performed at the Grand, leaving the Grand to struggle financially.
Increased car parking
The scheme includes a 786 space underground car park, which is an additional 215 car parking spaces on what is there already (including the land potentially used by the university). The Council will be paying around £1m to rent the car park on a 30 year lease. So, financially, the Council will want as many people to use the car park as possible. Yet, at the same time we know that the city fails air quality levels and that nationally 42,000 people are dying per year because of air pollution (equates to around 87 per year in the Lancaster District). So, the Council will have a massive conflict of interest. The Council should have a responsibility for the health of its citizens to keep cars out of the city centre - using the park and ride, for example - and yet, financially, it will be tied into a 30 year lease for the car park - and the rent will increase year-on-year.
In October 2017 carbon levels in the atmosphere passed 400 parts per million for the first time ever. And yet the Canal Corridor scheme is an energy-intensive scheme which encourages people to drive from as far away as Ingleton. A similar scheme in Gateshead, for example, is going to be "off grid" - and generate all its own electricity. The Labour-run City Council is stuck in the 20th century, at best.
The park and ride at junction 34 isn’t working. The busses are virtually empty a lot of the time. The way to get people to use these busses is to remove car parks from the centre of the city. By increasing car parking in the centre of the city, this scheme does the opposite. It is difficult to imagine a more environmentally unsustainable scheme.
The Existing City Centre
The Canal Corridor scheme is still very much retail-led. It has 320,000 sq ft of retail, 250,000 sq ft of this being non-food and drink. This is a massive increase on the retail space currently in the city centre. Most of the shops that are being approached by British Land are already present in the existing city centre. This will lead to lots more empty shops in the city centre. The overall retail offer in terms of different shops (i.e. chains) seems unlikely to be much greater than it is now. The City Council has no plans to improve the existing centre (except for £10,000 for ginnels) and it will have no further borrowing capacity to do so. Thus, the Council will be investing £25m in the eastern part of the city and virtually nothing in the west.
The public is being kept in the dark
Nothing has happened on the Canal Corridor land for many years - principally because the developer, British Land (BL), has not been able to make a scheme work financially for British Land. BL has spent the last few years trying to get the city council to pay a subsidy, in one form or another. This demand for subsidy has been increasing over that time. The detail of all this, frustratingly for Green councillors, is kept confidential. At the October 31st Full Council meeting, Labour used its majority to win a vote to keep the press and public out of the meeting and keep the agenda secret. The negotiations with BL involve external consultants for which the City Council has budgeted £400k.
One thing we know about British Land the chosen developers is that the company is set up to ensure it pays the least possible tax by the use of shore tax havens. Labour leader of the council Eileen Blamire when asked whether we should be supporting tax avoidance said, "It is not up to me to decide" and 'It is impossible to take any opinion on this" Greens believe that the City Council should refuse to support companies that immorally deprive government of revenue.
Lancaster market – a cautionary tale
Cost of buying out the lease of Lancaster market was £13m. This happened because the City Council did not update and refresh the market as people’s retail habits changed. As a result the council was left with an upward-only rent on a 99-year lease with no break clauses. No business would have agreed to such a one-sided deal. But Lancaster city council did and had to borrow more than half its annual net budget to buy itself out of its obligations less than 20 years after the market opened 'amidst a blaze of publicity' and after the public had been told that after extensive comparative research, Lancaster market would be 'the very best'.
A public-sector led regeneration of the canal corridor
North Lancashire Green Party proposes a public-sector led re-development of the Canal Corridor. Our aim will be to put the public’s interests at the centre of the scheme and to remove the financial risks inherent in the Labour City Council’s scheme. The City Council currently owns around two-thirds of the land. We believe that the City Council should regenerate this land as soon as possible. When this is done, it should consider purchasing the land owned by British Land (who paid only just over £1m for their part). We are still working up details of our proposals but our aim is for them to look something like:
Bricks and mortar retailing is in decline. Town centres must become more places where people socialise and are entertained. The question is whether a location with a relatively small catchment can sustain 2 city centres. We don't think so. Latest research on the shrinking demand for retail premises in town centres across the country backs this view up.
City council to change course on Canal Corridor?
Green Councillor for Bulk ward Tim Hamilton-Cox explains the latest in the long running battle for a sensitive development on this stratetgic city centre site.
“In July 2015, city councillors learned that the deadline for the developer British Land (BL) to submit a planning application for the Canal Corridor had expired and it was open to the city council to withdraw from the exclusive contract with BL. In September the Greens asked full council to authorise a review by officers of other development options for the Canal Corridor. This was defeated but 2 weeks later the council's cabinet appeared to accept the need to think again. As a result, a report on alternative options for the Canal Corridor will be debated at full council on 16th December 2015.
The Greens hope to persuade a majority of councillors to move away from big retail in favour of a scheme which includes a mix of social and private housing; space for small business; and, importantly, a small park for town centre residents to enjoy. This mix would complement a housing-led regeneration of the Gillow quarter which includes the council-owned St. Leonard's House.“
What is the Canal Corridor?
a roughly triangular piece of land bounded by St. Leonardgate, Moor Lane and the canal. Car parks owned by the city council dominate but it also includes the 18th century brewery.
What is its recent history?
The city council entered into an exclusive contract with Centros in 2005 to develop a retail-led scheme. This was rejected following a public inquiry in 2009, principally because of adverse impact on heritage assets. British Land took over in 2012 and promised to submit a planning application by the end of 2013. That hasn't happened.
"Much (not all) of the Canal Corridor land is owned either by the city council or British Land - land previously in Mitchell's ownership. Against the Green party's judgement, the city council signed a development agreement first with Centros in 2005, and later with British Land, which gives the developer exclusive rights to the council's land.
The 2002 plan for the Canal Corridor was for a mixed-use development of Mitchell's land, including some retail - and car parking and housing for the rest of the site. The Greens have generally supported this approach. And after 13 years of 'will they, won't they?' we think that it's time to move forward with an affordable housing-led regeneration of the land which the city council owns."