18th March 2016
Long-term revenues by using our assets
There is no denying that local authorities are operating in a challenging financial environment, against a backdrop of huge demographic pressure on their services, especially from an aging population. As a result, publicly-owned land and property assets are becoming increasingly important for local authorities but rather than focusing on short-term benefits of selling assets, there has started to be a shift towards a more strategic approach that maximises capital assets by turning them into sources of funding for long-term revenue.
The report Delivering change: Making the most of public assets from think tank Centre for Cities, put this trend under the spotlight. Although there are policy issues which still need to be addressed to help councils make the most of their public assets, opportunities do exist. And as highlighted by the report and our own experience, we know that there are a number of different and proactive approaches that can be taken.
One such approach involves partnership working. As the report recommends, strong local relationships between places, public sector organisations, and the private sector, will help local authorities capitalise on the opportunities that public assets present. Linked to this, it highlights the increasing popularity of Local Asset Backed Vehicles (LABV) which helps pool finance, land, planning powers and expertise, ensuring an acceptable balance of risk and return for all partners and the ability to plan and deliver projects more strategically.
From our work and discussions with local authorities, we believe that there is huge potential to evolve and develop new partnership models that could have a major impact on economic growth and generate new revenue streams.
This is why we recently partnered with Solace to host a thought-leadership event that discussed how local authorities can use their assets to generate long-term revenue streams, including the challenges, opportunities and best practice. Attended by 28 local authority chief executives and directors, the event explored potential funding, delivery, and management opportunities.
As a placemaking organisation, comprising 21 complementary businesses, we are well placed to help local government manage their assets more effectively and exploit the revenue potential of their sites and buildings. We provide end-to-end property development and management service, working alongside local government and meaning that it only has one relationship to manage. And we have taken advantage of new funding mechanisms, putting us in a stronger financial position, helping to reduce risk.
This business model has seen us join forces with a number of local authorities in several types of joint venture structures across the UK to help deliver major housing, regeneration and placemaking schemes.
In Scotland for example, Places for People has been selected as the preferred bidder on a £300 million partnership to provide thousands of much-needed new homes in a joint venture with Aberdeen City Council. This new partnership model is the first of its kind for a Scottish local authority and will see us partner in the building, ownership, and management of housing for rent to target a range of local needs, including those of key workers in the area.
Further south, Birmingham City Council and the Canal & River Trust has selected a joint venture between Places for People and Urban Splash as their preferred partner for the development of Icknield Port Loop in Birmingham, one of the most significant brownfield regeneration schemes in the UK.
Places for People and Urban Splash will enter into a period of exclusivity, prior to taking a 50% share in a limited liability partnership with the council and other landowners, to bring forward a mixed-use scheme, including 1,150 new homes plus commercial uses and community facilities.
For local authorities there are many challenges ahead, but by working together, aligning our objectives and creating a unified vision, we can make the most of future opportunities. By developing strategic partnerships and forming joint ventures and other structures with complementary organisations, there is the potential to balance risk and share resources, skills and expertise. The benefits of these collaborations should not be underestimated, so let’s find a way to make this work.
For a copy of the outcome report from the Solace and Places for People thought-leadership event, please email email@example.com
By David Cowans, Group Chief Executive, Places for People