Oh it's complicated, very complicated...So complicated that the councillors who sit on Salford Council's planning panel probably won't even bother their brains to think about it...They probably won't even raise a tired eyebrow to get their heads around how Salford people are losing £millions almost every month...as they weep crocodile tears for the impending £55million cuts they are about to impose on public services.
While housing support services for the city's poorest people are about to get battered in the cuts budget, property speculators are cashing in on scandalous ConDem Government planning policy and a pathetically weak response from Salford councillors, rolling over every time a hand wringing developer cries poverty because their profit levels aren't high enough.
The Salford Star has documented over £20million in planning fees and obligations dodged by developers without so much as a whimper from councillors at the planning panel, who prefer to argue whether the bricks on these massive apartment blocks look pretty enough.
The latest scandal to be set before planning councillors on Thursday covers over 1,500 apartments in nine massive blocks up to twenty five storeys high that will scar the skyline of Chapel Street and Salford Quays. The two developers, Acroy Ltd and Amstone Ventures, should be paying £5,934,459 and providing affordable housing. They will possibly pay £1,498,000 with no affordable housing. A loss to Salford people of around £4,436,459.
Even more strange is that the payments by the two sets of developers are being set on completely different levels of profit that they are being allowed to make. Why?
First up is the Amstone Ventures II LLP development on prime land where the old cinema used to be, facing Trafford Road on Clippers Quay. This application is for up to 665 `Private Rented Sector' (PRS) flats plus loads of `commercial floorspace' (shops and restaurants) in five blocks up to fifteen storeys high.
Salford Council policy states that 20% of the total flats should be set aside for affordable housing - 133 units – or for an equivalent fee to be paid by the developer for affordable housing elsewhere in the city. However, Amstone won't be providing any affordable housing, nor will the developer be paying any equivalent fee because it has submitted a `viability assessment', reviewed by the District Valuer, stating it can't afford it..."This position is accepted by the city council".
The developer should be paying "full Section 106 contributions of £2,376,796" but, because of the `viability appraisal', will be paying just £700,000 - "to facilitate delivery of the proposed pedestrian bridge across the Manchester Ship Canal or public realm improvements". Another bridge?
Even worse is that this payment has been worked out based on impossible to work out profit margins that the developer is allowed to make before the scheme becomes `unviable' (for details see below*)...
For the PRS scheme, the developer will be allowed to make a profit of 8.20% plus the full Section 106 payment of £2,376,796, or a profit of 10.38% with a payment of £700,000 (If the flats are sold rather than rented the developer can make a profit of 14.50% with full Section 106 payment, or a profit of 17.10% with a payment of £700,000).
Contrast this with the PRS development at Chapel Wharf on Chapel Street, where Acroy Ltd is proposing to build 995 flats plus `commercial floorspace' in four blocks up to 23 storeys high.
Here, the developer should be paying £3,557,663 in planning obligations but `has agreed to contribute' only £798,000 to `public realm'. Its `viability assessment' is based on a profit of "less than 10%", although it doesn't state what the exact level of profit actually is.
So the Clippers Quay developer's financial contribution is 10.38% profit with a payment of £700,000, and the Chapel Street developer's contribution is 10% profit with a payment of £798,000. If both schemes were treated same, the Clippers Quay scheme would be contributing much more and would possibly have to stump up the full Section 106 sum of £2,376,796.
Why are these developers being treated differently? Don't expect the planning panel councillors to ask. They never do.
Meanwhile, the Chapel Street scheme should also be providing 20% affordable housing – almost 200 flats – but, again, the Council and District Valuer have agreed with the developer that the scheme would not be `viable' if it had to cough up.
The Salford Star has seen the `Affordable Housing Justification Statement' submitted by Acroy as part of the planning application – and to describe it as a joke would be an understatement...
The Justification argues that a private rent property is, kind of, affordable housing... "Private rent is an increasingly 'affordable' option to tenants than homeownership in its own right" it states "Rents are often considerably lower than mortgage payments for the same size property elsewhere and renting does not require the financial responsibility of maintaining a property...etc"
Then, incredibly, the Justification adds that speculators, or `investors', don't like affordable housing... "it does not lend itself to the inclusion of a mix of tenures
as it causes management issues" it states "Fragmented ownership of large residential developments, are generally unattractive to larger institutional investors... Therefore, the applicant wishes to provide 0% affordable housing properties on site..."
The result? A recommendation for councillors to approve both planning applications and their lax financial contributions, losing the city around £4.5million and desperately needed affordable housing.
The Council would argue that its hands are tied by the ConDem Govertnment's shocking National Planning Policy Framework (NPPF), while planning officers would argue that just to squeeze out over £700,000 from each developer plus various `claw back' terms is a job well done, considering that many pay nothing for similar schemes...But nobody is explaining what is going on to the people of Salford, and the politicians are certainly not challenging it, or even raising a whimper of protest.
At the planning panel meeting on Thursday will one single councillor raise an objection to the fact that two developers, whose applications are before them, are being treated completely differently in terms of the financial contributions they should be paying to the people of Salford? Don't hold your breath.
Meanwhile, Salford is being transformed into a Monopoly board with Park Lane-type areas being handed over for the cost of the Old Kent Road...while Salford's affordable housing crisis escalates.
Salford Councillors on the Planning Panel...
Councillors Mashiter, Antrobus, E. Burgoyne, Dawson, Lea, G. Wilson, K. Garrido, Burch, Kean, Critchley, Hunt, Murphy and R. Wilson.
* Work it out for yourself!
Here are the full paragraphs from the planning application for Clippers Quay...
Full Planning Application Contributions
Open Space £260,320.00
Public Realm, Infrastructure &
Heritage
£156,000.00
Construction Training £15,600.00
2.5% admin charge £10,798.00
Total £442,718.00
"The applicant has advised that the provision of the contributions outlined above would result in a developer's profit below that expected as an 'industry standard'. However, the applicant has offered to make a financial contribution of £700,000 to facilitate delivery of the proposed pedestrian bridge across the Manchester Ship Canal or public realm improvements if the bridge is not delivered and therefore accept a sub-optimal return on investment.
The applicant has submitted a viability appraisal in support of their application. The appraisal considers two scenarios, firstly if the site is developed as a Private Rented Sector (PRS) scheme with each apartment block transferred to a partner institution upon completion and secondly if the apartments are sold individually in the open market. The appraisal applies a developer's profit level of 15% for the PRS scheme and 20% for the open market scheme. The risks associated with a PRS scheme are considered to be lower than selling individual apartments in the open market. However, in turn a discount on the market value is also applied to reflect the 'bulk' sale of the apartments. The District Valuer has advised that developers have been prepared to accept levels as low as 10% for PRS schemes.
It should be noted that the appraisal has applied a total Section 106 payment of £2,376.796 which includes an indicative contribution for the 'Outline' element of the development (a minimum of 614 units). Should an increased number of units be constructed in line with the parameter plans submitted, i.e. to the maximum 665 units, the impact of this increase upon viability will need to be reassessed. For both scenarios the appraisal has tested a profit assuming payment of indicative full Section 106 contributions of £2,376.796 and payment of £700,000. For the PRS scheme the appraisal concludes a profit of 8.20% with a full Section 106 payment and a profit of 10.38% with a payment of £700,000. For the 'open market' scheme the appraisal concludes a profit of 14.50% with full Section 106 payment and a profit of 17.10% with a payment of £700,000. This assessment has been reviewed by the District Valuer who agrees with the applicant's appraisal of viability.
The applicant has offered to make a financial contribution towards the delivery of a
pedestrian bridge or public realm improvements if the bridge is not delivered, despite the profit levels expected for the scheme being lower than would normally be expected in both scenarios. The willingness to accept a lower level of profit in order to facilitate the delivery of the bridge is welcomed and supported by the City Council."
See also previous Salford Star planning related articles...
*Salford Feeds The Rich - Part 1 - click here
Part 2 - click here
Update: 15th January
Salford planning councillors defer Chapel Warf application and pass Clippers Quay application but slam developers and question their roles and power - click here
Bank Note Graphics by Steven Speed
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