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BPF victory over EU red tape

After pressure from the British Property Federation, the Government has today published guidelines for councils over how to interpret an EU legal ruling which had been derailing development through costly procurement procedures.

It was one of the key points of the BPF’s Regeneration Manifesto, published earlier this year.

The OJEU ruling, which was intended to ensure competition, had seen many local authorities entering into lengthy and costly procurement processes. This had caused delays to more than 70 development projects around the UK, with some projects being abandoned altogether.

There was even an example of a big name pension fund property firm having to go through the process to extend a shopping centre it owned.

The 2007 ‘Roanne ruling’ left Local Governments in doubt about the legality of development agreements entered into without a formal financial tendering process. Not wanting to risk legal challenges, many have been taking the safest option of formally procuring development agreements through the Official Journal of the European Union (OJEU) – a long and expensive process.

The BPF has long been calling for the government to clarify the rules, which would avoid so many local authorities having to go through the official EU procurement process and ease some of the pressure on developers during this period of severe economic pressure.

The BPF hopes the new guidelines offered by the Office of Government’s Commerce will go some way to lift the fog around the issue and provide clarity about exactly when a partnership between a local authority and a developer requires the full tendering process via the OJEU.

Liz Peace, chief executive of the BPF, said:

“We are pleased that officials have responded to our ongoing conversations behind the scenes with some helpful guidance. Of course, the devil will be in the detail and we will spend the next few days looking through it. This demonstrates that CLG officials are committed to working with the industry and we hope to continue to our efforts to tick off the other requests listed in our Regeneration Manifesto.

“While the industry is fully supportive of moves to ensure procurement is democratic and that all deals are carried out in the public interest, it is vital, especially during more challenging periods of the cycle, that over the top democracy doesn’t start to contravene common sense.”

Alistair Parker, development partner at Cushman & Wakefield LLP, said:

“It is very helpful in making clear that development agreements will frequently not require any public procurement process and helpfully points to several circumstances where development agreements should be ‘OJEU-d’. Many development agreements don’t have to go through a complex public process at all. People were interpreting the directive to the point where practically every agreement went through it.”

Several projects have been affected by the ruling. Below are details of just a few:

The Kings Quarter, Morley’s proposed £100 million redevelopment of Gloucester’s Kings Walk shopping centre, has faced severe delays.

A £500 million agreement between Hammersonand Kingston Upon Thames Council about the re-development of the Eden Quarter in Surry was terminated as a reaction to the ruling.

North Hertfordshire District Council had to delay Hitchin’s Churchgate town centre regeneration scheme because of the ruling.

Land Securities Stratford Island regeneration project, including an extension to a shopping centre had to be sent out to tender by the London Borough of Newham and the London Thames Gateway Development Corporation.

For more information and all PR and media queries, please contact Andrew Teacher, Head of Media, on ateacher@bpf.org.uk.

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Guidelines for councils