Financial Viability Assessments
Financial Viability Assessments
Because the amount of “affordable” housing proposed by the developer – just 9 units out of 53 (17%) – fell below the borough-wide target of 50%, a series of Financial Viability Assessments (FVAs) were submitted for each of the planning applications. These purport to show the scheme would not be viable if the developer were to provide more “affordable” homes than it was offering. Some of these FVAs were reviewed by Jones Lang LaSalle on behalf of Hackney Council to see if they were reasonable.
There was a long legal battle to see these documents – which not even the Planning Sub-committee were allowed to see. This ended in victory in December 2015, two days before the case to see the documents was due to be heard by a Judge and two experts at the First Tier Tribunal (Information Right).
The viability documents:
- Jun 2012 GL Hearn FVA (first planning application) [disclosed Jan 2016]
- Nov 2012 JLL report (to assess the Jun 2012 FVA)
- Feb 2013 GL Hearn FVA (revised first planning application) [disclosed May 2016]
- Mar 2013 JLL update report (to assess the Feb 2012 FVA)
- May 2013 GL Hearn FVA (second planning application)
- No JLL update was commissioned to assess the May 2013 FVA
- Sep 2013 GL Hearn FVA (third planning application)
- Nov 2013 JLL update report (to assess the Sep 2013 FVA)
Timeline of the battle for the viability information
June 2012: Newmark (the developer) lodges it’s first planning application with a Financial Viability Appraisal (FVA)
August 2012: The Council refuse to disclose the FVA saying it is “confidential”.
November 2012: Hackney receives an independent assessment of the FVA from Jones Lang LaSalle (JLL).
February 2013: Newmark scales down its scheme and submits a revised FVA [not yet disclosed].
March 2013: Hackney receives an update to JLL’s earlier assessment.
April 2013: Hackney refuses Newmark’s planning application.
May 2013: Newmark submits a second planning application with small changes, along with a new FVA.
July 2013: Officers tell the Planning sub-committee that it has had the latest FVA independently assessed*. The committee agreed to grant planning permission.
September 2013: A Judicial Review is launched to challenge the granting of planning permission. One of the “grounds” is the failure to make the viability reports available to the public. Within days, Newmark submits and identical planning permission with what is described as an “updated”** FVA to that in May. It is hoped by the Council and Newmark that this application will overcome all of the grounds of the Judicial Review bar the ground relating to the viability reports.
October 2013: A formal request is made under the Freedom of Information Act 2000 (FOI) and Environmental Information Regulations 2004 (EIR) regime to see the FVA and JLL reports for the May and September planning applications. Hackney refuses, but the developer provides a copy of the FVA with all the financial figures redacted.
November 2013: Hackney receives an updated assessment on the latest FVA from JLL.
December 2013: Hackney’s Planning Sub-committee agrees to approve the identical third application having been told the financial viability information has been “reviewed three times”. Permission is granted by the High Court to pursue the Judicial Review.
March 2014: A second Judicial Review is launched to challenge the third, identical application, again citing the failure to disclose the viability information.
April 2014: An application is made to the High Court to see the viability reports.
May 2013: The High Court refuses the application to see the viability reports but orders that both Judicial Reviews can be joined and heard together.
August 2014: A parallel complaint is made to the Information Commissioner’s Office (ICO) over the Council’s failure to disclose the viability reports under the EIR regime.
September 2014: The Court of Appeal refuses an application to see the viability reports as, it says, they are not needed to argue the point in the JR, that they ought to have been disclosed.
October 2014: The High Court dismisses both Judicial Reviews and the planning permissions stand. **During court proceedings it emerges that the redacted FVA supplied in October 2013 is the wrong FVA but that in redacted form it would look the same as the correct FVA as the “updated” figures would be redacted. *Meanwhile the Council reveals to the ICO in private that the May 2013 FVA had not, in fact, been reviewed by JLL. It acknowledged the Officer’s Report to the Planning Sub-committee and show in Court was “misleading”.
November 2014: An appeal against the JR decision is launched.
December 2015: As a result of lack of co-operation on the part of the Council, the ICO issued an Information Notice compelling the Council to provide certain information so it can conduct its investigation.
January 2015: Sainsbury’s withdraws from Newmark’s development plan.
February 2015: The ICO reveals what the Council had confirmed to it in October – that the May 2013 FVA had not been reviewed by JLL.
April 2015: The Council reveals three items from the redacted FVA but the ICO rules that the rest of the information does not have to be disclosed. The Court of Appeal refuses permission for the JR appeal to continue.
May 2015: The ICO decision is appealed to the First Tier Tribunal (Information Rights), with a half day hearing scheduled for September 2015.
June 2015: In response to a separate EIR request, the Council releases the November 2013 JLL report but with all important figures redacted.
September 2015: The case before the Tribunal becomes more complex as it draws in an expert witness and the Council. The ICO concedes the earlier JLL reports ought to have been disclosed (in redacted form). The hearing is rescheduled for two days in December 2015.
October 2015: Newmark (the developer) sells the Wilmer Place site in its entirety to Reichmann Properties for £15.1m.
November 2015: The Council releases redacted versions of the first two JLL reports and redacted versions of the May 2013 and September 2013 FVAs. **The Council reveals that the May 2013 and “updated” September 2013 FVAs are, in fact, identical. The developer claims it corrected this by sending a further FVA in October 2013 with updated figures but the Council has no record of having received it.
December 2015: Two days before the scheduled hearing, and 26 months after the formal request, the Council releases all three JLL reports and the last two FVAs. We ask for the earlier FVAs for the refused application of 2012/13 to complete the picture
January 2016: Hackney disclose the first FVA from June 2012, but claim they have no record of a revised FVA for the ‘reduced’ scheme submitted in February/March 2013.
March 2016: A local estate agent begins marketing and taking reservations fees for The Cotton Exchange – a development of 33 homes comprising conversion of many of the offices and light industrial units in the old shoe factory. Works are underway to reclad the factory, and convert the interiors. Advertised sales prices range from £705-£1072 per square foot (average £868 per sq ft). None are “affordable”.
May 2016: The February 2013 FVA is discolsed finally completing the set of FVAs.