Wednesday, July 2, 2003
Legal row threatens work on landmark site

RICHARD WARREN in London

Work has finally started on redeveloping one of London's most famous landmarks, Battersea Power Station, after a 10-year wait.

However, a legal dispute could delay Parkview International's plans to redevelop the derelict building into an entertainment hub for two years, while a lack of funding could scupper the scheme altogether, experts have revealed.

According to Ian Rumgay, communications director at Parkview International, basic infrastructure work on the site's water and heating equipment started at the end of last year. Parkview is also building an office for its own use on the site.

Work has yet to start on the 500 million (about HK$6.4 billion) project's two theatres, two hotels, 650 apartments, "product showcase" and offices, and within the power station: shops, restaurants, cafes, bars and entertainment venues. The completion date for the first phase of the project comprising the power station, hotels and offices is 2007.

However, a judicial review of the planning procedures used to grant Parkview permission to redevelop the 15.4-hectare brownfield site will be held in October. The case is being brought against the planning authority, Wandsworth Borough Council, by protesters from the Battersea Power Station Community Group.

A court will decide whether Wandsworth was correct to extend planning permission for two aspects of the scheme after expiry dates had passed. If the council is found wanting, new planning permission would have to be granted. The council may also be asked to carry out an Environmental Impact Scoping Assessment of the project.

According to Mary Power, director of commercial planning at property consultancy FPDSavills, Parkview's project could be delayed by two years if Wandsworth loses the case. Although Parkview could stick to its existing plans, the council would have to start the process of awarding planning permission all over again.

"They would have to start from scratch. They would have to go through the whole consultancy process again," she said.

Commenting on the protesters' campaign, Steve Mayner, head of public affairs at Wandsworth Borough Council, said: "It is an irritant. The protesters are just trying to delay it even more. They want fresh consideration of the plans, so that it can include affordable housing and more public transport."

Political pressure for more affordable housing is also mounting.

London Mayor Ken Livingstone said: "Battersea Power station is a large site in a truly stunning location along the Thames. But plans for the site make absolutely no provision for lower-cost housing to address the needs of key workers and others. There is a great risk the power station will become a wealthy person's play area, gated from the wider community.

"The planning permission was granted in 1997, before my post of Mayor of London was even initiated, so the site lies outside of my jurisdiction. If at any time in the future new plans were drawn up and a new application came to me, I would look for major changes to address the needs of those people who have been priced out of London's heated housing market."

Mr Mayner said affordable housing was not included in the scheme because it was not financially viable.

"It is a very difficult site. Unlike the Dome, it has not had a penny of public money," he said.

Insufficient funding could kill off Parkview's scheme. Aside from a lack of public investment in the project, Parkview will not pay most of the cash.

According to Mr Rumgay, Parkview's bankers, Royal Bank of Scotland, will finance the project either from its own coffers or by raising funds from other sources.

A lack of funding meant the project was unlikely to be built, a property specialist said.

Yolande Barnes, research director at FPDSavills, said many large mixed-use schemes remained on ice, particularly when the developer was dependent on outside funding.

"I am surprised that anyone can debt fund such a thing. It is by no means assured that even if it has planning permission that it will get off the ground. Funding is the big barrier," Ms Barnes said.

"To have it work for you, you have to build this lot before you can make anything from it. In the case of mixed-use schemes, you need to put in lots of infrastructure and build some big buildings."

Ms Barnes, who specialises in analysing mixed-use developments, said the absence of affordable housing indicated that the finances underpinning the scheme were fragile.

To ensure that large, mixed-use projects such as Battersea Power Station were built, the public sector ought to assist developers with fund raising, she said.

The judicial review would make it more difficult for Parkview to raise funds because the uncertainty it created increased the level of risk for investors, she said.

Parkview has made slow progress with the site since buying it in 1993.

Mr Mayner said potential tenants had dropped out over the years, which meant plans needed to be altered.

"They [Parkview] have got overall planning permission, but we are still getting the finer details coming in, modifications to the detailed plans, it is a continuing process. If they had all of their partners together at the start then this would all have been done by now," he said.

Andrew Lloyd Webber's Really Useful Company, the Cirque du Soliel, Warner Village Cinemas, British airports operator BAA and the United States-based Gordon Group are among the companies whose negotiations with Parkview have broken down.

Parkview was in discussions with only one potential tenant at the moment, Hyatt Hotels, Mr Rumgay said.

Protesters accuse Parkview of wanting the power station to decay, so the developer can demolish it to make way for an easier redevelopment or sale of the site.

Keith Garner, committee member of the Battersea Power Station Community Group, said: "I think Parkview are speculators. I don't think Parkview has any intention of carrying out development on this land."


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Published in the South China Morning Post. Copyright (C) 2003. All rights reserved.