Fears grow over future of 10,000-home post-Olympic redevelopment sites as LDA and government fail to agree on price
The London Development Agency has failed to come to an agreement with the government over the price of the land bought by the agency for the Olympics.
The agreement is needed before land can be transferred to the Olympic Park Legacy Company (OPLC) set up to deal with the 10,000-home post Olympic redevelopment, and has led to fears an agreement will never be reached.
The failure to agree a deal has been unearthed in board papers to the LDA which state that transitional arrangements allowing the legacy body to function should be extended for another six months from 1 Feb. The papers say: “Discussions have continued … to see if a funding package could be agreed that was acceptable to all parties. This has not been achieved at the time of writing this report and is likely to take some time to resolve. In light of these ongoing discussions and the need to provide some certainty for OPLC and the staff seconded to it from the LDA, it is recommended that the current transitional arrangements be extended for a period not more than six months.”
The news is the latest twist in a long-running saga over the plan to transfer the 200ha land-holding to the OPLC, seen as vital in allowing the company to progress the redevelopment of the east London site. The LDA borrowed £687m to pay for the land, on which it is now planning to spend £1.15bn to buy and remediate. Sources say it is now debating with the Treasury how much it will receive in compensation when the land is transferred to the OPLC. This will involve the Treasury agreeing to pay the LDA and taking on the outstanding debt, which is not secured against the land.
It is not clear what the implications are for the Olympic legacy regeneration vehicle, set up just last year, if the deal is not agreed before the election. The OPLC, chaired by former English Partnerships chair Margaret Ford, is in charge of the 15-year redevelopment of most of the Olympic site after the games, which will include re-using the media centre, masterplanning huge areas of development land, and finding a role for the Olympic stadium.
Sources close to the OPLC said they were relaxed about the negotiations and that they still expected agreement before the election.
However, in separate documents the LDA said it was having to revise its budget to work on the basis that no deal would be forthcoming. It will now have to pay £12.7m in extra financing costs because it will be holding the debt for longer than it had assumed. The document said: “In the absence of an agreement on the funding of the land and debt issues it is prudent to assume that the LDA will fully fund its remaining Olympic commitments over the next three years. This will require additional borrowing to fund remaining land compensation payments and payments to the Olympic Delivery Authority, in line with the original funding strategy.