Friday 26 October 2007

Questions Over Funding

The public inquiry into the Arrowcroft and Croydon Council arena heard this week that there were question marks over the funding of the project.

It was pointed out that Arrowcroft and the council have not signed contracts with banks or third parties to provide the funding required for the project, and that so far Frogmore has only committed £3M to the project.


At a public inquiry last Friday, the possibility of the sale of the controversial Croydon Gateway site was raised, which could end the decade-long fight between the two rival developers: Stanhope and Schroders; and Arrowcroft and Croydon Council.

If a sale of the site can be agreed it will end the matter before it goes to secretary of state for communities and local government Hazel Blears at the end of the inquiry.

Stanhope and Schroders own the site in question, and have planning permission for a 1m sq ft office and residential-led scheme called Ruskin Square.

However, the council and development partner Arrowcroft, with funding from Paul White's Frogmore, have proposed a 2m sq ft Croydon Gateway scheme that would feature a 12,500-seat arena.

The inquiry, which has one week left to run, deals with two issues: whether planning permission should be granted to the arena-led scheme; and, if it is, whether Croydon Council can go ahead with a compulsory purchase order to force Stanhope and Schroders to sell the 9 acres that they own in the 13 acre site.

Last Friday, the inquiry heard that the council and Arrowcroft have never made a formal offer to Stanhope and Schroders to buy their part of the site.

Alan Jones, finance director of Arrowcroft, said this was because the company was unsure whether any purchase of the land would contain an overage provision.

This would state that a larger sum would have to be paid if planning consent for a higher use value were to be obtained.

Keith Lindblom QC, acting for Stanhope and Schroders, told the inquiry that no such provision existed, and that any bid for the land would be welcomed.

It is thought that if Arrowcroft and the council receive written confirmation that there is no overage provision, they will make an offer to buy the land owned by Stanhope and Schroders after evidence on the site’s value is heard next week.

However, evidence is to be submitted showing a £47m to £55m difference in how much the two sides think the site is worth.

William Hill, head of property at Schroders, said: 'I can confirm that Arrowcroft and the council have made no offer to us or the previous landowners for part or all of the site.

However, there is no encumbrance to them doing so. If they made us an offer at a price that reflected the value and potential return of the site, then we would, of course, consider it. But as it stands, it is our intention to continue with our development.

As the inquiry enters its final week, it has moved from examining whether the council and Arrowcroft’s scheme should be granted planning permission, to whether it should be allowed to use a CPO to purchase the land.

Stanhope and Schroders were among the objectors to the scheme being given planning permission. Their evidence to the planning inspector stated that the arena was not economically viable, and that the scheme did not contain enough affordable housing.

But in its submission regarding the CPO, Croydon Council said the arena was vital to regenerating Croydon and changing its image as a 'concrete jungle'. Jon Rouse, chief executive of Croydon Council, said in his evidence: ‘We all want it to happen because we know that it will have a profoundly positive impact on the prospects of this town.

'Only the Gateway [site] makes sense as the location for a major entertainment and leisure facility.'

However, Stanhope and Schroders sought to show that the funding and operation of the potential arena is far from secure. Lindblom pointed out that Arrowcroft and the council have not signed contracts with banks or third parties to provide the funding required for the project, and said that so far Frogmore has only committed £3m to the project.

However, Paul White, managing director of Frogmore, who agreed to fund the scheme in February, said: 'I am reasonably offended by the suggestion that I would go back on my word. Frogmore has an unblemished reputation when it comes to providing funding.'

Sign the petition against the arena via this link on the Number 10 website: Petition

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