Provocation 3

Sharing the delivery of places

with many partners

Steven Tolson

Learning from the Past

“For his different purposes man needs many different structures, both small ones and large ones.... For constructive work, the principle task is always the

restoration of some kind of balance. Today we suffer from an almost universal idolatry of giantism.

It is therefore necessary to insist on the virtues of smallness..”

EF Schumacher: Small is Beautiful – A Study of Economics as if People Mattered

1973

Jimmy Reid’s Rectorial Address 28 April 1972"the greatest speech since President Lincoln’s Gettysburg address”

New York Times

“…Let me right at the outset define what I mean by alienation. It is the cry of men who feel themselves the victims of blind economic forces beyond their control.

It's the frustration of ordinary people excluded from the processes of decision

making. The feeling of despair and hopelessness that pervades people who feel with justification that they have no real say

in shaping or determining their own destinies....”

An Asset Based Approach

Assets are the resources or strengths that empower individuals and communities to

make the most of life.

They include:

- knowledge, skills and experience of people

- strength of local associations - support of institutions - the economy - buildings and infrastructure

Community Empowerment & Renewal Bill

Aim - strengthen community participation, unlock

enterprising community development & community

renewal. Ideas:

• Extend community right to buy (Urban Scotland) • Give people a greater say in local decisions • Give right to challenge public service delivery if it doesn’t

meet needs • Give local authorities powers to deal with empty homes &

buildings • Amend allotments legislation to support grow-your-own

projects • Explore how existing legislation can be used to allow

Local Authority and RSL tenants to manage their housing.

Delivering Places to Live

10 Propositions for transforming Placemaking in ScotlandProfessor Stuart Gulliver & Steven Tolson

Place Really Does Matter!

• Place is about People, it is a “public good”• Place is not a fractured ensemble of out of tune “bits and

pieces” (collaboration)• Places need orchestrating to connect things (leadership)• Place is an intrinsic component of national economic

performance• Place is not just about a Master Planning Process

Scottish Government’s Council of Economic Advisers, First Annual Report, 2008

“Too much development in Scotland is a missed opportunity and of mediocre or indifferent quality.

There are a few examples of new or regenerated places which are well thought out, some fine new buildings and smaller projects that are to be welcomed but they are the exception rather than the rule.

The ultimate test of an effective planning system is the maintenance and creation of places where people want to be. We need to rise to that challenge”

Blockage Issues

• Economic Performance – - Corporations globally active - local small companies inactive- polarisation of funds to big players(risk and preference for quick return)

• Demand - Underlying consumer demand for property but unable to be realised due to lack of equity.

Demographic Issues

• Household formation 2.91 persons in 1971 to 2.35 persons in 2011. (ONS)

• Large increase in 1 person households 17% in 1971 to 31% in 2011 (ONS) with greatest increase in age band 16-59yrs

• By 2033 Scottish population of over 60s set to increase by 50% (1.4m). An increase of 148% of people over 90 in same period.

Supply Side Blockages• There is little development taking place (housing

production less than 50% pre 2008).

• New housing land supply is predominated by large sites many held by large builders who control when, where and how production occurs.

• New housing supply is based on numbers with mismatch between dwelling size supply and household size (2.35 persons in GB) and sub-sector requirements (young and older age groups). In Scotland 41% of all dwellings built since 1982 have been in a detached form.

• Development finance polarised in favour of large builders with robust balance sheets.

There is a mismatch of Housing Supply with Household

CompostitionThe recession has brought a change in

product supply. Supply has different characteristics in Scotland compared to

England.

Scotland still has around 1/3rd of new build houses in detached form and flat

production has broadley halved. In England detached supply is between 10% and 20% with flats accounting for more

than 1/3rd of supply

% English House Types

0%

10%

20%

30%

40%

50%

60%

2008 2009 2010 2011 2012

Year

%

Detached Houses

Detached Bungalows

Semi Detached Houses

Terraced Houses

Attached Bungalows

Flats and Maisonettes

NHBC New Homes Statistics Review Q1 2012

Does supply match what is

needed in England?

% Scottish House Types

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2008 2009 2010 2011 2012

Year

%

Detached Houses

Detached Bungalows

Semi Detached Houses

Terraced Houses

Attached Bungalows

Flats and Maisonettes

NHBC New Homes Statistics Review Q1 2012

Does supply match what is needed in Scotland?

The role of the State • State is short on resources – “A State of Retreat”

• Pressure to get cash in for assets – sell to highest bidder

• Public stimulus funding is small and short term (shovel ready) and struggling to change market conditions.

• Public sector lacks confidence due to risk aversion.

• Public sector tied to rigid approaches and literal translation of procurement rules.

• Due to risk transfer there is a lack of investment, development skills and [municipal] entrepreneurial action

The Role of the Council ismuch more than front line services

• Legislator and Policy maker• Investor (not developer)• Promoter & Participator – Leading role not “bit part”

“to improve economic competitiveness and ensure that local people secure the public

service they deserve, while at the same time having access to the wealth that

competitiveness should be bringing”

Sir Howard Bernstein – CEO Manchester & a Municipal Entrepreneur

Why more involvement from the State?

• Switch from Grant to Loan culture – can’t just hand over the money so Spruce/Jessica could work

• State has best covenant for borrowing money – private sector is struggling

• State still controls significant property assets – currently worth low value so why not work them and get production activity?

• State should control investment for the public rather than individual interest –Scottish FuturesTrust’s initiatives working for Health Centre / Education / Housing investment. Join these activities and assets together to achieve Place Investment.

Place Making is Investment not Development

• Development is a short term process (in and out)

• Investment is long term (stay in and have a stake)

• Investment has financial, human and physical capital all needing to be collectively managed.

Well maintained Social Housing Gardens

Place Making Leadership

We need informed leadership to:- Listen – “A wise old Owl sat on an oak, the more he

saw the less he spoke, the less he spoke the more he heard, why aren’t we like that wise old bird?”

- Promote Vision, Planning and Implementation – “municipal entrepreneur” (Howard Bernstein – CEO Manchester)

- Bind things together to get a coalition of support – get people out of their silos and find “marriage value”

- Create certainty, clarity confidence and credibility – “what is said will be done” [put it into action]

- Avoid a risk aversion culture [nothing will be done]

Collaboration -“Bridge Spanning”

Vertical management hierarchyHorizontal between functionsStakeholder customers, producers etcDemographic communities and people

from diverse groups

Delivery: Not Paint by Numbers

• We have Written Policy• We have Written Rules• We have Written Procedures & Processes

BUT THERE IS A DELIVERY BLOCK!Need to

• be informed on how market can be shaped / flexed• generate conditions for creative and innovative

solutions. Don’t default to formulaic approach• encourage a common sense approach• co-operate and collaborate to stimulate solutions and

avoid a “paint by numbers” approach.• adopt a “can do” culture

BIG Players

Corporate Players with Corporate Funds

TOO BIG TO FAIL

BIG Players

Corporate Players with Corporate Funds

TOO BIG TO FAIL

SMALL Players

SMEs and Third Sector with Micro Finance

TOO SMALL TO SUCCEED

SMALL Players

SMEs and Third Sector with Micro Finance

TOO SMALL TO SUCCEED

We have to get things going

There’s a need to change attitudes and behaviours and re-learn how to re-shape the market – especially stimulating small

Power of European Place Making DeliveryA way to stimulate the Small

A Delivery Model by Multi Participation

• A response to Delivering Better Places

• A response to public policy• An opportunity to utilise public assets• Invest and exploit public covenant• Collaborate with Institutional Player

to match long term investment and merge skills

• Get benefits from BIG and SMALL

Development and Investment of Place

The StateLong

Term Investor

The DeveloperShort

Term Investor

The CitizenLong

Term Investor

InfrastructureWorks

-Serviced Site Purchase - Development

Charges -Tax- Rental Income

The Products

The Place

Stewardship

Site Assembly

© S Tolson September 2012

Collaboration in Action

ALocal Asset Backed

Vehicle for Place Investment

Place Investor & Delivery Elements

• Macro The State (land assets) and Investor (investment funds) create the Place Framework

• MicroMulti Developers fill in the framework a Plot Based Approach

Long Term Place Investor An active Joint Venture

1.Public investor seeks financial long term return and social & economic benefits

2.Private investor seeks a financial return

State participation • brings covenant strength • lowers risk• improves access to funds• increases value.

The Investment Activity

MACRO INPUTS

• Long term Place Framework • Infrastructure & Services – Hard & Soft• Energy Provider – Income generating • Income Generating Uses - Property

(Stable Income generation = Long term Finance)

Development by Multi Players

MICRO INPUTS – Plot Based

• Corporate – House Builders• Non corporate SME / Social Enterprise etc• Co-operatives – formal co-op or

partnership• Individual Self Build / Custom Build• Housing Associations - affordable

Create variety, choice and competition and better social balance

Lower equity inputs allows greater developer access Spreads Risk amongst many participants Speeds up delivery through many participants

Two Tiered Approach to Project Delivery1. Infrastructure Investment (Long term – Place Making)

2. Block Development by multi Players – (Short term build but long term occupancy)

Public Sector

Partner

Private Sector

Partner

Public Land Assets

Public Sector Loans

• PWLB

• TIFs

• Jessica

Joint Venture

Place Investor Equity

Cash Match for Assets

Multi Developer DeliveryDeveloper

Agreements

Developer

“A”Volume Builder

Developer

“B”Commercial Developer

Developer

“C”Housing

Cooperative

Developer

“D”Housing

Association

Developer

“E”Self Build

ExternalPrivate Debt

Funders

© S Tolson September 2012

Steven Tolson7 Park Avenue

StirlingFK8 2QR

07753720347

stevenjtolson@gmail.com