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City-centre scheme may never happen without new deal, developers warn
DEVELOPERS say they may never resume work on York’s massive Hungate site unless they are allowed to pay less towards community projects.
Hungate (York) Regeneration Ltd says it can no longer afford to meet the affordable housing demands agreed when it received planning permission in 2006, nor the £6.6 million it is supposed to pay towards archaeology, cycling, a car club, CCTV, education and open space.
It now wants to strike a new deal with City of York Council, and says reduced demands could allow them to resume work in 2015, completing the remaining five phases of work in stages by 2024.
John Jowitt, of PJ Planning, on behalf of the developer, has written to Richard Beal, of the council’s plans processing unit, asking him to “relax” the original requirements.
Mr Jowitt said some community contributions had been paid, but wrote: “These are not presently considered to be affordable, and are preventing the development proceeding. Delay on further work on this important site has also arisen due to viability issues. These must be addressed if work is to recommence.”
The original plan for Hungate was for 720 homes, a landmark office building, shops and bars, a community “focal building”, a new bridge over the Foss and a riverside piazza, over a site of 4.1 hectares. Work on the first 162 homes finished in 2009. The remaining five phases have yet to begin.
As well as the £6.6 million ‘section 106 contributions’ required from the developer for community benefit, the original planning consent also said 20 per cent of the Hungate homes must be affordable housing, with 87 properties for affordable rent and 57 for discounted sale.
Mr Jowitt cited national planning guidance that said requirements on developers should not be so great as to threaten viability.
He said that without the section 106 contributions, the developer would make a profit of £15 million, or 12 per cent. He said the firm would ordinarily seek a 25 per cent profit margin but would settle for 20 per cent at Hungate. He said the development value was worth £130 million but the current obligations on the developer would cause a loss of £215,000.
The Press asked Polo PR, which represents the developer, whether that would be an overall loss or a loss in the 20 per cent profit, but the firm declined to say.
A spokesperson said the firm was monitoring the housing market and economy with regard to starting phase two.
She said: “These economic conditions have reduced developer margins across the country, and in line with many other developers, we are reviewing all aspects of the proposed development in order to continue to deliver a high-quality mixed-use scheme.”
She said only five town houses in phase one remained for sale.
The developers’ original outline planning permission expired this month, and Hungate (York) Regeneration Ltd has applied to extend that deadline.
A “reserved matters application” for the whole site, covering detailed matters such as design, originally had to be ready this month, with construction due to start by July 2014. The company now wants to begin phase two in September 2015 and complete it in May 2017.
Three further phases could start in 2017, 2019 and 2021, each taking about 18 months, and the final stage in January 2023, ending in October 2024.
Mr Jowitt said “viability” should be reassessed at each stage, and the overall development had been “devalued further” by approval of new student flats in nearby Carmelite Street.
Mike Slater, the council’s assistant director for city development, said: “No detailed viability assessment has yet been carried out by the applicants on Hungate. Until City of York Council receives and reviews this assessment no re-evaluation of their section 106 payments can be submitted to support the application.
“Hungate is an important city centre development and we remain committed to working with the developers in order to continue to deliver a high quality scheme. However, given the current national economic difficulties it is usual practice for developers of such large scale developments to consider changes in their orginal plans, and the associated 106 payments.”
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