Sale of Old Street (former) Police Station & Magistrates Court

Report: 20
Date: 18 April 2002
By: Commissioner

Summary

At the meetings of the Co-ordination & Urgency Committee in July and September 2001 it was decided that the Community Advice Project (CAP) be given opportunity to raise funds to purchase the freehold of the former Police Station by 31 March 2002. The LDA has pledged some financial support and architects have prepared a scheme, but funding for the purchase has not been forthcoming. CAP, with the support of the GLA/LDA, seeks to review the basis for disposal of the property.

A. Recommendations

Members are asked to note:

1. the request from the Community Advice Project Board (CAP) seeking a review of the valuation for the property and to investigate means for transferring the property to the LDA at a reduced or nil price;

and to decide:

2. whether to reconsider the MPA's previously agreed position in view of CAP's request; or
to seek bids for the property on the open market in accordance with the original decision.

B. Supporting information

Background

1. The former Old Street Police Station and Magistrates Court premises were the subject of reports to the Co-ordination & Urgency Committee in July & September 2001. The construction of the premises, in which the upper floors of the police station oversail the court building, prevent vertical separation of title. The abolition of the Receiver of the MPD (the previous owner of both properties) resulted in the freehold title being held by the MPA, with the GLMCA granted a 999 year lease at nil rent. The Magistrates Court is a grade II listed building.

2. The Community Advice Project (CAP) is sponsored by the Black Lawyers Association, who approached the Commissioner and the Magistrates Courts Service three years ago, when the Court was due to close, expressing an interest in acquiring the premises as their future base. Subsequent discussions resulted in CAP seeking to purchase both properties, subject to price and a successful bid for funding for their project.

3. The Director of Property Services was instructed to obtain an independent valuation to establish a price for both properties from the District Valuer. This was reported at the Authority's meeting in September, concurrent with a report to the Greater London Magistrates Courts Authority. Both Authorities agreed to sell the premises to CAP provided they could obtain appropriate funding and purchase the property at a price equivalent to the valuation by the District Valuer by the end of March 2002.

Present position

4. On 20 March 2002 a meeting was held with representatives of CAP, the GLA, London Development Agency (LDA), GLMCA and the MPA to discuss the position. CAP has received a grant of £2m from the LDA towards the development of the project and commissioned a firm of architects to assess the work necessary to bring both buildings back into full use and to convert them to meet CAP's needs. The estimated cost is considerable and in the opinion of CAP's advisers, this creates a negative value for the property. As a consequence CAP has suggested that procedures exist to permit the transfer of the premises at nil cost and seek the involvement of the GLA to facilitate a transfer on that basis.

5. The MPA has a legal obligation to use its best endeavours to achieve market value for any property sold. The legislation permitting local authorities to seek Secretary of State's consent to a sale at less than best value does not apply to the MPA and therefore seeking exemption by that route is not open to the MPA.

6. The sale of a public building at a concessionary price or for nil cost has occurred elsewhere on rare occasions in order to preserve a building of outstanding historical significance, when no alternative uses were considered possible. Historical importance is not definitive. This would need to be tested before the value of Old Street could be confirmed in this context, but it should be noted that Grade II is the lowest national grading for a building of historic value. Possible alternative use can be demonstrated through open market competition - subject to obtaining planning approval to change of use. In this case it would be necessary to grant an option to a preferred bidder for an appropriate period as the cost of preparing a planning application would be considerable. (Alterations to a listed building can only be considered as a detailed application with the decision frequently determined through appeal to a Secretary of State.)

7. The LDA do not believe funding the purchase of the buildings would represent the best use of their funds and suggest ownership, or a long tenure, being granted to the Community Courthouse Partnership at nil cost whilst protecting the MPA/GLMCA through a suitable 'clawback' agreement, in the event of the properties subsequent sale.

8. CAP state that it has received advice from independent valuers, supported by Hackney Council's "Building at Risk" officers and English Heritage that their proposals are suited to maximising the retention of the court building's character and important internal features.

9. "The Disposal of Historic Buildings" by the Department of Culture, Media and Sport contains guidance to public bodies on the need to show flexibility when disposing of such buildings. It states that the aim should be to obtain the best return to the tax payer, having regard to various criteria and that "maximisation of receipts should not be the overriding factor".

10. Consequently CAP has formally requested both the MPA and GLMCA review the previous valuation of Old Street by the District Valuer to reflect further market research and the properties current condition, together with potential restrictions on its use by the Local Planning Authority. CAP would wish to enter into negotiations to find a mutually agreeable way forward whereby the sale or transfer of the Old Street project can be made to them at less than the market value. Also since the MPA & LDA are functional bodies of the GLA "family", it proposes that legal advice be sought on establishing a means whereby the sale or transfer can be effected on this basis.

11. In the meantime, CAP request the property be made available to them at an agreed rent, immediately it is vacated, pending agreement on its purchase.

C. Financial implications

A sale to CAP at less than the price assessed by the District Valuer would result in a reduction in the capital receipts target for 2002/03. It will require agreement with the District Valuer on the basis that the sale at a reduced price arises from factors that were unknown at the time of his earlier valuation and that a sale in the market would also produce a similarly reduced price.

Any property transaction at less than market value is likely to be examined by the District Auditor, whether by his own choice or as a result of the matter being drawn to his attention through the Public Inspection of Draft Accounts. Any arrangement reached, therefore, will need to be capable of robust scrutiny.

D. Background papers

• Co-ordination & Urgency Committee meeting 5 July 2001
• Co-ordination & Urgency Committee meeting 13 September 2001
• Report by District Valuer held by Graham Douglas (Deputy Director PSD Estates)

E. Contact details

Report author: T G Lawrence, Director of Property Services, MPS.

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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