If You Build It They Will Come – Structuring Development Agreements Outside Of Public Procurement Rules

Finding ways to develop land without engaging public procurement rules is challenging. The public body may have land which it wants developed and developers who are happy to take the risk of developing it, but often these arrangements are structured to trigger obligations on the public body to tender the development proposal as works contracts. This can often delay or even prevent development opportunities from being realised. In an environment where demand for development is at crisis levels (be it in the area of social housing, student accommodation or nursing care, for example), delivering developed infrastructure in the most efficient way possible is key to addressing demand. A recent UK case has offered a path to allow developers and public sector counterparts to enter into development agreements without engaging public procurement requirements: Faraday v West Berkshire Council ([2016] EWHC 2166 (Admin)). Briefly the background is:

West Berkshire Council (the "Council") was owner of lands and wanted it comprehensively developed The developer was appointed by the Council as a master and plot developer and estate management advisor in relation to the proposed project. The main objective was to maximise the returns from the property and development potential of development sites within it. A "Steering Group" was established (with representative from both the Council and developer) to monitor project implementation with functions including approving business plans and acquisitions. There were a number of procedural mechanisms to go through before any development could be actioned. These included approval of business cases and site appraisals The developer had unconditional obligations in relation to master-planning while others were conditional. Among the conditional obligations was the option (following approval of business cases and plot appraisals by the Steering Group) for the developer to acquire certain sites and to develop them. The Council did not tender the development agreement because it did not consider public procurement rules applied. This was one of the...