IV. Jurisdiction Surveys

F. England

The Local Government, Planning and Land Act, 1980, developed the ideas of Urban Development Corporations (UDC’s) and Enterprise Zones (EZ’s). The intentions of both were to help revitalize deteriorating or dead urban centers. How well they have worked is up for debate. Below are some evaluations and the general outlines of the methodology behind both plans.

1. Urban Development Corporations

UDC’s were created ad hoc solely to “regenerat[e] areas of derelict, run-down land (often the inner cores of old towns).” See Planning R.115: August 1996 (Planning), 10153. The Secretary of State could designate any land anywhere in England as an urban development area, so long as it had been approved by both Houses of Parliament and it was within the realm of “the national interest.” See id.

To allow the public sector to lead the regeneration of urban areas, the UDC’s, whose members were appointed by the Secretary of State, took over many of the functions of the local authorities for the area. See Planning, 10153 and Malcolm Grant’s e-mail (MG), 1. A corporation had a chair, a deputy chair, and five to 11 other members, all of whom the Secretary of State found to have a particular knowledge of the area. See Planning, 10153. These UDC members could be paid, and their work compensated, by the Treasury, as recommended by the Secretary of State. See Planning, 10154.

The UDC’s had broad powers to acquire land by compulsory purchase, which helped to promote redevelopment as quickly as possible. (R. Dean Interview). The Act required that the development of a plan for regeneration must be finished within a year of the creation of the corporation, despite the recommendation for consultation with local authorities. See Planning, 10157. Once the UDC’s had decided on a plan, the Secretary of State could, after conferring with the local planning authority, approve the plan with or without modifications, and grant an automatic planning permission for the development of the land. See Planning, 10155. This expedited approval allowed UDC’s to use their expansive powers to acquire, manage and dispose of land and other property; to build; to provide utilities to the area; and to generally undertake any business or other project to expedite the main goal of regeneration of the area. See Planning, 10154. The local planning authority may have had input, but no responsibility for the outcome of the project. See Planning, 10155. Thus, the UDC’s could most efficiently achieve their goals of: 1) putting land and/or buildings to “effective use”; 2) encouraging industry and trade; 3) creating an attractive environment; and 4) providing adequate housing and social facilities. See Planning, 10154.

The Secretary of State controlled the UDCs’ powers by occasionally limiting them, extending the UDC over another district, and accumulating land via a vesting order, or compulsory purchase. See Planning, 10155. The UDC’s had the ability to dispose of such vested land to those they thought could do the best with it for regenerating the area. See id. They also could, with the secretary’s permission, allow development not permitted by a special development order or the general planning laws. See Planning, 10155-6. Despite the UDCs’ seeming freedom, they did have to abide by laws protecting properties of historic or conservation value, limiting advertising, maintaining waste lands, and enforcing planning controls. See Planning, 10156. Also, the Secretary of State had final say in most matters, and the Act provided for regular consultation between the UDC’s and the relevant local authorities. See Planning, 10155 and 10157.

The Secretary of State also could transfer various functions of the local government for an area to the UDC’s, including the control of development of land and buildings, fire precautions and home insulation, housing, sewerage and some public health issues. See MG, 3. To accomplish these goals, the UDC’s could acquire, compulsorily if the Secretary of State confirmed the need, land within or adjacent to the development area. See id. For example, the local highway authority’s ability to acquire land for new or improved roads to develop and access these urban areas was extended. See id.

Two such UDC’s were created under these provisions in 1981: Merseyside Development Corporation (Liverpool area) and the London Docklands Development Corporation (5,120 acres in greater London, including the boroughs of Newham, Tower Hamlets and Southwark). See MG, 2. Five were established in 1987, as well as four “mini” urban development areas in 1988. See id. Two more were created in 1992 and 1993.

Once the corporations had completed their functions, they were to be disbanded, with their responsibilities and powers returned to the local authorities. See MG, 3. All of the corporations were dissolved as of 1999, and no new ones created. See MG, 3-4. For example, the London Docklands Development Corporation (LDDC) dissolved in March 1998. See MG, 4.

2. London Docklands

The Docklands, on the Isle of Dogs and the surrounding neighborhoods on the Thames River, had once been the center of international marine commerce. See Planning, February 1993, 13. When container ships could no longer make it up the river, the shipping world moved downriver and Docklands feel into decay. See id.

The LDDC’s were the local planning agency for the Docklands area, consisting of a total of eight square miles, completely replacing the local authorities from 1981 – March 25, 1998. See id. and Town & Country Planning (TCP), May 1992, 153. Those functions were returned to the local authorities, and its assets and liabilities were transferred by the LDDC’s (Transfer of Property, Rights and Liabilities) Order 1998 to the Commission for the New Towns, to English Partnerships, to the Lee Valley Regional Park Authority. See MG, 4. The LDDC remains responsible, however, for paying any just compensation that may arise from any action it originally took. See id.

When trying to revitalize Docklands, planners focused on the 71-acre Canary Wharf, which it hoped to make an international banking and finance center of more than 30 buildings, two hotels, and extensive parking facilities. See Planning, February 1993, 13. Canary Wharf was purchased in 1987 by the then-world’s largest developer (Toronto-based Olympia & York), but the company went bankrupt in 1992, leaving the development incomplete. See id.

The government also designated 460 acres of the Docks as an EZ (see below) to encourage development. See Urban Land (UL), August 1988, 24. That designation, in this case, meant that developers of office and commercial space would be assured automatic planning approval, a waive of local property taxes until 1992, and a full write-off against the taxable capacity of the capital cost of all nonresidential buildings. See id.

The LDDC began in 1981, but preparation for acquisition of lands and the uses thereof began many years prior by the Docklands Joint committee, the Docklands Borough Councils and private interests. See TCP, February 1989, 52. The prior planning helped the corporation to begin and complete its private housing element quickly as well as plan several commercial schemes. See id. Part of the prior planning included the purchase of the 100-acre London Docks and the 120 acre Surrey Docks. See id. These two dock areas were then laid with roads and public transit, services and sewers before private development began. See id. Government understood that the sector would not pay for much infrastructure in the redevelopment of process, and accordingly spent hundreds of millions on a light railway, road access, and the extension of the London Underground Railway’s Jubilee Line into and through the Docklands. According to several experts, this government investment was critical to the redevelopment of Docklands, along with the designation as an EZ and the formation of a UDC. From 1976 to 1980, 85 percent of the first phase of the London Dockland’s Strategic Plan had been finished (1,350,000 square feet of factory and warehouse space built, and 3,400,000 more square feet planned; 800 dwellings built and 1,500 begun; and 100 acres of open spaces laid out). See id. From 1981 on, however, the LDDC prided itself on its flexibility and lack of structured planning. See Planning, February 1993, 13.

3. Monitoring and Review

In 1993, the Comptroller and Auditor General published a report on the accomplishments of the corporations: The Achievements of the Second and Third Generation Urban Development Corporations. See MG, 5. This performance review found that those corporations created between 1987 and 1989 had spent a total of _753 million by March 1992. See id. From 1989 to 1992, these corporations were found to have met or exceeded 605 of their annual goals, but the National Audit Office did not completely concur with these figures, suggesting that they were hard numbers to prove. See id. The report stated the “leverage ratio in relation to private sector investment secured” (about _2,500 million) as 3.3, but admitted to difficulties in determining the quality and quantity of the more general accomplishments of the corporations. See id.

The Docklands Consultative Committee published an appraisal report that stated, “An approach which rejected planning and relied so heavily on private sector investment and rapid economic growth was almost inevitably going to run into trouble, and when the UK economy caught a cold, Docklands caught pneumonia.” TCP, Nov. 1990, 303. The committee criticized the use of the UDC’s, saying that they were not accountable to the area’s citizens, but mainly to the private sector. The author of the TCP article argues that the local authorities should be in charge of urban regeneration because they will be more likely to take all interests of the community that they already know into account and not further segregate the various sectors of the community. See TCP, Nov. 1990, 304.

The author of this article finds few successes in the docklands, mainly because of the lack of “democracy.” See id. He claims that most of the new jobs and homes in the area went to outsiders moving in, not to those already part of the community and that the community was blocked from meetings about the projects because of the rushed, closed-door aspects of the UDC program. See id. The local community of the London Docklands also complained about its interests being made secondary to that of private enterprise. See TCP, Nov. 1990, 305. Some developers tried to remedy those complaints by attempting to create good relations with their neighborhoods. See id.

The Shadow Secretary of State of the Environment in 1990 wrote that he thought a lot of the divisive complaints could be remedied by making the relationships between the UDC's and the local authorities more formal. See TCP, Nov. 1990, 305. A balance between local governments (which would be allowed to commit money quickly) and private enterprise (which responds to underlying economic demands from the purchasing power of consumers) can cause land value increases, increased confidence in the city, and general regeneration of an area. See TCP, April 1997, 107.

While the five borough councils impacted by the LDDC may not have initially welcomed the process because they felt excluded, at least one is pleased with the impact it was able to have on the LDDC. See Planning, February 1993, 14. Tower Hamlets, the borough most impacted, also had the most impact, for it had a representative on the board. See id. However, Tower Hamlets also wants the LDDC to prepare and act upon an exit strategy sooner rather than later, as most of the corporations’ goals have been completed. See id.

Others felt that the Docklands, specifically, were a great financial success. As of 1988, the Docklands had about $14.4 billion of private investments committed (double what had been invested prior to the creation of the LDDC). See UL, August 1988, 25. Although Docklands had no urban design scheme or master plan, the LDDC created an environment that was conducive to private investment and growth. See id. The leverage factor was still rising as of 1988, and was expected to reach 20:1 by the end of the year. See id. Housing grew exponentially, and in some areas land values had risen to about $36 million per acre. See id.

4. Plymouth

The UDC planned for Plymouth in 1992 was granted a _45 million budget over five years, with half of its members being county and city council members. See TCP, May 1992, 152. The areas to be placed under the UDC’s control were to be small enough not to make the local authorities feel that their roles were being eroded. See TCP, May 1992, 153. The three UDC areas in Plymouth included the historic Royal William Yard, which would take most of the UDC budget for restoration. See id. The other two sites are smaller, but also waterfront. See id. One could be used for housing, either upper end or low-cost, while the other area includes the remains of an old castle, which could be used for housing, hotel, museum, and or recreation purposes. See id. These three small areas probably would not have attracted private finance on their own, especially with all their historic and environmental requirements, but with secured financing, they will likely acquire some inventive proposals for development, renovation and preservation. See id.

5. Enterprise Zones

Enterprise zones freed businesses within the area from certain planning controls and certain taxes for up to 10 years in order to attract private sector development. See Planning, 10158 and 10160. Under the 1980 Act and the Town and Country Planning Act, 1990, certain district or London borough councils, or development corporations could be chosen by the Secretary of State to create an enterprise zone plan for their area. See MG, 5-6 and Planning, 10160. Once the plan was authorized, development specified in it has automatic planning permission, and like the urban development corporations, the zone authority may take over the local planning authority’s responsibilities. See Planning, 10160. This, according to one expert, was a critical incentive for private development. The EZ for part of the Canary Wharf development was thus free from land development controls, while the surrounding area obtained favorable mixed use “zoning” from the UDC for the Docklands (LDDC). (Johns and Sheppard interview).

An area must be invited by the Secretary of State to become an EZ, and that area’s local authorities create the plans for that zone, which must be approved before the zone is official. See Planning, 10159. Among those that can create the plan are UDC’s (an EZ can be in an urban development area). See Planning, 10159 and 10160. The area can choose not to become a zone, but if it does choose to become one, the local authorities must publish their intentions before drafting the plan. See Planning, 10159. The authorities can adopt, with or without modifications, their own plan, but the plan must be advertised and sent to the Secretary of State. See id. Because the plan is not statutory, the public can comment on it and take their complaints to the High Court within 6 weeks. See id. After this period has passed, the Secretary of State has the discretion of whether or not to declare the area an official EZ. See Planning, 10160.

By most accounts, Canary Wharf is certainly successful as a commercial redevelopment project. That part of the Docklands now consists of thirteen office buildings (five more to come soon), a retail center consisting of 250,000 square feet (soon to be 500,000 square feet), a conference center, and two train stations together with car parks and 20 acres of landscaped open space. Occupancy of rental properties is at 100 percent. Most of the recently-completed retail space was entirely pre-let before construction finished. (Johns and Sheppard interview)

For 10 years from the date at which the zone is created, new and existing businesses and industries would gain the following benefits:

_ exemption from the Development Land Tax (a tax later abolished in 1985);

_ exemption from rates on industrial and commercial property;

_ exemption from Corporation and Income Tax for capital expenditures on commercial
buildings;

_ priority in applications for certain customs facilities;

_ exemption from Industrial Development Certificates (which were abolished in 1982 anyway);

_ exemption for employers from industrial training levies and reports to the Industrial Training Boards;

_ simplified planning requirements (once permission is granted for the general scheme for the zone, individual plans need not be permitted separately, but are automatically permitted);

_ quick administration of all remaining controls; and

_ a reduction of government requests for statistical information.

See Planning, 10158. Of these incentives, the most critical in attracting private investment and development were freedom from land use controls, exemptions from property tax (rates) and 100 percent write off of capital expenditures against income tax. (Johns and Sheppard interviews).

The plans can be modified (even completely replaced), following the same procedure as the original creation of the plan, at the invitation of the Secretary of State, although such modification must be approved by the Treasury and can be annulled by Parliament. See Planning, 10160. Any development begun before a plan modification can continue after it. See Planning, 10161. Any development that does not exactly conform to the original plan can still be approved, but the developer must go through the regular permission-seeking process, or a special development order may be created. See id. Equally, any development that was begun but not completed during the 10-year timeframe can continue after the deadline. See Planning, 10160.

5. Monitoring and Review

The 25 zones designated by 1990, for a total of 3,623 hectares, had developed 80 percent of their land by October 1990, and about 50 percent of since the zones were designated. See MG, 10 and, for more information, Final Evaluation of Enterprise Zones (HMSO, 1995). By October 1990, the number of businesses within the designated zones had increased by 269 percent in first-round zones, and by 409 percent in second-round zones. See MG, 11. In 1995, it was estimated that 58,000 additional jobs had been created. See id.

It is estimated that _798-968 million came from public support and _2 billion of private investment in these zones, between 1981 and 1993 (leverage ratio of about 1:2.3). See id. Until March 1990, the Exchequer costs of zones were about _1,031 million, at 1989/90 rates, with capital allowances about _660 million from designation to 1990. See MG, 10. Foregone rates revenue were _371 million up to 1990, and public sector investment was at least _342 million until 1990, with _60 million for land acquisition and _282 million for infrastructure. See MG, 10-11. Reviewers estimate that 40 percent of the infrastructure expenditures would not have been allowed without enterprise zone status. See id.

According to reviewers, the most important factor in attracting businesses to zones was the 100 percent rate relief, although that did tend to produce higher rents. See MG, 11. Other factors that contributed to businesses being attracted to zones included relaxed planning requirements, the availability of locations and enhanced capital allowances. See id. About 82 percent of businesses felt that the ending of the designation of the zones, and the reinstatement of taxes would not affect their current employment levels. See id.