Select Committee on Public Accounts Second Report

1  Presenting the commercial opportunity to potential buyers

Figure 2: The location of the Greenwich Peninsula

The Greenwich Peninsula is located in East London and is in a major regeneration area, the Thames Gateway

Source: Office of the Deputy Prime Minister

1. The Dome is located on a strategically important site. The Greenwich Peninsula marks the western end of the Thames Gateway (Figure 2), one of the main growth areas proposed for economic regeneration and development in the South East of England. Public investment in remediation, servicing and landscaping works and in transport links has opened up the site for intensive and profitable redevelopment. In 1998, Ministers decided that the Millennium Dome would itself remain as a legacy after the Millennium Experience Exhibition and asked English Partnerships — the national regeneration agency which owned the site, to find a sustainable long term use for it.

2. The initial unsuccessful competition to find a future use for the Millennium Dome began in March 1999 but failed to find a buyer able to complete the deal on acceptable terms. There were several reasons behind the lack of success of this original Dome sale competition. The objectives for, and process of, the first competition were complex. The difficulties were exacerbated for those bidders which depended on the deficient business records and weak commercial performance of the New Millennium Experience Company. Second, it was inherently difficult to sell the Dome separately from other parts of the Greenwich Peninsula site, and difficult for the Government to derive sufficient confidence about the deliverability of innovative proposals from bidders. In March 2001 the Government initiated a new sale process which led to a deal with Meridian Delta Ltd and the Anschutz Entertainment Group (Anschutz) for the redevelopment over 20 years of the whole northern Greenwich Peninsula, including reuse of the Dome. This complex deal preserves the Dome in place until 2018, housing a large indoor arena and leisure complex, and provides for a major office development and some 10,000 new homes on the adjacent land (Figure 3). Meridian Delta Limited is a joint venture between Lend Lease, an Australian property company, and Quintain Estates and Development plc. Meridian Delta selected the Anschutz Entertainment Group to operate the Dome. Anschutz is a major owner of sports teams around the world with a track record of designing and building and operating major indoor arenas.[2]

3. During the initial Dome Sale competition only the 48 acres of land beneath and immediately around the Dome had been offered for sale, with an indication that up to a further 20 acres of land adjoining the Dome could be available provided that bidders could show that they were essential for their proposed use of the Dome and an integral part of their proposals. When the initial competition came to an unsuccessful end in early 2001 the competition team, advisers and the Board of English Partnerships came to recognise that the 68 acres under and adjoining the Dome itself might not be viable for sale on its own.[3]

4. The next sale process nevertheless began on the same formal basis as before, allowing for additional land to be made available only where it was an essential part of bidders' proposals for the Dome. Although English Partnerships were in practice open to proposals for much more of its land on the Peninsula, some 170 acres in total (Figure 4), it believed that to advertise the fact would attract bids from property developers who were only really interested in the land itself. Ministers had decided that the priority would be to find a sustainable use for the Dome itself, with regeneration of the Greenwich Peninsula as a secondary objective. So English Partnerships and the Department invited market interest on the basis that the Dome and immediately adjacent land was available - some 48 acres of land under the Dome itself and 20 acres used during the Millennium Exhibition for visitor reception and administration. Interest in further land owned by English Partnerships on the Peninsula, some 100 acres, was not ruled out but nor was it explicitly advertised. As a result some potential bidders were unclear about how much land was on offer. It was not apparent to all that there was an opportunity to bid for other land.[4]

Figure 3: The Meridian Delta Scheme

The main elements of the deal are:

1.  Change of use and retention of the Millennium Dome, with some external alternations;

2.  Erection inside the Dome of a 20,000 seat Dome Arena;

3.  Creation of the Dome Waterfront, a sports, leisure, entertainment and retail complex within the Dome;

4.  Construction of Millennium Square; a large plaza between the Dome and the London Underground station serving it, and designed to accommodate large crowds and special events;

5.  Car Parking to serve the Dome Arena and Waterfront;

6.  Up to 10,010 residential dwellings, student and special needs housing;

7.  Up to 325,000 square metres of office, research and development floorspace;

8.  Up to 18,600 square metres of light industrial, business park floorspace;

9.  Community uses including schools and health care provision;

10.  48 acres of Public Open Space;

11.  A new Hotel;

12.  Up to 22,800 square metres of retail and up to 11,000 square metres for food and drink.

Source: Meridian Delta

5. Public sector vendors are most likely to maximise the value they receive if they inform all potential bidders of the exact parameters of what is on offer The Department maintained that there would not have been more interest if the vendors had been clear how much land was on offer. Their advisers had spoken to some 150 potential partners and had found very little interest in the Dome, whereas the proposals put forward by Meridian Delta were very strong. The Department were satisfied that there was no offer around the corner that had not been tapped. Potential bidders were shown the full extent of English Partnerships' landholdings on the Peninsula, and which portions were absolutely available with the Dome, but at no stage was anyone prevented from talking about what other land they needed. In their opinion the reason why companies did not proceed was that very few of them wanted to be involved in finding a sustainable use for the Dome itself. The fact that Meridian Delta, having in discussion detected the availability of more land, were willing to invest time and money in working up proposals for the Dome itself, suggests that other potential bidders might nevertheless have been incentivised to do the same.[5]

Figure 4: The North Greenwich Peninsula

English Partnerships own most of the land on the Peninsula; important areas are owned by London Underground Limited and by private companies.

Source: English Partnerships

2   C&AG's Report, Part 1 Back

3   ibid, paras 1.20-1.23 Back

4   ibid, Part 2; Qq 15, 21 Back

5   Qq 9, 23 Back

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