New plans for 374 homes, a cultural centre and a new shopping street on the derelict coach park at Potters Fields next to Tower Bridge have been unveiled.
The co-operation agreement followed years of wrangling about the controversial Ian Ritchie-designed scheme for eight towers – nicknamed 'daleks' – on the prime riverside site.
Now the new designs by Squire & Partners have been put on display for local residents to have their say.
"It's fair to say progress on this site hasn't been smooth," explains council leader Nick Stanton.
"But at the beginning of this year we and Berkeley mutually agreed to start again with a blank sheet of paper to try and come up with a development which reflected ... a real passion for the site and a real belief that this can be a landmark development by the river that really suits the historic nature of the site and adds something to the south bank."
Justin Tibaldi from Berkeley Homes adds: "The brief we gave to Squire was to provide the same amount of commercial, residential and cultural space as was in the [Ian] Ritchie scheme."
"I think one of the criticisms of the Ritchie scheme was that the cultural space wasn't as identifiable as hopefully it is now."
The developers plans to announce the intended user of the 8,000 sq m cultural space early next year; a shortlist of four organisations has recently been drawn up.
Cllr Stanton explains that in the new scheme the cultural space is gathered in one place rather than being split between multiple buildings as in the Ritchie scheme.
"That allows you to have a museum or a signature performing arts space in this site, rather than having smaller things dotted around," he says.
Architect Murray Levinson says that his firm has tried to "consider some of the failings" of the previous scheme by Ian Ritchie.
The buildings will be between 6 and 11 storeys, with a 20-storey 'campanile' tower of studio apartments as the centrepiece.
The campanile – a possible reference to a Venetian pastiche previously proposed for the site – follows the same proportions as St Mark's Campanile in Venice.
The top of the tower is roof garden to a duplex apartment.
"All of this development is completely permeable; this is not somewhere where we close the gates at night," explains Levinson.
"The public are allowed in to walk from the park into the courtyards and through to Tooley Street and beyond."
The architects are working with Gross Max, the firm responsible for the recent revamp of Potters Fields Park, to integrate the new development with the riverside public park.
A pedestrian shopping street is planned to link the western section of Queen Elizabeth Street to the southern underpass of Tower Bridge, creating a visual link from the statues of Ernest Bevin and Samuel Bevington to the southern tower of Tower Bridge.
"We do believe we've got a one-off development here that hopefully will appeal to – if not the UK market – the international market," says Berkeley's Justin Tibaldi. "We do expect there to be quite a demand."
He added: "If the market continues to fall away, we've got the option of building the affordable housing first – a lot of developers are doing that at the moment – and we'll bide our time. But we're certainly confident that by the time we start construction we'll be seeing light at the end of the tunnel."
We asked Cllr Stanton whether he was troubled by Berkeley's keenness to sell homes to overseas buyers who might not be part of a stable, long-term local community.
"There a riverside phenomenon already," he says. "You see it in my ward in Shad Thames, you see it a bit in Rotherhithe ... where there is quite a high turnover and quite a lot of company lets and stuff like that going on."
"OK, that's a particular section of the market we tap into and get a band H council tax or something.
"I personally would like to see a more sustainable, rooted community where people want to say 'this is home' ... but that kind of thing is out of our hands."
"I assume that both parties will be able to screw the other one to the best advantage of Berkeley shareholders and Southwark Council taxpayers.
"At the end of the day – despite everything – this is still a pretty valuable piece of real estate right in the heart of central London. We've got a very ambitious capital programme and any money we raise from this goes into building new schools, mending potholes, renovating parks and lots of other lovely things for people in Southwark."
"The fact is that this scheme is more sympathetic to its surroundings and that certainly was the aspiration that locals and the council were looking to achieve, so we're behind that."
Asked whether the Ritchie scheme was still on the table, Tibaldi replied: "It is, abolutely."
"We certainly have no intention as we sit here today of going back to the Ritchie scheme, but obviously if things fall away on the planning application then we may have to review that."
As the site is opposite the Tower of London world heritage site the plans have also been shown to UN-backed body ICOMOS which has previous expressed concern about unsympathetic development in central London.
Planning officers at City Hall have also been supportive of the initial designs.
"Building a new cultural centre is an opportunity to respond to fundamental questions about children, families, communities and wider society," says co-chair Fiona Pryor.
"The process of developing such a unique site as this, visited by people from all over the world, should prompt those fundamental questions. Why can't we play by the river? Riversides, parks and open spaces – as distinct from designated playgrounds – are places where children must be seen, heard and given opportunities to play."
The group is circulating a petition calling for the building nearest the river to be removed from the plans to allow for an expanded riverside park.
Cllr Stanton says: "Part of the trick of this is going to be to find a way of funding [Potters Fields] Park out of this development so we don't have to go on hiring it out for events."
He adds: "At the moment we do that to raise the revenue we need to maintain the park to a high standard, but I think nobody wants all these residents – including affordable residents – to be up in arms about having events on the park right outside their windows."
A planning application is due to be submitted in late January or early February with a decision expected by the end of 2009. If the application is successful, work could start in 2010 with the first residents moving in to their new homes in 2012.