The councillors in charge of the £1.5 billion Elephant & Castle regeneration have told a town hall committee that they are working to reach a deal with developers Lend Lease by 1 July.
Cllr Kim Humphreys, the deputy leader of Southwark Council, and Cllr Paul Noblet, who holds the regeneration portfolio, faced questions from the cross-party Overview and Scrutiny Committee at Southwark Town Hall on Monday night.
A deal was due to be concluded by the end of 2007, but nearly two years on the two parties are yet to put pen to paper.
On 1 July the exclusivity agreement between the council and Lend Lease comes to an end. Scrutiny committee chair Cllr Fiona Colley began by asking the executive members how confident they were that the a deal would be reached before that deadline.
"Um, it's a bit like predicting outcomes of political elections, isn't it?" replied Cllr Paul Noblet.
"We've certainly got no reason to suspect that they want to pull out," he added.
"On all sides we want this resolved by 1 July."
Cllr Kim Humphreys reminded the committee that Lend Lease had demonstrated their ongoing commitment to the Elephant & Castle in front of Mayor of London Boris Johnson at a recent City Hall summit.
The council had previously claimed that the main obstacle to a deal with Lend Lease was a lack of information from Transport for London about costs for rebuilding the Northern line station at the Elephant and remodelling the northern roundabout. Cllr Colley asked whether the council had now received all the necessary data.
"We're in the process of getting it," replied Elephant & Castle project director Jon Abbott. "We will have it in time."
Cllr Colley recalled the claims made by Cllrs Noblet and Humphreys when they appeared in front of the same committee last November and expressed a hope that the deal could be done by the end of 2008 and asked why the committee should take the latest assurances more seriously.
Cllr Humphreys hinted that the latest deadline is make-or-break for the current Lend Lease proposals: "If we're not going to meet it in June there are going to be some clear issues that we will have to address, and we'll have to have a good think about that".
He added: "We've taken the view that 30 June is two years from the point that we signed the original – that's long enough and we need to bring that to a head."
Tory backbencher Cllr Toby Eckersley – who was executive member for resources at the time that the Lend Lease bid was chosen – alluded to the detailed financial data he had seen in 2007.
"In the material that Lend Lease submitted to justify their bid they put in a sensitivity clause [relating to the potential change in property prices]," he explained.
"The property market has fallen much more – much more – than that sensitivity percentage that they put in.
"Therefore it is obvious ... that the problems are very serious in relation to the financiability [sic] of this project."
Cllr Eckersley wanted to know whether the council was prepared to enter into a deal with Lend Lease "at any cost".
He went on to raise the "drastic and probably unpopular short-term option of having to tell Lend Lease that they've got to walk away – with the associated holding of a vacant piece of land (ie the Heygate Estate) – with a view to an upturn in the property market in several years' time".
Cllr Eckersley's scepticism was echoed by Labour's Cllr John Friary who asked whether the probable "lowest point in the trough" of property prices was the right time to be making a deal.
The committee also discussed the recent confirmation that the southern roundabout and subways at the Elephant & Castle will be removed and replaced with a T-junction and surface-level pedestrian crossings.
Cllr Kim Humphreys confirmed that the final design is "not significantly" different to Southwark's original proposal for the junction. Work should start on site just after Christmas, according to Jon Abbott.
Mr Abbott also spoke about one of the rejected proposals – nicknamed the propeller – which would have seen pedestrians corralled at the centre of the roundabout. However this design failed Transport for London's safety audit because pedestrians couldn't see oncoming traffic when standing on a circular traffic island.
Cllr Kim Humphreys was unwilling to discuss any potential timetable for works to remodel the junction to the north of Elephant & Castle – where cyclist Meryem Ozekman was killed earlier this month – as funding for such works is entirely dependent on cash from property developers.
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