Regeneration

Cover story: “Done? You certainly have been!” Done? You certainly have been! Stan Edwards has sympathy for the people of Newport as he returns with the “Friar’s Walk” sequel. In the summer of 2016 I submitted an future, for an aspirational vanity city The first indicator of doom was the failure article that I thought would be my last on centre scheme that never did stack up in of the developer partner Modus Corovest the subject of a decade of the demise of commercial terms from the outset – it was Newport Ltd., that became unable to the retail led regeneration compulsory never adequately appraised for the John fund 100% of the capital required to purchase order (CPO) – a tale of “unrealistic Frost Square CPO in 20062. Time and again, secure control of the development area. expectations”, where the intervention promoters of such schemes cannot seem Modus informed the council in 2009 by government funding fed, retail led, to comprehend the difference between that the previous (original) scheme regeneration CPOs left a legacy of many “want”, “need” and “demand”. The was undeliverable in the (then) current completed but half let retail schemes. approach would have been different if it economic climate. The effect was to take was a completely commercially promoted away the developer funding mechanism. “The approach would scheme, but this was one delivered by Newport City Council then decided to still public intervention through a CPO and all progress the CPO based scheme. have been different the rigours of the public interest that were The signs were there for all to see. Yes, if it was a completely supposed to accompany that. the economy had collapsed but scheme commercially promoted promoters failed to recognise the change Wellbeing and public in the pattern of retail shopping and the scheme, but this was interest urban structure. The city council had fallen one delivered by public into the trap of attempting the reversal of The CPO purpose was for redevelopment urban growth. In other words, they felt, intervention through a and the power was appropriate. However, erroneously, that if they created something compulsory purchase what we have evidence of now, which was attractive enough, the shoppers would order and all the rigours wanting all along, was that the qualifying return. The market had said “no” and the compulsory purchase empowerment council did not even seek unfettered of the public interest by Section 226 (1)(a) of the Town and independent market advice. that were supposed to Country Planning Act 1990 as amended Next came the High Court challenge accompany that.” and fulfilling the qualifying well-being of Iceland3, after which the city council condition of s.226 (1A) was only half the wriggled through the comments contained argument. in the Judge’s decision. The Judge read There is an epilogue! I have tracked The public interest for which there as a whole the relevant reports from the the Friar’s Walk scheme, Newport, on a must be a compelling case is much wider council’s Cabinet, in that they were being professional and academic level for many and must look deeper into the collateral advised “to take a course of action which years1 and there is now an eventual sale impact of the scheme as to whether it is for will best facilitate the carrying out of a to an investor. The South Wales Argus the wellbeing of the citizens or a project redevelopment scheme at John Frost Square”. recently made the headline quote, “A Done focused on just one facet of the town/ The Judge’s decision significantly held Deal” in respect of the Friar’s Walk scheme, city. The local authority promoters with that the site was to be re-marketed on the provoking Fletcher’s quote in “Porridge” – an “attention bias” will not investigate basis of existing terms and conditions and “Done? You certainly have been!” far beyond their (with the developer) that the permitted scheme could (in the www.irrv.net No matter how you wrap this up, the argument to push the scheme. It is left Cabinet’s view) still viably be delivered, ratepayers of Newport are now stuck with to those who challenge such a scheme obtaining alternative funding from another a rent share agreement, paying a top-up of to put up the argument but they do not developer. VALUER the rent (termed an investment subsidy) of usually have the funds to raise a significant Newport City Council in October 2010 16 £500,000 per annum into the foreseeable objection or challenge. decided to seek another developer partner Cover story: “Done? You certainly have been!” and ended up with Queensberry Real Estate. The trouble is that under-girding CPOs is a requirement that there must be Attention bias – looking at something Projection bias – extending one’s own a reasonable prospect the scheme will too narrowly, ignoring other elements beliefs, opinions or attitudes to others proceed. Did that align with the Judge’s or attributes that may make a material believing they will also embrace them. comments in the Iceland case? Of course difference. Reference group bias – deferring to the not, but when the council in its vanity actions or beliefs of others with whom a found that the developer could not get Authority bias – this is a risk management decision maker has an affinity or holds in market funding, it decided to apply for a technique in which a consumer places high regard. Public Works Loan Board (PWLB) loan of more importance on the opinions of £90 million to pay for the development to experts or others than warranted. If the Selective perception – this is a filtering proceed. Remember that this was against decision is wrong, the consumer can blame technique in which a decision maker what the market was saying and exposed the expert rather than accept personal focuses on positives (or negatives) that are the Newport ratepayer to a possible risk of responsibility for the error. consistent with a prior belief or perception paying off the loan if the wheel came off. to reinforce that belief, ignoring other Bandwagon/herd bias – a tendency to facts. Perceptual and behavioral get caught up in the momentum of the biases4 market; to defer to others in arriving at a Survivorship bias – focusing on the belief; the lemming phenomenon. winners, rather than recognizing the losers Newport City Council suffered what, in that fell along the way; failing to recognize terms of real estate behaviour, is termed Believability bias – this bias relates to the risks associated with various activities “optimism bias”. This is also known as whether something is credible, whether it or actions. “developer’s syndrome” – the eternal is plausible or within the range of possible optimist who believes it will all work out outcomes. The relative success of ”Best and then acts in a decisive, committed Value” manner to assure that it does occur. The Consistency bias – this relates some trouble is that this blinkered approach activity or event to some prior experience Newport City Council considers Friar’s Walk takes no account of the impact on other or belief, to determine whether the disposal as a success and in a way “Best businesses in the city, let alone the intense perception is consistent with what one Value” is because, in its partnership with competition in the centre, to capture believes or expects to be true. the Talisker Corporation, the ratepayers limited consumer spending. These do not have to pay off the whole of the schemes never seem to consider collateral Familiarity bias – this is the tendency to massive £90 million loan. However, the damage. focus on items or attributes with which upshot is that Friar’s Walk was never in a one has some past experience and/or was position to compete its way into success “The trouble is that this helpful in making prior decisions. because of Newport’s inherent congestion and inconvenience problems, plus other blinkered approach takes Normalcy bias – failure or inability to alternative retail opportunities preferred no account of the impact plan for the unknown events that have not by shoppers (e.g. Cardiff, Cwmbran, Cribb’s on other businesses in occurred in the past or in one’s experience, Causeway, let alone those in greater even though they are plausible and might Newport) – big spending travels by car. the city, let alone the occur. Don’t get me wrong, it looks good, intense competition in but it went ahead because of the ostrich Ostrich bias – ignoring the facts by mentality of politicians of all shades and the centre, to capture putting one’s head in the sand to make regeneration zealots who only wanted limited consumer them go away or change the reality to focus on unrealistic aspirations. What spending. These schemes surrounding some event or circumstance. was never understood (and not just by Newport but by many other authorities never seem to consider Outcome bias – judging the quality of a as well) is that spending power is finite collateral damage.” decision by the outcome rather than the and has to come from somewhere else decision support; this feeds into “track to make a scheme tick. In other words, Below are just some of La Salle’s records” which are widely used in selecting retail somewhere else has to suffer for behavioural biases that the reader may vendors/advisors but are difficult to Friar’s Walk to succeed, remembering that consider applying to this case, or those analyze in terms of attribution (i.e., luck vs. shoppers exercise consumer preference. cases which may be more familiar: skill). The number of eating places in the finished scheme demonstrates this.

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