Narrowing the Options and Raising the Cash: The Battersea Northern Line Extension Moves Forward

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Writing about public consultations on the proposed Northern Line extension to Battersea seems to be developing into somewhat of a May tradition.

In May last year, TfL and Battersea Site owners Treasury Holdings undertook a public consultation aimed at establishing which of four Northern Line extension proposals should be taken forward by the developers (you can find all the proposed options here). Today, the two bodies have announced that a final likely route has been chosen and they are now ready to begin the final stage of the consultation process – a public consultation on that specific option.

It appears that the route chosen was option 2 in the proposal. To summarise, this was Kennington – Battersea Power Station via South Nine Elms and involves a 3km tunnel from Kennington to Battersea Power Station with a mid-station in south Nine Elms (see map below).

This new public consultation will run from today until Friday 17 June, with leaflets to be distributed to local residents (if any LR readers receive one we would obviously be interested in seeing it) and a number of public exhibitions on the dates below:

– Wednesday 18 May and Monday 6 June from 12pm to 8pm at the Acquire Arts Gallery, 155 Battersea Park Road, London SW8 4BU
– Friday 20 and Saturday 21 May from 10am to 6pm at The Long Room, The KIA Oval, Kennington, London SE11 5SS
– Thursday 26 and Friday 27 May from 10am to 6pm at Sainsbury’s Nine Elms, 62 Wandsworth Road, London SW8 2LF

A Question of Cost

The elephant in the room of course with any Battersea Extension proposal is financing. TfL have always made clear that whilst they support an extension, they cannot commit any funding to it. Tube extensions obviously don’t come cheap and although costs are not yet available it seems likely that the Battersea Extension would be in the £350m or above range. In that light, the single-developer supported model for private financing that London has so far seen in West London with Westfield or over in Woolwich with Berkley Homes (for the Crossrail station box there) seems unlikely. Indeed, developers Treasury Holdings/REO would likely not even be able to support such a cost even if they wanted to – they were hit heavily by the recession both here and in Ireland (from whence they originate) and this was a major factor in the lack of movement on the Battersea Project towards the end of last year.

We have covered in some detail before where all this probably leaves the extension in terms of finance. In summary, it seems likely that any funding cost is likely to be met by a combination of the three fund-raising options below:

– Developer Contributions from REO
– Other Developer Contributions in the area which would otherwise have gone to Crossrail
– A Tax Increment Funding scheme put together by Wandsworth Council

The developer contributions from REO obviously needs little explaination. The sitution with regards to contributions from other developers, however, is slightly more complex, and is the result of Wandsworth having kept their eye on the “long game” when it came to large-scale transport funding for some time.

The first signs of this came back in 2009, when Wandsworth Council questioned the distribution of transport contributions raised in relation to Make’s Vauxhall Tower. To provide some background, councils can demand S106 contributions from developers in relation to new projects with the money raised being used to improve transport links in the area (the idea being that this means new developments contribute to improving the transport links in areas where they are increasing the transport needs). Even though Make’s tower fell within Lambeth’s beat, Wandworth objected to the amount of money from that project that got swept into the general pot for Crossrail rather than for locally targetted works.

Wandsworth’s words were obviously written with half an eye on their home turf. With both the potential Battersea site and the new US Embassy both falling within the Borough’s borders (and more specifically within its designated Nine Elms development area), the Council was clearly determined not to see the majority of any transport contributions from those two projects syphoned off to Crossrail under the Mayor’s London Plan (the “Crossrail Levy” – a kind of London-wide S106).

It was an issue the Council continued to press on and, in October 2009, the Mayor’s office confirmed that supplementary guidance to the London Plan on Crossrail contributions would be issued. This indicated that any office development in Vauxhall and Nine Elms would be exempted from the Crossrail Levy, with any contributions sought from all new developments available to be used as funding for any proposed Northern Line Extension.

Objectively speaking, it seems likely that Wandsworth’s victory here was as much a political one as one based on common sense. Wandsworth’s very vocal objections were raised at a time when there was growing discomfort in various Boroughs over the Crossrail Levy (particularly those not set to benefit directly from the scheme) and when Crossrail’s gestation was at a critical and fragile point. Thus this NLE extension clause was likely aimed as much at quickly shutting up a vocal Borough around which others might rally as anything else.

Nonetheless, it was a major victory for Wandsworth and as a result it means that the full value of any contributions raised not just from REO but also from other developments in the area will be available for the NLE pot.

The final funding source mentioned above is Tax Increment Funding (TIF). Again, this is a topic we have covered before (more information for those interested here). TIF is a funding model that has traditionally been more common in the US than it has here. It relies on the fact that most large-scale infrastructure projects (particularly transport ones) lead to a measurable increase in tax revenue within a given area when they are completed (in this case, that would be the London Borough of Wandsworth). This is the “tax increment” and – the theory goes – if you can accurately estimate what this increase is likely to be, then there is nothing to stop you borrowing the money to pay for said infrastructure project and financing the loan via that future tax revenue increase.

In a nutshell, therefore, Wandsworth would take out a loan to cover any contributions it needed to make to the NLE. The NLE (and associated developments) would, upon completition, lead to a boost in the Borough’s taxes and that increase would be used to pay off the loan Wandsworth had taken.

Up until recently, there had been no framework in place at a UK Government level for Boroughs who wished to look into using TIF to fund projects, but recently the Goverment’s stance on TIF has become far more positive, and this now seems likely to emerge. Given that Wandsworth have again been one of the Borough’s most vocal about developing said framework, therefore, it seems highly likely that we will see it in some form on the NLE.

Overall then, the Northern Line Extension to Battersea has crept forward again. It is a slow process and it seems unlikely that we’d see a Transport and Works Act Order submission before the Autumn rather than the “Spring” the Treasury Holdings site still optimistically suggests, but it is progress nonetheless. Should that submission take place, and going on previously indicated work timescales, then an extended Northern Line by 2018 is not entirely out of the question.

Written by John Bull