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CREATING SUSTAINABLE MIXED-USE COMMUNITY DEVELOPMENTS

NETWORKVILLAGECOMMENCEMENT BUSINESS PLAN

A joint venture between

Many towns and villages were suffering from fallingpopulations and lack of jobs, high levels of crime andproblems with long-term illness.

As part of the National Coalfields Programme, whichreached its eleventh year in March 2008, EnglishPartnerships in 1999 established Network Space Ltd,a joint venture company with Langtree Group plc, toaddress the shortage of good quality small businesspremises in the coalfield areas. The joint venturecompany has far exceeded expectations and its initialtarget of 500,000 sq ft, and has now delivered over700,000 sq ft of employment floor space. The latestinitiative, Network Village, is set to deliver a further300,000 sq ft of business space that will take us past the one million square feet milestone. This will be achieved within a 7 year timeframe through thedevelopment of 6 sustainable mixed use schemeswhere the additional funding required for the delivery of the business space will be funded byresidential development.

Successful, sustainable and cohesive communitiesrequire not only good housing, but also an attractiveenvironment and a thriving economy. Network Villagewill deliver mixed-use development where the provisionof high quality business premises will be at the forefrontand carefully integrated into the existing communityalongside exemplar, energy-efficient housing andattractive parks and open space.

Network Space will consult with local communitiesand work closely with key stakeholders and localauthorities to prepare detailed masterplans for theNetwork Village proposals.

Thriving business centres will act as a catalyst to enablelocal businesses to grow, attract inward investmentand generate better job opportunities. The benefits ofwell-designed, good quality mixed-use developmentcreate more cohesive communities and better placesto live, reducing crime and anti-social behaviour.

We need to ensure that we continue to achievesustained regeneration of coalfield communities and mixed-use redevelopment. The provision ofattractive business premises is key to the delivery oflong-term benefits and the creation of economicallyand socially sustainable communities. EnglishPartnerships has an on-going commitment to thecoalfield communities and we see Network Villages as an important initiative to the plans for the newHomes and Communities Agency.

John WalkerChief Executive, English Partnerships

IN 1997 THE COALFIELDS TASK FORCE WAS SET UP BY THE DEPUTYPRIME MINISTER JOHN PRESCOTT MP TO DEVELOP A PROGRAMME OF ACTION TO ASSIST COALFIELD COMMUNITIES.

FOREWORD BY JOHN WALKER

PAGE 04/05 EXECUTIVE SUMMARY

THE CORE BUSINESS MODELThe business plan sets out a generic Network Villagescheme (based upon the Murton pilot) in order todevelop the financial model and demonstrate thesize of site required to fund the delivery of thenetwork village concept. Sensitivity analysis has beencarried out on key variables including residual landprice, residential values, and remediation costs.

It is anticipated that Network Space will enter intodevelopment agreements with landowners for thedelivery of the proposed Network Village schemes.

Community participation is one of the key objectivesin the Government’s reform of the planning system.Network Space will undertake pre-applicationdiscussions at an early stage with the local authority,community groups and local stakeholders. Thecompany recognises the importance of maintainingongoing engagement as proposals are developedand this will be achieved through public exhibitionsand inviting feedback and comments from local people.The intention is to secure the fullest possible localcommunity support for the Network Village proposals.

The offices and workspace will be developed to BRE Environmental Assessment Method (BREEAM)standard of Excellent. Network Space has alreadyachieved the Excellent rating for the developments at Allerton Bywater Millennium Community and i2in Mansfield. The housing will aim to achieve currentEnglish Partnerships standards including Code forSustainable Homes Level 4 and will be developed inaccordance with a strict design code prepared byNetwork Space.

The business space will be maintained and managedby Network Space and the accommodation will beavailable to let on flexible lease terms. The residentialland will be prepared for development and marketedfor sale on an unconditional basis with the benefit ofoutline planning permission to attract experiencedhouse builders.

The parks and open space within the Network Villagedevelopments are assets of the local community andtherefore long term ownership and stewardship ofthe open space will be carefully considered in eachcase. This may be through adoption by the localauthority or transfer to another body such as theLand Restoration Trust or local community trust.

FUNDINGThis business plan has been prepared for the periodto June 2015. The delivery of Network Villages will befunded by increased bank facilities from the currentlevel of £27m up to £50m. The increase can beprovided with a Loan to Value ratio below 55% andwith minimum interest cover of 1.5%. The net assetsare projected to grow in the period from £18m to £29m.

MARKETING & PRA marketing and PR action plan has been prepared to raise the profile of Network Space at both regionaland national levels in order to promote the NetworkVillage proposals.

CONCLUSIONNetwork Village will continue to deliver theregeneration of Coalfield communities throughmixed-use development. The provision of attractivequality business premises will lead to the creation ofeconomically and socially sustainable communities.

NETWORK VILLAGE - A NEW APPROACH TO SUSTAINABLE SPACENetwork Village is a bold programme to delivervibrant, exemplar and sustainable employment ledmixed-use developments in the former EnglishCoalfield areas. The primary objective is the deliveryof high quality business space providing attractiveaccommodation for small and medium size businessand increasing the availability of wider and betterlocal employment opportunities. This will bedeveloped alongside a range of high quality housingincluding affordable housing, to provide crosssubsidy where necessary, all carefully integrated into existing communities.

INTEGRATION OF NEW BUILD USES AND CROSS-SUBSIDYThe Network Village concept is entirely consistentwith the Government’s intentions for the delivery ofurban renaissance and the creation of sustainablecommunities. Network Village is about sustainableeconomic diversification and high quality jobcreation in former coalfield communities. Its aim is to provide high quality employment space thatwill retain and attract higher quality companies andencourage and support local start up ventures. Thedevelopment of of high quality housing will fund the delivery of the employment space where crosssubsidy is necessary and also create a truly sustainablemixed-use addition to the existing community.

The developments will deliver fully integrated,sustainable mixed-use employment and residentialschemes which will include high quality managedbusiness centres offering Grade A quality servicedoffice accommodation; flexible high quality workspaceunits designed for a mixed use environment; selfcontained offices; high quality housing providing amix of housing choice and tenure; and attractiveopen space designed to provide opportunities forcommunity use and residential amenity.

WHO AND WHAT IS NETWORK SPACE?Network Space Limited is a joint venture betweenEnglish Partnerships and Langtree Group plc set upin 1999 with a specific remit to deliver high qualityemployment space in the former English Coalfieldsregions. Langtree provides both development andmanagement services. Langtree is a developer thatspecialises in mixed-use regeneration and thedevelopment of high quality employment spacessuitable for SMEs in regeneration areas. Networkspace has now delivered over 700,000 sq ft ofworkspace, offices and serviced offices. NetworkVillage is the next phase of Network Spacedevelopment and the target is to secure the deliveryof 300,000 sq ft of employment space through the development of six Network Villages within aseven-year time frame. Network Space is primarily a commercial developer and therefore the delivery of the high quality employment accommodation willbe at the forefront of each scheme.

SCOPE AND RANGE OF THE NETWORK VILLAGE CONCEPTThe regeneration benefits of the Network Villageproposals include re-use of brownfield sites insustainable locations with a strong employmentled justification. This coupled with the commitmentto deliver high quality development provides acogent regeneration case.

The areas of operation cover the former EnglishCoalfields regions. The first site has been identifiedat Murton, Easington and the business plan proposesthe identification of a further five sites over the nextthree years. The initial site search programme willfocus on the North East, Yorkshire and East Midlands.It is anticipated that identification of sites will bethrough direct contact with senior executives anddecision makers involved in regeneration and aprogramme of presentations and meetings withEnglish Partnerships, RDAs and local authorities has been prepared.

EXECUTIVE SUMMARY

08 1. Introduction1.1 Background to Network Space1.2 Network Village1.3 Strategy

10 2. Network Village Elements2.1 Employment2.2 Residential2.3 Open Space2.4 Retail, Commercial and Leisure

12 3. Sustainability14 4. Areas of Operation

4.1 Coalfield Areas4.2 Suitable locations

16 5. Network Village Model5.1 Generic scheme5.2 Appraisal

18 6. Site Identification Process6.1 Site finding proposals 6.2 Site delivery programme6.3 Initial Site Assessment

20 7. Financial Commentary22 8. Development

8.1 Development Agreement8.2 Planning

8.2.1 Policy8.3 Exit strategy

8.3.1 Employment8.3.2 Residential8.3.3 Open Space8.3.4 Retail, Commercial and Leisure

24 9. Community Engagement and Socio-Economic Impacts

9.1 Consultation9.2 Planning process9.3 Economic and social impact

26 10. Marketing and PR10.1 Introduction10.2 Aims and Objectives

10.2.1 Target Audience10.2.2 SMART Objectives

10.3 Communications Tactics10.3.1 Direct Marketing10.3.2 Advertising 10.3.3 Events 10.3.4 Public Relations10.3.5 Advertorials10.3.6 Literature10.3.7 E-marketing10.3.8 Budget and Timing

30 11. Risk Assessment and Management11.1 Governance11.2 Acquisition11.3 Construction

32 12. Monitoring and Evaluation12.1 Performance Management Framework

12.1.1 Introduction12.1.2 Monitoring 12.1.3 Scheme Monitoring

12.2 Evaluation12.2.1 Overview12.2.2 Interim Evaluation12.2.3 Full Evaluation

34 13. Way Forward

CONTENTS

PAGE 06/07 CONTENTS

PAGE 08/09 INTRODUCTION

300,000 SQ FTOF HIGH QUALITYBUSINESS SPACE

1.3 STRATEGY

Network Villages are about the delivery of highquality employment space as a key element ofsustainable mixed-use regeneration. Network Spaceis a commercial developer therefore the delivery ofthe high quality employment accommodation will beat the forefront of each scheme.

The strategy is to secure the delivery of 300,000 sq ftof employment space through the development ofsix Network Villages within a seven year timeframe.

The approach to identifying and securing suitabledevelopment opportunities for Network Villages is as follows:

A programme of meetings and presentations to key regeneration people in EP, RDAs and localauthoritiesThrough a carefully considered marketing and PR strategy, highlighting the success of NetworkSpace and promoting the Network Village visionA focus on the main former coalfield areas –initially North East, Yorkshire and East Midlandsfollowed by Staffordshire

.

The key factors that make Network Villagesdistinctive are as follows:

Network Space’s track record of delivering highquality business spaceIt’s remit is development in the former EnglishCoalfields regionsThe design and delivery of business space is primary not secondaryHighly sustainable developments Regeneration benefits in towns and villagesThe support of English Partnerships and its abilityto highlight potential public sector opportunitiesProvision of high quality business space suitablefor local SMEsWell managed business centres offering flexiblelease termsAim to develop to high standards – BREEAMrating of Excellent; Code for Sustainable Homeslevel 4

On behalf of Network Space, Langtree provides both development and management services. Thisextends from site finding, design and constructionthrough to letting, management and maintenance.Langtree is a developer that specialises in developinghigh quality employment space suitable for SMEs inregeneration areas.

1.1 BACKGROUND

Network Space Ltd is a joint venture company,between Langtree Group plc and English Partnerships,launched in October 1999 by the Deputy PrimeMinister the Rt Hon John Prescott MP. Its remit is todevelop high quality employment space in the formerEnglish Coalfields, providing quality employmentaccommodation suitable for new and expandingsmall and medium-size enterprises (SMEs).

The initial remit to deliver a minimum of 500,000 sq ft(46,450 sq m) was achieved within the 6 year targettime frame and as a result of this success, the jointventure partners extended the programme to deliver5 more schemes providing an additional 200,000 sq ft(18,580 sq m), without further funding support fromEnglish Partnerships. The networkcentre producthas evolved, as the company responds to marketneeds, to provide a range of workspace, offices andserviced offices.

Network Space has now entered a further phase ofdevelopment, through a new initiative named NetworkVillages, to deliver a minimum of 300,000 sq ft(27,870 sq m) of high quality business centres, officesand workspace accommodation in the former coalfieldareas over the next 7 years – integrated with andfunded by sustainable high quality residentialdevelopment.

1.2 NETWORK VILLAGES

The primary objective of Network Village is thedelivery of high quality business space providingattractive accommodation suitable for SMEs therebyincreasing the availability of wider and better localemployment opportunities – generating sustainableeconomic diversification and high quality job creationin former coalfield areas. Developed alongside highquality housing and carefully integrated into existingcommunities, the development of the housing willcross subsidise the delivery of the speculative highquality employment space and also deliver trulysustainable mixed-use regeneration.

English Partnerships is at the forefront of theGovernment’s response to climate change and theNetwork Villages programme is entirely consistentwith the Government’s intention for the delivery ofurban renaissance and the creation of sustainablecommunities. It accords with the Green Paper (July2007) ‘Homes for the future: more affordable, moresustainable’ which sets out proposals for more homesthat are well designed, greener and more affordable to rent or buy.

Network Village as part of the National CoalfieldsProgramme, will deliver further benefits to coalfieldcommunities through brownfield regeneration and theprovision of high quality housing and business space.

The new Homes and Communities Agency proposedin the Housing and Regeneration Bill, will haveresponsibility for land and funding to deliver newgreener and more affordable homes and infrastructurethrough sustainable development. (The definition ofinfrastructure includes services; roads and transportfacilities; retail and other business facilities; health,educational, employment and training facilities; andpublic open space).

1. INTRODUCTION

To enhance the sustainability – explore newproposals for live/work zones where units can bebuilt as offices and or homes and occupied partlyor wholly for either useResidential land disposal strategy – NetworkSpace will obtain planning permission, partoutline and part detailed, for the mixed useNetwork Village development then market theland available for residential development withthe benefit of outline planning permission forsale on an unconditional basis. Land remediation,new roads, drainage and services will be deliveredby Network Space as appropriate. The receipt forthe residential land will fund the remediation,abnormal costs and infrastructure and cross-subsidise the speculative development of theemployment accommodation

2.3 OPEN SPACE

The open space element of the scheme will include:

The open spaces, parks, play areas and landscapingare important elements that will vary significantlywithin each scheme. It is important to create well-used places that have a good perception of safetyand provide valuable amenity for both existingand new communitiesCommunity involvement will be necessary duringthe detailed design process to foster a sense of ownership, and hopefully minimise risks ofvandalism. The design of play areas will need to betargeted to local need and potential user groups

There are opportunities to involve local peoplewhen developing any art feature, perhapsreflecting the history of the site of the area,and possibly during the implementation phase in planting trees, shrubs and bulbsRecycled materials will be utilised whereverpossible in the construction of footpaths and cycle ways. Durable natural materials should be used for benches, boardwalks and fencesSustainable management practices are intrinsic in the long-term success of parks or open space as assets to the local community. Long termownership and stewardship of the open space bythe local authority or community trust or the LandRestoration Trust, will be considered in each case

2.4 RETAIL, COMMERCIAL AND LEISURE

Certain sites may offer additional sustainablecommunity development opportunities and mayrequire suitable provision of retail premises andcommunity facilities. Depending on the size of theproposed Network Village scheme there may beopportunities for the development of additionalretail or commercial/leisure premises which willenhance the sustainability and viability of theproposals, to include:

Neighbourhood centres that may include, localsupermarket or general store, and small retailunits for a range of occupiersCommunity facilities such as village orcommunity hall, library and crècheHealth care facilities including clinic, consultingrooms, dental and doctors’ surgeriesOther commercial opportunities will depend on the size of the site, location and main road frontage. Possible uses could include carshowroom, hotel, pub and restaurant, gardencentre, local trade park units, small and mediumsize industrial units

2.1 EMPLOYMENT

The basis of a Network Village scheme will includea combination of the following employment space:

Critical mass of 2,322 to 6,503 sq m (25,000 to70,000 sq ft) of high quality business spaceHigh quality managed business centre typically2,322 sq m (25,000 sq ft) providing fully servicedoffices on flexible terms as recently completed at Matrix Business village, Keys Park, HednesfordOut of hours community use of the meetingrooms and conference facilities within businesscentres will be available to local communitygroups providing Multi-occupied office building providing highquality offices suites offering grow-on space forSMEs. Mansfield i2 provides up to 18 suites in a high quality 3,252 sq m (35,000 sq ft) officebuilding next door to Mansfield’s high technologyincubation centreNetworkcentres providing high quality workspaceunits suitable for SMEs and start-up businessestypically 1,858 to 3,716 sq m (25,000 to 40,000 sq ft)providing units ranging from 70 to 325 sq m (750 - 3,500 sq ft). Allerton Bywater and SherwoodEnergy Village, Ollerton are two recently completedschemes designed to be adjacent to housingIn appropriate locations self-contained own frontdoor offices available for sale or to let, typical size 140 to 280 sq m (1,500 - 3,000 sq ft) will beconsidered. The developments at West Moor Park,Armthorpe and Sherwood Energy Village, Ollertonboth offer own front door offices

The offices and workspace will be design with the aim of achieving BREEAM excellent ratingWhere there are suitable existing buildingsrefurbishment and subdivision may be an alternative

2.2 RESIDENTIAL

The residential element of the scheme will includethe following:

Network Space to obtain outline planningpermission and prepare land for sufficientnumber of residential units (houses andapartments) to cross subsidise the speculativedevelopment of the proposed employment space.The amount of residential necessary to crosssubsidise the scheme will vary depending on thecost of abnormal works, residential values, Section106 requirements, the supply and demand foremployment space in any particular areaThe agreed masterplan and design of thedevelopment will deal with access, safety, security,outlook, play areas, traffic management and goodquality design reflecting local characteristics and ensuring that the employment space is in an appropriate prominent position within thedevelopment; creating a connective neighbourhoodintegrated into the existing communityAffordable housing will be a key element withineach scheme – providing a range of house typesto meet local requirementsA Design Code for the delivery of energy efficient,sustainable homes to be developed to a minimumstandard of Code for Sustainable Homes Level 4(rising in line with English Partnerships/Homesand Communities Agency quality standards)Building sustainable homes is not simplyreducing CO2, but also looking at the materialsused in construction and minimising otherenvironmental impacts such as reducing the useof water and the waste generated in constructionand in the way we live

2. NETWORK VILLAGE ELEMENTS

PAGE 10/11 NETWORK VILLAGE ELEMENTS

The strong regeneration benefits of the networkvillage proposals include making use of brownfieldsites in sustainable locations with a strongemployment led justification. This coupled with acommitment to deliver an exemplar high qualitydevelopment provides a compelling regenerationplanning case.

The proposals are for mix-use developments withinor adjoining existing towns and villages thereforemaximising the use of infrastructure and facilities.

Key aims will be to achieve CO2 reductions, energyefficiency and reduce energy consumption. Sustainableenergy design needs to be affordable and practical.Improvements can be achieved by:

Improving fabric performanceCondensing boiler technologyNatural ventilationDaylight linked lighting controlHeat recoverySolar shadingGround source heat pumpSolar thermal water heating

The houses and apartments within the NetworkVillage will aim to achieve Code for Sustainable HomesLevel 4 (rising in line with current EP standards). Thismeans the development will improve performance in a range of areas including, water, waste, materials,drainage, energy and CO2, pollution, health and well being, management and ecology. A Code forSustainable Homes pre-assessment will be preparedby Network Space in order to provide house builderswith guidance on the particular site and EnglishPartnerships quality standards including LifetimeHomes and Buildings for Life.

Building sustainable homes is not simply reducing CO2,but also looking at materials we use in constructionand minimising the other environmental impacts –reducing the use of water and the waste generatedin construction and in the way we live.

Network Space will aim to achieve BRE EnvironmentalAssessment Method (BREEAM) standard of Excellentfor the offices and workspace. (Network Spaceschemes are developed as a minimum to very goodstandard and BREEAM excellent has been achievedfor workspace schemes at Allerton Bywater and i2in Mansfield).

3. SUSTAINABILITY

PAGE 12/13 SUSTAINABILITY

The offices and workspace will provide high qualityemployment space for local businesses. The majorityof occupiers in Network Space schemes are localbusinesses and come from within 5 miles.

Secured by Design accreditation will be achieved byappointing an architectural liaison officer at an earlystage of the design process.

Network Space will work with key stakeholders oncross cutting sustainability themes including:

Community engagement and managementPromotion of design innovation using modernmethods of construction and energy efficiencyProvision of training and educationalopportunities (to be developed throughappointment of consultants by Network Space and English Partnerships)Insuring the creation of a connectedneighbourhood

In conjunction, the masterplan and design of thedevelopments will deal with access, safety andsecurity, English Partnerships’ minimum spacestandards, outlook, play areas, traffic management,and good quality design reflecting local characteristics– creating a connected neighbourhood and deliveringdiversity in housing choice and tenure.

PAGE 14/15 AREAS OF OPERATION

Newcastleupon Tyne

Durham

York

Sheffield

Stoke-on-Trent

Nottingham

ManchesterLiverpool

Whitehaven

Birmingham

Cambridge

London

Southampton

Bristol

Exeter

Dover

Oxford

Leeds

4. AREAS OF OPERATION FORMER COALFIELD AREAS

SITES WANTEDFOR EXEMPLAR MIXED-USE

REGENERATION SCHEMES

4.1 COALFIELD AREAS

The broad areas of operation cover the formerEnglish Coalfields. The agreed boundary of the areasof the company’s operation is defined in the IMCConsulting Engineers Ltd report entitled ‘WorkspaceDevelopment Areas in the closed English CoalfieldsJanuary 1999’. The former English Coalfields areas areshown on page 15.

4.2 SUITABLE LOCATIONS

Suitable sites will be identified as opportunities thatrequire the delivery of high quality employmentspace as a key element for the delivery of exemplarmixed-use regeneration. Site characteristics mayinclude some or all of the following:

Within existing towns and villagesClose to existing employmentNear to adjoining residentialConvenient for the town or village centreUse existing infrastructure, services andcommunity facilitiesHighly accessible by public transport, walking and cyclingOffer additional benefits to local peopleBrownfield landProvide open spacePotential to sustain and enhance biodiversity and ecological interestSuitable for a range of high quality homes both affordable and market housingSites are likely to be 4 hectares (10 acres) or more, but could be smaller in high density urban locations

NORTH EAST

CUMBRIA

NORTH WEST

STAFFORDSHIRE

WEST MIDLANDS

FOREST OF DEAN

KENT

YORSKSHIRE

NOTTINGHAMSHIRE

PAGE 16/ 17 NETWORK VILLAGE MODEL

5. NETWORK VILLAGE MODEL5.1 GENERIC SCHEME

For the purposes of developing the business plan abasic Network Village model based upon the Murtonpilot experience with sustainable site characteristicsas highlighted in the previous section has beenadopted and this comprises the following:

Business centre providing high quality servicedoffices 26,000 sq ft (GIA)Workspace scheme of 15 units totalling 26,000 sq ftProvision of serviced ‘oven ready’ residential landwith outline planning permissionHigh quality public open spaceBrownfield site requiring remediation andconstruction of infrastructure

Key assumptions:In order to develop the financial model the followingassumptions have been made:

A serviced offices building and workspace schemewould require approximately 4 acresResidential sales value – £175 per sq ftAffordable housing (to be maximised as far aspossible) – assumed to be 20%for the purposes of the modelSection 106 contributions – there will be a rangeof contributions in addition to affordable housingat a cost of say £2,500 per unitProfit on cost – a standard developer’s profit of15% including costs of site acquisition,remediation and infrastructureAn appraisal is attached for a 16-acre siteassuming a base initial land price of £200,000per acre and remediation costs of £1 million

5.2 APPRAISAL

At a remediation cost of £1 million a site ofapproximately 16 acres with 12 acres for residentialwould be required. A summary of the developmentappraisal is set out below.

Sensitivity analysisA sensitivity assessment has been carried outto show the effects on the size of site that may be required - by varying the land price per acre,remediation costs and residential values.

Residential value – an increase in the residentialsales price of £10 per sq ft will reduce the landrequired by 3 acresInitial land price – an increase from £200,000 to£300,000 per acre will result in a increased landrequirement of 3 acresRemediation costs – an increase from £1m to £2mwill require additional land of 3 acres

Network SpaceRevenue £’s

Business Centre 21,000 sq ft (net) 3,500,000

Workspace units 26,000 sq ft 1,500,000

Residential land sale 12 acres 9,700,000

Total Revenue 14,700,000

Costs £’s

Site 3,400,000

Planning 300,000

Construction & Fees 8,000,000

Other costs & interest 1,000,000

Total costs 12,700,000

Profit on cost 2,000,000

ResidentialRevenue £’s

Market housing 177,000 sq ft @ £175.00 31,000,000

Affordable housing 41,000 sq ft @ £122.00 5,000,000

Total Revenue 36,000,000

Costs £’s

Site (serviced) 10,000,000

Construction & Fees 18,000,000

End payments S106, Marketing & Interest 3,000,000

Total costs 31,000,000

Profit (excl interest) 5,000,000

PAGE 18/19 SITE IDENTIFICATION

6. SITE IDENTIFICATION 6.3 INITIAL SITE ASSESSMENT

Initial Site Assessments (ISA) will be considered at monthly Network Space Operations meetings.Key points to be considered are as follows:

Timescale for deliveryInitial market assessment of supply/demand forhigh quality employment space and housingSite is of sufficient size to deliver residential thatwill fund the development of the site and theprovision of the employment spaceAchieving high standards of development i.e.BREEAM excellent and Code for SustainableHomes minimum of Level 4High level of sustainable developmentPotential for wider benefits for the localcommunityOverall scheme to be commercially viable

The ISA will be carried out using available informationand will then be considered at the next OperationsMeeting allowing a minimum of two weeks for an assessment. The site will be considered againstthe key points and the ISA will take the form of aconcise report.

Following a positive ISA - a budget for the appointmentof a development team will be agreed along with aprogramme for the completion of an Outline ProjectProposal (OPP). This will be a more detailed assessmentof the site and preparation of a proposed scheme tobe considered by the Network Space Board.

Following completion of the OPP, and subject torecommendations, approval would be granted byNetwork Space Board to conclude negotiations with the landowners (enter into a developmentagreement) and proceed with the preparation of aplanning application and detailed site investigationsand assessments.

6.1 SITE FINDING PROPOSALS

The target is delivery of six Network villages and300,000 sq ft of employment space within a sevenyear timeframe. The proposed programme for securingfurther sites for development are two sites in 2008,two in 2009, and a sixth in 2010.

The first site at Murton is located in the north eastand therefore the proposed target is to identify andenter into agreements for two further sites in 2008 –say one in Yorkshire and one in the East Midlands.

A programme of meetings and presentations is being developed. Initial meetings and presentationswill be at a regional level with a programme ofpresentations and meetings with key individuals inEnglish Partnerships and the RDAs. This will thenprogress to local authorities, HMR pathfinders andURCs. It is anticipated that there will also be ‘windfall’type opportunities identified outside the initial search areas.

We would also aim to meet with senior propertyconsultants who specialise in public sectorregeneration and development. These individualshave knowledge of local authority regenerationinitiatives and plans for high quality sustainablemixed-use development where the Network Villageconcept would be appropriate.

It is anticipated that sites are more likely to besecured on a negotiated basis rather than opencompetitive tendering.

Network Space has been developing in the coalfieldareas since 1999. Langtree has in depth knowledge ofthe market for employment space in many of theseareas and English Partnerships through its key role in the National Coalfields Programme has detailedknowledge of the communities and former collierysites within the coalfield areas.

6.2 SITE DELIVERY PROGRAMME

The indicative development programme outlinedbelow indicates that the period for delivery from site identification through to completion is likelyto take 3 - 4 years.

An indicative programme for site identification anddevelopment is as follows:

Period Month no.

Initial Site Assessment 4 weeks 1

Outline Project Proposal 2 months 2 - 3

Masterplan & Planning Application 6 months 4 - 9

Consideration of Planning Application 4 months 10 - 13

Detailed design & tender 6 months 14 - 19

Site remediation & Infrastructure 6 months 20 - 25

Marketing & Sale of Residential Land 16 - 194 months 20 - 25

Construction of Buildings 12 months 26 - 37

Site Identification Start Completion& Agreement Construction

1 Murton 2007 2008 2010

2 2008 2009 2011

3 2008 2010 2012

4 2009 2011 2013

5 2009 2011 2013

6 2010 2012 2014

PAGE 20/21 FINANCIAL COMMENTARY

Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15£000 £000 £000 £000 £000 £000 £000

1) Capital Programme (8,640) (14,351) (16,315) (12,320) (12,420) (8,440) (6,043)

2) Profit & Loss Account

Pre interest profit 2,909 3,897 4,988 3,768 4,105 4,674 4,000

Interest (1,851) (2,055) (2,472) (2,395) (2,655) (2,822) (2,694)

Profit before tax 1,058 1,842 2,516 1,373 1,450 1,852 1,306

Bank interest cover (PBIT) 1.57 1.90 2.02 1.57 1.55 1.66 1.48

3) Balance Sheet

Tangible Fixed Assets £000 £000 £000 £000 £000 £000 £000

Estates - Investment 50,831 50,831 50,831 50,831 50,831 50,831 50,831

Estates - NV Phase III 2,356 8,724 11,306 16,580 21,859 22,086 28,891

Total Fixed Assets 53,187 59,555 62,137 67,411 72,690 72,917 79,722

Bank debt (24,466) (29,822) (29,858) (33,899) (37,515) (36,627) (42,136)

Other assets/liabilities (10,091) (9,815) (9,785) (9,133) (8,857) (8,676) (8,295)

Net Assets 18,629 19,919 22,494 24,379 26,318 27,614 29,291

Bank debt as % of INV & DEV 46% 50% 48% 50% 52% 50% 53%

Year on year growth rate 4.1% 6.9% 12.9% 8.4% 8.0% 4.9% 6.1%

Peak debt (32,316) (37,904) (40,949) (41,879) (45,596) (45,024) (42,136)

7. FINANCIAL COMMENTARYCapital ProgrammeThe delivery of the six sites will require a significantcapital programme with spend averaging in excessof £10m per annum for the seven years to June 15.

Profit and Loss AccountThe results show profit being delivered every year upto June 2015. The projections show an interest coverof at least 150%. The business plan assumes thatnew workspace will continue to let up over fifteenmonths, which has been the case historically. It alsoassumes a serviced office element will let up overtwenty-one months. Peak occupancy is assumed at 87.5%.

Balance SheetThe projection assumes that fixed asset values willremain at June 2007 levels. The above shows that netassets are projected to grow from £18m at June 2007to £29m at June 2015.

The year on year growth rates in net assets are alsoshown in the table above varying from 4.1% to 12.9%.The overall growth over the period is at an annualisedgrowth rate of 7.3% from June 2008 to June 2015.

The Network Village programme will be funded bybank debt. It is expected that the bank facility wouldneed to increase from the current approved level of£27m up to around £50m, and increasing bank debtcan be provided with a satisfactory loan to valueratio of below 55%.

The following table sets out some of the key financial indicators for the Network Space Business Plan for the periodto June 2015.

PAGE 22/23 DEVELOPMENT

8. DEVELOPMENT

8.3 EXIT STRATEGY

8.3.1 EmploymentThe managed business centre/serviced officebuildings and workspace schemes will be retainedand managed by Network Space. Own front dooroffices may be available to let or for sale and this willdepend on the particular details of each scheme.

8.3.2 ResidentialServiced residential land will be marketed for salewith the benefit of outline planning permission and full details of site investigations, infrastructureremediation proposals to be completed by NetworkSpace, Code for Sustainable Homes, affordablehousing, and S106 Agreement and a strict DesignCode prepared by Network Space to ensure thedelivery of high quality aspirational housing.

Marketing will take place following receipt ofplanning permission with unconditional sale andland receipt following remediation and infrastructureas appropriate. Network Space may also considerdirect development of homes or apartments inlive/work zones.

8.3.3 Open SpaceSustainable management practices are intrinsic inthe long-term success of parks or open space asassets to the local community. Therefore long termownership and stewardship of the open space will beconsidered in each case. Alternative options include:

Adoption by the local authority;Community or trust ownership and managementcompany with service charge; andTransfer ownership to the Land Restoration Trust(with a dowry payment), which was also createdby English Partnerships, and is a key operator inthe coalfield areas. Network Space has alreadyheld preliminary discussions with LRT who haveconfirmed potential interest

8.3.4 Retail, Commercial and LeisureOpportunities and requirements may arise forcommercial development for uses such as hotel,pub/restaurant, local supermarket, neighbourhoodcentre, motor trade, or small/medium industrial units.Development or sale of plots will be on the basis ofmaximising receipts through pre-let, turnkey or landsale basis.

8.1 DEVELOPMENT AGREEMENT

Following the identification of a suitable site andhaving completed an initial site assessment, NetworkSpace will agree Heads of Terms and enter into aDevelopment Agreement with the land owner forthe delivery of the proposed Network Village scheme.Under the terms of the Development AgreementNetwork Space will acquire the whole site and thenarrange the disposal of the residential land andcommercial areas to cross subsidise the delivery of the development and the employment space.

8.2 PLANNING

The development team will prepare an initial siteassessment based on available information and aninitial masterplan will be drafted for the purposes ofearly consultation. A scoping study for a planningapplication will then be agreed with the localplanning authority.

Following pre planning consultation with the localauthority, local people and stakeholders, includingpublic exhibitions, the masterplan will be revised andprepared in more detail for the planning application.In accordance with the agreed scoping study fullreports will be prepared to support an outlineapplication for the site as a whole and detailedapplication for employment space and infrastructure.

.

8.2.1 PolicyThe masterplanning, design and development andthe strong regeneration benefits of the NetworkVillage proposals accord with the Government’sprincipal planning guidance, and it’s objectives for sustainable development. This includes:

Regional Spatial Strategies and Regional Planning GuidancePPS 1 Delivering Sustainable Development – statesthe importance of good design, pre-planningdiscussions and community involvementPPS 3 Housing – sets out the Government’s policyframework and housingA wider choice of quality homes that;- Widen opportunities for home ownership;- Improve affordability across the housing

market, including by increasing the supply of housing; and

- Create sustainable, inclusive mixed communities in all areas

PPG 4 Industrial, commercial development andsmall firms – identifies that economic growthand high quality environment have to be pursuedtogether. That where appropriate small scaleemployment development should be integratedwith residentialPPS 9 Biodiversity and Geological conservation PPG 13 Transport – focuses on promotion ofsustainable transportPPG 14 Development on unstable landPPG 17 planning for open space spatial andrecreationPPS 23 Planning and Pollution ControlPPG 24 Planning and NoisePPS 25 Development and flood risk – deals withsustainable development – appraising, managingand reducing the riskPPS 1 draft supplement on Planning and Climate Change – spatial planning should reduce emissions

PAGE 24/25 COMMUNITY ENGAGEMENT AND SOCIO-ECONOMIC IMPACTS

9. COMMUNITY ENGAGEMENT ANDSOCIO-ECONOMIC IMPACTS

9.3 ECONOMIC AND SOCIAL IMPACT

The Urban White Paper, Our towns and Cities:the future, launched in November 2000, sets outthe agenda for the long term redevelopment of the urban fabric with improving sustainabilityestablished as the clear goal. The focus of the WhitePaper is on achieving sustainable economic growththrough engaging local people to tackle problemssuch as poor living environments, failing economies,inadequate services and weak social networks.

The Network Village concept is fundamentally in linewith the strategic vision outlined within the WhitePaper. As well as bringing brownfield sites back intoproductive economic use, high quality design will becentral to the Network Village proposals resulting in the overall improvement of the urban fabric forthe benefit of all within the local community. Theproposals will provide new and better employmentopportunities for the local community as well asproviding a high quality mixed residential environment.

The delivery of the business accommodation in supportof economic development objectives is financiallyand strategically supported by the residentialdevelopment. The residential development not onlysecures the financial viability of the scheme, butalso supports local economic development throughthe provision of a better choice of homes as well as supporting local services. The justification forNetwork Villages is also based upon a market failureargument as without grant assistance or cross-subsidyfrom residential development the employment spacecould not be delivered.

The high quality employment space will bringadditional quality employment and investment intothe area. Network Villages will result in additionalbenefits of increased competitiveness as well as local multiplier effects and social benefits fromincreased investment. Furthermore by diversifyingand strengthening the local economic base, theability of the area to withstand future economicchanges would be enhanced.

Well-designed mixed-use development that includesthe supply of high quality open space will make thearea more attractive and improve its image.

Network Villages may also provide demonstrationeffects in the form of sustainable redevelopmentthat is compatible with the surrounding area andlocal community; as well as raising confidence and aspirations within the area; and assisting inencouraging more speculative development andstimulating other landowners to invest in their own sites.

Network Village will deliver new high qualityemployment space that will bring significantsocio-economic benefits to the local area creating a more sustainable local community.

9.1 CONSULTATION

Community participation is a key objective in theGovernment’s reform of the planning system. NetworkSpace will undertake pre-application discussions at anearly stage with council officers, community groupsand local stakeholders. The company also recognisesthe importance of maintaining ongoing engagementas the draft masterplan is developed.

Following initial consultation and production of a draftmasterplan the proposals would be displayed at apublic exhibition inviting feedback, comments andideas from local people. A second public exhibitionwould be arranged thereafter to display the revisedmasterplan and alterations as a result of the pointsraised at the first exhibition.

Additionally consultation and engagement would beachieved using leaflets, press releases and interviews withjournalists, meetings with residents and stakeholders,and meetings with objectors to understand issues andto explain and clarify the proposals.

9.2 PLANNING PROCESS

As part of any planning application, the Design andAccess Statement would also include a Statementof Community Engagement outlining the stages ofconsultation undertaken with various stakeholders.

PAGE 26/27 MARKETING & PR

10. MARKETING AND PR10.3.4 Public Relations Targeted public relations will help to raise awarenessand reinforce and support the marketing strategy.Good news stories and press releases will betargeted at key media and quality coverage will besought in local, regional and trade press andbroadcast and national media where appropriate.

Aims and ObjectivesPR consultants have been appointed to deliver an effective public relations strategy by:

Raising and broadening brand awareness Secure consistent PR coverage in target areasPosition Network Space as an innovativedeveloper of high quality, exemplar workspaceand homes in the former English coalfield areasEnsure key members of the Network Space teamare visually seen as the face/s behind the brand at key events and networking opportunitiesDrive footfall to all events

Key messagesThe key Network Space messages to incorporate intoall communications are:

Network Village is a unique and distinctivemixed-use development initiative led by acommercial developer, where delivery of highquality employment space is at the forefrontNetwork Space specialises in regeneration informer coalfield areas, delivering high qualityworkspace and exemplar homesTrack record – completed 22 sites, delivering700,000 sq ft of workspace and offices with highoccupancy ratesNetwork Village will create six sustainable mixed-use developments and deliver a further300,000sq ft of employment space

MethodologyPR consultants will use the following tools to ensurethat Network Space and the Network Village brandwill receive regular media coverage:

Focus on the key messages and benefits toformer coalfield areasNews – a regular stream of news releaseshighlighting business success, planningsubmissions, launches and successful Photo opportunities – use photo caption stories.Surveys/research – any research undertaken byNetwork Space can create a new press opportunityComment opportunities – proactively seek ontopics such as brownfield redevelopment,legislation changes, sustainable buildings,accommodation for SMEsForward feature opportunities – in target areas Media one-to-ones – interviews with keyjournalists Awards – submit schemes for awards in order to profile the success of the company and itsfuture aims

10.3.5 AdvertorialsPlace stories in regular magazines and newsletters oflocal authorities, Chambers of Commerce, BusinessLinks and RDAs.

10.1 INTRODUCTION

Network Space needs to gain a higher profile atboth regional and national levels in order to promotethe Network Village proposals. The majority ofnetworkcentres are in the East Midlands, Yorkshire andthe North East and consequently this has led to theprofile of Network Space remaining relatively localised.

10.2 AIMS AND OBJECTIVES10.2.1 Target AudienceThe target audience are senior executives anddecision-makers involved in regeneration initiativeswithin the former coalfield areas. This includes EnglishPartnerships regional teams, Regional DevelopmentAgencies, local authorities and property consultants in regeneration and development.

10.2.2 SMART Objectives Promote Network Space’s track record andachievementsRaise awareness of the Network Village conceptEncourage new land opportunities for Network Village sitesRaise the profile of the expertise behind the brandHighlight the quality and sustainability of the initiativeHighlight involvement of English Partnershipsand the fit with the Government’s agenda

10.3 COMMUNICATIONS TACTICS10.3.1 Direct MarketingOne-to-one appointments, meetings and presentations,to key executives and decision makers; use of directmail and e-mailers to named individuals; attendingappropriate events in target areas.

10.3.2 AdvertisingTargeted advertising in national and regionalmagazines and newspapers will be considered to tiein with events and milestones and direct marketinginitiatives.

10.3.3 EventsTargeted event attendance and sponsorship offers opportunities for good public relations viamedia coverage, networking, and promotion ofNetwork Villages.

Network Space corporate events – it is proposedto elevate the Matrix Business Village launch inJune 2008 to an event to mark the completion ofthe 700,000 sq ft milestone and further promoteNetwork VillagesSeminars/workshops – identify workshops andseminars on regeneration, housing, mixed-useand sustainable development for speakingopportunitiesProperty dinners & award ceremonies – considersponsoring awards and hosting tablesBoardroom lunches – host boardroom lunchesand presentations

DISTINCTIVEMIXED-USE

DEVELOPMENTDELIVERY OF EMPLOYMENT

SPACE IS AT THE FOREFRONT

PAGE 28/29 MARKETING & PR

10.3.6 LiteratureAll literature is professionally designed incorporatingthe Network Space and Network Village branding:

Network Village vision brochure – has been produced to showcase the vision forNetwork Villages E-Newsletter – a four-page newsletter is currentlyproduced on an annual basis. It is proposed toproduce this as an e-newsletter on a morefrequent basis as this is a cost effective ways to reach an audience in a highly targeted,personalised manner. A personalised database of senior executives and decision-makers in thetarget areas has been created Factsheets – detailed case studies to demonstratevarious elements and Network Space successsuch as BREEAM ratings and awards Commencement business plan – sets out theareas of operation and delivery plan for the period to 2015

10.3.7 E-marketingThe proposed use of e-marketing includes thefollowing:

WebsitesA new website www.networkvillage.co.uk hasbeen created using the design and content of the Network Village vision document. It has been designed so that it can be updated withnews featuresThe website – www.networkspace.co.uk – has a full content management system and is constantly up-datedAnalysis of the web traffic statistics reports willhelp us to improve website content, graphics andlay-out or add more links to other parts of the sites

Search engine optimisationSearch engine optimisation is an effective way togenerate targeted website traffic through strategicselection of key phrases, and research shows 60-80%of site traffic originates from search engines.

10.3.8 Budget and TimingA marketing and PR action plan and budget havebeen prepared. The action plan includes:

Updated and expanded database of key playersfor mail shots and eventsIdentify range of key events to attend andpossible speak opportunitiesPresentation and meeting dates in the diary for EP, RDAs and regeneration contacts

PAGE 30/31 RISK ASSESSMENT AND MANAGEMENT

11. RISK ASSESSMENT AND MANAGEMENT

11.1 GOVERNANCE

The development process is managed by Langtree on behalf of Network Space involving highlyexperienced external consultants and managedthrough four stages of reporting:

Initial site assessment – carried out to identify the risks on delivery, timescale, planning, fundingand marketingOutline project proposal – providing a moredetailed assessmentPre planning report – a detailed report preparedprior to submission of the planning applicationPost tender report – prepared following receipt oftenders and prior to letting construction contracts

On an on-going basis the joint venture partners attendmonthly Operations meetings dealing with assetmanagement and reviewing individual developmentschemes. Board meetings are held quarterly.

Network Space has a strong corporate governanceregime following English Partnerships corporateguidance and subject to annual assessment by theirinternal auditors. Network Space has always received a good rating.

11.2 ACQUISITION

Through a combination of experience and advicefrom external consultants, during the acquisitionprocess risk is managed through the reportingsystem with valuations prepared by externalproperty agents and cost plans prepared by externalconsultants. Legal risk is managed by independentlawyers who draft and negotiate developmentagreements and prepare reports on title.

11.3 CONSTRUCTION

Tender process – A minimum of four establishedregionally based contractors with a proven trackrecord are invited to tender and normally three outof four are contractors who Network Space has used before. The tender process and assessmentis managed by an experienced professional teamfamiliar with Network Space developments.

Post-contract – Contracts are normally awarded on a Design and Build basis and are managed byexternal project management consultants who liaisewith the contractors on behalf of Network Space.

PAGE 32/33 MONITORING AND EVALUATION

12. MONITORING AND EVALUATION12.2 EVALUATION

12.2.1 OverviewEvaluation is the critical examination of projects andprogrammes in order to assess the extent to whichthe objectives of intervening have been achieved,additional impacts or changes that are attributableto the project or programme have resulted, to assessthe extent to which changes were secured in anefficient and cost effective way, and to providelessons for the future. Monitoring data will be one of the key inputs into any evaluation.

It is proposed that the evaluation of Network Villagesshould comprise two components as follows:

Interim evaluation – within the first year followingthe completion of the first few schemes – it issuggested that this would be after 2 years; andFull evaluation – an independent evaluation ofNetwork Villages after the first 4 years of operation

12.2.2 Interim evaluation The evaluation will be undertaken in order to assessthe added value of Network Villages. It is proposedthat the evaluation will be based upon a review ofmonitoring data collected to date coupled with astructured interview programme of partners andother organisations.

12.2.3 Full evaluation A full evaluation of Network Villages will becommissioned after 4 years of operation. Thisevaluation would be undertaken by independentconsultants. It would address a number of keyquestions, including:

The impact of Network Villages;Causality and attribution;Additionality and value for money;Change processes;Effectiveness;Sustainability and equality; andKey lessons

12.1 PERFORMANCE MANAGEMENT FRAMEWORK

12.1.1 IntroductionThis section provides a framework for the systematiccollection of information in order to measure theperformance of the Network Villages project in termsof monitoring and its subsequent evaluation.

12.1.2 MonitoringMonitoring is the process of checking actual progressand comparing this with the plans for a projectwhen it was conceived or promoted. It can provide an early warning that things are not going to planand an opportunity to take timely corrective action.Similarly, it can usefully highlight where performanceis significantly better than expected. The partnerstherefore recognise the importance of giving timeand effort to developing and implementing aneffective monitoring system.

Establishing an appropriate framework for the on-going monitoring of Network Villages will beessential in order to ensure that progress is in linewith the objectives set by the partners. Accordingly,an approach composed of two elements is proposed:

A bottom-up approach based upon theassessment of individual schemes; andAn evaluation of the programme as a whole

Each of the approaches has its advantages anddisadvantages. For example, while the bottom-upapproach can provide a detailed understanding ofthe effects of the key schemes within NetworkVillages and the communities within which it sits,it may be difficult to discern the wider, induced orless tangible impacts. On the other hand, a formalevaluation can provide an overall understanding ofhow Network Villages is performing, albeit that up-to-date socio-economic indicators are often notavailable, and it may be difficult to attribute impactsto Network Villages or its elements as opposed toexternal factors. The proposed methodology for thisPlan therefore seeks to use both approaches.

12.1.3 Scheme monitoringA clear and simple performance managementsystem will be established to collect monitoringinformation for each of the schemes in line withLangtree’s standard reporting format for NetworkSpace. This will mean assembling and updatinginformation on each scheme.

This includes:

Finance ReportLettings and Management Report – portfoliostatistics, current deals, vacancy summary,enquiry tracking, space availableDevelopment ReportPR and Marketing Report

The following reporting arrangements are proposed:

Monthly reports as part of the establishedNetwork Space accounting and reporting cycle for Operations and Board meetings, focusing on scheme performance; andAn Annual Report, for the joint venture partners –for use by both partners in line with their ownexternal communications strategiesIn addition, an annual Business Plan and budgetwill be prepared for consideration of the NetworkSpace Board in its normal cycle for these in latespring of each year

PAGE 34/35 WAY FORWARD

13.WAY FORWARD

By Spring 2009:

The first Network Village scheme atMurton will have obtained planningpermission and will be on site. Duringthe process key issues will have beenidentified regarding masterplanning,consultation and costs

Further opportunities for Network Villageschemes will have been identified andwill be under assessment and negotiation

A programme of presentations andmeetings will be underway in the secondphase of target areas

Increased awareness of Network Space in the target areas and Network Villagesis recognised by stakeholders as aninnovative and sustainable mixed-useregeneration model

The Business Plan outlines the Network Space operational areas in the former EnglishCoalfields regions and outlines the minimum size and type of sites to be considered.

During the course of the business plan it may be necessary to review the business planmodel based on ongoing experience of the planning and development for Network Villages.Property market conditions will be constantly monitored and factored into reviews.

For further information on Network Village please contact:

Network Space LtdCentrix HouseCrow Lane EastNewton-le-WillowsWA12 9UYTel: 0800 542 0402Email: info@networkvillage.co.ukWebsite: www.networkvillage.co.uk

This Business Plan has the backing of English Partnerships and Langtree and during the firsttwelve months we will aim to pass the following milestones:

Spring 2008A marketing and PR action plan to be in place including a programme ofpresentations and meetings with seniorexecutives and decision makers involvedin regeneration in the initial target areas

Summer 2008To have secured planning permission forMurton Network Village with a target forstarting on site by December 2008

Autumn 2008To have completed a programme ofpresentations and meetings with seniorindividuals, key stakeholders and deliverypartners in the initial target areas

December 2008To have identified and agreed terms fortwo further Network Village schemes