1.42 The new museum was intended to be the focal point for the development of the Clarence Dock site. In December 1993 the Armouries and RAI had entered into an agreement with the British Waterways Board as to what would happen should the dock site around the museum be developed as planned. This agreement included the sharing of the development gains arising, worth potentially several million pounds. However there was a delay in the development scheme and therefore in the Armouries' and RAI's share of the proceeds from the development. The British Waterways Board, Armouries and RAI did not select a developer for the site until July 1997 when they accepted a proposal from Berkeley Group. Under this proposal Berkeley Group would pay £13.4 million for a leasehold for the undeveloped part of Clarence Dock, eventually agreed at 150 years, which would then be shared by the three parties. Negotiations with Berkeley Group then took longer than expected.
1.43 After the selection of Berkeley Group there were disagreements over the exact share of the proposed disposal proceeds of £13.4 million between the British Waterways Board, Armouries and RAI. Also, the Armouries had a number of conditions and requirements which it wanted the development scheme to fulfil. These included the construction of a museum extension of 40,000 square feet to provide an exhibition hall and further storage for the collection. The exhibition hall was required, in the Armouries' view, because it did not have control over the use of the exhibition hall in the existing museum. This further space would be funded by Berkeley Group, at an estimated cost of £2.8 million, in lieu of the Armouries' share of development gain. The Armouries also sought the provision by Berkeley of a further 30,000 square feet for expansion (later reduced to 12,500 square feet). The Armouries sought this additional space in response to a request by Berkeley Group that the length of its lease for part of the dock site be 150 years, longer than had originally been proposed. The Armouries therefore wanted the additional space to enable it to cope better with the loss of this land for a longer period than expected.
1.44 After much negotiation the amount of storage and expansion space that Berkeley eventually agreed to provide free to the museum will be less than the Armouries originally sought as the total development proceeds due to the British Waterways Board, Armouries and RAI will be less than first expected because of increases in the costs of preparing the site for development.
1.45 Further delay of over a year arose as planning approval was sought for the proposed development to proceed. Approval was not obtained until February 2000 and the development agreement with Berkeley, which would provide RAI with its revised share of development gain, was not entered into until March 2000, after the financial crisis and renegotiation of the agreement with RAI. Consequently RAI was unable to use its share of the development gain to help resolve its financial difficulties as it had envisaged within its business plan.