Q81 MrJenkins: When you said that the site is worth £30 million more with the Dome than it would be without the Dome, I understand perfectly, and then you give the reason that it is because of traffic flows off and on the Peninsula. Once again, I was quite happy until you said that, but is this not a development that is going to be sustainable as a community? Do people not work, live and have leisure within the Peninsula itself?
Dame Mavis McDonald: Yes.
Q82 Mr Jenkins: So there will be less traffic movement off and on the Peninsula than in a normal non-planned environment; yes?
Mr Walker: Yes, and that was taken into account, and when we are talking about traffic we are talking bout from the Underground, the bus service and cars.
Q83 Mr Jenkins: So if very little traffic is coming on and off why would the Dome interfere with that at probably a different time?
Mr Walker: There is no guarantee that all the people who will live on the Peninsula will actually work on the Peninsula-you cannot foretell that-so in the traffic modelling there is an assumption that some would and some would not, and that was accepted by the Planning Authority because obviously it is the Planning Authority that determines the amount of development that can take place on the Peninsula.
Q84 Mr Jenkins: I understand that, but when you answered Mr Sheridan and you said that the cost for professional advisers for this site in particular is £7.8 million, that was just for the second sale and it was £6.7 million for the first; so you have paid £14.5 million for advisers, and you have a "maybe" that traffic will be less or "maybe" people will come on and off the Peninsula. Do you think that more modelling could have been done to assume exactly what traffic would come on, and that is depending on the planning, which you are effectively in control of in this Partnership, to say what is going to go on that site to maintain the whole area we are talking about, that we are now in control of this to develop this sustainable community; yes?
Mr Walker: The advice we got on traffic movement, if you like, was taken into account in our modelling. At the end of the day they came up with some parameters that were part of the planning application to the local authority. The local authority engaged their own advisers and used in-house people. They then took a view as to what would be allowable, which was broadly in line with the planning application that was put in by the Consortium.
Q85 Mr Jenkins: One of the things that just struck me as an oddity was that we are going to have part of £170 million worth of land from this development, so with the £170 million and with the add-on costs effectively that will be generated by your department over the next 20 years, when do you expect the breakeven point to come that we will do better with this deal than just selling the land off from day one?
Mr Walker: We will be achieving something in the order of just over £30 million by 2007-08 and thereafter-
Q86 Mr Jenkins: 2007?
Mr Walker: 2007-08 is when we get the first £30 million back, which are the costs of running the Dome. Thereafter we get a minimum land value- because it is not all just profit share that is coming from the disposal of the land. When the developer draws down the land we are paid the minimum land value as at that time and we then share in any profit thereafter. So that the payments coming in to us are a mixture of minimum land value, which is a guaranteed payment because that is set down in the contract as to how much they have to pay, together with a share of the profit. Obviously in the early stages of the development we will get more minimum land value than profit and profit will come in later. You talk about the breakeven; the £170 million would be around about 2015.
Q87 Mr Jenkins: So with the initial investment, with the add-on costs, et cetera, by 2015 in real terms we will have got to a breakeven point and everything from then on will be profit?
Mr Walker: If we could sell all of the land in one hit at £170 million you could actually get it now and then if you took the alternative, yes, you are talking about 2015, but then of course the profits then continue to generate for the taxpayer.
Dame Mavis McDonald: What we are hoping, obviously, is that as the development takes off then you add to the value of the land as well, so in the later parts of the development you are not necessarily going to be selling it at a land value which is at the £170 million. Some of the development on the southern end of the Peninsula has already raised land values on the whole Peninsula from before anything took place at all.
Q88 Mr Jenkins: Fair enough, I look forward to this very healthy return in 2015. Because one of the things that you quoted is that the extra development levered into this site will add value to the site, et cetera.
Dame Mavis McDonald: In terms of the Quintain land, yes
Q89 Mr Jenkins: Obviously if we get something like maybe a casino coming on to this site it will increase the value tremendously, and it will hopefully increase the profitability of the Dome. So what plan would you have to accommodate a casino in relation to the Dome as well?
Dame Mavis McDonald: The deal is not predicated on there being a casino. If there is a casino and it adds value, as we do from the Dome, then English Partnerships get a share of the profits. But the operators, Anschutz, have to get both planning permission and whatever the licensing permissions for casinos that will be in place when the current Bill is through the House. They have to get their own; there is no conditionality about that at all.
Q90 Mr Jenkins: I just wondered about profitability of the Dome if it had a casino alongside it, for instance. I would have assumed that would boost it tremendously.