26. As part of the restructured deal, LCR created two new 100 per cent owned subsidiaries, Union Railways (South) to design and build Section 1 of the Link and Union Railways (North) to build Section 2. LCR had originally contracted Rail Link Engineering (RLE) for the project management, design and construction of the Link. RLE is an unincorporated joint venture led by Bechtel, together with Ove Arup, Sir William Halcrow and Systra. Union Railways has entered into an agreement with RLE so that RLE will continue to project manage the construction of Section 1 of the Link. Upon completion of Section 1, Railtrack will purchase a lease over the infrastructure and related lands until 29 July 2086 (the date on which the Eurotunnel concession terminates). The design and project management of Section 2 remains with LCR as the contract for this work between Union Railways (North) and RLE is awaiting final agreement.
27. Section 1 of the Link will be some 43 miles of twin track high speed overhead electrified railway from the Channel Tunnel to Fawkham Junction. From its connection to Eurotunnel's track at the Channel Tunnel, Section 1 will head west to Ashford and then north west to Southfleet. A two mile spur will run form Southfleet to Fawkham Junction where it will join the existing track leading to Waterloo International. Key works on Section 1 include connections with Ashford International station, a two mile tunnel through the North Downs and a major bridge over the river Medway The target cost estimate for Section 1 is £1,700 million with a target construction period of 5 years. Construction began in October 1998 and is scheduled to be complete in October 2003.
28. Although Union Railways (South) is a subsidiary of LCR, Railtrack has the obligation to buy Section 1 at a price directly related to the construction cost and is therefore taking the construction risk. As risk taker, Railtrack can make all decisions involving the operations of Union Railways (South) through a right to appoint the directors of the company and approve any payments made. Railtrack also holds a redeemable special share in Union Railways (South).
29. Land acquisition for Section 1 has been carried out by Union Railways (South) as agent of the Secretary of State, using powers granted under the Channel Tunnel Rail Link Act 1996. Acquisition of land for both Sections of the Link must be completed before these powers expire in December 2001. All land acquired is owned freehold by the Government, reflecting the time-limited nature of LCR's interest and the Government's need to protect its long-term ability to continue Eurostar UK operations if the Development Agreement is terminated. There was a considerable amount of surplus land, comprising individual properties acquired for old routes or because they are seriously affected by construction activity. Most of the former have now been sold while the bulk of the latter will be held over until construction is complete and then sold.
30. More substantial areas of land granted to LCR as part of the original deal, mainly at King's Cross and Stratford, offer substantial development opportunities. The Department will receive a half share of any development surplus at these major sites after the cost of bringing the land to development has been deducted. Railtrack has an option to buy into LCR's land development opportunities through an option agreement under the restructured deal.