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A European Court of Justice ruling and EU regulations will have a profound impact on regeneration schemes in the UK, as Helen Meyler explains. Since the European Court of Justice ruled on the Roanne case in January 2007, there has been confusion whether EU procurement regulations should apply to regeneration and development agreements. Before Roanne, it was thought that development agreements were not contracts for ‘works' or ‘services', but primarily agreements for the disposal of land and, therefore, were exempt from EU procurement regulations, under the land disposal exemption. Roanne turned this assumption on its head, indicating that a development agreement could not come within the straight land disposal exemption. It was therefore felt that the safest way forward for both parties – post-Roanne – was to ensure such opportunities were advertised in accordance with EU procurement regulations. Following this decision, many major regeneration schemes were halted and re-advertised – because they had not been procured in line with the EU regulations – at significant cost and delay to both the local authorities and their private sector partners. In its Regeneration manifesto in spring 2009, the British Property Federation (BPF) called on the UK Government to publish guidance to combat [in the BPF's opinion] the misinterpretation of the Roanne case in the UK, which was having ‘such a widespread and damaging impact on regeneration throughout the country'. "This position is likely to be unwelcome to councils and the private sector alike..." Given that the nation states' – including the UK – role is to implement EU legislation, not set it, it was surprising when the BPF claimed that the Government had agreed to issue the requested guidance. Moreover, a recent intervention by the European Commission has called into question this claim, but at the same time, would appear to have laid the issue to rest. On 25 June 2009, the European Commission sent a formal request to the UK Government concerning the award of what it described as a ‘public works concession' in respect of the activities of the City of York in transferring land at Derwenthorpe in Osbaldwick, Yorkshire, to the Joseph Rowntree Foundation to build 540 homes without an OJEU compliant tendering process. The formal request takes the form of a ‘reasoned opinion' – which is not yet available – and is the second stage of the infringement procedure – the first stage having been an inquiry launched by the commission in October 2008 following a complaint by members of the public, who were opposed to the Rowntree scheme. Of particular interest were comments made by a commission spokesman, who maintained that the UK Government had recently ‘changed its stance' and accepted that the Derwenthorpe scheme should have gone out to tender, but she was concerned that ‘no measures have been introduced to bring to an end the original infringement'. She added: ‘Furthermore, no sufficient and adequate measures have been introduced to ensure that the award of future land development agreements will be compliant with the applicable European Union rules.' This statement surely provides conclusive evidence that, if councils are selling land and wish to have a say on how it will be developed, they must use EU procurement regulations when tendering the opportunity. This position is likely to be unwelcome to councils and the private sector alike, in view of the increased costs and delays involved However, at least now, local authorities and their private sector partners, and their advisers, should be in doubt as to the process they need to follow to avoid falling foul of the regulations, nor the penalties they face in the event of non-compliance. This is likely to become even more of an issue after the new Remedies Directive is introduced into UK legislation this December, as the courts will then be able to declare agreements that have been entered into ‘ineffective', and the period for an aggrieved party to make a claim will be increased from three months to six months. Helen Meyler is a partner at lawyer Davies Arnold Cooper

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ECONOMIC GROWTH

Rules land developers in a hole

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