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Date: 30th Apr 2007

Warning over CPO 'Windfalls'

Businesses operating in Liverpool's regeneration hotspots are underestimating the challenges Compulsory Purchase Order can present to their future.

The city has seen a wave of CPOs in key areas surrounding the Lime Street Gateway and the Paradise Project as regeneration takes place. The proposed redevelopment of Great Homer Street by St Modwen Developments means more are likely to follow in the run-up to 2008 and beyond.

Phil Rees-Roberts, one of the city's leading property lawyers, is involved in a number of on-going cases. He says too many businesses lose out by chasing windfall compensation pay-outs instead of concentrating on securing their futures.

"It is tempting for a business to see a CPO settlement as a potential windfall, but it's essential that priority is given to the other issues which can have a profound impact on their future," says Phil.

"Even a great settlement does not represent a safety net against going out of business and that's exactly what the unprepared business can be facing. Any relocation effectively means re-launching your business in a new setting and that carries with it new risks. The fact is you'll never be indemnified for the goodwill of your customers - that's not something that the compensation code covers."

The spate of CPO's followed Liverpool's designation as European Capital of Culture 2008. The sites involved include:

  • The Paradise Street Development Area
  • Edge Lane
  • The Lime Street Gateway
  • St Modwens Great Homer Street Scheme

It's smaller owner-managed businesses that are most at risk from this kind of shake-up, says Phil.

"Historically these businesses will be occupying low-rent properties that enable a city centre presence. But the reality of Liverpool's regeneration means finding a property that offers the same value is a huge challenge. Too often this will result in these businesses being pushed further to the peripheries of the city centre or worse still being extinguished completely."

Phil also warns against settling too early. "We're not suggesting anyone should hold the city to ransom and slow up important projects. At the same time a fair and proper settlement needs to be reached."

It's businesses with foresight that stand the best chance of success, he says.

"To emerge healthily from a CPO you've got to get on the front foot right away. Preparing a fresh business plan and employing professional advice to successfully relocate and re-launch is essential. Sometimes this will require deep pockets or a friendly bank manager - back to back deals for relocating are rarely achieved."

"End of the rainbow settlements are rare - public agencies are, after all, bound by rules of land valuation and are legally obliged to deliver 'best value'. To get the best out of a compensation claim you've got to be prepared to be in it for the long haul. The only way to guarantee the future of the business is to move on with relocating in tandem with the compensation process."