The disposal and re-development of this Victorian hospital and associated buildings, once described by the Welsh historic environment agency Cadw as the finest purpose-built hospital in Wales, has been beset with problems for more than 15 years. The local authority could be placed at significant financial risk if they were to acquire the site while the condition of the buildings continue to deteriorate unless they have agreed a viable mix of new uses and have a developer partner to deliver the scheme. It is worth examining the history to date of the disposal process as it highlights a number of really useful lessons of wider applicability.

The first phase of the North Wales hospital was built in the 1840s and provided care for the mentally ill in North Wales . Eventually after many phases of construction it had 1500 beds and psychiatric healthcare, domestic, administrative and residential accommodation. The Victorian asylum is located in a rural area on the edge of the market town of Denbigh. It still dominates the skyline, covering some 55 acres. It was declared surplus to NHS requirements in the mid 1980s following the development of new mental health care strategies and a move away from 'institutionalisation' towards community care initiatives. At one time, many local people had employment at the hospital. After a period of winding down, the hospital was closed in October 1995. The main hospital building is listed grade II* and within the grounds there are four other buildings which are listed grade II, with the remainder of the buildings on the site being in the curtilage of the listed buildings.

1986 - 1994

A working group was set up comprising representatives from the local authorities, WDA and NHS to find a new use for the site. Options included an army barracks, a hotel, a college, etc… amongst many other possibilities, but there was no interest. Marketing was constrained by the need to be sensitive to the fact that many of the residents had been in the hospital for many years and treated it as their home.

1994 - 1999

The former North Wales Health Authority, the then owners of the hospital, began marketing the site for disposal in June 1994 but no suitable offers were received. The guiding principle for the disposal of the site was to realise the full market price. The site was re-marketed in autumn 1998 and sold as a single development to a Lancashire businessman in spring 1999 for £155,000; the purchaser had had previous success in developing a similar site. The sale agreement included clawback provisions for a share in profits over a ten year period. The sale of the hospital resulted in a net cost to North Wales Health Authority of almost £300,000. The loss on disposal was mainly due to the protracted nature of the sale and the high and continuing costs of security and maintenance. The final sale price was also depressed due to the deterioration of the property over the five years it was on the market and problems over rights and responsibilities in respect of adjoining properties identified late in the sale process.

Following expressions of concern about the consideration received for the site, the Health Authority commissioned a report by the District Auditor in June 1999.The report was essentially concerned with the process of disposal and did not take account of the wider complex political and planning environment in which the local authority and its officers were required to operate. One of the Auditor's key findings was that there should have been a piecemeal disposal of the site rather than deciding to sell it as a single site. However, the Health Authority felt that to have done so would have been unsustainable as it would have left the site with an 'unsaleable core', which would have been a long term drain on scarce financial resources.

1999 - 2004

The purchaser of the site subsequently lodged several planning applications with Denbighshire County Council, the Unitary authority which replaced the previous District and County Councils in 1996. As time passed, the Council lost confidence in the owner and his plans for the hospital. The buildings became increasingly dilapidated and suffered from theft and vandalism. Among the items taken over the years were large quantities of lead from the roof and the 19th Century clock from the hospital tower. In September 2002, the Council threatened enforcement action against the owner. The site and buildings were immediately placed on the market and were sold to new owners in December 2002 for £310,000, a 100 per cent increase in the original purchase price.

The new owners co-operated with an informal partnership of agencies comprising Denbighshire County Council, the Phoenix Trust (the forerunner of The Prince's Regeneration Trust), the Welsh Development Agency and Cadw to commission a feasibility study for the buildings. The study found that it was possible to save a substantial, and most important, part of the main hospital building together with other listed buildings and proposed granting planning permission for an 'enabling development', which would release capital for repair works and/or mothball important buildings of the site. In July 2004, His Royal Highness The Prince of Wales visited the site and took the opportunity to launch a public consultation exercise for the latest proposals.

2005 - present

In May 2005, the Council granted outline planning permission for the enabling development on 17 acres of land for new build housing located discreetly behind the main hospital building. This permission was subject to the applicant signing a Section 106 Agreement which obliged the owner to pay a significant sum into a restoration fund, controlled by the Council. During the planning process, the ownership of the building was transferred to an offshore company. In September 2006 the Agreement was signed and underwritten by a bond with a British bank. A deposit was to be paid initially and the balance was to be paid before the end of September 2009.

At the end of September 2009, the balance of the restoration fund was not paid and the planning permission lapsed. DCC entered into discussions with the bank about the bond.

In April 2008 listed building consent was granted for demolition of approximately 60% of the main building in accordance with the outline planning approval. Demolition was started at the end of October but was stopped shortly after because the owner had failed to get a licence to disturb the habitat of a protected species of bats.

In November 2008 the main hall was destroyed by fire. It was believed to be arson. The hall lies within that part of the main building which is earmarked for demolition.

“Enabling development” is the mechanism for moving a project forward, where development is allowed to go ahead that would not normally be permissible under planning policy but is granted for the specific purpose of creating capital value that can be used to fund the restoration of listed building. However, during 2007 and 2008 the housing market declined putting pressure on the viability of the scheme, despite a significant element of enabling development granted as part of the planning permission. As a result the scheme was never implemented and the Council now finds itself back at square one with a deteriorating building, no developer and the need to find a solution for the building, whilst mitigating the risks involved in taking on such a significant project.

• The significant effect the closure of the hospital had on the local economy, coupled with the large and complex nature of the site and its lack of attractiveness to developers because of various profit inhibiting factors, including the rural location, all pointed towards the adoption of a multi-agency approach to the disposal to give it the best chance of success. Close and productive co-operation between the planning and health authorities at the working level is not enough for this to happen. Political commitment at a local and regional level, including from the regional economic development agency, is a necessity.
• Prior to any disposal, consult early with local partners including the local planning authority and local community to address any concerns upfront so a clear development brief can be developed and a coherent approach to planning consent agreed. The plans should be made public as early as possible so prospective purchasers have a good understanding of what they would buy.
• Ensure that sufficient due diligence checks are carried out on prospective owners to assess their capacity and financial viability. In this case, the Health Authority felt they had undertaken all reasonable financial checks on the initial purchaser, within the context of the very limited interest in the site and the fact he had a successful track record in large site re-developments.
• Secure sufficient financial guarantees from the initial purchaser, as a percentage of the purchase price, if the development did not proceed as agreed after a reasonable period of time (e.g. one year).
• Although there might be a stronger market preference for a single use scheme, the site should have been packaged to support mixed use development and tenure. Mixed-uses usually work best for the redevelopment of historic buildings and are generally, inherently more sustainable. It is necessary however to manage this process carefully to ensure that repair of the listed building is achieved successfully.
• Ensure that effective controls are put in place to safeguard the condition of the listed building during the planning process.