Content

RESOLVED:
 
1. 
That the
CIL Revenue scheme summarised below and set out in section 11 be
approved:
 

Project
Description

 

2023/24
£'000

Carnival 2024

123

Total CIL Revenue for
Approval

123

 
2. 
That the
s106 Capital scheme summarised below and set out in section 11 be
approved:
 

S106

2023/24
£'000

2024/25
£'000

2025/26
£'000

Total

Capital

167

167

167

500

Total S106 Capital for
Approval

167

167

167

500

 
3. 
That the
re-profiling of the budgets as set out in Appendix 1 and summarised
below be approved:
 

S106

2023/24
£'000

Capital

150

Total Capital S106 for
Noting

150

 
4. 
That the
re-profiling of the budgets as set out in Appendix 1 and summarised
below be approved:
 

Current
Directorate

Re-Profiling
23/24

Re-Profiling
24/25

Re-Profiling
25/26

 

£'000

£'000

£'000

Non Housing

(30,495)

34,657

38

Housing

(10,862)

10,862

0

Total

(41,356)

45,518

38

 
5. 
That the
capital adjustments of the budgets as set out in Appendix 1 and
summarised below be approved:
 

Current
Directorate

Capital
Adjustments

 

£'000

Non Housing

(284)

Housing

(0)

Total

(284)

 
6. 
That the
Quarter 2 Capital Monitoring in section 13 be noted.

 
7. 
To note
the Council has secured additional grant funding (DELUCH LAHF 2)
which will enable the budget increase of the Council’s
Temporary Accommodation investment by £1.55m to
£5.75m.

 
8. 
To
authorise the sale of the freehold of 234-238 Mare Street London E8
1HE, (as described for information purposes only in Appendix
2).

 
9. 
To
delegate authority to the Interim Group Director of Finance to
agree all commercial terms of the transaction.

 
10.To delegate authority to the Acting Director of
Legal, Democratic and Electoral Services to settle, agree and enter
into all documentation necessary for this
transaction.
 
REASONS FOR DECISION
 
The decisions required are necessary in order that the
schemes within the Council’s approved Capital programme can
be delivered and to approve the property proposals as set out in
this report.
 
In most cases, resources have already been allocated to the
schemes as part of the budget setting exercise but spending
approval is required in order for the scheme to proceed. Where,
however, resources have not previously been allocated, resource
approval is requested in this report.
 
To facilitate financial management and control of the
Council's finances.
 
Proposed Disposal of 234-238 Mare Street, London,
E8 1HE: The
property is in need of significant investment and to facilitate
that the Council obtained a planning permission for the partial
extension, partial demolition and partial refurbishment of the
premises.
 
It is not financially feasible for the Council to undertake
direct development, and such an approach would require resources
that could be applied more productively to other schemes to be
diverted to this and carries with it significant risks for little
gain.
 
Similarly procuring a developer would be problematic for a
development of this size and very likely a futile course of action,
without lowering the risk profile to the Council
significantly.
 
Due to the risk of squatting the property is costing the
Council approximately £160,000 pa on security charges and c.
£7,000 on utility bills.
 
With no realistic prospect of the Council developing the
premises and holding costs of approximately £167,000 pa,
disposal of the property will achieve a capital receipt and stop a
considerable loss on the revenue budget.
 
DETAILS OF ALTERNATIVE OPTIONS CONSIDERED AND
REJECTED
 
Proposed Disposal of 234-238 Mare Street, London,
E8 1HE: The
Council has considered the possibility of direct development of
this site as a housing regeneration scheme. Officers have
considered it as a policy-compliant 50% affordable housing option
and a 100% Hackney Living Rent (intermediate rent)
option.
 
The conclusion of this exercise was that at nine dwellings
the site is at the smaller end of the Council’s programme and
would consume disproportionate staff resources for a limited
outcome.
 
The financial return using standard Housing Regeneration
assumptions indicates a loss for all options, and generally a
weaker value for money indication than the Regeneration
portfolio.
 
The Council would be exposed to a significant construction
and development risk at a time when there is great uncertainty in
the market.
 
There is a substantial reputational risk linked largely to
the construction risk and the fall out should something go wrong,
particularly in the context of the adjacent listed terrace. The
Council would also be responsible for the full after care of all
the residential properties.
 
The Council has also considered the possibility of
procuring a developer.
 
This would follow a model similar to that adopted for
Dalston Lane Terrace (DLT) whereby the
chosen developer would be obliged to build out the scheme as
consented and take the risk of construction onto themselves. Their
reward would be to sell the residential units, whilst the Council
could either take money or a mixture of the money and the
commercial space in payment. The Council taking the letting risk of
the commercial space on would make the site much more attractive to
residential developers and could even go so far as to fund the
construction of the commercial space in return for a larger share
payment at completion.
 
This approach has some resource implications in running a
procurement process with close involvement thereafter and it does
provide a fair amount of flexibility prior to the start of
procurement. Procurement may be an issue though as developers who
are both sufficiently experienced in this type of development but
small enough to be interested who are prepared to go through that
process simply may not exist. The types of developer who may be
interested will probably mean a departure from the DLT model where
close control was exercised by not giving an interest in the land
until practical completion. The size of the firm likely to come
forward would probably not have sufficient resources to be able to
finance the build without borrowing and that would mean granting an
interest in the land at the outset.
 
There is significant doubt that any firm of the size where
this development might be of interest to them and who would be
prepared to enter into the procurement process necessary and who
has recourse to sufficient funds to build this without the need for
borrowing exists. If the Council embarked on this course there is a
very real chance that no suitable firm would be forthcoming causing
more delay, holding costs and deterioration of the
building.
 
This approach does mitigate risk to some degree, with the
developer owning both the construction and the development risk,
but the reputational risk of a failed development would still sit
largely with the Council.
 
Officers also considered a structure whereby a developer
was under no obligation to build but if they did they would be
obliged to develop out the consented scheme. This has the advantage
of avoiding a formal procurement and so opening up the market but
comes with risks that without any obligation to develop, the
developer may choose not to and at the end of the contract, could
choose to walk away leaving the Council in a position where it
currently is but with a great deal more time passed.
 
The final option is maintaining the building empty, which
is in effect the absence of a decision and would leave the Council
with the security bill of approximately £160,000 pa, and the
ongoing costs of looking after a deteriorating asset, and the
opportunity cost to the Town Centre of an inactive
building.