Purpose

The report will set out recommended options
for the financing of Populo’s
ongoing delivery of its home building programme during 2024.
 
The report will ensure that Populo has sufficient resources to progress new
developments into planning and continue to increase the number of
homes it has under management, supporting future sustainability

Decision

Decision:
 
For the reasons set
out in the report and its appendices Cabinet RESOLVED to Agree:
 
i) 
To note the emerging position on the Local Plan where the Council
(subject to member approval on the 11th December 2023) will be
specifying (i) 50 percent Social Housing should be built on all
Council sites; and (ii) no fast track process/exceptions should
feature in the Regulation 19 Draft Local Plan when it published in
2024 for consultation;

 

ii) 
To approve the Council entering into a Development Management
Services Agreement with Populo Design & Build Limited for a
contract sum of up to £10m to
cover all activities required to progress the Cyprus project
to construction start on site including completion of Enabling
Works to remediate contamination and prepare the site for
construction.

 

iii) 
To approve a total budget of up to £10m which will cover all
expenditure incurred by Populo to date, forecast Populo costs to
get to start on site and Enabling Works expenditure of £2.4m
utilising grant funding received from the Brownfield Land
Remediation Fund (BLRF) specifically for remediation works on the
Cyprus site.
 

 

iv) 
To note that once the BLRF is drawn down, LBN will be obliged to
release the land for housing development by March 2027.

 

v) 
To delegate to the Corporate Director of Inclusive Economy and
Housing in consultation with the Portfolio Holder for Inclusive
Economy and Housing Delivery to approve the final terms of the
Development Management Services Agreement.
 

vi) 
To approve the Council entering into a Development Management
Services Agreement with Populo Design & Build for a contract
sum of up to £8.1m to cover all activities required to
progress the Pier Road project to construction start on site.
 

 

vii) 
To approve a budget of up to £8.1m which will cover all
expenditure incurred by Populo to date and forecast Populo costs to
get to start on site.
 

viii) 
To delegate to the Corporate Director of Inclusive Economy and
Housing in consultation with the Portfolio
Holder for Inclusive Economy and Housing to approve the final terms
of the Development Management Services Agreement.
 
 
 
Alternatives
Considered
 

a) 
Pause both developments – the Council could agree with Populo
to pause both developments.  As stated
at para 4.8 and 4.15 the hold cost to Populo at current interest
rates is £0.74m per annum.  This
rolled up interest would further constrain viability as interest
costs would continue to be incurred on the current
spend. 

b) 
Both of these approaches would mitigate risk of delivery but no
affordable homes would be built on these sites in the near
future.  It is also necessary to
progress enabling works at Cyprus to avoid needing to return
£2.4m of BLRF grant already received.

c) 
Fund Populo directly to progress developments – rather than
move to a Development Management Services approach the Council
could increase Populo’s working capital facility to allow it
to progress the schemes directly. 
Although this would provide Populo with the funding to progress, it
would increase Populo borrowing costs and the projects would still
not pass Populo’s required LBN and Populo Board hurdles
rates.