Purpose

Approve LBN entering into a conditional development
agreement with Hollybrook to purchase
Hollybrook and Morgan Wealth land and
fund development of up to 179 homes split 64% market / 36%
affordable (Social Rent).

 

Approve the marketing of the Rex Theatre building on
a leasehold basis, seeking leisure/entertainment
operators.
 

Decision

Decision
 
For the reasons set out in the
report and its appendices Cabinet RESOLVED to Agree:
 
i)    To approve entering into a
conditional Development Agreement with Hollybrook (via its Special
Purpose Vehicle, Bridge Road Quarter Limited) to purchase
Hollybrook and Morgan Wealth land and fund development of up to 179
homes, as set out in the Heads of Terms at exempt Appendix
4.
 
ii)   To approve a budget
of up to £88.2 Million as a total development budget to
deliver 179 homes per the costs set out in exempt Appendix
6.
 
iii)   To delegate to the
Corporate Director of Resources in consultation with the Cabinet
Member for Finance and Corporate Resources and the Corporate
Director of Inclusive Economy, Housing and Culture, to approve
variance to these funding figures of up to 5%. Any variation above
5% overall will be brought back to Cabinet.
 
iv)   Approve the award and
entering into a Development Management Services Agreement with
Populo Design & Build Limited for a contract sum of up to
£1.1m to cover all activities required to progress the
Development to completion, this fee is included within the
£88.2m total development budget costs in (ii)
above.
 
v)   To approve payment of
£5.6m to Populo Design and Build Ltd to cover working capital
costs incurred in maintaining and operating the sites for meanwhile
uses, promoting the development of the sites including
sub-consultants’ costs and rolled up interest costs
associated, this cost is included within the £88.2m total
development budget costs in (ii) above.
 
vi)   To delegate to the
Corporate Director of Inclusive Economy, Housing and Culture in
consultation with the Portfolio Holder for Inclusive Economy,
Housing and Culture to approve the final terms of the Development
Management Services Agreement.
 
vii)   To market the leasehold interest
in the Rex Theatre building and delegate to the Director of
Property in consultation with the Corporate Director of Inclusive
Economy, Housing and Culture in consultation with the Portfolio
Holder for Inclusive Economy, Housing and Culture to finalise and
enter into relevant agreements as a result of the marketed
asset.
 
viii)   To further agree in relation to the
appropriation of the Council owned land for planning
purposes:
 
ix)   To acknowledge that the
purpose of the appropriation is to enable the use of Section
203-206 of the Housing and Planning Act 2016 to override all
third-party rights and interests that are a constraint to the
development of the Land subject to the conditions in section 203
being satisfied.
 
x)   That the land outlined in
red on the Plans at Appendix 1 (“Red Land”) is no
longer required for the purposes for which it is currently held
(vacant open land).
 
xi)   To agree and delegate
power to the Corporate Director of Resources in consultation with
the Lead Member for Finance and Corporate Services pursuant to
paragraph 5 of the report to:
 
a)  Implement the
appropriation of the Red Land for planning purposes under s122(1)
of the Local Government Act 1972;
 
b)  Deal with all
matters related or incidental to the appropriation of the Red
Land.
 
xii)   In relation to the land to be
acquired by the Council at a future date outlined green on the
Plans in Appendix 1 (“Green Land”) to delegate power to
the Corporate Director of Resources in consultation with the Lead
Member for Finance and Corporate Services and the Corporate
Director of Inclusive Economy, Housing and Culture to (following
acquisition):
 
xiii)   To conclude that the Blue Land is no
longer required for the purposes for which it is currently
held;
 
xiv)   To implement the appropriation of the
Blue Land for planning purposes under s122(1) of the Local
Government Act 1972;
 
xv)   To deal with all matters related
or incidental to the appropriation of the Blue Land.
 
xvi)   That subject to (vii) and/or (viii)
above, delegate authority to the Corporate Director of Resources
and Corporate Director of Inclusive Economy, Housing and Culture in
consultation with the Lead Member for Finance and Corporate
Services to determine when the Red Land and/or Blue Land will no
longer be required for planning purposes, and to decide whether to
approve the appropriation of the Land for housing purposes under
section 19(2) of the Housing Act 1985 and section 122(1) of the
Local Government Act 1972 including dealing with all matters
related or incidental to that appropriation.
 
Alternatives Considered:
 
Island Site

a) 
Do Nothing
or Delay – The development of this site has been frustrated
for Wealth no longer being willing or able to engage in disposal.
Furthermore, costs have been accrued on the site and a continued
delay would see this figure rise due to interest rates negatively
impacting on the overall viability and proportion of affordable
homes that may be delivered.

b) 
As set out
in exempt Appendix 7, the Council could also hold the private units
and discharge homeless duties through a lease arrangement with a
third party housing provider, however this is shown to deliver a
negative NPV and so is considered unviable.

c) 
Also as set
out exempt Appendix 7, the Council could commit to selling the
private units to Populo now, however this would need to be at a
significant discount while LBN borrowing is at 5.50%. It would also
deliver a negative NPV and so is considered unviable.

d) 
The Council
could seek to develop its small land parcels to the rear; however,
this would not be acceptable in planning terms.

e) 
Populo could
seek to purchase Morgan Wealth land directly however given
the

site history, this would undermine negotiations to
date and likely to impact the successful delivery of the site to
its full potential with all parties.
Appropriation
f) 
To proceed with the development without
appropriation to Planning presents a
greater risk
that a claimant could come forward and try to exercise their
rights
by way of
legal challenge which might frustrate the building or subsequent
use
of the new
housing creating risks around delay and escalating
costs.
Rex
Theatre

g) 
Do nothing
to the Rex theatre –If left, the condition will further
deteriorate, meaning the cost to return the building to a lettable
state will increase. There are also the ongoing risks of squatting,
outbreak of fire and significant water damage should the building
remain unoccupied. Do nothing is therefore not considered an
option.

h) 
Disposal
– the Council could seek a straight freehold disposal that
removes any maintenance liability for the building. However, this
would see the Council lose control over the asset and the long-term
revenue which is considered beneficial. Once formal bids are
received, Populo will judge all offers on their merits and bring a
considered recommendation to the Director of Property and the Mayor
for their review in line with the recommendations in this
report.