Purpose

· 
To Approve a Total Development Budget for Pier Road and Cyprus
Gardens Developments.
· 
To Approve an increase in Populo Design
& Builds DMS contract to and approve Populo entering into contract with Hill
Partnerships providing that contract includes a Notice to Proceed
mechanism that limits expenditure to the budget approved by Cabinet
in December 2023. 
· 
To Approve the issue of a Notice to Proceed between Hill
Partnerships and Populo via delegation
to the Corporate Director of Resources in consultation with the
Lead Member for Finance. 

Decision

Decision
 
For the reasons set
out in the report and its appendices Cabinet RESOLVED to Agree
to:
 

i) 
Approve an increase in the development budgets to cover the full
construction budget as per Appendix 3:

 

· 
Pier Road from £8.1m to £155.1m. This reflects the
inclusion of £147m in the budget to deliver the construction
phase of the project, including expenditure of £1.7m of
Brownfield Land Remediation Fund (BLRF) grant funding per Section
5, noting that once the grant funding is drawn down, LBN will be
obliged to release the land for housing development by March
2028.

· 
Cyprus from £10m to £107.2m, to reflect the inclusion
of a £97.2m budget to deliver the construction phase of the
project.

 

ii) 
Approve Populo entering into contracts that includes a Notice to
Proceed mechanism with Hill Partnerships for the Contract Sum
of:

· 
£110.3m for the Pier Rd.

· 
 £75.4m for Cyprus.

 

iii) 
Delegate to the Corporate Director of Inclusive Economy in
consultation with the Corporate Director of Resources to approve
the final form of contracts that Populo will enter into with Hill
Partnerships in respect of Pier Road and Cyprus Developments.

 

iv) 
Approve an increase in the authorised expenditure limit for the
Pier Rd development from £8.1m to £9.3m (an increase of
£1.2m and is within the proposed project budget) as per
Appendix 3 to cover early enabling works.

 

v) 
Approve the variations to the Populo Design & Build Development
Management Services (DMS) contracts to include Construction Stage
Services and an increased contract value which is within the
increased budget (being the Total 5 Development Budget including
Populo’s DMS fees less LBN capitalised interest as per
Appendix 3):

· 
Pier Road of £142.5m.

· 
Cyprus of £ 99.1m.

 

vi) 
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 varied terms of both Pier Rd
and Cyprus Development Management Services Agreements.

 

vii) 
Delegate to the Corporate Director of Inclusive Economy and Housing
in consultation with the Portfolio Holder for Inclusive Economy and
Housing Delivery to issue the Notice to Proceed on both Pier Rd and
Cyprus contracts to Populo.
 
Alternatives
Considered
 

a) 
It could be possible to convert to a 2-stage Design & Build
process. The Contracts agreed with Hill would become the
‘Draft Contract’ and a Pre-Construction Services
Agreement completed for Hill to progress the works necessary to get
through GW2. The costs payable and activity undertaken will be the
same as per the proposed contract route, however the cost certainty
is lost, and the Council would be exposed to cost increases during
the second stage. Therefore, the contract with NTP mechanism is
preferred.

b) 
Pause both developments – the Council could pause both
developments. The money spent to date (set out in the Financial
Implications) would continue to roll up interest and no new homes
would be built to help address the housing crises.

c) 
Exit both developments via a sale to the market prior to
construction – The estimated valuations for each site will
not be sufficient to offset the costs estimated to be spent pre-NTP
and will therefore result in a loss as per Appendix 4. This would
also mean a loss of control of the sites and their long-term
income. It would also delay delivery of the new housing. The
external grants already referenced may be clawed back by the
respective grant givers.