Purpose

To consider the report of the Cabinet Member
for Economic Development outlining the next steps required to
progress the development of Chapel Riverside.

Decision

(i) 
To approve the novation of the Chapel Riverside Development
Agreement to a new developer.
(ii) 
To delegate authority to the Chief Executive following consultation
with the Leader, Executive Director Corporate Services, Executive
Director for Growth and Prosperity and Director of Legal &
Governance to progress with the novation of the agreement to the
preferred party (Developer A) as set out in Appendix 1.

Reasons for the decision

The Chapel Riverside development has stopped
as the developer, Inland Homes has entered administration. Various
elements of the scheme are incomplete, including the storm water
‘Caisson’ tank and there are a number of planning
breaches due to delivery ceasing. As the freehold landowner, the
Council aims to support the re-commencement of the Chapel Riverside
development as soon as possible in line with its vision for the
City's growth and to rectify the planning breaches. There is an
existing development agreement in Agenda Item 12 place which
facilitates the delivery of the remaining phases of the scheme and
therefore a new development agreement is not required to complete
the development as the Council originally intended.
 
Following a marketing process conducted by the
Administrators, other developers have expressed interest in
completing the unfinished components of the scheme and advancing
the remaining phases of the project in line with the development
agreement. Allowing a novation of the agreement would enable a new
developer to take forward the development according to the terms
outlined in the existing agreement between the Council and Inland
Homes. Further details of the marketing process undertaken by
Inland and the Administrators to identify a suitable new developer
is set out at Appendix 1 – Marketing Report and Next
Steps.
 
Inland Homes through their administrators have
the ability to novate the agreement, which represents the quickest
path toward securing a new developer to undertake the project. This
approach is also beneficial as it ensures a comprehensive exchange
of information between all involved parties. The process requires
the Administrators to source and appoint a new contractor in
accordance with the conditions set out in Regulation 72(1)(d)(ii)
of the Public Contract Regulations 2025. The Council must be
satisfied that they have undertaken the relevant process to comply
with the Regulations but must not play a part in the selection of
the new contractor in its own right. Legal and procurement advice
has been sought from the outset, and SCC officers are satisfied
that this option is compliant with procurement regulations.
 

Alternative options considered

· Do Nothing. Choosing to take no action
means the site will remain unfinished. Since Inland Homes is in
administration, they can’t complete the development. Without
support from the Council to transfer the agreement, the site could
stay empty for an indefinite period. This would mean the issues of
the site, relating to odours from the open storm tanks will persist
as the new tanks will not be completed. Other planning conditions
will also remain uncompleted.
 
· Terminate the Development Agreement.
Terminating the agreement with Inland Homes is an option given
insolvency is statutory grounds for termination. The Council would
be required to reimburse reasonable costs to the developer (up to
100%). The costs the developer has incurred in the site could be
substantial and likely to be more than any losses the Council could
attempt to claim as a result of the insolvency.
 
· This option would require the Council
reconsidering how to finish the project which could include the
Council restarting the process of finding a new developer through a
marketing/ procurement process. The use of an accelerated process
under Reg 32 of the PCRs was reviewed in relation to this option to
speed up this route, however advice on this matter established that
there would likely not be a case for the Council to use an
accelerated route and therefore a full procurement process to
procure a new development agreement would be required. The Council
would incur additional costs in setting up a new development
agreement, would be responsible for managing a vacant construction
site and would incur further delays before any work could begin on
the site to complete the scheme. It is not considered necessary to
terminate the agreement and then re-procure a new development
agreement to complete the development, therefore this option has
been discounted at present.