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Decision details

ESSEX CLOSE SITE: FUNDING DRAWDOWN AND APPROPRIATION OF LAND

Decision Maker: Cabinet

Decision status: For Determination

Is Key decision?: Yes

Is subject to call in?: No

Purpose:

Cabinet is recommended to:

 

Funding Drawdown

·         Agree that the Council make a loan available to Sixty Bricks Ltd of a specified amount (appendix B) on the basis of the draft loan agreement (Appendix E) and the business case  (appendix B) for the South Grove – Site C project.

·         Agree that the Council makes an equity investment in Sixty Bricks Ltd of a specified amount, on the basis of the draft agreement, appendix E.

·         Agree that the Council enters into a development agreement with Sixty Bricks Ltd on the basis of the draft agreement, appendix E.

·         Delegate to the Director of Property and Asset Management in consultation with the Corporate Director of Housing to buy back any commercial or non-commercial leaseholder interests to enable the progression of the scheme

·         Delegate to the Assistant Director of Housing Strategy and Development in consultation with the Portfolio Lead Member for Economic Growth and High Streets and the Head of Supply Chain (Place) the authority to novate existing contracts in relation to this development from the Council to Sixty Bricks Ltd.

 

Appropriation of Land

·         To approve that the Council appropriates to planning purposes under section 122 of the Local Government Act 1972 the land identified as edged red on the attached plan (Appendix A).

·         Cabinet notes the strategy for negotiating compensation payments for third parties whose rights may be affected by the proposed development.

·         Approve the use of statutory powers under Section 203 of the Housing and Planning Act 2016 to override easements and other third-party rights to facilitate development subject to the implementation of the negotiating strategy

The above decision is recommended to ensure that the proposed housing development at Essex Close can proceed.

 

Decision:

Cabinet:

 

(1)          agreed to a new capital budget of £3.641m in the Housing Revenue Account (HRA) capital programme funded by GLA grant, sales of shared ownership property, borrowing and other housing capital resources to fund the affordable housing to be built for the HRA;

(2)          agreed to new capital budgets in the general fund of £2.092m and £0.896m to fund the loans and equity investment respectively in Sixty Bricks Ltd; the loans to be funded by borrowing and the equity investment to be funded from general fund reserves and/or capital receipts;

(3)          agreed that the Council make a loan available to Sixty Bricks Ltd of up to £2.092m on the basis of a loan agreement (as summarised in Appendix G of the report), and the financial appraisal is at Appendix F of the report, for Essex Close project;

 

(4)          agreed that the Council makes an equity investment in Sixty Bricks Ltd of up to £0.896m;

 

(5)          agreed that the Council enters into a development agreement with Sixty Bricks Ltd. Terms and conditions of this agreement to be agreed between LBWF and Sixty Bricks legal representatives;

 

(6)          agreed that the Council appropriates ‘the Land’ edged red on the plan at Appendix A of the report, for planning purposes under Section 122 of the Local Government Act 1972 subject to obtaining any necessary ministerial consents;

 

(7)          agreed that the Council agrees to use its powers under Section 203 of the Housing and Planning Act 2016 to override third party rights over the Land edged red on the plan, appendix A of the report;

 

(8)          approved the transfer of the land shown as the hatched area in Appendix A of the report, valued at £0, from the Housing Revenue Account to the General Fund following the appropriation authorised at paragraph 2.5 of the report; 

 

(9)          noted the strategy for negotiating compensation payments for third parties whose rights to light may be affected by the proposed development;

 

(10)       authorised the Director of Property and Asset Management, the Commercial Director of Housing Delivery and the Director of Governance and Law to deal with all necessary legal arrangements to effect the appropriation as set out in the report including where deemed necessary to seek consent from the Secretary of State relating to the proposed appropriation; and

 

 

(11)       noted that all of the above decisions are subject to planning permission being granted at November 2019 Planning Committee.

 

OPTIONS & ALTERNATIVES CONSIDERED

 

In regards to the funding recommendations:

If the Council were not to develop the Essex Close site, it would be an under-utilisation of an asset. This option is not recommended, as the Council would lose the opportunity to provide new homes and significantly improve the Essex Close estate.

The Council could dispose of the site on the open market. The Councilwould expect to receive a capital receipt but would have no controlover future development of the site, except through planning powersand could not guarantee the delivery of 50% affordable housing.

 

Another option is development of the site directly by the Council underhousing powers funded by HRA borrowing.

 

There are benefits to the Council in transacting with Sixty Bricks Ltd todeliver this opportunity. These benefits are set out in paragraph 7 and it is therefore considered to be the best option for the Council topursue.

 

In regards to the appropriation recommendations:

The alternatives to appropriation the land and using Section 203 powers to override third party rights would be to proceed with the risk of injunction, which could halt or pose significant financial burdens to the development or not to proceed at all with the proposed development. Not proceeding with development proposals will be contrary to the Cabinet decision of January 2019.

 

Report author: Jennifer Daothong

Publication date: 05/09/2019

Date of decision: 05/09/2019

Decided at meeting: 05/09/2019 - Cabinet

Accompanying Documents: