Decision details

Chatsworth Gardens, Morecambe Regeneration Project - Site Assembly

Decision Maker: Cabinet

Decision status: Recommendations approved

Is Key decision?: Yes

Is subject to call in?: No

Purpose:

To provide Cabinet with an update report regarding the delivery of the Chatsworth Gardens West End Housing Exemplar Project.

Decisions:

(Cabinet Members with Special Responsibility Councillors Archer and Kerr)

 

The Corporate Director (Regeneration) submitted a report updating members about the delivery of the Chatsworth Gardens West End Housing Exemplar Project. 

 

The options, options analysis, including risk assessment, were set out in the report as follows:

 

Option 1

The City Council has already started a process of acquisition in line with the 2005 funding agreement and the 2005 funds have now been fully drawn down by the City Council.  In accordance with the (Plan A) proposals of the original scheme, the City Council could seek to work with English Partnerships to identify how a partial demolition/refurbishment scheme could progress, and identify future funding needs to deliver such a project.  At this stage, it is impossible to assess whether such a scheme would be financially viable and whether funds could be made available.  Further work will be required to draw up a (Plan A) option and it is recommended that officers are instructed to start early negotiations with funders to seek an “acceptable” funding package for further consideration by Members.

 

 

Operated Risk

Financial Risk

Legal Risk

Benefits

·                     English Partnerships would not agree to such a proposal as their existing analysis on the refurb/demolition option (Plan A) was originally considered by the funder as not to be a cost effective option.  Bearing in mind current market conditions, it is difficult to see how this analysis would signicantly change to provide a positive cost effective outcome.

·                     A developer partner cannot be found to deliver such a scheme.  This is of particular concern as the Plan A scheme was the proposal that was originally tested with developers.

·                     The community within the West End will consider the consultation exercise for the Exemplar Scheme to have been “ignored”, and they may raise concerns that a “step change” project has not been achieved.

·                     Further design work/appraisal work will take time, and we currently have empty properties within the scheme awaiting demolition.  We are also holding all costs of staff and security as a City Council cost, which is outside budget provision.

In the absence of a full commitment from English Partnerships and on a fully committed developer partner, there would probably be an increase in the financial contribution required from the Council sufficient to rule this option out.

 

There is also the risk that while a certain level of commitment might be obtained from English Partnerships and / or a developer partner could be secured under certain conditions, the increase burden would still be greater than the Council could afford.

 

Further costs that would be incurred will be, in the absence of any additional funding, represent an additional cost to the Council which will increase steadily with time.

All options have legal implications in terms of our contractual relationship with English Partnerships and at this stage it would premature to observe what these implications would be prior to further discussions with the funding body.

 

·                     The City Council is seen to be proactive with the community and its funders to finding a positive solution in current economically challenging times.

 

Option 2

The City Council seeks to re-negotiate the current “variation to funding agreement” document with English Partnerships to reflect the funding gap, and seek possible options on how this funding gap should be addressed, for further consideration by Members.

 

 

Operated Risk

Financial Risk

Legal Risk

Benefits

·                     Insufficient funds will be made available to bridge the gap, causing a delay in delivery for any possible alternative options.

There is no specific financial risk in that if sufficient funds are not made available the scheme will simply not proceed.

 

There will be some residual costs but this is dealt with in option 4.

All options have legal implications in terms of our contractual relationship with English Partnerships and at this stage it would premature to observe what these implications would be prior to further discussions with the funding body.

·                     The City Council is seen to be proactive with the community and its funders to finding a positive solution in current economically challenging times.

 

Option 3

That the City Council seek to implement both Option 1 and Option 2, ensuring that a full report is submitted to Members, providing for:

a)            Possible options for partial demolition/refurbishment.

b)            Options for implementing a full scale demolition/re-build for the Exemplar site.

 

Operated Risk

Financial Risk

Legal Risk

Benefits

·                     See Options 1 and 2.

See options 1 & 2

All options have legal implications in terms of our contractual relationship with English Partnerships and at this stage it would premature to observe what these implications would be prior to further discussions with the funding body.

·                     The City Council is seen to be proactive with the community and its funders to finding a positive solution in current economically challenging times.

 

Option 4

The City Council no longer proceed with the Exemplar scheme, and either offer the properties acquired back to the original owners, or dispose of the assets on the open market, in their current condition.

 

Operated Risk

Financial Risk

Legal Risk

Benefits

·                     The City Council may be subject to claw-back provision with EP, for the funding already spent on the scheme.  Due to current market conditions, it is unclear whether the subsequent sale of these properties on the open market will release sufficient capital to re-pay the funding drawn-down.  It is also uncertain whether the City Council could sell these properties taking into account current market conditions.

·                     The delivery of the objectives of the West End Masterplan would be significantly affected, as the original proposals for the project was to reduce the large numbers of rented accommodation and HMOs, and replace with family sized owner occupied/part ownership accommodation.

·                     The future relationship with our funding partner, English Partnerships, could be damaged due to the Exemplar Scheme not proceeding in some form.

The maximum amount that is potentially subject to claw-back is £4.5M.  Though, if the full amount were required this would be offset by receipts from the sale of the properties currently held.

 

A more likely outcome is that EP would require that the properties be sold and the proceeds be remitted to them, though any such arrangement would be subject to negotiation. 

 

There would be some additional revenue cost to the Council incurred in the maintenance and security of properties pending sale.  These are estimated at approximately £32K per annum. 

 

The Delivery Team is subject to a separate funding agreement of £277K and there is sufficient funding to finance the team for another 9 – 12 months, if it isn’t subject to claw-back.  Provision.

All options have legal implications in terms of our contractual relationship with English Partnerships and at this stage it would premature to observe what these implications would be prior to further discussions with the funding body.

 

 

 

Officer Preferred Option

 

The preferred option is Option 3 in the report.  This will hopefully find an early solution to an issue that has been created by a recession in the markets, and will work with funders to ensure that we retain good partnership working, which is essential during the current financial crisis.

 

The recommendations of Councillors Archer and Kerr were set out in the report as follows:

 

”That Cabinet:

 

(1)               Notes (a) the need to provide quality family accommodation on a key gateway site into the West End, and (b) the current position regarding delivery of the Chatsworth Gardens Housing Scheme.

 

(2)               Requests full independent legal advice as to the status of and enforceability by or against the Council of “the 2005 funding agreement” and all the subsequent development and other related agreements, whether signed or not, and the continuing or future legal and financial implications of all those agreements.

 

(3)               Requests the Corporate Director (Regeneration) to enter into urgent discussions with English Partnerships as the funding body, to clarify the legal implications of our relationship, and to pursue the potential for options to be placed before Cabinet in place of a complete new-build which would be more economical and more environmentally sustainable than the current scheme, would not be subject to the risk of claw-back, and would deliver quality family accommodation in partnership with one or more developers over a period of time.

 

(4)               Subject to the advice received in (2) above, and the outcome of discussions in (3) above, requests a report setting out alternative options for the council, in place of a complete new-build.”

 

It was moved by Councillor Kerr and seconded by Councillor Archer:

 

“That the recommendations, as set out in the report, be approved.”

 

Members then voted as follows:-

 

Resolved unanimously:

 

That Cabinet:

 

(1)               Notes (a) the need to provide quality family accommodation on a key gateway site into the West End, and (b) the current position regarding delivery of the Chatsworth Gardens Housing Scheme.

 

(2)               Requests full independent legal advice as to the status of and enforceability by or against the Council of “the 2005 funding agreement” and all the subsequent development and other related agreements, whether signed or not, and the continuing or future legal and financial implications of all those agreements.

 

(3)               Requests the Corporate Director (Regeneration) to enter into urgent discussions with English Partnerships as the funding body, to clarify the legal implications of our relationship, and to pursue the potential for options to be placed before Cabinet in place of a complete new-build which would be more economical and more environmentally sustainable than the current scheme, would not be subject to the risk of claw-back, and would deliver quality family accommodation in partnership with one or more developers over a period of time.

 

(4)               Subject to the advice received in (2) above, and the outcome of discussions in (3) above, requests a report setting out alternative options for the council, in place of a complete new-build.

 

Officers responsible for effecting the decision:

 

Corporate Director (Regeneration)

 

Reasons for making the decision:

 

The decision will hopefully find an early solution to an issue that has been created by a recession in the markets and will work with funders to ensure that the City Council retains good partnership working, which is essential during the current financial crisis.

Publication date: 04/12/2008

Date of decision: 11/11/2008

Decided at meeting: 11/11/2008 - Cabinet

Accompanying Documents: