Agenda item

(Cabinet Members with Special Responsibility Councillors Archer and Kerr)

Report of Corporate Director (Regeneration) to follow.

(Cabinet Members with Special Responsibility Councillors Archer and Kerr)

The Corporate Director (Regeneration) submitted a report to provide members with details of the current position following the selected developer no longer being able to deliver the Chatsworth Gardens Housing Exemplar Project and in particular the contingency development as contracted in the funding agreement with the Homes and Communities Agency (HCA), together with associated proposals.

The options, options analysis, including risk assessment and officer preferred option and comments, were set out in the report as follows:

Option 1 – Progress Refurbishment Scheme

Firm costs are required to establish the viability of this option, or the extent to which it could be implemented. Previously as part of the Green Book Appraisal this option was discounted as being not financially viable. It may only be possible to undertake a selective refurbishment of target blocks with some properties sold off with restrictive covenants to provide funding to invest in the selective acquisition of outstanding properties in target blocks. It may also include some demolition to create either new public open space or private external space. Demolition may also be undertaken to enable a new development to come forward on part of the site from small developers. In summary the refurbishment option will review all possibilities to obtain the best possible scheme.

For the properties that can be refurbished this option would include the removal of rear outriggers and for the four storey properties the removal of a storey to make the houses of a size more suitable for single family occupation. To enable Level 4 Code for Sustainable Homes to be obtained the refurbished properties would require external wall insulation as well as party wall, floor and roof insulation internally. The properties would also require the extensive use of high efficiency heating and plumbing.

Renewable energy technologies such as solar hot water and photovoltaic panels would also be needed. Demolition may also be undertaken to enable a new development to come forward on part of the site from small developers. Any proposal made under this scheme would be subject to HCA funding and approval.

Option 2 – Disposal of properties already acquired for the scheme

The 2005 Funding Agreement does make provision that, if no alternative scheme is considered acceptable to the HCA and the Council, then all of the properties should be placed back on the market and sold in order to recoup public investment.  It should be noted that this option is not favoured by HCA who are keen to see the Council put forward alternative options.

            Non-statutory guidance issued under the Crichel Down Rules will need to be considered in the event of this option.

Officers have updated the previous options analysis undertaken for the Green Book appraisal and discounted a new build option due to the PFP outcome. If no viable option can be found or agreed Option 2 provides a mechanism to dispose of the acquired properties and close the project.  As noted this latter case is a last resort and not currently favoured.

Further work is required to develop a detailed cost model to be able to evaluate the feasibility of Option 1, and this would need to be considered as a growth item. Previously a full site refurbishment has been discounted by the private sector on the grounds of high cost. However, the council could itself lead site acquisition, undertake phased refurbishment and remodelling. By using council internal staff resources as much as possible it is clear costs could be reduced significantly. The public sector also has no requirement for profit and exemption from VAT. 

Tendered costs for the remodelling of large villa terraced properties on Bold Street are due to be received on 20 January 2010. This will provide some up to date cost information for estimates and enable officers to better understand the potential extent of a refurbishment scheme. 

Officers will also need to develop a specification for the refurbishment of the properties that will meet Code for Sustainable Homes Level 4 and the other quality and price standards set out by the HCA. However, it is more than likely funds will still not be sufficient to pursue a full refurbishment and this should be regarded as ‘aspirational’ for the moment.  

The preferred option is Option 1 with officers being given a mandate to explore the full extent of what can be achieved with the potential funding available and to seek agreement with HCA.

In addition to the tender price data received for Bold Street it will be necessary to appoint a Quantity Surveyor to develop robust cost estimates. Architectural services will also be required to assist in layouts, design and providing the most cost effective solutions to turning what are extremely inefficient homes into some of the most environmentally efficient homes in the district.

Any refurbishment scheme would need to meet the Code for Sustainable Homes Level 4 and the other quality and price standards for an HCA housing scheme.  A considerable advantage of refurbishing the existing properties is that it would act as an exemplar for what can be achieved with these large properties in the West End.

Contingency development costs will be incurred. Up to £60k should be allowed for investigations which cannot be undertaken ‘in house’ by the council e.g. architects and quantity surveyors, although officers will try wherever possible to use ‘in house staff’. HCA could agree that these costs be funded from capital receipts but the mechanism has still to be agreed and in line with accounting practice, this would be dependent upon it being reasonably certain that a capital scheme would progress.   As such, it would be prudent (and advised by the s151 Officer) to allow for this in the council’s revenue budget proposals at this stage.

The council is incurring property ‘holding’ costs which are forecast to be met for this year, but future costs are not covered by any current funding agreement as the current funding agreement has been drawn down in totality. HCA will not fund these directly.  However, HCA have agreed that capital receipt/disposal of “non-project properties” could be re-utilised towards holding costs – though again this may present accounting difficulties. Two non-project properties are going to auction in early February 2010 and if sold would more than cover the contingency development costs – though this links with the issues raised in paragraph 5.4 of the report.

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

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

Members then voted:-

Resolved:

(8 Members (Councillors Archer, Ashworth, Barry, Blamire, Bryning, Fletcher, Kerr and Langhorn) voted in favour and 2 Members (Councillors Mace and Thomas) voted against.)

(1)       That Cabinet notes the position of the project following Places for Peoples’ retraction of their bid and the legal position of the Council as stipulated in the contract.

(2)               That Cabinet supports Option 1, as set out in the report, for officers to develop and appraise a contingency proposal that will provide members with a detailed cost/risk appraisal of a selected refurbishment scheme, and that the £60K funding needed be considered as a revenue growth bid, for referral on to Council.

Officers responsible for effecting the decision:

Corporate Director (Regeneration)

Head of Financial Services

Reasons for making the decision:

The decision is in line with the existing contract between the Council and HCA and will allow officers to develop and appraise a contingency proposal that will provide members with a detailed cost/risk appraisal of a selected refurbishment scheme. It will enable members to make an informed decision on whether to progress this important regeneration project with HCA.