Agenda item

St. Leonard's House

(Cabinet Member with Special Responsibility Councillor Leyshon)

 

Report of Chief Officer (Resources)

Minutes:

(Cabinet Member with Special Responsibility Councillor Leyshon)

 

Cabinet received a report from the Chief Officer (Resources) which sought a decision on a proposed variation to the draft heads of terms for the disposal of St. Leonard’s House, as previously submitted to Cabinet in the report dated 29 March 2016.

 

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

 

 

 

Option 1: Do nothing

Option 2: Approve the deed of variation

Advantages

Keeps the Council’s buy-back provision in place and unchanged.

Removes a significant unforeseen financial liability from the redevelopment that would impact on its overall financial viability.

Disadvantages

Introduces a significant unforeseen financial liability to the redevelopment that would impact on its overall financial viability.

Some potential still remains for delay between the signing of the building contract and work starting on site. By approving this deed of variation the Council waives its right to buy back the freehold interest in the event of significant delay during that period.

Risks

As outlined earlier.

 

The impact of the additional Stamp Duty Land Tax could affect the scheme to the extent that it may not be financially viable to proceed and the ongoing costs, risks and liabilities for the building would remain with the Council, at least for a time.

 

This risk is not worth taking, given the deed of variation now proposed.

As outlined earlier.

 

Although a legally binding building contract would be in place prior to freehold transfer the Council would not be party to it and therefore would have no rights to enforce it beyond its existing planning powers from that point onwards.

 

The risks involved are considered small and acceptable however, given progress being made and the commitment being demonstrated by Robertsons.

 

 

With regards to the proposed deed of variation, the officer preferred option is to approve Option 2 i.e. approve the deed of variation. Officers consider that doing so will protect the financial viability of the redevelopment proposal and that the existence of a signed legally binding copy of the building contract for the development provides enough certainty to be comfortable that the building work will proceed, especially when combined with the significant time and financial investment Robertson has already put into the scheme.  

 

The report provided a solution to a technical Stamp Duty Land Tax implication of the buy-back clause introduced during the drafting of the heads of terms that has only become apparent through process as the project has developed. The acceptance of the deed of variation would give the redevelopment of St. Leonard’s House and all the advantages associated with it the best chance of success by simply adjusting the point at which the Council waives its right to buy-back the freehold interest in the building.

 

Councillor Leyshon proposed, seconded by Councillor Hanson:-

 

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

 

Councillors then voted:-

 

Resolved unanimously:

(1)       That Officers be authorised to incorporate the proposed deed of variation, as set out in section 2 of the report, into the conditional purchase contract for Robertsons to acquire St. Leonard’s House.

Officer responsible for effecting the decision:

 

Chief Officer (Resources)

 

Reasons for making the decision:

 

Robertsons have already committed significant resources into this project, both in time and financial terms and are currently targeting a start date of April 2017 with a view to the building opening in time for the start of the University year in 2018.  With any new student accommodation development it is essential that they are open for business at the start of a new University year and therefore any significant delays at this point could potentially push the opening back to the start of the following University year in 2019 – and have implications for the scheme’s viability.

Supporting documents: