Cabinet Member for Assets and Investments
This report is coming forward for consideration subject to Cabinet approval on 13 December 2018
Minutes:
94a.1 Councillor Lawrenson introduced the report and MOVED the recommendations in the report which Councillor Simon Barrett seconded.
94a.2 In his presentation Councillor Lawrenson informed Council that the plans for the future of the former offices at Hadleigh and the former care home at Angel Court included 78 new homes of which 27% were affordable giving a total of 21 affordable homes. The Council had been determined to leave the former offices empty for as little time as possible and the planning application was one of the next steps in bringing the site back into use.
94a.3 Commenting further Councillor Lawrenson said that following the Cabinet decisions to set up a joint venture company with the Norse Group a company wholly owned by Norfolk County Council, to assist the Council in the delivery of high quality energy efficient housing within the district, the report was seeking total funding of £3.77m in the form of a loan to deliver the scheme as set out in the financial section of the report. The special purpose vehicle would be known as Babergh Growth.
94a.3 Councillor Arthey queried why the figures in the report did not include the Angel Court development?
94a.4 in response Councillor Lawrenson confirmed that the figures were not included in the report and would be included in the HRA funding.
94a.5 Councillor Arthey sought further clarification on what the figures did include?
94a.6 In response The Strategic Director for Resources confirmed that the figure included all of the planning stages from 1 to 3 the RIBA stage, however the figure did not include the cost of security for the site. Going forward once Babergh Growth had been set up, the security costs would be within that budget.
94a.7 Councillor Kemp stated that he found the figures confusing and asked where the acquisition and conversion costs were reflected?
94a.8 In response the Strategic Director for Resources confirmed that the figure for the value of the site was based on external validation and had concluded that there was a notional value of zero for the site, with a projected return profit out of the investment of £800k.
94a.9 Councillor Arthey asked what the impact in terms of the viability of the redevelopment would be if the headquarters site had to provide affordable housing rather than the existing hybrid arrangement.
94a.10 In response Councillor Simon Barrett stated that the situation would be the same if you were in the private sector, if you had a site that you were unable to put affordable housing on it you would normally pay a commuted sum and that was what effectively Angel Court was becoming, to enable the delivery of affordable housing.
94a.11 Councillor Busby raised concerns about the viability of Norse and asked if a full due diligence process had been undertaken?
94a.12 The Strategic Director for Resources confirmed that full due diligence
of the company had been undertaken, which had confirmed that the Company was very stable and growing.
94a.13 Councillor McCraw sought clarification on how the Joint Venture Company would work on a structural basis with the Council, whether the £3.77m would be the total exposure to the Council and what options were being considered for the private rental income aspect?
94a.14 In response Councillor Lawrenson stated that the £3.77m was the cashflow requirement and not the extent of the liability. The Strategic Director for Resources added that in terms of the relationship with Norse, the joint venture company would be set up using Suffolk Holdings Ltd. The governance arrangements would be very similar to CIFCO and as a deadlock company no voting would take place. The report also highlighted the objectives, The Strategic Director emphasised the importance of those objectives and that they were set at the beginning to ensure that the Council gave a clear indication of what they wanted to achieve. With regards to the options for the tenure, there was an obvious assumption that it was a market led scheme for sale. The Council was highly likely to retain the freehold to a number of apartments and there might be leaseholds to the owners or tenants for up to 125 years so there was lots of potential and there would definitely be different tenures on the site based on the best options for the site.
94a.15 Councillor McCraw raised the issue of the profitability of the site and asked if the original consultation costs had been taken into account?
94a.16 In response the Chief Executive stated that the sum of between £500k and £600K had been a notional sum which he believed was actually a total that included Mid Suffolk as well. However, he would need to check and confirm this, but he certainly would have expected that some of the costs that had been discussed would come out of this.
94a.17 Councillor McCraw also asked who would be responsible for agreeing the freehold of the apartments.
94a.18 In response the Chief Executive confirmed that it would be the Board of the new Company that would make those type of decisions based on the finances placed before them and the Articles of the Company which had not been created yet.
It was Resolved: -
That capital funding of £3.77m as set out in section 6 of the report be approved, to enable funding to be provided to Babergh Growth, in the form of a loan to enable the development of the former HQ site within Hadleigh.
At the request of Councillor Kemp his vote against the recommendations was recorded.