The Cabinet Member with the Resources Portfolio introduced the report of the Group Director of Operations (previously circulated) requesting that consideration be given to the establishment of a Joint Venture Company (JVC) to provide the infrastructure build and sale of homes at Blackwell, under the company name Blackwell Grange JV Limited and undertake the landscape restoration works to the parkland and to the sale of the land at Blackwell to the JVC.
In presenting the report the Cabinet Member with the Resources Portfolio stated that the housing development would only take place on site 403 and did not include the Parkland.
The submitted report recommended the establishment of a new JVC between this Council and Esh Homes Limited to acquire site 403 and bring forward residential development on the site; stated that an application for planning permission had been submitted for the delivery of 44 houses on site 403; and that nutrient neutrality (NN) had been applied for. It was reported that the purchase price for site 403 had been negotiated and that the JVC would purchase the site and undertake associated works to deliver housing and the landscape restoration works to the parkland; be based on a 50:50 split between the Council and Esh Homes Limited; return developer profits to the Council and Esh Homes Limited; and that the JVC would be fully funded by the Council and this would be via prudential borrowing of up to a maximum of £8.482m. The loan would be repaid via the JVC to the Council and the Council was estimated to receive a pre-tax profit share of £0.871m.
It was reported that the risks involved in the JV had been identified and mitigated via the agreement; due diligence on site condition had been undertaken; the site investigation reports (SI’s) did not indicate known issues with the land; the SI report, cost appraisal and a valuation report on the sale prices had been reviewed by the Council’s estates section and were considered achievable; the JV was set up to deal with changes in the sales market, with the ability to slow or stop development on agreed costs should there be changes in the market; the Council’s lending was supported by a legal charge over the land and works; and that the abnormals, section 106 obligations and investment into the Blackwell housing scheme were substantial. Reference was made to the £760,000 that would be made available to enhance the historic parkland at Blackwell and to the £918,000 that would be provided for the development of off-site affordable homes and significant contributions to highways and sustainable transport.
Members and members of the public in attendance at the meeting addressed Cabinet in respect of a number of issues including the ambiguity around the wording contained within the report in relation to site 403 and the parkland; whether the parkland would remain in Council ownership or be transferred to the JVC; best value and whether consideration had been given to using Section 123 of the Local Government Act 1972; maintenance of the parkland; the sensitivity around the parkland restoration and the need to consider the ecology of the area and in particular the Great Crested Newts; the involvement of community groups and Ward Councillors in the proposals; whether the additional housing was required; and on the financial risk to the Council. Particular reference was made to the The Leader and the Cabinet Members with the Resources and Economy Portfolios responded thereon.
RESOLVED - (a) That the establishment of the Joint Venture Company, Blackwell Grange Joint Venture Limited, be approved, to acquire site 403 as marked in Appendix 1 to the submitted report, to deliver, build and sell new homes at Blackwell subject to obtaining nutrient neutrality credits, in addition to undertaking the landscaping and restoration works to the council owned parkland.
(b) That £8.482m from the Investment Fund to fund the Joint Venture Company financed by prudential borrowing, be approved, subject to a first Legal Charge in favour of the Council over the land acquired by the Joint Venture Company, together with a guarantee from the Joint Venture Partner in respect of 50 per centre of the loan sum.
(c) That the Joint Venture Agreement be approved and delegated authority be granted to the Chief Executive to negotiate the final terms of the Joint Venture Agreement and finalise the establishment of the Joint Venture Company, in line with the terms and supporting development appraisal and cashflows, as detailed at Appendices 2 and 3 to the submitted report.
(d) That conditional upon completion of the Joint Venture agreement a secured loan facility be entered into with the Joint Venture Company, as a secured loan simultaneous with the land acquisition.
(e) That the Chief Executive, Group Director of Operations and the Assistant Director Law and Governance be appointed to act as directors in the Joint Venture Company as part of its Executive Board.
REASONS - (a) To assist in the delivery of the Economic Strategy by speeding up the building of new homes.
(b) To deliver income for the Council.