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Agenda item

Haringey Development Vehicle

Report of the Director for Planning, Regeneration and Development. To be introduced by the Leader of the Council.] The report will seek  approval of  the business case for a Haringey Development Vehicle and procurement of a joint venture partner.

 

Minutes:

The Cabinet Member for Housing and Regeneration introduced the report which sought agreement to the establishment of a Development Vehicle for Haringey to deliver regeneration and achieve new housing, jobs and social and economic benefits for the borough. A business case was presented supporting this and approval was sought to commence a procurement process under the Public Contracts Regulations 2015 using the Competitive Dialogue procedure to procure an investment partner.

 

The Cabinet Member explained how important it was to take forward a social dividend scheme for Haringey residents and put forward the approval for developing a joint venture company to help the Council’s ambition for increasing jobs, and homes at a time when the Council did not have the financial resources to do this as a lone venture nor the wide range of skills and expertise needed for this future wide scale regeneration.

 

The report sought agreement to begin the procurement process for seeking a partner for the joint venture vehicle.

 

In response to Councillor Engert’s question, it was noted that new build projects under the joint venture vehicle would not have Right to Buy applied. However, given the current housing policy activities of the Government, an absolute assurance could not be provided that this policy would remain as is.

 

In response to Cllr Engert’s question about the inclusion of Wood Green Library site in the categories of assets to be included in the vehicle, it was noted that there was further consultation with residents in the next few weeks on the development of Wood Green.

 

The funding for the procurement of the partner would be met from the Urban Renewal reserves.

 

Following a vote of Cabinet Members  -

 

RESOLVED

 

1.    To approve the Business Case attached as Appendix A1, and as referred to in the exempt report, for the establishment of the ‘Haringey Development Vehicle’.

 

2.    To agrees that Option 6 as set out in paragraphs 7.40-7.42 of this report (the Overarching Vehicle) is the most appropriate structure for Haringey.

 

 

3.    To the commencement of a Competitive Dialogue Procedure under the Public Contracts Regulations 2015, to procure an investment partner, with whom to set up a vehicle as set out in Option 6, subject to this matter being brought back to Cabinet for the selection of the preferred bidder and approval of the final documentation as set out in recommendation 5 below.

 

4.    To provide delegated Authority to the Director of Regeneration, Planning and Development, after consultation with the Leader of the Council, to agree all documentation required to support the procurement process.

 

 

5.    To provide delegated Authority to the Director of Regeneration, Planning and Development, after consultation with the Leader of the Council, to deselect bidders, in line with the evaluation criteria, throughout the procurement process and to return to Cabinet for approval of the preferred bidder following the conclusion of the procurement process.

 

6.    That the list of properties or sites set out in paragraph 7.54 be included in the procurement as Category 1 Land owned by the Council that it is intended will be transferred into the vehicle’, subject to satisfaction of the appropriate conditions precedent and obtaining necessary consents where applicable.

 

 

7.    That the Category 2 properties listed in paragraph 7.54  be included in the procurement process as they may potentially be transferred into the vehicle in future. Cabinet will receive a further report at the appropriate time should it be intended to transfer these into the vehicle. 

 

8.    To note that the Council may wish to transfer into the vehicle at a future time additional currently unidentified strategic, vacant or surplus sites or assets, located in the Borough and owned by the Council, that are suitable to deliver the regeneration and socio-economic aspirations of the Council, These are referred to as Category 3 Properties in paragraph 7.54 of this report and Cabinet is requested to agree that these be included in the procurement. These may be Housing Revenue Account or General Fund sites and should these be brought forward Cabinet will receive a further report on the potential disposal of these assets to the vehicle.

 

9.    That the initial procurement brief as set out at Appendix 7, indicating in outline the priority areas of regeneration, social and economic benefits that the Council is seeking be taken forward and that delegated authority be given to the Director of Regeneration, Planning and Place, after consultation with the Leader of the Council to make any necessary amendments during the procurement process.

 

 

10.  That additional funding of £547,000 from the Urban Renewal Reserve be provided to carry out the procurement process, as set out in paragraph 8.8.

 

 

Alternative options considered

The potential alternative options are considered in detail in the business case attached a Appendix A1, and referred to in the exempt report, and covered in the main report.

Reasons for decision

The Council has set out in its Corporate Plan and associated strategies, a set of challenging social, economic and regeneration objectives. It also has challenging economic and housing growth targets from the London plan, as well as a need to maintain its existing housing stock and carry out major estate renewal. It has neither the resources nor the capacity to achieve these alone.

 

In the autumn of 2014, Turnberry examined the market on the Council’s behalf to see if there was an appetite for partnership with the Council to deliver these social and economic objectives; deliver new housing and economic growth. On confirming that there was interest, the Council commissioned detailed work into the options for delivering the objectives, which is included in the Business Case at Appendix A1 and considered in detail below.

In summary, the site by site disposal of land will not deliver the required social and economic benefits or the renewal of estates as the level of up front funding required by the private sector, particularly for estate renewal, will prevent them being developed, and where it is possible to move development forward will reduce returns and inhibit the delivery of social and economic benefits.

 

For the Council to establish a wholly owned company and carry out the work itself, would mean a commitment to a level of borrowing that is impossible for the Council to sustain, and a level of risk that would not be prudent.   

 

Accordingly the option recommended is that the Council should seek through open procurement a private sector partner with whom to deliver the objectives in partnership.

 

The Council accepts a degree of risk in that it will commit its commercial portfolio to the vehicle, and will, subject to the satisfaction of relevant pre-existing conditions, also commit land. It has also to bear the costs of the procurement and establishment of the vehicle, and some limited development risk. However, in return, the contribution to its Corporate Plan objectives, including high quality new jobs, new homes including affordable homes and economic and social benefits, will be at a scale and pace that would otherwise be unachievable.  The Council also receives a financial return that it can reinvest in the fulfilment of its statutory functions, and particularly in measures to achieve such socio-economic objectives ( as more particularly described in paragraph 7 below and Appendix 7) or, as appropriate, such other strategic outcomes under the Corporate Plan.

 

The development partner, who continues to bear funding risk and the consequent development risk, enters a long term partnership with a non – commercial partner in a political environment, making it essential for them to maintain relationships. However, they obtain a long term pipeline of development work, in an area of London with rising land values, and with a stable partner.

 

It is not feasible for the Council to continue to operate as it has done previously and the approach outlined will help deliver wider social and economic benefits, as well as the housing and jobs outlined in the Council’s plans.  It should be noted, however, that this report does not recommend a decision to establish a vehicle, but simply to open a procurement process with a view to establishing one; the decision to establish will come back to Cabinet in due course.

Supporting documents: