Agenda item

[Report of the Director for Planning, Regeneration and Development. To be Introduced by the Cabinet Member for Housing, Regeneration and Planning.]

The report sets out the key elements of the Housing Zone Phase 2 funding package which has been allocated by the Greater London Authority (“GLA”) to facilitate regeneration in North Tottenham and seeks approval to agree and enter into an Overarching Borough Agreement (“OBA”)  (and all Borough Intervention Agreements (“BIA”) flowing from the OBA) with the GLA.

The Cabinet Member for Housing, Regeneration and Planning was pleased to introduce the report which took forward a new exciting phase for the regeneration of Tottenham. The GLA had already agreed £44m for the Housing Zone phase 1 in Tottenham Hale and were now agreeing a further £62m to support High Road West regeneration in, Northumberland Park, with Phase 2 of the Housing Zone. This would fund housing infrastructure costs, land assembly, including affordable housing, ensuring a continued mix of housing in Tottenham.

The report set out the key elements of the Housing Zone phase 2 funding package and sought approval to enter into an overarching Borough Agreement[OBA] and BIA[ all Borough Intervention agreements[ BIA] flowing from the OBA with the GLA.

In response to Councillor Engert’s questions, the following information was noted:

• The Council’s continued aspiration was for a higher ratio, than the 30% listed in the report, of affordable housing. It was noted that the 30% figure included the use of the affordable housing grant, and other grants, demonstrating the challenges faced with building affordable housing in North Tottenham. The Council were aiming to get a higher ratio of affordable housing but this depended on land values secured and also taking into account a need to rebuild properties in this area as this would push up cost and further affect the level of affordable housing units available.

• Bids on a set of development proposals will be taken forward for the scheme. Firstly, the Council will acquire the land in the scheme and divide this up for development. Land would then be released in phases to the agreed developer allowing the financial viability for each stage of development to be assessed and the Council’s vulnerability to any cost to be understood.  Should the market valuation at each phase show a problem with financial viability then there would be an opportunity to look again at each of the phases, as this would be part of the contractual arrangement. The Director for Planning, Regeneration and Development assured Councillor Engert that the Council would not take forward a deficit position in the development of this land for housing.

• The length and timing of Brexit negotiations were uncertain and land values had not currently seen an impact. Therefore, the Cabinet were being recommended to capture the opportunity provided by GLA funding and to take forward the competition for the development of land for housing in North Tottenham.

RESOLVED

1.To agree to the funding from the Greater London Authority (“GLA”) set out in paragraph 6.6 of this report and give delegated authority to the Chief Operating Officer and the Director of Regeneration, Planning and Development after consultation with the Cabinet Member for Regeneration and Housing to:

1.1Finalise and agree the Overarching Borough Agreement (“OBA”)  for Tottenham Housing Zone Phase 2 (North Tottenham)  based on the core terms set out in paragraphs  6.7- 6.11 of this report and associated legal documents, including all  Borough Intervention agreements (”BIA”);

1.2 bid for and agrees any further funding from the GLA for the Housing Zones; and agrees, and/or varies, and finalise any Housing Zone Overarching Borough Agreements and associated legal agreements, including BIAs, in respect of the core terms set out in this report and in respect of any further funding from the GLA for the Housing Zones.

1.3 agree, and/or vary, and finalise any Housing Zone Overarching Borough  Agreements and associated legal agreements, including BIAs, in respect of the core terms set out in this report and in respect of any further funding from the GLA for the Housing Zones.

Reasons for decision

The Phase 2 Housing Zone funding for North Tottenham is critical in ensuring the High Road West Regeneration Scheme and the wider North Tottenham regeneration objectives can be delivered. The High Road West Regeneration Scheme will provide the key place-making investment and infrastructure required to ensure that North Tottenham becomes a new residential and leisure destination, which will then secure the necessary up-lift in place and value to support the future regeneration of North Tottenham.

As set out in the December 2015 High Road West Cabinet report, GVA Bilfinger had completed a financial model for the High Road West Scheme. The financial model has shown that the scheme has a significant funding gap due to the substantial upfront costs associated with land assembly and infrastructure. The High Road West Scheme cannot be delivered unless this funding gap is reduced. The Housing Zone Phase 2 funding will reduce this gap by providing a mix of grant funding and borrowing to fund and cash flow the land assembly costs and infrastructure costs.

The Council is seeking to enter into an OBA with the GLA now, to ensure that the contractual framework for the funding is agreed. It is only once the contractual framework is agreed that the funding will be secured and can be released.  The Council is aware that the Housing Zone Phase 2 funding allocation is oversubscribed, it is therefore imperative that the funding for High Road West and North Tottenham is secured as early as possible. It is also the case that the procurement process to select a development partner for the High Road West Scheme is underway and the Council will need to be able to demonstrate that it has the public sector funding required to support the delivery of the scheme.  

Alternative options considered

It has been demonstrated via the financial model for the scheme that it has a significant funding gap. The Council’s commercial consultants, GVA Bilfinger, have advised that the Council will not be able to deliver the regeneration scheme unless this funding gap is reduced. Officers have sought to reduce the funding gap, by reviewing the masterplan and testing the number of homes which can be delivered and revisiting the land use. 

Officers have also explored other options to reduce the funding gap, including Council prudential borrowing and HM Treasury funding. In autumn 2015, the Council commissioned GVA to produce a business case to support negotiations with HM Treasury to provide financial assistance to bridge the funding gap. However, both options have proved unviable. Consequently, seeking Housing Zone funding is the best feasible option for the Council.