Agenda item

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

 

Approval of the legal documentation to establish the joint venture Haringey Development Vehicle, the Vehicle Board and its first set of business plans.

 

 

 

Before the Cabinet Member introduced the report, the Leader advised the meeting, that the public appendices to this report were included at pages 97 to 1474 of the second pack of papers, for ease of reference.

 

The Leader asked the Cabinet, in particular, to note the equalities comments in the report at section 8.49-8.57 and the equalities impact assessments completed for the strategic business plans for Northumberland Park at appendix 3b, Wood Green at appendix 4b, Cranwood at appendix 5b. Also to note the equalities impact assessments for the Commercial Portfolio at appendix 6B and the social economic business plan at appendix 7b.

 

Councillor Strickland introduced the report and set out the overall aim in establishing the HDV [ Haringey Development Vehicle] which was to meet current and future demands in housing need, by building greater numbers and types of housing in the borough. In addition, tackling unemployment and child poverty, improving use of existing land for employment stock, and creating more local jobs. The HDV would further provide the right infrastructure to meet the regeneration needs and ambitions of the borough.

 

Councillor Strickland continued to provide the background which had led to consideration of a joint venture vehicle. This was following participation in the Future of Housing Review with a cross party group of Members and visiting other Councils which had various development arrangements in place. The cross party group had been concerned that other Councils were handing over land with little or no control on the outcome and not having any skills / expertise to access to regenerate areas.

 

The Cabinet Member underlined the importance of having a vehicle to facilitate estate and town centre regeneration of the borough with people at the centre of the decision making process. He continued to outline the benefits of the joint company model put forward which would mean setting up a 50/50 company with Haringey elected members retaining control over key decisions, and the company can only act within the priorities and plans set out in the company’s business plan.

 

Specific requirements and guarantees were sought from Lendlease before the HDV was proposed for establishment. The Cabinet Member was satisfied that the Council was being offered:

 

 

·         6400 new homes built with at least 40 % affordable

·         Guarantees on right of return.

·         More control of the development of sites to ensure that there is increased housing.

·         Access to skills and expertise to make the most of the land.

·         Taking forward estate regeneration and being at the centre of the decision making for the next 20 years.

 

There was also a landmark proposal, similar to the agreements reached on the Olympic Park on local jobs and employment standards including the Living Wage. The joint venture would ensure existing residents get better housing, improved community facilities, jobs, health centre access, community facilities, a library, new green space and youth programmes. This was beyond what has been previously secured by the borough through regeneration schemes.

 

Councillor Strickland emphasised that the recommendations had come forward after a two-year process, which included scrutiny involvement. He recommended Cabinet approve the establishment of the HDV as this arrangement provided a good offer on homes and jobs and facilities for improving life chances and tackling inequality.

 

Cabinet Members put forward questions to the Cabinet Member for Housing, Regeneration and Planning and the following information was noted:

 

• There was significant difference between these arrangements and Southwark’s relationship with Lendlease. The Heygate estate project had been under a traditional development agreement where the estate had been sold, wholesale, to a developer. The Council were not doing this, but proposing a joint partnership arrangement, on an equal basis, meaning that the Council could, at the start of the development process, clearly set out their needs and expectations of the development and ensure the pre – agreed business plans are adhered to.

 

• The Council had a strong policy on right of return and re-provision of housing for existing residents. The Council was consulting on a revised Estate Renewal, Re- housing and Payments Policy for tenants and leaseholders. This was a vitally important policy and makes commitments to residents whose properties will be demolished as part of the estate renewal and regeneration schemes. The policy intention of Southwark was different and they had not been explicit on right of return.

 

• The Monitoring Officer referred Cabinet to page 108 sections 3.7 of the report pack and clarified the decisions being taken forward by Cabinet, at this meeting. These were decisions on the transfer of the Council’s Commercial Portfolio to the HDV and the conditional option agreement in respect of the disposal of the Wood Green sites. As section 3.7 makes clear, no decisions were being taken in respect of disposals concerning Northumberland Park and Cranwood. There would be no decisions on disposal of any part of these sites before statutory consultations were undertaken.

 

• There had been extensive discussion with Lendlease, about compiling a framework agreement, similar to the Olympic Park agreement, on jobs, skills, apprenticeships and investment. This agreement offers: London living wage and enforcing this throughout the supply chain, making sure local people have access to jobs and local businesses are signed up to the local supply chains. Also making sure that local people are skilled up to compete for the jobs that arise from the regeneration and development.

 

• There were clear assurances to drive these commitments through supply chain by Lendlease. New ideas could come from communities and residents that can be added to the programme.

 

• The Cabinet Member for Housing, Regeneration and Planning referred to the recent Council negotiations, for securing 40% affordable housing on the Hornsey depot and Apex House sites, as a good example of the Council negotiating with the private sector.

 

• The social dividend procurement weighting had been equal to the weighting of other factors and demonstrated the Council’s commitment to the wider community and improving lives.

 

There were questions put forward from Councillors: Engert, Rice, Bevan, McNamara, M Blake, Stennett, Berryman, G Bull, Tucker, Cater, Connor, Brabazon, Ibrahim and Diakides. This information ,obtained from questions, has been grouped into the main subject areas of: decision making, housing, regeneration/ business plans, and arrangements with Lendlease for ease of reference]

 

 

Decision making

 

• The decision being taken forward, by Cabinet this evening, was concerning category 1 sites and there was no decision being made on category 2 sites this evening. Also the report made clear that no decisions were being taken in respect of disposal of Northumberland Park or Cranwood.

 

• The Cabinet responses to the scrutiny review already summarised the response to scrutiny review recommendations. Councillor Bevan was offered a meeting with the Director for Housing and Growth to talk through the reports and how the changes and improvements suggested by the scrutiny panel were put into place.

 

• In considering the number of documents included in the appendices packs, the Cabinet had placed a significant number of documents in the public domain for openness and transparency purposes. The Cabinet had reports before it in respect of the HDV decision over the last two years and were familiar with the issues involved.

 

• The meetings of the HDV would not be open to the public, as this was not deemed a public body but there would be further discussion with Lendlease on providing information on the business discussed.

 

• The HDV would strive to be as transparent as possible. The Council will have three members on the board and they will have access to the commercial information.

 

• The equalities comments were set out at section 8.49 to 8.57 of the report and outlined the equalities work completed thus far. The Cabinet Member emphasised that there will not be disposal of category 1B properties until there has been a full consultation. As and when further decisions on these sites come forward equalities impact assessments will be refined and improved in future as more information is available and as and when further decisions are made

 

• The current equalities impact assessments, contained in the agenda packs, as referred to by the Leader, were prepared by regeneration officers, in the areas in question, with Council in house equalities policy expertise provided to support their completion. There had also been external legal advice sought to ensure the equalities impact assessments were consistent with the Council’s public sector equality duties.

 

• The Leader reported to the meeting, that the external auditors had advised the Council, today, of their initial review findings concerning the proposed establishment of the HDV. The scope of the review focused on: considering whether due process had been followed, if there were indications of poor value for money for the Council and its residents and further considering if the interests of the Council had been adequately protected. Their preliminary findings were reported in a letter to the Leader, and initial conclusions were that they were satisfied that appropriate work had been completed and information brought forward to Cabinet to allow a reasonable decision on whether to proceed with the HDV. No concerns were raised that needed to be considered by Cabinet and the external auditors were happy for the Leader to communicate to Cabinet that they had no issues to raise.

 

• There would be multiple opportunities for Overview and Scrutiny Committee to scrutinise the HDV and HDV staff could be invited to the Committee meetings as the case with other associated external bodies. The Overview and Scrutiny Committee could also call the Leader and Cabinet Member to meetings to respond to concerns.

 

Housing

 

• The Council would be maintaining 40% affordable housing on sites and would be part of the decision making process to find solutions that meet the boroughs needs if there was a down turn in the housing market. This could be solutions such as ensuring that other phases of development are brought forward if needed.

 

• There was no imminent building work planned for commencement by the HDV and it was hoped that there would be clear recommendations arising from the public inquiry into Grenfell by the time building works, by the HDV, commenced. The Council would abide by any new building regulations, and was determined to abide by fire safety regulations. There was also a legal obligation for the Council to abide by these rules.

 

• The interim Chief Executive reported on learning the lessons from Grenfell. There was a commitment by central Government to provide interim findings of the Grenfell inquiry to the public and Councils. However, until these findings were released, the interim Chief Executive had spoken to the DCLG about, more immediately, obtaining the learning from the technical panels compiled by the DCLG to look at changes needed in building regulations and what needs to happen to adapt to these changes. The meeting noted that the DCLG had committed to advise the Council of the Technical Assessment Panel findings and some had already been released.

 

• The Council remained absolutely committed to a right of return for residents, in a regeneration scheme and wherever possible to ensuring that families move only once. There was potential to be more sequences to moves but this would be to accommodate the resident’s needs and their preference area. There would be continual close working with residents in estate renewal areas, individually and collectively, to continue to ensure their housing needs are met.

 

• The Cabinet Member emphasised that there was not enough housing in the borough of any type and rents and house prices were going up. The Housing Strategy was committed to providing different types of housing. The 40 % ratio of affordable housing was above current national levels of affordable housing being built.

 

• The Council were committed to right of return and Lendlease could not make their own decision, unilaterally, on this policy. Also, as the Council would have an equal stake in the HDV, they could block this unlikely situation occurring.

 

• Noted that the right of return commitment trumps the habitable room policy. Individual assessment would be undertaken to meet the tenant’s needs i.e. additional room for families or adaptations. It maybe that the configuration of the space will be different to meet the needs of a family but the amount of space still remains affordable

 

• There would be no suspension of maintenance routines/ regimes to the estates that had been identified for regeneration and the Council would be maintaining building standards.

 

• When approaching the period when a site needs to be fully vacated and there are homes used for temporary accommodation and empty flats, these would still be counted as Council flats when calculating re-provision.

 

• There was current consultation on a shared equity scheme for leaseholders covered in the revised Estate Renewal, re housing, Payments Policy where the Council is going beyond its statutory obligations so leaseholders can get a fair deal.

 

• The Council were committed to continuing with the Decent Homes scheme and normal repairs where required by tenants. Where properties were in the early phase of the HDV, decent homes works had been paused and a further decision on decent homes works would be made Homes for Haringey board following this Cabinet meeting.

 

Regeneration/ business plans

 

• Academisation of Northumberland Park School was not a decision for the local authority but for the governing body of the school.

 

• The Cabinet Member for Children and Families stressed that the Northumberland Park master plan was indicative and decisions on a new school and Sixth form would only be considered following a full consultation. This was set out in section 3.4.2.1.4 of the report. Therefore, the Northumberland Park development would still be subject to further consultation and Cabinet consideration. The Cabinet Member for Children and Families had asked officers to look at green spaces offer on this site as it was not adequate currently

 

• In relation to current and potential future air pollution issues in Tottenham, near Northumberland Park School, arising from close proximity developments, this was a key planning consideration and would have formed part of the construction management agreement with Spurs. The Assistant Director for Planning could be asked to write to the Councillor Rice about these obligations with Spurs, in light of the increased development and the impact on the environment around Northumberland Park School. This immediate operational issue had also been discussed by the interim Chief Executive with the School last week and the conversation was ongoing. They discussed the large scale building work and discussed where exams take place and additional cleaning required as a result of dust issues.

 

• In relation to pages 992- 1006 of the appendix pack, the addresses listed, were the land and sites in Northumberland Park area that could be developed by HDV. These were the same addresses listed in the Site Allocations Plan and Tottenham Area Action plan, and had been subject to repeated public consultation and approved for inclusion in Local Planning documents by the Government inspector.

 

• The Caxton road site had been included in the Site Allocations planning document and was covered in the Wood Green Area Action Plan which has been consulted on. Therefore, this site’s inclusion in regeneration plans has been in public domain.

 

• The Leader highlighted the continuing commitment to Cross Rail 2. The National infrastructure project report published last week, had emphasised the importance of Cross Rail 2. Also the upgrading of the Piccadilly line was funded and on course for completion in the mid 2020’s with an expected 60% increase in passengers. This would be a 30 % of passengers following through increased frequency and 30% through rolling stock.

 

• Cllr Goldberg clarified that he had provided an example of good public sector negotiations with the private sector, in achieving affordable housing numbers on the Hornsey depot and Apex house sites. The Leader had referred to lost local authority expertise on physical developments due to previous government decisions.

 

Arrangements with Lendlease

 

• In relation to the exclusivity agreement, essentially the Council needs Lendlease to develop and make use of the skills and expertise that they have available to deliver increased homes in the borough. There would be independent valuation of this cost to ensure that it did not increase beyond market rates.

 

• The VAT charge would have a small effect on small business and the Council and Lendlease were committed to options for managing this cost so there was minimal impact.

 

• In relation to voluntary termination of the contract between the Council and Lendlease, both sides would need to reach an agreement, should this situation occur. The appendices also set out the other scenarios which could lead to a termination of the contract i.e. deadlock or default. In all termination scenarios, the Council has right to acquire back property assets. In a voluntary scenario, they can acquire back at market value. In other scenarios there were different rights depending on whether either side had defaulted on the agreements.

 

• There will be a lengthy decision making process associated with the regeneration and development of areas which will be subject to different consultations. If in a section 105 consultation, significant issues raised by residents that cannot be resolved then there is no obligation for the Council to transfer the land.

 

• The HDV would be delivering growth, mix of jobs and priority industries. In relation to the calculation of the number of jobs to be achieved, 22,000 was the best estimate on what could be achieved.

 

• It was clarified that vertical build is concerning the structure that arises from the ground and horizontal build is the infrastructure, drainage and conduit for electrics and internet. Lendlease would get vertical build allocation at 60% and also get the horizontal infrastructure works associated with that vertical build.

 

• There was no risk around dereliction of fiduciary duties for Councillors who were not decision makers. FOI [Freedom of information requests] was a nuanced position. If the HDV held information on behalf the Council, then this information could be subject to FOI but the HDV itself would not on its own be subject to FOI.

 

Further to considering exempt information at item 16, Cabinet unanimously

 

RESOLVED

 

1. To note the outcome of the Preferred Bidder Stage of the Competitive Dialogue Procedure under the Public Contracts Regulations 2015 as outlined in this report;

 

2. To confirm Lendlease Europe Holdings Limited (“Lendlease”) as successful bidder to be the Council’s HDV partner; and

 

3. To approve the setting up of the HDV with Lendlease or a subsidiary vehicle set up by Lendlease on the basis that the Council will hold 50% and Lendlease 50% of the vehicle and based on the proposed structure as set out in the attached report.

 

4. To approve the legal documents at Appendices 1b through 1j of the attached report and summarised in paragraphs 6.35 to 6.90 of this report so as to give effect to resolutions 1, 2 and 3, subject to resolution 6 [ a to d] below.

 

5. To approve the following Business Plans at Appendices 2a through 7a, and summarised in paragraphs 6.91 to 6.121 of this report, subject to recommendation 6 (d) below:

 

a)    Strategic Business Plan

b)    Northumberland Park Business Plan

c)    Wood Green Business Plan

d)    Cranwood Business Plan

e)    Commercial Portfolio Business Plan

f)     Social and Economic Business Plan

           

6. Gives delegated authority to the section 151 officer, after consultation with the monitoring officer:

 

a)    To approve the final terms of the two Property Management Agreements, referred to in paragraphs 6.70 to 6.72 of this report, to a maximum total value as set out in the exempt part of this report, such agreements to be agreed before the Members Agreement is entered into;

b)    To approve any of the financial agreements and instruments listed in paragraph 2.1.1 of the Members’ Agreement (at Appendix 1b);

c)    To approve any further deeds and documents which are ancillary to the legal documents approved here, as described in paragraph 2.1.1 of the Members’ Agreement (at Appendix 1b); and

d)    To approve any amendments to the legal documents and business plans approved here as may be necessary, for reasons including but not limited to ensuring consistency between them and finalising any outstanding areas.

 

 

7. To declare that the Commercial Properties listed in Appendix 6c are no longer required for housing purposes, and to appropriate these properties for general fund purposes (subject to obtaining any necessary Secretary of State consent);

 

8. To dispose of the Council’s commercial portfolio (as listed in Appendices 6c and 6d) to the HDV’s Investment LP subsidiary in phases (as set out in the Agreement for Sale of the Investment Portfolio at Appendix 1c) for the total sum of £45m, and that the disposal shall be on the basis of a long leasehold interest for a term of 250 years and based on the lease referred to in the Agreement for Sale of the Investment Portfolio;

 

9. To agree that the sum of £45m referred to above will be the Council’s initial investment in the HDV; and

 

10. To give delegated authority to the section 151 officer to agree the timing for the disposal of these properties to the HDV’s Investment LP subsidiary and to approve individual final leases to facilitate such disposals.

 

11. To give the HDV an option for a 250-year lease on land identified in the Development Framework Agreement as being Category 1A land in Wood Green and within the Council’s freehold ownership, subject to the valuation methodology set out in the Development Framework Agreement.

 

12. To note that in agreeing to the suite of legal agreements and to the Business Plans, Cabinet is not being asked to decide whether any part of Northumberland Park or Cranwood is to be disposed of to the HDV or any of its subsidiaries, and that nothing within any of them commits the Council to make any such disposal;

 

 

13. To note that any such decisions will only be made following community consultation, including statutory consultation under section 105 Housing Act 1985, and further equality impact assessments, all of which will be reported back to Cabinet in future report(s) for decision;

 

14. To note that if Cabinet in its discretion does make future decisions to dispose of any part of Northumberland Park or Cranwood to the HDV or any of its subsidiaries, there will also be need for Full Council authorisation for making an application for consent to dispose to the Secretary of State under sections 32 and 43 Housing Act 1985.     

 

15. To note that as a result of the disposal of the commercial portfolio and the transfer of some of the management services there may be a small number of employees that will be TUPE transferred (to the HDV or its supply chain) and the Council and Lendlease have agreed that – if this occurs – these employees should remain within the Haringey Pension Fund.

 

Reasons for decision

 

The case for growth

 

The Council’s corporate plan makes a strong commitment to growth. Specifically, it identifies the need for new homes to meet significant housing demand which is making decent housing unaffordable for increasing numbers of Haringey residents, and causing more and more families to be homeless. It also identifies the need for more and better jobs, to revitalise Haringey’s town centres, increase household income for Haringey residents and give all residents the opportunity to take advantage of London’s economic success. This commitment to growth is further reflected and developed in the Council’s Housing Strategy and Economic Development & Growth Strategy.

 

The need among Haringey’s population is stark:

 

• In Northumberland Park ward, unemployment (at 26%) is almost double the rate across the whole borough and three times the national average. More than a quarter of residents (26%) in the ward have no formal qualifications, against 13% for all of Haringey.

 

• There is also a growing incidence of “in- work poverty”: 32% of Haringey residents earn below the London Living Wage compared to 24% in 2010. Median income of employees living in Tottenham is £11.40 an hour, compared to £16.90 in the rest of Haringey and £16.60 in London.

 

• Too many young Haringey residents are not in employment, education or training (NEET). Northumberland Park, St Ann’s and Noel Park wards have a 16 and 17-year-old NEET rate over 4%, compared to the Haringey average of 3.6% and the national average of 3.1%.

 

• Life expectancy is demonstrably worse in the east of the borough compared to the west of the borough: on average the difference between parts of the east and parts of the west is 7 years. Obesity amongst children in Tottenham and mental health challenges in the whole borough are significant, and stubborn.

 

• Market rents in Haringey have increased from a median rent of £900 per month in 2011 to £1,400 per month in 2016. In order to afford the median, rent for a two-bedroom private rented flat in the borough, a household would need to earn an annual income of around £63,000, based on the principle that a household shouldn’t have to spend more than 40% of their net income on housing costs. On this principle, a household on the median income in the borough could afford to pay rent of £878 per month, compared to the actual median rent (£1,400 per month as above). This means that a lot of households are in fact spending 50%+ of their net income on housing costs.

 

• Meanwhile, for prospective purchasers, the average house price in Haringey is now around £430,000, up from £225,000 ten years ago, which in turn leads to higher demand for private rented housing, pushing rents up still further. House prices in the borough are now 13.7 times the median income – in 2002 it was 7 times.

 

• This means that for both renters and buyers, market-price housing is less and less accessible – making the need for new affordable housing more important than ever, and showing how demand in all parts of the market is failing to keep up with supply. And in the next ten years, Haringey’s population is estimated to grow by 10.9%, adding another 30,000 residents by 2025 and a total of 52,000 additional residents by 2035.

 

• At the end of March 2017 there were 9,098 households on Haringey Council’s Housing Register. The number of social housing lets in Haringey in 2017/18 is expected to be just fewer than 500; in 2011/12 it was just over 1,100. Across London, supply of new homes has been below the London Plan target every year, and even further adrift of the London Strategic Housing Market Assessment target.

 

• There are over 50,000 London households who are homeless and in temporary accommodation, with over 3,000 of those Haringey households. Homeless acceptances in Haringey have increased from 355 in 2010 to 683 last year. Increasingly these are households who were evicted from the private rented sector because they could not afford the rent.

 

Overall, based on data from the combined Indices of Multiple Deprivation (2015), Northumberland Park ward falls among the 10% most deprived areas in England and many parts of the ward are in the 5% most deprived.

 

Growth is also essential to the future sustainability of the Council itself. With Government grant dwindling, local authorities are increasingly dependent on income from Council tax and – in light of recent reforms – business rates. Without growing the Council tax and business rate base, the Council will increasingly struggle to fund the services on which its residents depend. Improvement in the living conditions, incomes, opportunities and wellbeing of Haringey residents will directly contribute to the full range of aims in the Council’s Corporate Plan.

 

• Particular groups - including women, disabled people and BAME groups – are more likely to experience these inequalities in prosperity and wellbeing, and therefore most likely to benefit from the positive outcomes from growth.

 

• By securing growth in homes and jobs – and maximising the quantity, quality and/or pace of such growth – is core to achieving the Council’s aims, including:

 

• Meeting housing demand will lead to more and more families are able to afford a home in the borough, either to rent or buy, alleviating the stark housing crisis.

 

• Meeting housing demand also drives down levels of homelessness, so fewer households find themselves in crisis, and the significant pressure on the Council budget through increased temporary accommodation costs is relieved.

 

• increasing the number of jobs in the borough will lead to more opportunities for Haringey residents to boost their incomes and job prospects, more vibrant and successful town centres with more activity and spending during the working day, with reduced risk of ‘dormitory borough’ status as working residents leave the borough to work elsewhere.

 

• increasing levels of development in turn increase the Council’s receipts in s106 funding and Community Infrastructure Levy, in turn increasing the Council’s ability to invest in improved facilities and infrastructure (like schools, health centres, open spaces and transport) and in wider social and economic programmes such as those aimed at improving skills and employability.

 

• Growing the Council tax and business rate base will reduce the risk of financial instability for the Council and of further, deeper cuts in Council budgets and hence to Council services as Government grants dwindle to zero over the coming years.

 

Options for driving growth on Council land

 

The Council cannot achieve its growth targets without realising the potential of unused and under-used Council-owned land. Accordingly, in autumn 2014 the Council commissioned work from Turnberry Real Estate into the options for delivering these growth objectives. Turnberry also examined the market appetite for partnership with the Council to deliver new housing and economic growth.

 

In February 2015 Cabinet, on the basis of this work, agreed to commission a more detailed business case to explore options for delivery. At the same time, the member-led Future of Housing Review concluded (as set out in its report to Cabinet in September 2015) that a development vehicle was ‘likely to be the most appropriate option’ for driving estate renewal and other development on Council land.

 

The business case developed following Cabinet’s February 2015 decision compared a number of options for achieving the Council’s objectives, and ultimately recommended that the Council should seek through open procurement a private sector partner with whom to deliver its objectives in an overarching joint venture development vehicle. This business case, and the commencement of a procurement process, was agreed by Cabinet on 10 November 2015.

 

The joint venture development vehicle model

 

The joint venture model approved by Cabinet on 10 November 2015 is based on bringing together the Council’s land with investment and skills from a private partner, and on the sharing of risk and reward between the Council and partner. The Council accepts a degree of risk in that it will transfer its commercial portfolio to the vehicle (as part of its initial investment), and will (subject to the satisfaction of relevant pre-conditions) also commit other property, as its equity stake in the vehicle. It has also to bear the costs of the procurement and establishment of the vehicle, and a share of 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, would be at a scale and pace that would otherwise be unachievable. The Council will also receive a financial return, principally through a share of profits that it can reinvest in the fulfilment of its wider strategic aims as set out in the Corporate Plan.

 

Under this model, the development partner matches the Council’s equity stake, taking a 50% share of the vehicle and hence a 50% share of funding and development risk. In return, and by maintaining strong relationships and delivery momentum, they obtain a long term pipeline of development work in an area of London with rising land values, and with a stable partner.

 

The procurement process

 

As well as approving the business case for establishing the HDV, at its meeting on 10 November 2015 Cabinet also resolved to commence a Competitive Dialogue Procedure under the Public Contracts Regulations 2015 to procure an investment and development partner with which to establish the HDV. Following a compliant procurement process, Lendlease was approved as preferred bidder by Cabinet at its meeting on 7 March 2017. Cabinet also approved a reserve bidder in the event that it was not possible to finalise the agreement with Lendlease.

 

Following that decision, further work was undertaken by the Council and Lendlease teams to confirm the terms of the Lendlease bid, in order to arrive at an agreed set of legal agreements (to establish the HDV) and business plans (to set out its first phase of work). By approving the legal agreements and business plans put forward here, and therefore authorising establishment of the HDV and agreeing its initial work programme, Cabinet will be taking a major step in unlocking the considerable growth potential of the Council’s own land and meeting a number of core Council ambitions.

 

The establishment of the HDV (through the execution of the legal agreements) and the agreement of its initial work programme (through the approval of the business plans) represent a significant step in delivering the Council’s objectives for improving the prosperity and wellbeing of Haringey’s residents. However, it is also important to recognise the flexibility in the arrangement to respond to changing circumstances and changing priorities – and the Council’s capacity to control that change. For example:

 

§  It is likely that plans for major development schemes will change following extensive consultation with residents and other stakeholders;

§  If market conditions change, the HDV can decide to amend its proposals – for example, switching homes for sale to homes for rent – or to re-phase its programme;

§  Arrangements for the ownership and management of homes are flexible, and can respond over time including in response to changing Council priorities and changes in the local and national funding regime.

 

All material changes would be subject to the Council and Lendlease agreeing any necessary elements of – or amendments to – the scheme business plans. Further, any additional Council property proposed for development by the HDV would be subject to a new business plan which would have to be approved by the Council (and Lendlease) before work could commence.

 

In addition to these controls over the work programme of the HDV through its status as a 50% partner, the Council will retain its statutory functions in respect of the HDV work programme, including as local planning authority, giving it further influence and assurance over the implementation of the HDV’s programme of work.

 

Alternative options considered

 

In November 2015, Cabinet considered and approved a business case for establishing an overarching joint venture vehicle to drive housing and job growth on Council land. That business case identified and assessed a number of alternative options for achieving the Council’s objectives, and found that the overarching joint venture vehicle would be the most effective mechanism for achieving those goals.

 

Throughout the process of procuring a partner with which to establish the HDV, the Council has reserved its position to not appoint any of the bidders in the event of the bids not being satisfactory, or otherwise not wishing to proceed. This report outlines the benefits and projected outcomes that will arise from the establishment of the HDV, in the context of the Council’s objectives and aspirations as set out in the November 2015 report to Cabinet. If the Cabinet chooses not to proceed with establishing the HDV, it will risk not obtaining these likely benefits, or not obtaining them at the scale, pace and/or quality which would otherwise be possible.

 

The Council has within its procurement documentation made clear that bidders’ participation in the Competitive Dialogue process is at their own expense, that the Council will not be responsible for bid costs and that it is not obliged to accept any tender.