[Report of the Strategic Director for Planning, Regeneration and Development. To be introduced by the Cabinet Member for Housing, Regeneration and Planning.]This report will seek Cabinet approval for the selection of the preferred bidder for the High Road West Regeneration Scheme as part of the competitive dialogue procedure under the Public Contracts Regulations and give delegated authority to the Council's Section151 Officer after consultation with the Cabinet Member for Housing Regeneration and Planning to agree the final version of the development agreement and other ancillary documents. This report will also seek a decision on the ownership of the replacement housing for the Love Lane residents and agree the next steps for progressing the High Road West Regeneration Scheme.
The Cabinet Member for Housing, Regeneration and Planning introduced the report which sought approval for the selection of the preferred and reserve bidder for the High Road West Regeneration scheme and sought approval to the next stage of work which was to refine and clarify the preferred bidder’s proposal and to agree the disposal of the Council’s land within the High Road West Regeneration Area (shown edged blue on the Site Plan at Appendix 1].
The Cabinet Member highlighted that the recommendations put forward to Cabinet were a culmination of work completed over the past 5 years by residents, Council officers and local Councillors. Consultation on the High Road West Master Plan had begun in 2013 and this document had been agreed in 2014, demonstrating strong support for regeneration with 60 % of residents advising that the estate should be demolished and replacement homes built. The procurement process to seek a development partner was then instigated in 2016.
Residents had met with the bidders and challenged bidders, so although they were not involved in the scoring, they were still part of the procurement process. They also helped develop the design guide which the bidders had based their bids on. At the end of this long process there was proposed to be:
· Over 2,500 high-quality, sustainable homes made up of at least: 750 affordable homes (a net increase of 539), 191 high quality, safe, Council homes. These include 155 social rent homes for Council tenants.
· Over £10m of funding for social and economic support for both businesses and residents, including a contribution of c.£8m for supporting the Tottenham People Priority overall commitments.
· A cutting edge new Library and Learning Centre and a refurbished Grange Community Hub which will provide improved community facilities early in the scheme.
· 143,500sqft of green spaces for the community including a large new linear community park with an outdoor gym, children’s play area and Grange Gardens; a safe, central green space for local people.
· A welcoming new civic square which will be an important focus of local events and activities, bringing the community together, promoting cultural activities and enhancing activity and safety at night.
· Over 130,000sqftof commercial, retail and leisure space throughout the scheme providing a wide range of leisure, employment space, shops, cafes and restaurants around a new civic square.
· £500k of investment in the town centre and also a £500k fund for events and activities, as well as meanwhile uses which will revitalise the local centre during construction and afterwards.
· Over 3,300 construction jobs and more than 500 end-user jobs once the development is complete.
· 3000 construction jobs
· High quality new industrial and maker/artisan space to support businesses from the existing Peacock Industrial Estate
Therefore, based on the objective procurement process outcome, the Cabinet Member recommended, to Cabinet, the appointment of Lendlease as the development partner for the High Road West Scheme.
There were questions put forward from Councillors: Engert, Bevan, Ibrahim, Brabazon and Tucker and the following information noted. [This information obtained from questions has been grouped into the main subject areas of Housing, leaseholder issues, Businesses, Regeneration, Procurement, for ease of reference]
Housing/ Leaseholder issues
· The number of homes and percentage spilt of affordable housing, included in the scheme was set out at page 68. Although the 40% affordable housing target had not been reached, this was due to the financial challenges of making the scheme work and also prioritising council housing which had additional costs. However, the Council had worked hard to replace the existing Council housing owned by the Council, and managed by Homes for Haringey. Therefore, the scheme is a positive story for affordable and social housing.
· The Council’s aim had always been to remain the landlord of tenants at the Love Lane Estate, as had been noted at previous Cabinet meetings, but had not been able to guarantee this two and a half year ago, as at the time, a procurement process had not yet been initiated and the outcome of this could not be known. The Cabinet Member further responded, that there were a wide range of reasons for tenants choosing to move away from the estate i.e. moving near close family, away from the estate, or wanting to go to sheltered housing and this could not be associated with the Council not giving a guarantee, two years ago, on the ownership of homes.
· Through the Cabinet Member’s experience of correspondence with leaseholders, there could be no blanket claim that all leaseholders were unhappy. It was accepted that there was, among leaseholders, a complexity of views. There was a dedicated leaseholder and rehousing support officer available to support tenants as well as the ITLA and the offer by the Council to pay for independent valuations. It was the leaseholder’s choice whether to ask for a valuation of their property.
· There were staff dedicated to supporting residents at Love Lane and the views that they wanted to express. If leaseholders were confused with the process, they can be directed to dedicated independent advisors. [ITLAs]
· The value of the homes had increased on the estate since regeneration consultation activity had begun, and there were 46 units set aside for leaseholders who want shared equity homes. If leaseholders were not able to fully purchase a new property, they could apply for an equity loan from the Council to enable a property on the estate to be purchased. This offer was going beyond statutory requirements and what other London borough Councils provided.
· The Council could not leave the housing blocks empty on Love Lane Estate while regeneration is prepared, in a time when there were a significant number of homeless households. Therefore, using the units as temporary accommodation was a good solution.
· The replacement Council homes nominations would be taken forward by Homes for Haringey and the Council would put forward nominations for affordable homes in the normal way. Nominations for shared ownership properties would be in accordance with shared ownership policy
· 1400 was the minimum number of homes sought from the High Road West scheme from bidders, but 2500 homes had been offered by the winning bidder.
· The original number of Council properties as 212. The impact on the HRA had been mitigated with the new properties added.
· There was a small reduction in social rented homes available in the scheme, but it was important to take into account the new Brook House development, adjacent to the estate, which 29 Love Lane residents had chosen to move to last year and also the net increase of 500 affordable homes, including the Mayor’s new affordable rent homes.
· Leaseholders should not feel pressurised into making decisions about their properties and could get in touch with the Cabinet Member for Housing, Regeneration and Planning if this situation occurred. Some leaseholders had asked for a valuation, others have not asked for this, so experience varied on this issue.
· In terms of leaseholder accessing external legal advice, the Council had contracted an ITLA [Independent Tenant Liaison Adviser] to support leaseholders and tenants and already paid the legal fees for acquisitions of properties. The Council could consider on a case by case basis whether, in particular, more vulnerable leaseholders were being supported adequately.
· The principles set out in the ARUP masterplan had previously suggested that it was difficult to keep the businesses at the Peacock Industrial estate, for a variety of reasons. There was a strong commitment by the preferred partner to protect business space, and there was a lot of work to do with businesses around that. It was difficult for the Cabinet Member to provide an overall position as there would be individual negotiations with each business to find out if they would like to stay or prefer relocation with compensation and support. There was £500k set aside to support this work.
· This scheme could not have been a test case for the HDV as the Council had started the High Road West Scheme in 2012 before the HDV wider process had commenced. Also the master planning process was developed earlier with residents and separately to the HDV scheme.
· If the CPO was not secured, this would be called a condition precedent and the scheme would not proceed until issues were resolved.
· This was a development agreement and it was normal to refer to a company as development partner but this did not imply a legal arrangement. The Council remains the freeholder and disposing of a 250-year lease.
· This arrangement is a conditional disposal of land. It is important to note that the land would be disposed of in tranches and only when certain conditions had been met i.e. vacant possession, planning, strategies, and social economic programme completion. Hence, land would be disposed of only over a number of years and dependent on outcomes being achieved.
· With regard to how the vacant possession worked, the Council would continue their responsibility for working with residents that are leaseholders and tenants and the Council would also fund this. Lendlease would support the Council by working with businesses and completing the negotiations. The Council would then make the payments for those acquisitions. However, Lendlease had offered 100% indemnity so the Council would be reimbursed the cost of the property and the costs associated with the sale.
· The green space will be publically accessible and managed by an estate management company with tenants and leaseholders participating on the board.
· In respect of the land ownership and viability challenges, there were contractual obligations for Lendlease to meet and the scheme would be developed on a phase by phase basis.
· THFC owned 13% of the land in the High Road West. The Council had already been clear about their comprehensive approach to redevelopment and would continue working closely with THFC in the coming years to develop this comprehensive approach.
· With regard to governance, a Steering Group would oversee the operation of the Development Agreement and the CPOIA and the successful delivery of the Scheme. This would be established following completion and signing of the Development Agreement. The Steering Group would have equal representation from both the Council and Development Partner comprising 3 members from each organisation with each organisation having one collective vote. These members had not yet been chosen.
· The Cabinet Member stated that he saw no evidence to support the suggestion that the first deputation had been unduly influenced by Council officers.
· This is a viable scheme, which gives funding back to the Council whilst providing outcomes to the community.
· There had been a separate design panel and a separate procurement panel and overall it should be accepted that no one group spoke for the whole community and this included the leaseholder’s association. It was acknowledged that there would be a complexity of views coming forward.
· The procurement processes for the HDV and High Road West had involved different processes and different panels. There was complete separation of the teams working on these procurement processes with the only exception being the same finance, legal and procurement officers providing advice to both teams.
· The third party guarantors of the bidder are another company within the
Lendlease structure, and would have been assessed as part of the PQQ which was completed at the start of the procurement process. They would have been subject to the same stringent assessment as the bidder, including assessment of their financial standing.
· The Council had not previously claimed that this scheme was low risk but had identified a series of risks which it had worked hard, through the procurement process, to mitigate and a major accomplishment was achieving the indemnity which alleviated the major risk.
· The Council was working hard to minimise the impact of tax on the scheme and this had been assisted by the 100% indemnity achieved which would pick up land assembly and land costs.
Further to considering the exempt information at item 17, Cabinet -
1. To note the outcome of the Competitive Dialogue Procedure under the Public Contracts Regulations 2015 as outlined in this report.
2. To agree the selection of Lendlease Europe Holdings Limited (“Lendlease”) as the preferred bidder with whom the Council will enter into a Development Agreement to deliver the Scheme.
3. To agree to the selection of a reserve bidder as set out in the exempt part of this report.
4. To agree to proceed to the Preferred Bidder Stage (“PB Stage?) so the preferred bidder’s proposal can be refined and optimised, in particular to finalise the Development Agreement (Appendix 2), Compulsory Purchase Indemnity Agreement, (Appendix 3) the lease (Appendix 4) and any associated legal documentation following the preferred bidder stage.
5. To agree to the disposal of:
a. (Subject to the approval of full Council to make the application to the Secretary of State and the consent of the Secretary of State) the properties belonging to the Council and situated within the High Road West Area held within the Housing Revenue Account and listed in Section 1 of Appendix 5 of this report; and
b. The properties belonging to the Council situated within the High Road West Area held for planning and general fund purposes and listed in Section 2 of Appendix 5 and any other properties belonging to the Council within the High Road West Area and shown coloured pink on the site plan attached at Appendix 1.
And that these properties be included within the Development Agreement.
6. To give delegated authority to the s151 Officer and the Director of Regeneration, after consultation with the Cabinet Member for Housing, Regeneration and Planning, to approve the final Development Agreement, Compulsory Purchase Indemnity Agreement, the lease and any associated legal documentation following the preferred bidder stage.
7. To note that if the Development Agreement and ancillary documents required to be agreed at the preferred bidder stage cannot be agreed with the preferred bidder, a further report will be brought back to Cabinet to seek permission to enter into the preferred bidder stage with the reserved bidder.
8. To note the results of the High Road West ownership and management of replacement homes feedback report, which can be found at Appendix 6. This includes the statutory consultation under Section105 (“s105”) of the Housing Act undertaken with secure Council tenants living on the Love Lane Estate.
9. To agree that the 145 replacement social rented units and 46 shared equities, which will be delivered by Lendlease, will be acquired by the Council for housing purposes and be held in the Housing Revenue Account and to further give delegated authority to the s151 Officer and the Director of Regeneration, after consultation with the Cabinet Member for Housing, Regeneration and Planning, to approve the final terms of the option in the Development Agreement.
10.To resolve the above having considered and had regard to the Equalities Impact Assessment (Appendix 7).
Reasons for decision
All of the recommendations detailed above will support the delivery of the High Road West Scheme. The Scheme will support the Council in delivering all of its Corporate Priorities, will address issues of deprivation which have long characterised the Northumberland Park Ward and will set a benchmark for future regeneration across the borough.
Supporting the Corporate Priorities and tackling deprivation
The selection of a preferred bidder is the next step in delivering the Council and local communities’ vision to transform High Road West into a vibrant, attractive and sustainable new residential neighborhood with a blend of housing and support the creation of a premier leisure destination for London, alongside the Tottenham Hotspur Football Club development.
Delivering this vision offers a unique opportunity to tackle the entrenched deprivation that has characterised the Northumberland Park Ward and meet the Council’s Corporate Priorities:
· Priority 1: Enable every child and young person to have the best start in life, with high quality education- The Scheme will help ensure that children and young people have the best start in life, by providing a high quality living environment and world class community facilities, such as the new Library and Learning Centre. This will go some way in tackling the 4% (national average of 3.1%.) of 16 and 17 year olds living in the Northumberland Park Ward who are not in employment, education or training (NEET).
· Priority 2: Enable all adults to live healthy, long and fulfilling lives -The Scheme will help all residents to live healthy, long and fulfilling lives by providing, and giving easy access to a range of services by delivering a healthy neighbourhood with ample public space, such as a large new community park with play and gym equipment and food growing as well as, a new public square for public events and encouraging community cohesion. All of which will seek to address the issue of life expectancy, which 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. It will also address the obesity amongst children and the mental health challenges which are significant, and stubborn.
· Priority 3: A clean, well maintained and safe borough where people are proud to live and work- The Scheme will deliver a clean, well maintained and safe welcoming environment for residents, businesses and visitors alike where people are proud to live and work. This will be delivered through high quality inclusive design, place making and responding to the needs of the area and community. It will be maintained by one inclusive, transparent estate management regime, that will be responsible for the management and maintenance of the high quality, affordable environment. The management regime will seek to train and support residents and businesses and community partners to once ready will be able to run the management and maintenance of the area, fostering long-term civic pride and community ownership.
· Priority 4: Drive growth and employment from which everyone can benefit- Critically, the Scheme will deliver economic growth which is not only essential to residents and businesses of the borough and the wider region but also the Council. The new employment and commercial space will provide significant opportunities for training, jobs and employment and will go some way to address unemployment (at 26%) in Northumberland Park, which is almost double the rate across the whole borough and three times the national average. The improved environment and the creation of a new leisure destination in London will bring thousands of visitors who will contribute to the local economy and support local businesses.
· Priority 5: Create homes and communities where people choose to live and are able to thrive-The Scheme will deliver over 2500 new high quality homes, which residents will be involved in designing, in a mix of tenures ensuring that residents’ housing choice is maximised. 2500 new homes are a significant contribution to meeting the boroughs housing demand. Meeting the housing demand will lead to more and more families being able to afford a home in the borough, either to rent or buy, alleviating the current difficulties faced by local people. It will also help to drive down levels of homelessness, so fewer households find themselves in crisis, and the relieve some of the significant pressure on the Council budget through increased temporary accommodation costs. The Scheme will build on the strengths of the existing local residents and businesses to create an even stronger sustainable community where people don’t only live, they thrive.
Development Delivery Methodology
In bringing forward significant development opportunities across Tottenham and Wood Green assessments have been made in each case to ensure that appropriate delivery mechanisms are used.
In December 2015 a business case setting out the preferred delivery approach for the High Road West Scheme was presented to Cabinet. The business case recommended that the Scheme should be delivered through a contractual development agreement as this delivery option best met the Council’s objectives and reduced exposure to risk. The Cabinet noted the business case and agreed to commence a Competitive Dialogue Procedure under the Public Contracts Regulations to procure a commercial partner to deliver the Scheme.
In May 2016 the procurement process was launched. Following a compliant procurement process, which has been validated by an independent auditor (Appendix 8), the preferred bidder is recommended in this report. Through the procurement process the development agreement and supporting legal documentation (explained in detail at paragraphs 6.32-6.55 below) have been developed and refined over the course of the competitive dialogue process.
By approving the recommendations to enter into the final stage of work with a single preferred bidder and paving the way for refining the Development Agreement, Cabinet will be taking the next vital step in unlocking the considerable growth potential of the Council’s own land and meeting a number of core Council ambitions.
Ownership of the replacement homes
The Cabinet is being asked to make a decision on the ownership and management of the replacement homes within this report so that the Development Agreement can be finalised and thus delivery of the Scheme can progress following the conclusion of the preferred bidder stage of the procurement process. Making a decision now, will also help residents on the Love Lane Estate in making their rehousing choices.
The rationale for recommending that the Council acquire the replacement homes is set out in paragraphs 6.107-6.124 below.
Alternative options considered
Delivery approach and procurement process
In December 2015 Cabinet noted the business case setting out the preferred delivery approach for High Road West. That business case identified and robustly assessed three alternative options for achieving the Council’s bespoke objectives for the Scheme. The options are detailed in paragraphs 6.12- 6.16 below.
Ownership and management of the replacement homes
The Council had carefully considered two options relating to the ownership and management of the 191 replacement homes. The two options are:
· Option 1: The preferred bidders RP partner acquires the replacement homes
· Option 2: The Council acquires the replacement homes.