Agenda item

To receive the report of the Executive Member for Housing and Benefits.

The Executive Member for Housing and Benefits, Councillor Knight, introduced the report which confirmed the updated capital budget forecast for the Cromwell Road Development and sought to enter into a build contract with the recommended contractor to deliver the project.

Councillor Knight explained that Cromwell Road was an important regeneration opportunity, and that the financial forecasts presented when approval was given by the Executive to proceed with the development had been reconsidered. This was because certain assumptions that had been used were no longer supportable. Councillor Knight explained that there had been a potential increase in build costs received. This increase had been put forward by the contractor, in October 2019, as the tender validity period had expired. The project remained within the budgetary envelope.

In response to observations from Visiting Members, it was confirmed that:

·         The approved capital budget was £10,107,300, and that the approved budget was incorrectly shown as £6,448,000 in recommendation 4.

·         The ability to amend the tenure mix at a later stage would be used if considered beneficial to both the Council and residents.

The Leader of the Council advised that there was an exempt report relating to this item, at item 14. Agenda item 7 was adjourned so that the exempt information relating to the item could be considered under item 14.

During the discussion on exempt information, the following issue was considered:

·         The scheme costs

Following consideration of the information at item 14, the Executive returned to item 7 and;

RESOLVED that

1.    The updated capital budget forecast be accepted and approved.

2.    The Head of Housing be authorised in consultation with the:

·         Head of Finance

·         Head of Legal & Governance

·         Executive Member for Housing & Benefits

·         Executive Member for Finance; and

·         Executive Member for Investment and Companies

To enter into a contract to build with the recommended contractor.

3.    To appoint and enter into contracts (as required) with any remaining consultants or suppliers to allow the contract to progress to completion including unit sales.

4.    To amend the tenure mix at a later stage (as required) with up to a maximum of 100% of the scheme being retained by the Council with a condition that the scheme expenditure remains within the approved capital budget of £10,107,300 as detailed within the exempt report in Part 2 of the agenda.

5.    The Head of Housing be authorised in consultation with the:

·         Head of Legal & Governance

·         Executive Member for Housing & Benefits

·         Executive Member for Finance; and

·         Executive Member for Investment and Companies

a)    To enter any Easements, Licences, Covenants or Wayleaves as required on the development.

b)    To Complete Party Wall agreements are required on the development.

c)    Authorise new leases granted or entered into by the Council on the development.

d)    Authorise the sale of new homes on the development.

Reason for decision: The baseline financial forecast for the scheme, as presented to the Executive in April 2018 was no longer considered to be an accurate forecast of delivery costs. An exercise to rebaseline the project has been undertaken and a summary of the position was within the exempt report in Part 2 of the agenda. Should the revised baseline be considered acceptable the recommended approvals were required to facilitate the delivering of this project. Delivery of this project would meet the Corporate priority of making the Borough a great place to work and live. It also supports the Executive’s commitment to deliver housing that meets the needs of local people, as half of the dwellings on this site were proposed to be sold on a shared equity arrangement.

Alternative options:

Take a purely commercial approach and sell more units for market sale to generate an increased profit margin. This was not a recommended option as the Council was in the position to use its property activities not only to generate profit but also to contribute to wider social and environmental objectives.

Not proceed with the development. This was not a recommended option as the original building has been demolished and the site is sitting vacant. Not proceeding may lead to reputational damage with the public as well as the contractors who have tendered for this development opportunity.