MAIDSTONE BOROUGH COUNCIL
RECORD OF DECISION OF THE CABINET
Decision Made: 7 February 2024
1,000 Homes Programme – Individual Scheme Updates (Five sites)
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Issue for Decision
To seek approval for the updated works cost, changes in tenure and to appoint the contractor to deliver four of the schemes for the 1,000 Homes Programme.
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Decision Made
That:
1. The increased works costs for Bathstore, Land at Granville Road and Britannia House, be approved, taking note of scheme performance summaries in Appendix 1 to the report. To approve the switch in tenure from Affordable Rent to Social rent for all 4 sites and in addition the 7 Market rented units to social rented units at the RBL site. 2. The Director of Finance, Resources and Business Improvement, be given delegated authority, to appoint the preferred contractor to carry out the necessary building works as per the tenders for Britannia House, Corbens place, Land and Granville Road, and the Bathstore noting that the Corbens place works tender was returned under the works budget previously approved.
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Reasons for Decision
The development strategy to
deliver 1,000 new affordable homes was agreed by the Policy and Resources
Committee on 19th January 2022. The report relates to the five
schemes that form part of the 1000 homes programme, that have already been
approved by Cabinet since the inception of the programme. The schemes in
question are:- a. Royal British Legion Site (RBL) Heather House Site b. Bathstore c. Corbens Place d. Britannia House e.
Land at Granville Road Cabinet re-approvals are
required on all five sites in respect of changes to each scheme. These
changes are as follows: a. Royal British Legion Site (RBL) Heather House site – a change in tenure from 7 market rented homes to 7 affordable homes, with the addition of grant funding from Homes England and the use of MBC S106 contributions. The four First Homes units will remain unchanged. b. Bathstore- Increased construction costs. c. Corbens Place- Reduced construction costs. d. Britannia House- Increased construction costs. e. Land at Granville Road-Increased construction costs.
The RBL scheme is already on
site, and for the others the tender procurement process has been completed
and there is now a need to appoint the preferred contractor on aggregate
higher cost than previously approved. However more positively, the
increased cost and tenure change can be accommodated without materially
diminishing the financial returns to the council. If the Council chooses to
let the properties at Affordable Rents (80% of market rent capped to the
Local Housing Allowance), this is Option A and the returns are
broadly maintained because the Local Housing Allowance has recently risen,
and because the council is advised to allocate £15,000 per affordable homes
of S106 monies that it holds from developers contributions for off-site
affordable housing provision. If the Council chooses to let
the properties at Social Rents (a formula linked to local property prices in
1999, and average local earning), that yields rents at circa 50% of the
Market Rent plus service charges, then this is Option B, the
returns are maintained by a more favourable grant rate for this tenure from
Homes England. Financial Commitments The exempt Appendix 1 to the
report sets out the previously agreed metrics of the schemes, with the latest
tenures, and construction costs as either Option A Affordable Rent
or Option B Social Rent. Proposed Schedule of Events All Contractors were invited
to tender based on a maximum construction period of 105 weeks including any
allowance for the detailed design of the schemes. Details of the programme
proposals, in accordance with the preferred contractor’s tender submission
are given below.
The Housing, Health and
Environment Policy Advisory Committee considered the matter on the 30 January
2024, and recommended that the report recommendations be agreed by the
Cabinet. The approval of the recommendations will enable the project team to appoint the contractor to commence works.
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Alternatives considered and why rejected
Option 1 - To approve that the
Director of Finance and Business Improvement is granted delegated authority
to enter into the works contract based on Option A of the exempt appendices,
(Affordable Rent) and to approve the change in tenure for the RBL site from
Market rent to Affordable Rent, noting the grant
rates from Homes England and the allocation of MBC Section 106 monies to all
five schemes. Option 3 - Not to approve entering into the works
contract, leave the sites secured and re tender at a later date although
tender prices are unlikely to come down. This however would continue to incur
utilities costs and site security costs. This is not recommended as there
would continue to be uncertainty as to the future of four of the sites. These options were rejected as if option 1 were pursued the Cabinet could advise officers to bid for more favourable terms from Homes England, but that would be above the level allocated by Homes England generally, so this may not be successful. Option 3 would continue to incur utilities costs and site security costs, and there would continue to be uncertainty as to the future of four of the sites. Homes England have provided a verbal confirmation in respect of the terms set out in the agreed recommendations.
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Background Papers
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I have read and approved the above decision for the reasons (including possible alternative options rejected) as set out above. Signed:_ __________________________________ Leader of the Council – Councillor David Burton
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Full details of both the report for the decision taken above and any consideration by the relevant Policy Advisory Committee can be found at the following area of the website
Call-In: Should you be concerned about this decision and wish to call it in, please submit a call-in form signed by any three Members to the Proper Officer by: 5pm on 16 February 2024 |