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Cabinet |
28 June 2023 |
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Property Acquisition for 1,000 Affordable Homes Programme |
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Will this be a Key Decision?
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Yes
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Urgency |
Not Applicable
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Final Decision-Maker |
Cabinet |
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Lead Head of Service |
Philip Morris – Head of New Business and Housing Development |
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Lead Officer and Report Author |
Philip Morris – Head of New Business and Housing Development |
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Classification |
Public Report with Exempt Private Appendices The information contained within the Appendices has been considered exempt under the following paragraph of part 1 of schedule 12A to the Local Government Act 1972:-
3 = Information relating to the financial or business affairs of any particular person (including the authority holding that information)
Public Interest Test
On applying the public interest test, the public interest in non-disclosure of the report outweighs the public interest in disclosing this information. The reasons in favour of disclosure are the public interest in ensuring value for money and the reasons against disclosure are the harm to the Council’s financial position in respect of a commercial transaction. Any disclosure of such information may compromise the negotiating position of the Council. Keeping the information exempt is therefore in the public interest.
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Wards affected |
Fant Ward |
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Executive Summary
The Council has an ambitious housebuilding programme that is funded via the Council’s adopted Capital Programme. This housebuilding programme encompasses homes for Affordable Housing (AH), Private Rented Sector Housing (PRS) and on occasion a limited amount of exposure to Market Sale (MS) Housing too. The development strategy for this programme was approved by the Policy & Resources Committee on 19th January 2022, and the proposals within this report are consistent with delivering that strategy.
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Purpose of Report
For Consideration and Recommendation to Cabinet |
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That the Cabinet:
1. Approve the financial returns for the proposed acquisition as shown in Exempt Appendix 3 of this report, which supports the Housing Development and Regeneration Investment Plan and overall Development Strategy.
2. Give delegated authority to the Director of Finance, Resources and Business Improvement to:
a) Negotiate terms for the purchase of the proposed acquisition for the sum as shown in the Exempt Appendix 3 of this report. b) Procure and enter into all such deeds, agreements, contracts and documents which may be required to facilitate the purchase of the site, and the subsequent redevelopment works required to deliver the scheme referred to in this report. Including (but not limited to) any related appointments such as suitably qualified consultants and a Contractor. c) Subject to satisfactory conclusion of all due diligence to negotiate and finalise and complete all legal formalities, deeds and agreements which may be required to facilitate the purchase. 3. Authorise the Head of Mid Kent Legal Services to appoint the Solicitors required to negotiate and complete the necessary contract documentation, deeds and agreements associated with the purchase and construction works on the terms as agreed by the Director of Finance, Resources & Business Improvement. 4. Agree, post completion of the procurement process, to appoint a contractor for the build cost detailed in the financial summary at Exempt Appendix 3. If in the event tenders for the works cost are in excess of the agreed sum then officers will return to the Committee/Cabinet to seek further approval prior to the development itself commencing.
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Property Acquisition for 1,000 Affordable Homes Programme |
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1. CROSS-CUTTING ISSUES AND IMPLICATIONS
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Issue |
Implications |
Sign-off |
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Impact on Corporate Priorities |
The four Strategic Plan objectives are:
· Embracing Growth and Enabling Infrastructure · Safe, Clean and Green · Homes and Communities · A Thriving Place
The purchase of the homes described in this report supports the Councils Development Strategic plan in building 1,000 Affordable Homes, within the agreed capital spend of 200m.
Accepting the recommendations will materially improve the Council’s ability to achieve and support Embracing Growth and Enabling Infrastructure and Homes and Communities.
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Philip Morris Head of New Business and Housing Development |
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Cross Cutting Objectives |
The four cross-cutting objectives are:
· Heritage is Respected · Health Inequalities are Addressed and Reduced · Deprivation and Social Mobility is Improved · Biodiversity and Environmental Sustainability is respected
The report recommendations support the achievement of the Deprivation and Social Mobility is improved cross cutting objective by delivering a high-quality development of affordable homes.
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Alison Broom Chief Executive |
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Risk Management |
Already covered in the risk section.
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Philip Morris Head of New Business and Housing Development |
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Development
of the specific site is not currently included in the draft capital programme,
however monies have been allocated for indicative schemes such as this. This
scheme would therefore draw upon those resources already allocated to those
indicative schemes, subject to the risks set out in this report and to the
initiatives described in the report to close any potential viability gap. |
Paul Holland (Senior Finance Manager – Client Accountancy)
Philip Morris Head of New Business and Housing Development |
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Staffing |
We will deliver the recommendations with our current staffing. However, we will employ external consultants to help facilitate and oversee the redevelopment works with the appointed contractor.
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Philip Morris Head of New Business and Housing Development |
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Legal |
S120(1)(2) of the 1972 Act also enables MBC to acquire land to be used for the benefit, improvement or development of their area or for the purpose of discharging MBC’s functions.
MBC must follow its internal procurement rules as detailed in the Constitution and comply with all legal requirements as may be applicable from time to time.
Acting on the recommendations is within MBC’s powers as set out in the above statutory provisions.
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Russell Fitzpatrick MKLS |
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Information Governance |
The recommendations will impact personal information (as defined in UK GDPR and Data Protection Act 2018) the Council processes.
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Georgia Harvey and Lauren Connett - Information Governance Team |
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Equalities |
The recommendations do not propose a change in service therefore will not require an equalities impact assessment |
Nicola Toulson Equalities & Communities Officer |
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Public Health
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We recognise that the recommendations will not negatively impact on population health or that of individuals. |
Philip Morris Head of New Business and Housing Development |
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Crime and Disorder |
The recommendation will not have a negative impact on Crime and Disorder. |
Philip Morris Head of New Business and Housing Development |
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Procurement |
On accepting the recommendations, MBC will then follow procurement exercises for commissioning consultancy advice to secure the works contract. We will complete those exercises in line with financial procedure rules.
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Philip Morris Head of New Business and Housing Development |
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Biodiversity and Climate change |
Providing 1,000 new affordable homes will have a significant impact on the Council’s carbon footprint and 2030 Net Zero commitment. Highly thermally efficient, low carbon heating, and climate adapted housing, as well as consideration for shared heating solutions, renewable energy, active travel, and biodiversity enhancements as part of the development strategy will ensure alignment with the Biodiversity and Climate Change Action Plan.
Special attention is needed in regards to the implications of the following to action of the Biodiversity and Climate Change Action plan:
Action 9.3 Deliver Policy that ensures sustainability criteria is used for all Maidstone Borough Council construction of new buildings (offices, housing, leisure facilities) and sustainability criteria is part of decision-making process for all Maidstone Borough Council building acquisitions, to ensure buildings owned by the council are sustainable, future proofed, and align with our net zero commitment.
Action 9.4 Establish criteria for investment in climate change and biodiversity and invest to save schemes (eg. renewables, heat networks). These will consider relative impact in terms of carbon reduction and ease of delivery, such that expenditure is focused on deliverable, affordable initiatives that maximise impact on the carbon reduction targets. |
James Wilderspin -Biodiversity and Climate Change Manager |
2 INTRODUCTION AND BACKGROUND
2.1 When appraising new housing development opportunities, the New Business and housing Development Team consider proposals against the following standard risk headings: -
· Site location and ownership.
· Town Planning Status.
· Schedule of accommodation, tenure mix and parking ratio.
· Quality – Maidstone Building for Life 12.
· Housing Management.
· Deal structure.
· Contractor procurement.
· Financial viability.
· Delivery programme.
· Professional team.
2.2 The opportunity proposed in this report is fully appraised against these standard risk headings in the exempt Appendix 1.
3 AVAILABLE OPTIONS
3.1 Option 1: The Cabinet could choose not to approve
the purchase of the
proposed acquisition. The Council would however lose an excellent opportunity
to purchase a site with full planning permission with access to good transport
links and amenities to add to its affordable housing stock. It will assist towards
much needed affordable accommodation in the Borough and contribute towards the
Council 1,000 Affordable Homes delivery target.
3.2 Option 2: The Cabinet approve the purchase
of the proposed acquisition on the agreed terms and procures the professional consultants. That post completion of the procurement process to appoint a contractor for the works cost detailed in the financial summary Exempt Appendix 3. If in the event tenders for the works cost are in excess of the agreed sum then officers will return to the committee to seek further approval prior to the development itself commencing. This site when built would assist with affordable housing provision, contributing towards delivering the 1,000 affordable homes target.
4. PREFERRED OPTION AND REASONS FOR RECOMMENDATIONS
4.1 Option 2 is the recommended option. A significant amount of work and negotiation has been completed by officers to reach this accepted offer stage with the vendor. The scheme has full planning consent on purchase and represents a good investment opportunity which supports the 1,000 Affordable Homes Development Strategy.
4.2 The acquisition will also deliver a number of new apartments within a residential location, making a valuable contribution to the borough’s identified affordable housing need.
5
RISK
5.1
Please
see exempt appendix 1.
6 CONSULTATION RESULTS AND PREVIOUS COMMITTEE FEEDBACK
6.1 The was considered by the HHE PAC on 13 June 2023 the committee recommended that the Cabinet approve the recommendations. In doing so, and with the support of the Cabinet Member, the wording in recommendation 4 was changed to ‘build cost’ so that it correlated to the Exempt Appendix 3.
7 NEXT STEPS: COMMUNICATION AND IMPLEMENTATION OF THE
DECISION
7.1 The next steps, will be to secure the site with exchange and completion of contracts on the terms as agreed by the Director of Finance, Resources and Business Improvement, subject to RICS valuation, and satisfactory contract. Alongside the acquisition, officers will work with the appointed Employers Agent to source a suitable contractor, and will return to Committee/Cabinet, as per point 4 of the recommendations, should there be any variance to the build cost provided in Exempt Appendix 3.
8 REPORT APPENDICES
The following documents are to be published with this report and form part of the
report:
· Exempt Appendix 1: Risk Assessment
· Exempt Appendix 2: Site Layout
· Exempt Appendix 3: Financial Viability Outputs
9 BACKGROUND PAPERS