Cabinet |
22 January 2025 |
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Public Sector-Led Garden Community |
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Will this be a Key Decision? |
Yes |
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Urgency |
Not Applicable |
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Final Decision-Maker |
Cabinet |
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Lead Head of Service |
William Cornall |
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Lead Officer and Report Author |
Helen Garnett |
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Classification |
Public |
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Wards affected |
All, but in particular Harrietsham, Lenham & North Downs Ward |
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Executive Summary |
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Homes England (HE) and Maidstone Borough Council (the Council), as joint Co-Promoters, are leading the delivery of Heathlands Garden Community. To date, activities have included land assembly, promotion of the site for inclusion in the Local Plan Review (LPR), and early evidence base work to support the production of the upcoming Supplementary Planning Document (SPD) and Outline Planning Application (OPA).
The Local Plan Review was adopted in March 2024 with Heathlands as an allocation in that plan for 5,000 homes plus infrastructure and employment land. This report outlines progress to date, next steps, and project finance.
As in the case of previous reports to this Committee, the contents of this report relate to the Council's position as a potential property owner/developer and not as Local Planning Authority (LPA).
This report will be presented to the Housing and Community Cohesion PAC and Overview and Scrutiny Committee before being decided by Cabinet. |
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Purpose of Report
This report will provide an update of the current position of the Heathlands Garden Community. The report will then seek for approval for additional expenditure beyond the currently approved sum. |
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This report makes the following recommendation to the Cabinet: That
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1. The contents of
this report be noted; and 2. The additional spend of £2.5m associated with providing Supplementary Planning Document support to the Local Planning Authority and submission of Outline Planning Application be agreed.
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Public Sector-Led Garden Community |
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1. CROSS-CUTTING ISSUES AND IMPLICATIONS
Issue |
Implications |
Sign-off |
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 We expect the recommendations will materially improve achievement of all four corporate priorities. |
Director of Regeneration and Place |
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(s) of the four cross cutting objectives by seeking to deliver necessary housing supply within the borough in a manner that best protects and enhances the ability to achieve cross-cutting objectives. |
Director of Regeneration and Place |
Risk Management |
Risk is set out in section 5 of this report.
|
Director of Regeneration and Place |
Financial |
Accepting the recommendations will demand new capital spending of £2.5m. £2.5m is included in the draft budget for 2025/26 that is going through the approval process now. |
Section 151 Officer & Finance Team |
Staffing |
We will deliver the recommendations with our current staffing.
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Director of Regeneration and Place |
Legal |
· MBC has the statutory power under Section 1 of the Localism Act 2011 to do anything that individuals generally may do. Further, under Section 111 of the Local Government Act 1972 MBC has the power to do anything (whether or not involving the expenditure, borrowing or lending of money or the acquisition or disposal of any property or rights) which is calculated to facilitate, or is conducive or incidental to, the discharge of any of its functions.
· Acting on the recommendations is within the Council’s powers as set out in the legislation noted above. |
Deputy Head of Legal |
Information Governance |
The recommendations do not impact personal information the Council processes. |
Information Governance Manager |
Equalities |
The recommendations do not propose a change in service therefore will not require an equalities impact assessment |
Equalities & Communities Officer |
Public Health
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· We recognise that the recommendations will have a positive impact on population health or that of individuals. · Access to affordable, safe and appropriate housing with access to outdoor spaces and active public transport is a key factor in addressing the wider determinants of health. |
Health Policy Officer |
Crime and Disorder |
There are no implications to Crime and Disorder |
Director of Regeneration and Place |
Procurement |
On accepting the recommendations, the Council will continue to work with Homes England who are leading on procurement in consultation with the Council. We will complete those exercises in line with financial procedure rules. |
Director of Regeneration and Place and Section 151 Officer |
Biodiversity and Climate Change |
· There are no implications on biodiversity and climate change. · This aligns with action 1, 2, 3, 5, 6, of the Biodiversity and Climate Change Action Plan |
Biodiversity and Climate Change Manager |
2. INTRODUCTION AND BACKGROUND
2.2
Heathlands was
conceived in response to the need for the Council to identify a significant
number of sites in its LPR. Initially promoted by just the Council, in 2021
Homes England (HE) entered into a Collaboration Agreement with the Council to
jointly promote the site through the LPR and secure an Outline Planning
Permission (OPP).
2.3
The LPR was
adopted in March 2024, thereby securing the allocation. The allocation provides
a significant portion of housing supply in relation to the current adopted
plan, and going forward will provide a continued supply through several further
Local Plan Reviews.
Partnership with Homes England and
Project Team
2.4
The Co-Promoters (the
Council and HE) are working together to deliver Heathlands. HE is leading on
securing land options on the principal 330ha landholdings.
2.5 The Co-promoters have commissioned a multidisciplinary team of consultants to undertake work to secure the grant of OPP. Consultancy teams will handle the following aspects:
· Project Management (WSP)
· Planning advice (WSP)
· Masterplanning (Fabrik)
· Railway station consent, including Business Case (WSP)
· Engagement (Meeting Place)
· Highways (WSP)
· Technical (WSP)
·
Nutrient
Neutrality (WSP)
2.6
Other commissions
include, Pinsent Masons (legal advice), and Carter Jonas (property valuation,
business planning and delivery support).
2.7
The Council and
Homes England have signed a Collaboration Agreement setting out the objectives
and requirements of the project, and the obligations of each party. For both
parties the agreement requires that the costs of promoting the scheme to the
submission of an OPA are split on a 50/50 basis. Costs associated with
securing the principal land options and site assembly, along with any costs of
construction and S.106 costs, fall solely with Homes England. Any costs
incurred by the Council and HE shall first be reimbursed following disposal of
all or any part of the site (most likely in the form of serviced development
parcels to developers). Following that any profit accrued from disposals will
be shared between HE and the Council. The project should therefore recover any
costs incurred by the Council.
2.8
The Collaboration
Agreement also requires that the Council has first refusal on any affordable
homes delivered through the project (expected to be 1,600 affordable homes),
and first refusal on any commercial land offered for sale by Homes England.
The Agreement sets out the intention of both parties that the Council shall
take over stewardship of all non-adopted public realm and create a legacy board
to manage this.
Planning update
2.9 Heathlands has been developed and promoted by the Co-Promoters for several years through the various stages of the LPR, which was the first step in the process to starting on site. These stages are as follows:
i. Secure allocation in the LPR
ii. Technical Due Diligence
iii. Supporting the LPA to produce and adopt the SPD.
iv. Prepare and submit OPA
v. Reserved Matters planning application
vi. Start on site
2.10
Now that the LPR
is adopted and the allocation is secured, work has commenced on the SPD which
will sit alongside the allocation policy in the adopted LPR, for which the LPA
has commenced early preparatory work.
2.11
At this time, the
SPD is programmed to be adopted in November 2025. Following adoption, the OPA
and Design Code will be prepared in accordance with the LPR policy for
Heathlands and the SPD. Submission of the OPA is currently programmed for
Summer 2026. Any delays to the adoption of the SPD, which has already had a
long lead in time to date, represent a delivery risk to the project.
2.12
The Co-promoters
have undertaken a refreshed comprehensive Technical Due Diligence (TDD)
exercise for the site. This has established an up-to-date position on the key
constraints and opportunities of the site and will help to inform the SPD, the
OPA, and the masterplan process that will feed into both. The purpose of the
TDD was to identify and reduce/ mitigate risk, along with enabling the
master-planning team to better explore options and shape the plans.
2.13
The TDD work has
been supplied to the LPA so that the information within it can be used to
commence writing the SPD.
2.14
The SPD will be
supported by an additional detailed evidence base of technical reports, and
these will be provided by the promoter team. Survey work for this evidence
base is already underway with the timetable having been agreed by the LPA. The
evidence base includes:
· Ecology assessment.
· Archaeology assessment.
· Minerals assessment.
· Arboricultural assessment.
· Heritage and archaeology, including geophysical survey.
· Flood Risk Assessment and Concept Drainage assessment.
· Nutrient Neutrality assessment.
· Transport assessment.
· Land Contamination/ground conditions assessment.
· Noise and Vibration assessment.
· Air quality assessment.
· Strategic Infrastructure assessment.
·
Landscape Strategy
assessment.
2.15
The Co-promoters
have adapted the evidence base so that these studies can serve both the SPD and
OPA. Consequently, this requirement to provide technical support to the LPA
has resulted in previously unbudgeted for costs.
2.16
Following grant of
OPP, Reserved Matters applications will be developed to further refine and
define the detail of the development.
2.17
The OPA and
Reserved Matters applications will be informed by a range of engagement and to
ensure that consultation is robust, constructive, and that stakeholders and the
community feel embedded in the process, the co-promoters will prepare
comprehensive Engagement Strategy.
2.18
Once Planning
Permission is granted then the site will be divided into parcels which are
prepared for development, so key infrastructure such as the main access points
and wastewater services will be provided by a master developer. These parcels
will then be sold or ‘disposed of’ to developers who will then deliver the
development in accordance with the SPD, OPP, Design Code and Reserved Matters
applications. This arrangement enables developers to focus on delivering
housing and associated infrastructure.
2.19
Delivery of the
first housing on site in 2031 is premised on the ability to submit OPA in
summer 2026, with Reserved Matters applications, pre-commencement conditions
compliance, and preliminary infrastructure including wastewater treatment
subsequently taking place prior to commencement of the first houses on site.
Consequently, the programme of pre-commencement activity for delivery on site
is tight. Should any of these elements of pre-commencement programme be delayed
then it is likely that delivery of the first homes will be delivered later than
2031.
2.20
To overcome
potential delays, the Co-promoters have been working hard to support the timely
production of an SPD that is viable and is able to deliver the requirements of
LPR policy. The promoters are particularly keen to ensure sufficient
flexibility in the SPD to respond to changes arising from OPA engagement,
market forces, changes in society, and retains flexibility to remain relevant
for the lifetime of the Heathlands project.
Railway station update
2.21
The requirement
for a new railway station is now set in policy, and therefore the scheme is
mandated to deliver this by the end of Phase 1. (2031 – 2037)
2.22
The Position
Statement presented at examination and initial findings from preliminary work
indicate that the station is likely to become financially self-sufficient
during the build out of Heathlands. There are some local concerns regarding the
impact on Lenham station, however there is deemed to be minimal impact (three
minute delay on the network). There are no proposals for Lenham station to be
closed.
2.23
In order to
deliver new rail infrastructure, there is a requirement for the promoters to
engage in a formal process with Department for Transport and Network Rail to
establish the best approach to delivery. The Co-promoters commissioned WSP to
prepare a draft Strategic Outline Business Case (SOBC) which is the first in a
multi-stage approvals process to secure the design and planning of the new
station, in line with Network Rail’s PACE (Project Acceleration in a Controlled
Environment) requirements. The PACE process is split across four broad
stages: project definition, constraints, single option development (ES1-3);
design and standards approval (ES4-5); construction complete (ED6); project
handover (ES7-8).
2.24
Work in now
starting on ES1-3 which will define the project, identify constraints and
refine feasibility, following which a single option will be endorsed.
2.25
Whilst this is a
separate process to the OPA for Heathlands, the two approvals processes will be
run in parallel by WSP to ensure full integration of proposals and maximise
placemaking and high-quality design opportunities.
Land
Assembly
2.26 HE has been negotiating option terms with the principal landowners that make up the red line of the settlement. The total area of these landownerships is approximately 813 acres. HE has 75% of the total site red line under Option agreements.
2.27
The remaining
owners were awaiting the outcome of the LPR examination before entering into
any agreement. Now that the LPR is adopted discussions have re-recommenced.
Project Finance
2.28
At the point the Collaboration
Agreement was signed it was envisaged that the total cost of securing the
allocation of the site and the OPP would be circa £3m (£1.5m each). To date
this sum has been spent.
2.29
Since the
Collaboration Agreement was signed, the project has undergone significant
changes and has accrued additional costs. The likely shared cost of securing
the Allocation and making the OPA are now forecast to be £8m, for the following
reasons: -
·
Securing the
Allocation through the LPR took much longer than envisaged, and was far more
complex, requiring much more technical evidence and input, as well as legal
costs to secure the desired outcome. At the time of agreeing the initial
budget it was envisaged that the LPR would be submitted for examination in 2021
with adoption by 2022, following a single Regulation 18 consultation.
Ultimately the LPR underwent an extra consultation stage and was delayed due to
a need to find additional sites, and this resulted in additional costs for the
promoters.
·
Prior to
submission and during the examination process, changes to the legislative
framework resulted in a requirement for several additional evidence streams.
This included: costly works to establish suitable mitigation for nutrients and
to pass an Appropriate Assessment in line with new requirements introduced by
Natural England; additional viability testing; additional studies on minerals
which was introduced at a late stage; early position papers relating to the new
railway station. Finally, the examination process resulted in significant
additional transport work which proved particularly high in cost.
·
Challenges to the
LPR and a focus of some of these on Heathlands in particular, both during and
after examination, resulted in the accrual of significant additional legal
costs. Specifically, the cost of legal representation by way of barrister
attendance and support through the examination process.
·
The Allocation
introduced the need for an SPD, another document that is expensive and time
consuming to produce, resulting in the pushing back of the project timeline and
requiring the adaption of a significant amount of expensive technical evidence
and survey work to support the LPA.
·
The policy for the
Allocation now includes a railway station, which is another expensive and
time-consuming matter to bring forward (i.e. the OBC and its approval process).
This workstream in itself will require an additional £800,000.
·
A refreshed TDD
resulted in the identification of additional technical costs at this stage,
albeit it identified overall construction cost savings for the eventual
project. This work also expanded the scope of previous technical work to
incorporate land to the north of the railway line which had been included at a
later stage.
2.30
So far, the
promotors have spent c £3m (£1.5m each) on planning and promotion costs, but by
the time the OPA is submitted, this will have risen by a further £5m, to £8m,
with this expenditure to be shared 50:50 between the promotors, on the
following cost areas: -
· Rail SOBC and approval
· Masterplanning
· Environmental Impact Assessment and Habitat Regulations Appropriate Assessment
· Design Code
· Community engagement
· Stewardship and Governance
· Planning Performance Agreement & Planning Application fees
· Disposals/ Valuation technical services
· Planning legal fees (EiP and OPA)
·
Project management
2.31
For the next phase
of expenditure (£5m, shared 50:50), the cost breakdown is as set out below:
Shared Cost Workstream |
Joint cost |
MBC cost |
Planning application/SPD evidence base. |
3,888,000 |
1,944,000 |
Community Engagement and Comms |
530,000 |
265,000 |
Planning Performance Agreement and Planning Application fees |
404,000 |
202,000 |
Disposals/Valuation Advice |
150,000 |
75,000 |
Legal Advice |
150,000 |
75,000 |
|
|
|
50/50 Shared cost for MBC |
|
£2,561,000 |
2.33 As set out earlier, these costs are the first priority for reimbursement following disposal of the site after grant of planning permission is achieved.
2.34 The Housing and Community Cohesion Policy
Advisory Committee will consider the report on 14 January 2025.
3. AVAILABLE OPTIONS
3.1 Option A: To approve the additional budget of £2.5m (in addition to £1.5m sunk cost, to give a total exposure of £4m) for the Council as set out in the report, in order that the project may be progressed to OPA. This will allow Heathlands to come forward in time to meet the projected housing delivery as set out in the LPR. This is consistent with the Council’s Strategic Plan and The Council would continue to operate in accordance with the Collaboration Agreement.
3.2 Option B: To not approve the additional budget and withdraw from the Collaboration Agreement. Should the additional funds not be approved, then this would mean having to withdraw the project and write off the sums already invested to date, with significant reputational and financial cost for the Council. Additionally, this would breach the Collaboration Agreement with HE resulting in reputational cost with a key partner of the Council, and loss of the right to first refusal on affordable homes & commercial. Finally, should Heathlands not go ahead then a significant portion of the housing land supply would need to be written off leaving unmet need within the LPR.
4. PREFERRED OPTION AND REASONS FOR RECOMMENDATIONS
4.1 The preferred option is Option A. This is consistent with the Council’s broader objectives, would work towards delivery of future housing delivery in line with the LPR trajectory, and would ensure that The Council operates in accordance with the Collaboration Agreement.
5. RISK
5.1 The risks associated with the project, including a failure to approve further funding for the project are set out as follows:
· Delays to the adoption of the SPD and subsequent cost implications.
· Refusal of OPA, or any OPA approval being subjected to onerous conditions.
· Lack of engagement with, and cohesion between stakeholders during the SPD phase.
· Land assembly for the remaining unsecured land remains a risk.
· ‘At risk’ consultancy expenditure would become abortive, if the project fails.
· Council reputation would be damaged if it failed to deliver this key strategic project.
· A period of uncertainty for the community affected.
6. NEXT STEPS: COMMUNICATION AND IMPLEMENTATION OF THE DECISION
6.1 The next steps will be:
· The Co-promoters to continue to develop the proposal for community and stakeholder engagement, communications and stewardship in collaboration with the LPA.
· HE, the Council, and WSP to work with the Local Planning Authority to prepare the required SPD, Design Codes and Outline Planning Application.
· Continue to work with the external consultant team to ensure that work can continue at the appropriate pace to develop the strategic business case for the delivery of the new Heathlands railway station within the required timescale i.e., delivery by phase 1.
· The Co-promoters will prepare OPA, aiming for submission in Summer 2026.