Agenda item

This report provides an update in relation to procurement of a private sector partner to establish a housing and regeneration Joint Venture.

Mr Miah presented the report which provided an update in relation to procurement of a private sector partner to establish a Housing and Regeneration Joint Venture.

The Cabinet, at its meeting on 3 February 2014, had approved the appointment of Stanhope plc (subject to standstill period) as the Joint Venture partner. The report set out the key benefits of adopting a joint venture approach.

Stanhope plc  had submitted a detailed Site Specific Development Plan for Watermeadow Court and Edith Summerskill House (‘Opportunity Sites’), which would be adopted by the Joint Venture on its establishment. This would lead to the development of around 301 homes on the two sites, of which it was anticipated that 119 would be affordable (low cost home ownership).

The key benefits included the creation of approximately 350 new construction jobs and 14 apprenticeships, with 15% of the construction workforce to be taken from local residents and 10% of building contracts to be let to businesses in the borough.

Mr Miah responded to Members’ queries. The process had been set out at the beginning of the procurement exercise and  had been applied rigorously with  external advice in terms of selecting the final bidder. It has been set out that when this stage was reached, there would also be a reserve bidder in case negotiations with the preferred bidder were not concluded successfully.  On the basis of the scores and evaluation, Berkley Group plc and Barratt London (BDW Trading Limited) had been selected as the second and third place Bidders.

The bids had been based on the Council’s planning policies and in relation to the housing strategy. It was currently proposed that 40% of the homes would be affordable housing and the remaining 60% market value in order to provide a viable scheme.

Councillor Cowan queried whether any checks were proposed to ensure UK residents were able to buy those homes or would it be a free market approach whereby homes could be purchased by overseas investors purely for investment gains. Councillor Johnson responded that whilst there was nothing which the Council could do or should do to restrict foreign ownership of assets in the United Kingdom,  a flat sales structure allowing UK residents and overseas investors an equal opportunity to buy through the free market was the preferred solution.

Councillor Cowan referred to recent off plan sales of Sovereign Court by St. Georges, a subsidiary of the Berkeley Group. Councillor Cowan stated that Councillor Graham was conflicted in respect of St. Georges. Councillor Graham asked that Councillor Cowan either substantiated this remark or withdrew it.  Councillor Cowan responded  that Councillor Graham had supported a St. Georges development within his ward.  Councillor Graham responded that this was whilst he was on the Planning Committee and did not mean that he had a conflict of interest. Councillor Cowan stated that he wished to record that he considered that Councillor Graham had a consistent record of advocating on behalf of St. Georges. Councillor Graham stated that he rejected this and explained his reasons for supporting the Fulham Reach site.

Mr Miah confirmed that the Joint Venture would be a 50/50 Limited Liability Partnership which would be taken forward by the Council and developer. The Council would receive the land value up front. Both risk and post development profits would be shared 50/50. The Council had provided the land and Stanhope plc would provide development capacity and expertise and the capital. There had been an assessment to ensure that returns were commensurate with input and risk. PWC and Lambert Smith Hampton had advised the Council in respect of meeting its obligations.

Councillor Cowan queried how these figures had been calculated as he considered them to be extremely low, given the revenue which could be generated by just owning a  brownfield site in Hammersmith & Fulham. Mr Miah responded that it was a 50/50 joint venture and that the Council would receive the land value after planning and that in principle this was the same proposal as previously brought to the Committee. Councillor Graham stated that there had been no objections when the proposal was originally brought to the Committee.

Mr Miah responded to further queries. Following the Cabinet Decision, formal letters had been issued to all parties and there were no longer Reserve Bidder. The Council had built in a range of protections into the legal documentation to protect its position.

As part of the procurement exercise the final three bidders were asked to progress design in discussion with the Planning Authority up to RIBA stage C, which is essentially the pre-planning stage which includes fairly advanced modelling in terms of design, site capacity and transport.

Councillor Johnson confirmed that the affordable housing would be made available only to those people on the Homebuy register.

Councillor Cowan stated that whilst  the Opposition supported the Homebuy Register and the Joint Venture in principle, there were concerns in respect of the detail and the agreement with Stanhope plc. Council Johnson responded that the 3 February Cabinet meeting had provided an opportunity for the Opposition to query the detail of the Joint Venture.

RESOLVED THAT:

The report be noted.