Issue - meetings

This report presents the opportunity to acquire a Build to Rent (BTR) residential scheme in Carters Quay Poole. The acquisition of the scheme by the Council will provide 161 new homes and ancillary ground floor residential amenity and commercial space.

This scheme will support the delivery of the Council’s housing targets and deliver on the ambition to move the regeneration of the Holes Bay site forward, both of which are cornerstones of the Council’s “Big Plan”.

The proposed acquisition has been considered by the Council’s newly formed Urban Regeneration Company (URC). which has carried out a design review.  A number of their recommended design improvements will be made to the scheme within the agreed budget.

The confidential appendix to this report considers the detailed purchase terms and the financial business case for proceeding. It concludes that, subject to the delivery and operational risks (including the treasury management risk), it will deliver an overall positive return for the Council.

It is proposed that the purchase is funded using prudential borrowing and will be within the recently increased parameters of the Council’s prudential indicators as proposed to Council on the 14 September 2021. The revisions to the Councils prudential indicators were in accordance with the financial strategy adopted to support the Councils future ambitions and were endorsed by the Audit & Governance Committee at its meeting on 29 July 2021.

The BTR scheme will be operated via the Council’s wholly owned company, Seascape Homes and Property Limited and supports the ambitions of this company to increase its operational exposure within the BTR market across the BCP area.

This scheme will support the Council’s Corporate Plan objective to ‘create Dynamic Places through strategic regeneration or redevelopment opportunities’ and will also deliver significant socio-economic benefits.

RESOLVED that Cabinet: -

(a)           Approves the acquisition of the land and buildings known as Carters Quay outlined in red on the attached plan marked Appendix B, which will include the consented Build to Rent residential housing scheme as described in para 1 of this report;

(b)           Approves the payment of the purchase price for Carters Quay as set out in the confidential Appendix A;

(c)           Authorises the Corporate Property Officer in consultation with the Leader of the Council, the Council’s Section 151 and Monitoring Officer to agree the detailed provisions of all legal structure and documentation and enter into the relevant contract/(s);

(d)           approves the intention to grant up to 50-year lease to Seascape Homes and Property Limited subject to their board approval on terms to be agreed by the Corporate Property Officer, in consultation with the Monitoring Officer; and

RECOMMENDED that Council approve: -

(a)           the Capital Investment Programme be amended to include provision for this acquisition to be funded by prudential borrowing, as detailed in the confidential part of this report, and authorises the Section 151 Officer, in consultation with the Portfolio Holder for Finance, to determine the detailed funding arrangements for the forward purchase of the BTR scheme

Voting: Unanimous

Portfolio Holder: Regeneration, Economy and Strategic Planning

NOTE: Council approval is required for the acquisition of the land, this approval will be sought at Council on the 14 September. 

Reason

To kick start the regeneration of the wider Holes Bay, Poole area through the delivery of this new high quality residential led development.

To contribute to the Council’s Corporate vision, specifically helping to create dynamic places, investing in the homes our communities need, revitalising and re-inventing our high streets and local centres in line with the vision set out in the Big Plan.

The proposals are in accordance with the Capital Investment Strategy (Non-Treasury) 2020-2025 (CIS) objectives and the criteria adopted by Cabinet on 18 March 2020. They are also consistent with the HM Treasury consultation response to the document: ‘Public Works Loan Board: Future lending terms’ which came into effect on 26 November 2020.

The Portfolio Holder for Regeneration, Economy and Strategic Planning presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'H' to these Minutes in the Minute Book.

Cabinet was advised that the report presented the opportunity to acquire a Build to Rent (BTR) residential scheme in Carters Quay Poole, and that the acquisition of the scheme by the Council will provide 161 new homes and ancillary ground floor residential amenity and commercial space, and that it would support the delivery of the Council’s housing targets and deliver on the ambition to move the regeneration of the Holes Bay site forward, both of which are cornerstones of the Council’s “Big Plan”.

In relation to this Cabinet was informed that the proposed acquisition has been considered by the Council’s newly formed Urban Regeneration Company (URC) which has carried out a design review, and that a number of their recommended design improvements will be made to the scheme within the agreed budget.

Further to this Cabinet was advised that the confidential appendix to this report considers the detailed purchase terms and the financial business case for proceeding. It concludes that, subject to the delivery and operational risks (including the treasury management risk), it will deliver an overall positive return for the Council, and that it is proposed that the purchase is funded using prudential borrowing and will be within the recently increased parameters of the Council’s prudential indicators as proposed to Council on the 14 September 2021.

Cabinet was informed that the revisions to the Councils prudential indicators were in accordance with the financial strategy adopted to support the Councils future ambitions and were endorsed by the Audit & Governance Committee at its meeting on 29 July 2021.

Cabinet was further informed that the BTR scheme will be operated via the Council’s wholly owned company, Seascape Homes and Property Limited and supports the ambitions of this company to increase its operational exposure within the BTR market across the BCP area, and that this scheme will support the Council’s Corporate Plan objective to ‘create Dynamic Places through strategic regeneration or redevelopment opportunities’ and will also deliver significant socio-economic benefits.

The Chairman of the Overview and Scrutiny Board addressed the Cabinet advising that although there had been no formal recommendations from the Board that the following issues had been highlighted;

-       that the scheme was now a little bit out of date and didn’t reflect the requirements of the climate emergency that we are signed up to; and

-       risks regarding the rents which were considered to be ambitious in the financial model

-       occupancy and void rates being used given that the local situation reflects a different situation where there seems to be rather a lot of unoccupied flats etc in the area

-       planning risks in that it is expiring fairly shortly

-       lack of affordable social housing

-       a view was expressed that if the council were to buy the site  ...  view the full minutes text for item 47

To consider the following Regeneration, Economy and Strategic Planning related reports scheduled for Cabinet consideration on 1 September 2021:

•         Carters Quay Build to Rent Opportunity, Poole

The O&S Board is asked to scrutinise and comment on the report and if required make recommendations and observations as appropriate.

The Cabinet report for this item is included with the agenda for consideration by the Overview and Scrutiny Board.

The Leader of the Council presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'D' to these Minutes in the Minute Book.

The Leader of the Council, supported by Officers, responded to comments and requests for clarification, details included:

• The existing planning permission on the site was due to lapse which was currently being addressed by the current landowner.
• This was an opportunity for the Council to progress this site and lead by example and that by purchasing the site it would allow the council to take control of promoting regeneration in the immediate area.
• The price for building on site also included the land transaction costs and the landscaping of the site and was not solely on a cost to build per unit basis.
• The Council would be discussing the issue of gas boilers with the current landowner/developer.
• Market report data was taken before, during and after covid restrictions were in place and is therefore up to date and accurate.
• There was the possibility that four of the commercial units on site could assist with the homeworking agenda.
• The development provided a large central courtyard which would provide a quality amenity space.
• It was not unusual for developers to gain planning permission and then not fully develop a site and this allowed the council to step in and assist with its regeneration ambitions.
• There was a need to take a long-term view and once critical mass took effect, additional projects would follow.
• In developing these proposals, the council had obtained professional and expert advice from both an external body and from its own officers, who had both been prudent in the financial modelling.
• The reward to the council for taking a risk would be the profitability of the scheme, which in turn would be used on the Council’s frontline services.
• In relation to the planning permission that was due to lapse, there was only a requirement to satisfy the commencement conditions on site, not to actually start the work itself.
• Over a period of time, the level of investment would break even, before going onto make a profit.
• This scheme was geared at the private rented sector  and there was a degree of flexibility in the numbers if they did not work out as planned.
• Seascape would be managing the development on behalf of the Council.
• The Council was having constructive discussions with Inland Homes to ensure that the risks were mitigated, which would continue.
• The Council had been prudent in its assessment of occupancy rates and had its own data in relation to market requirements.

 It was moved and seconded that the recommendations to Cabinet and Council be amended as follows:

In the recommendations to Cabinet:

a)    Delete “and buildings” after ‘land’ in first line

b)   Insert “for the land” after ‘price’ in the first line

c)    –

d)   Insert a new d) saying “Authorises the Corporate Property Officer to pursue for the land  ...  view the full minutes text for item 71