Issue - meetings

Cabinet on 12 February 2020 approved a number of decisions in relation to the Winter Gardens scheme relating to the funding and lease terms which will assist the ability to secure third party funding.

The purpose of this report is to (i) seek approval for additional Council finance in accordance with the terms of the BDC Members Agreement to deliver the scheme and realise the scheme benefits and; (ii) consider the acquisition of certain elements of this strategically important scheme to enable the Council to meet its housing targets and long term regeneration objectives.

The proposed financing structure for the Winter Gardens Scheme is made up of Third-Party Finance (Debt and Forward Funding) and what is termed under the BDC Members Agreement as “Member Loans”, Additional Council Finance and Additional Private Sector Partner (PSP) Finance. The relevant extract from the BDC members Agreement is set out at Appendix B.

The Additional Council Funding requested will be in the form of a loan which will be repaid back at the end of the scheme in advance of development returns in accordance with Clause 7 and 26 of the BDC Members Agreement.

A key part of the financing structure is to secure investors via the forward sales/funding of key elements such as the Public Car Park, Private Rented Sector units (PRS) and Age Friendly residential elements.

In addition to agreeing the Additional Council Finance it is proposed that the Council acquire the Public Car Park and Private Rented Sector (PRS) elements of the scheme to  support its Corporate Plan objectives to deliver socio-economic benefits to the town and create Dynamic Places through strategic regeneration or redevelopment opportunities.

The PRS element will be operated via the Council’s wholly owned company, Seascape Homes and Property Limited.

The financial case for acquiring these elements is detailed in the confidential appendix attached to this report.

The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a “Global Pandemic” on 11 March 2020, has impacted global financial markets and market activity is being impacted in many sectors.

The short to medium term impact of COVID-19 on the residential PRS market sector is unclear at this stage. The impact on the market and valuations will be constantly reviewed and considered as part of the due diligence still to be undertaken prior to completion.

RESOLVED that Cabinet:-

(a)          approves the request for up to a further £7.6MAdditional Council Finance less the Site Lease Value. The Site Lease Value will be calculated once the construction procurement process is complete and the terms of the Third Party Finance have been settled. It is anticipated this will be around Q1 2021;

(b)          approves the MTFP to be updated in 2021/22 to include £304k per annum (plus interest) for the Minimum Revenue Provision (MRP) associated with this Additional Council Finance;

(c)          the purchase of the Private Rented Sector (PRS) and Car Park elements of the Winter Gardens Scheme, from the Bournemouth Development Company LLP, on the terms detailed in the confidential part of the report;

(d)          authorises the Corporate Property Officer in consultation with the Monitoring Officer to agree the detailed [contract provisions];

(e)          approves the grant of a 50-year lease of the PRS elements to Seascape Homes and Property Limited on terms to be agreed by the Corporate Property Officer in consultation with the Monitoring Officer; and

(f)           approves the MTFP to be updated in 2021/22 for the net loss of income relating to the redevelopment of the Winter Gardens car park totalling £743,200.

RECOMMENDED that Council:-

(a)          amend the Capital Programme to include Additional Council Finance up to £7.6M less the Site Lease Value anticipated to be drawdown in 2021/22. [It would be prudent to assume the Additional Council Finance will be £7.6M];

(b)          amend the Capital Programme to include provision for these acquisitions to be funded by prudential borrowing, which is subject to RPI as detailed in the confidential part of this report; and

(c)          authorise the Section 151 Officer in consultation with the Portfolio Holder for Finance to determine the detailed funding arrangements for both the forward purchase of the PRS and Public Car Park and the Additional Council Finance.

Voting: Unanimous

Portfolio Holder: Regeneration and Culture

Reason

To enable this exciting and reputationally important mixed-use regeneration scheme to go ahead, helping to deliver high quality homes, and increased footfall in Bournemouth Town Centre.

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

The proposals in addition to delivering regenerative benefits are in accordance with the Capital Investment Strategy (Non-Treasury) 2020-2025 (CIS) objectives and criteria adopted by Cabinet on 18 March 2020 and take note of the HM Treasury consultation document; Public Works Loan Board: future lending terms dated March 2020.

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

Cabinet were reminded that on the 12 February 2020 they had approved a number of decisions in relation to the Winter Gardens scheme relating to the funding and lease terms which will assist the ability to secure third party funding.

In relation to this Cabinet were advised that the purpose of the report was to seek approval for additional Council finance in accordance with the terms of the BDC Members Agreement to deliver the scheme and realise the scheme benefits and to consider the acquisition of certain elements of this strategically important scheme to enable the Council to meet its housing targets and long term regeneration objectives.

Further to this the Portfolio Holder advised that a question had been received in respect of this item from Councillor Bartlett, the question and response has been published on the Councils website as referenced under Minute No. 163.

The Chairman of the Overview and Scrutiny Board addressed Cabinet highlighting the opportunity this exciting project presented and advising that at their recent meeting the Board resolved to make the following recommendations to Cabinet in respect of this item:

1. Before approving the requests for Council Finance, Cabinet should confirm that it believes the projected revenue from car parking as outlined in the report is realistic; and
2. Cabinet should consider whether the public benefits offered by the proposed scheme genuinely reflect the Council’s ambitions for the Town Centre.

The Portfolio Holder thanked the Board for their recommendations and advised that it was felt that the projected revenue from car parking was realistic, and that it was also felt that the proposed scheme offered substantial net benefit to the town centre in terms of additional housing and increased consumer spending.

RESOLVED that Cabinet:-

(a)           approves the request for up to a further £7.6MAdditional Council Finance less the Site Lease Value. The Site Lease Value will be calculated once the construction procurement process is complete and the terms of the Third Party Finance have been settled. It is anticipated this will be around Q1 2021;

(b)           approves the MTFP to be updated in 2021/22 to include £304k per annum (plus interest) for the Minimum Revenue Provision (MRP) associated with this Additional Council Finance;

(c)           the purchase of the Private Rented Sector (PRS) and Car Park elements of the Winter Gardens Scheme, from the Bournemouth Development Company LLP, on the terms detailed in the confidential part of the report;

(d)           authorises the Corporate Property Officer in consultation with the Monitoring Officer to agree the detailed [contract provisions];

(e)           approves the grant of a 50-year lease of the PRS elements to Seascape Homes and Property Limited on terms to be agreed by the Corporate Property Officer in consultation with the Monitoring Officer; and

(f)            approves the MTFP to be updated in 2021/22 for the  ...  view the full minutes text for item 173