Appendices 2 and 3 to the report are exempt from publication under the provisions of paragraph 3 of Part 1 of Schedule 12A of the Local Government Act 1972 (as amended), as they contain commercially confidential information and the public interest in maintaining the exemption outweighs the public interest in disclosing the information.
The Cabinet Member for Regeneration and Social Housing presented a report on an opportunity for the Council to purchase 90 newly built affordable housing units at the former Job Centre Plus site, Chequers Lane, Dagenham, via a development agreement with Hollybrook Limited.
The Cabinet Member advised that planning permission for a development consisting of 49 x 1 bed flats and 41 x 2 bed flats, all compliant with London Plan internal space standards, was granted to Hollybrook Ltd in January 2020. However, the current economic climate meant that Hollybrook Ltd were reluctant to commence on site and an approach was made to Be First, the Council’s regeneration company, to ascertain whether the Council would be willing to purchase the newly built units on a ‘turn-key’ basis, whereby the developer would carry all of the construction risk and the Council would make structured payments under a development agreement before taking full ownership, via the B&D Reside structure.
The Cabinet Member alluded to the wider regeneration proposals for the South Dagenham area which could be kick-started by the new development and the financial arrangements that would underpin the proposed development agreement. He also confirmed that while the Council would make a small profit from the project, the key driver was the provision of much needed, good quality affordable housing units and, to that end, it was noted that 62 units would be let at up to 80% of market rent and the remaining 28 let at London Affordable Rent (LAR) levels.
Cabinet resolved to:
(i) Agree the preferred option for the project, consisting of a 100% affordable housing scheme comprising 62 Affordable Rent homes let at up to 80% of market rent and 28 London Affordable Rent (LAR) homes;
(ii) Agree to enter into a Development Agreement with Hollybrook Developments to deliver 90 units at a total development cost of £25,714,877 on a turn-key basis for expected completion in 2021/22, subject to satisfactory due diligence;
(iii) Agree to the borrowing of up to £17,624,877 within the General Fund to finance the entire development, subject to satisfactory due diligence;
(iv) Agree to allocate up to £5.29m restricted Right to Buy receipts, if required, to fund the construction and professional fees to support the financial viability of the affordable housing project;
(v) Agree to allocate £2.8m GLA LAR grant funding, subject to a successful bid, to support the financial viability of the LAR tenure;
(vi) Agree to allocate £69,000 for 2020/21 and £289,500 for 2021/22 (total of £358,500) to the Council’s interest payable budget to cover the scheme’s development costs;
(vii) Note that the scheme met the Investment and Acquisition Strategy financial performance metrics, as outlined in Appendix 3 to the report;
(viii) Agree to the use of an existing or the establishment of a Special Purpose Vehicle(s) as required within the B&D Reside structure to develop, own, let, sell and manage and maintain the homes in accordance with the funding terms in a loan agreement between the Council and Special Purpose Vehicle; and
(viii) Delegate authority to the Chief Operating Officer, in consultation with the Director of Law and Governance, to agree and execute any legal agreements and contract documents to fully implement the project.