Agenda item

Appendix 1 to the report is exempt from publication as it contains commercially confidential information (exempt under paragraph 3, Part 1, Schedule 12A of the Local Government Act 1972 (as amended)).

Further to Minute 97 (16 March 2021), the Cabinet Member for Finance, Growth and Core Services presented a report on a proposal to vary the original Development Agreement with Railpen, a Pension Fund Management Company, for the planned redevelopment of Trocoll House to provide 198 residential units and 650 sqm of commercial space on the site.

The Cabinet Member explained that since the signing of the original Development Agreement, a number of economic factors outside of Railpen’s control meant that the original funding terms were no longer viable for them.  Railpen had, therefore, submitted an initial proposal to vary the terms of the original Development Agreement through an increase of approximately 21% to the starting annual lease payment.  However, following a financial modelling assessment of that proposal and in the context of the Council’s Investment and Acquisition Strategy metrics, that offer was rejected by the Council.

In recognition of the key role that the redevelopment scheme would play in the regeneration of the Town Centre and both parties’ desire to deliver the project, transparent negotiations took place in order to try and establish a mutually acceptable position.  As a consequence, Railpen submitted a revised offer seeking a higher starting lease payment of approximately 15% alongside additional incentives / benefits for the Council.

The Cabinet Member advised, however, that the latest improved offer was still considered to represent too greater level of risk to the Council’s General Fund in the future.  Officers had therefore drawn up a range of detailed, costed options for the Cabinet to consider, which ranged from not proceeding with the project and the abortive costs associated with that option, to making a counter-offer which would mitigate the Council’s level of risk to an acceptable level in order to achieve the development of a major regeneration project in the heart of the Town Centre. 

Following detailed discussions on the options available, Cabinet resolved to:

(i)  Note that the revised offer from Railpen relating to the proposed terms of an amended Lease Agreement for the redevelopment of Trocoll House would not be financially viable for the Council, as detailed in the report and the financial modelling and options analysis set out at Appendix 1 to the report;

(ii)  Agree a final counter-offer to Railpen as detailed in option 4(b) of Appendix 1 to the report, which represented a circa 9% increase to the original starting annual lease payment while mitigating the Council’s level of risk to an acceptable and affordable level, and delegate authority to the Strategic Director, Resources to progress that course of action; and

(iii)  Agree, subject to Railpen accepting the terms of the Council’s counter-offer, to delegate authority to the Strategic Director, Resources, in consultation with the Cabinet Member for Finance, Growth and Core Services and the Head of Legal, to enter into all necessary and ancillary agreements to fully implement and effect the proposals.

(Note: During consideration of this item, a resolution to exclude the public and press from the meeting was passed to enable full consideration of the Railpen revised offer and the terms of the Council’s proposed counter-offer under the provisions of paragraph 3 of Part 1, Schedule 12A to the Local Government Act 1972 (as amended).)