Decision details

The Cabinet will be requested to approve proposals to enable the regeneration of the Gascoigne Estate (East) area to be progressed, including arrangements for the potential financial and commercial arrangements for the project, masterplanning and detailed design and planning consents for phase 1 of the project

(Prior to consideration of the report, Councillor Worby left the meeting in view of her pecuniary interest as an employee of East Thames Group.)

Further to Minute 39 (20 September 2011), the Cabinet Member for Housing presented a report on the proposed masterplan for the redevelopment of the eastern side of the Gascoigne Estate and detailed proposals for the delivery of Phase 1 of the project, including alternative options regarding the funding and ownership of the housing development.  The main features of the Phase 1 development included:

·  a mixture of houses and flats;

·  a new secondary and primary school;

·  a replacement community/children’s centre;

·  provision for a replacement of the existing health centre/GP practice to be funded by the GP practice with NHS England rental guarantee and for places of worship;

·  play areas and open spaces.

Following an OJEU procurement, East Thames Group were appointed as the Council’s Housing Association partner for the project in the spring of 2013.  Council officers and representatives of East Thames Group had carried out a reassessment of the most appropriate tenure mix for Phase 1 and an options appraisal in respect of financing and ownership of the new properties.  The preferred option would involve the creation of a Special Purpose Vehicle (SPV) with charitable status to develop, own and the commission the management of the new units.  The SPV would be funded by the Council via a loan agreement and the proposals also included the Council’s land being leased to the SPV under a long-term agreement.

In respect of the tenure mix under Phase 1, it was noted that 45% would be Shared Ownership and 43% Affordable Rented with the remaining 12% earmarked for private sale.  The Divisional Director of Regeneration responded to questions from the Cabinet Member for Children’s Social Care on Right to Buy / Acquire issues and possible restrictions to prevent properties being bought by ‘Buy To Let’ speculators.  Officers agreed to report to the next meeting on the legal position of those issues, together with the potential implications of accepting Affordable Homes Programme funding from the Greater London Authority.

The Cabinet Member for Finance expressed his support, as a Gascoigne ward councillor, for the project and spoke on the benefits and improvements that the Council’s regeneration have already brought to the area, while the Cabinet Member for Education and Schools welcomed several of the design aspects. 

It was noted that a detailed report on the proposed funding arrangements would be presented to the next Cabinet meeting and officers confirmed that the report would provide the necessary assurances regarding the borrowing and lending arrangements.

Cabinet resolved:

(i)  To approve the draft masterplan and detailedPhase 1 proposal for the eastern side of Gascoigne Estate, including the location of the new secondary and primary schools, as set out in the body of and Appendix 1 to the report;

(ii)  To approve the appropriation of the whole redevelopment site (following decanting and demolition of each block), as shown edged in red in Appendix 3 to the report, for planning purposes in accordance with section 122 of the Local Government Act 1972;

(iii)  To approve the appropriation of the land at Phase 1, as shown edged in red in Appendix 4 to the report, under Section 122 of the Local Government Act 1972 from the Housing Revenue Account to the General Fund following completion of decanting and demolition of each block, to enable the delivery and regeneration of the eastern side of Gascoigne estate via the proposed delivery structure;

(iv)  That the residential units shall be developed with East Thames Group in accordance with the agreed Heads of Terms;

(v)  To agree to the principle of establishing a Special Purpose Vehicle(s) to develop, own and be responsible for procuring the management of the units to be developed, as set out in the report;

(vi)  That the Council shall grant a 252 year lease to the Special Purpose Vehicle(s) which shall terminate at the option of the Council at the end of the funding term and repayment of the loans made by the Council, with full ownership reverting to the Council;

(vii)  To agree to the principle of establishing an independent charity which shall own and control the Special Purpose Vehicle(s) in accordance with the funding terms imposed by the Council;

(viii)  To agree to the principle of borrowing £62.86m within the General Fund to finance the development and ownership of the following tenures:

a.  Borrow £39.98m to fund development and ownership of 236 affordable rented units, social rent units and shared ownership units to be owned and managed by a Special Purpose Vehicle(s) controlled within the General Fund;

b.  Borrow £3.75m to fund 50% of 51 private for sale units to be developed and sold jointly by the Council and East Thames Group via a limited company, and

c.  Borrow £19.13m to lend to East Thames Group to fund the development and ownership of 135 units shared ownership units which shall be owned by East Thames Group subject to agreement of satisfactory terms;

(ix)  To note that a further report shall be submitted to the next meeting setting out the most economically advantageous funding arrangements that have been negotiated to facilitate the funding of the developments;

(x)  To note that a further report detailing funding options for the proposed primary and secondary schools shall be submitted to a future Cabinet meeting;

(xi)  To delegate authority to the Chief Executive, in consultation with the Head of Legal and Democratic Services, the Chief Financial Officer and the Cabinet Members for Finance, Housing and Regeneration, to negotiate terms and agree the contract documents to fully implement and effect the project subject to recommendation (viii) above; and

(xii)  To authorise the Head of Legal and Democratic Services to execute all of the legal agreements, contracts and other documents on behalf of the Council.