Issue - meetings

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 34 (20 October 2020), the Cabinet Member for Regeneration and Economic Development presented a report on revised proposals relating to the Beam Park development project.

The decision taken in October 2020 related to the purchase of up to 936 homes over three phases (then known as phases 3, 4 and 5 - now known as phases 6, 7 and 8) on the western side of Beam Park (adjacent to Dagenham Green) for a mixed tenure scheme.  The subsequent Development Agreement entered into with Countryside Properties (CPUK) was based on a fixed price for the properties but with indexation added for construction inflation.  The Cabinet Member advised, however, that as was the case with the Gascoigne East Phase 3b project earlier on the evening’s agenda, it had been necessary to review the Council’s position in the development project due to increased costs. 

A similar package of achievable measures had been drawn up that would enable the project to proceed in accordance with the metrics within the Council’s IAS, which included:

Ø  Acquiring 520 units within Phase 6 of the Beam Park development (excluding commercial units) from CPUK on a turnkey basis, made up of 265 AR, 134 Shared Ownership (SO), 59 LLR and 62 LAR properties;

Ø  Applying a service charge to the LAR properties;

Ø  Allocating £36.4m of Right to Buy (RTB) receipts, as a result of the switch from MR properties to AR properties;

Ø  Increasing the rental inflation position on AR tenures from 2% to 2.5%;

Ø  Reducing Reside operating costs to 20% above benchmark rates from 2028;

Ø  Applying an interest rate of 4% for LAR, LLR and SO tenures and 5% for AR properties.

The Council had also originally intended to purchase properties with Phase 7 of the Beam Park project.  The Cabinet Member advised, however, that the near-exhaustion of RTB receipts to support the Gascoigne Phase 3b and Beam Park Phase 6 projects meant that even by applying remedial measures, Phase 7 would not achieve a cashflow positive position, especially as construction inflation indexation would continue to apply under the terms of the original Development Agreement.

The Cabinet Member confirmed that, across the two projects, approximately 150 properties would be made available to families on the Council’s housing waiting list and he also responded to points raised by the Cabinet Member for Finance, Growth and Core Services in relation to the alternative options that had been considered.

Cabinet resolved to:

(i)  Agree the viability improvement measures set out in the report to enable the acquisition of 520 units within Phase 6 of the Beam Park development (excluding commercial units) from CPUK on a turnkey basis for an estimated total price of £166.4m and total scheme cost (including interest) of £183.5m;

(ii)  Allocate up to £36.4m of Right to Buy receipts to ensure positive cashflows for Phase 6 of the Beam Park development;

(iii)  Approve a handover loan to Reside of £114,356,401 to develop, own, let, sell, manage and maintain the Phase 6  ...  view the full minutes text for item 35