Agenda item

Appendices 1 to 4 to the report are exempt from publication as they contain commercially confidential information (exempt under paragraph 3, Part 1, Schedule 12A of the Local Government Act 1972 (as amended)).

The Cabinet Member for Finance, Performance and Core Services introduced a report on the proposed redevelopment of Trocoll House, Wakering Road, Barking.

Be First had been approached with the opportunity for the Council to bring forward the Trocoll House redevelopment opportunity, on an Agreement for Lease basis, in partnership with the development funder Rail Pen.  The principles of the agreement would be that Rail Pen would take on all of the development risk, with no payment from the Council until practical completion. At practical completion, the Council would take a head leasehold interest in the building for a 50-year period, with an initial lease cost of £2.0675m per annum, and at the end of the 50-year period the freehold would transfer to the Council for £1.

The development would consist of up to 198 homes, comprising 35% affordable housing, and approx. 650sqm of commercial floor space. Be First would manage the transaction and monitor the development process on behalf of the Council to practical completion in 2023/2024.  The scheme would then be held and operated by BD Reside as part of its residential portfolio, with any financial surplus made being paid back to the Council. It was also currently proposed that My Place would manage the commercial element of the development on the Council’s behalf.

The Cabinet Member advised that planning approval for the overall development had been secured and he also referred to the financial benefits for the Council of entering into the Agreement for Lease arrangement which would bring forward the development of a key strategic site in Barking Town Centre.

In response to questions raised, the Cabinet Member confirmed that the Council had undertaken due diligence on the proposal and was satisfied with the proposed outcome.

Cabinet resolved to:

(i)  Agree the proposal to enter into an agreement for a long Headlease interest in up to 198 homes, comprising 35% affordable housing and approx. 650sqm of commercial floor space, subject to legal and technical due diligence;

(ii)  Agree to enter into an Agreement for Lease with the Freehold owner of the site to deliver these units on an agreement to lease, subject to acceptable legal due diligence and the Council agreeing that the proposed specification is suitable for the intended purpose;

(iii)  Agree to the borrowing of up to £2,620,264 within the General Fund to finance the entire development period. This will cover development management fees and required professional fees;

(iv)  Note that the scheme met the Investment and Acquisition Strategy financial performance metrics, delivering a positive net present value of £14.2m;

(v)  Agree to the use of an existing or the establishment of a Special Purpose Vehicle(s) as required within the Barking & Dagenham 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;

(vi)  Allocate up to £50,000 to allow the necessary initial legal and technical due diligence work to be undertaken prior to entry into contract;

(vii)  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; and

(viii)  Delegate authority to the Finance Director, in consultation with the Cabinet Member for Finance, Performance and Core Services and the Chief Operating Officer, to agree the funding and finance arrangements to fully implement the project.