Agenda item

** Please note that exempt appendices 6 and 7 will follow as they are currently being finalised **

Report of Director (Bicester)

Purpose of Report

To set out the options available and a recommendation for the optimum delivery model that will deliver the Graven Hill Vision set out in the March 2014 report that approved the acquisition of the MOD land in order to deliver housing and employment opportunities.

Recommendations

The meeting is recommended:

1.1         To note the comprehensive piece of work undertaken including the utilisation of industry experts to assist in determining the optimum delivery model for delivering the Graven Hill vision set out in the report to the March 2014 Executive.  

1.2         To note the powers being used to set up the company and provide funding as detailed in exempt Appendix 3.

1.3         To consider and approve the creation of  companies (limited by shares) comprising Graven Hill Village Holding Company - wholly owned by the Council) and Graven Hill Village Development Company – owned 99% by the Graven Hill Village Holding Company and 1% by the Council to own and deliver Graven Hill as set out in exempt Appendix 2.

1.4         To consider and approve that the Company Boards be established as set out exempt Appendix 2 and also consider whether it may be appropriate for one or both Boards to also include at least one other independent “Non-Executive” Director with developer and construction experience.

1.5         To delegate authority to the Director of Resources, in consultation with the Leader of the Council to identify and approve the appointment of four elected Members as Directors of one or both of the companies detailed in exempt Appendix 2 and to appoint replacement elected Member Directors should any vacancies arise in the future.

1.6         To delegate authority to the Director of Resources to invite three members of the Joint Management Team (JMT) to become Directors of one or both of the companies detailed in exempt Appendix 2 and to approve and confirm their appointment to the roles. Such delegation should also extend to appointing replacement Officer Directors should any vacancies arise in the future.

1.7         To adopt the protocol on dealing with conflicts of interest at exempt Appendix 5 on behalf of the Council.

1.8         To approve the establishment of a Partnering Board comprising the Company Directors, three elected members (to be nominated by the Director of Resources / Section 151 officer in consultation with the Leader of the Council) and the Council’s Monitoring Officer. This group will have responsibility for safeguarding the Council’s equity investment and lending to the Company by undertaking more detailed monitoring of the Business Plan and providing advice and recommendations to Executive. 

1.9         To note the financial implications for the Council and Companies as detailed in exempt Appendix 6.

1.10      To consider and approve the draft business case for the companies detailed in exempt Appendix 2 and delegate authority to the Director of Resources, in consultation with the Leader of the Council and the Lead Member for Financial Management, final sign off of the business case as being compliant with legislation, due diligence and commercially sustainable.

1.11      To delegate authority to the Director of Resources, in consultation with the Leader of the Council and the Lead Member for Financial Management, to approve the financing of acquisition and development costs through a mix of state aid compliant equity investment and loans (funded from prudential borrowing) in accordance with the Council`s Investment Strategy.

1.12      To delegate authority to the Director of Resources, in consultation with the Lead Member for Financial Management to ensure that there is no adverse impact on the Council`s revenue budget during the initial years of the project when the company will not be generating profits and to note the establishment of the Graven hill Equalisation Reserve which will be included in the 2013/14 out turn report at its meeting on 23 June 2014.

1.13      To approve a simultaneous completion of the acquisition of Graven Hill and the onward sale to the Graven Hill Village Development Company. 

1.14      To delegate to the Director of Resources authority to approve the articles of association of the companies in consultation with the Head of Law and Governance/Monitoring Officer.

1.15      To agree to further work being undertaken by officers to develop a detailed implementation plan for pre-development and phase one delivery of Graven Hill including a communications strategy to be presented at the October 2014 meeting of the Executive.

1.16      To agree to finance the balance of match funding of up to £697,000 related to the Capacity grant received by DCLG in 2014/15 in relation to the delivery of growth in Bicester as set out in Paragraph 7.4 of the report.

1.17      To agree to passport any grants received (e.g. capacity grant) obtained for pre-development costs or sales promotion at Graven Hill to the company if the grant provider agrees and subject to state aid compliance as detailed in Paragraph 7.5.

1.18      To note the amendments required to the Council`s Treasury Strategy as detailed in Paragraph 7.3.

1.19      To agree to approve the procurement of required consultants to continue to provide technical support and the pre-development work necessary to support the acquisition whilst the company is being incorporated. All procurement will be in accordance with procurement rules and fully funded from the capacity funding.

Resolved

(1)          That the comprehensive piece of work undertaken including the utilisation of industry experts to assist in determining the optimum delivery model for delivering the Graven Hill vision set out in the report to the March 2014 Executive be noted.

(2)          That the powers being used to set up the company and provide funding as detailed in exempt Appendix 3 (exempt annex to the Minutes as set out in the Minute Book) be noted.

(3)          That the creation of companies (limited by shares) comprising Graven Hill Village Holding Company - wholly owned by the Council and Graven Hill Village Development Company – owned 99% by the Graven Hill Village Holding Company and 1% by the Council to own and deliver Graven Hill as set out in exempt Appendix 2 (exempt annex to the Minutes as set out in the Minute Book) be approved.

(4)          That the Company Boards be established as set out in exempt Appendix 2 (exempt annex to the Minutes as set out in the Minute Book).

(5)          That authority be delegated to the Director of Resources, in consultation with the Leader of the Council to identify and approve the appointment of four elected Members as Directors of one or both of the companies detailed in exempt Appendix 2 (exempt annex to the Minutes as set out in the Minute Book) and to appoint replacement elected Member Directors should any vacancies arise in the future.

(6)          That authority be delegated to the Director of Resources to invite three members of the Joint Management Team (JMT) to become Directors of one or both of the companies detailed in exempt Appendix 2 (exempt annex to the Minutes as set out in the Minute Book) and to approve and confirm their appointment to the roles and that such delegation should also extend to appointing replacement Officer Directors should any vacancies arise in the future.

(7)          That the protocol on dealing with conflicts of interest at exempt Appendix 5 (exempt annex to the Minutes as set out in the Minute Book) be adopted on behalf of the Council.

(8)          That  the establishment of a Partnering Board comprising the Company Directors, three elected members (to be nominated by the Director of Resources / Section 151 officer in consultation with the Leader of the Council), the section 151 officer and the Council’s Monitoring Officer be approved and it be noted this group would have responsibility for safeguarding the Council’s equity investment and lending to the Company by undertaking more detailed monitoring of the Business Plan and providing advice and recommendations to Executive. 

(9)          That the financial implications for the Council and Companies as detailed in exempt Appendix 6 (exempt annex to the Minutes as set out in the Minute Book) be noted.

(10)       That the draft business case for the companies detailed in exempt Appendix 2 (exempt annex to the Minutes as set out in the Minute Book) be approved and authority be delegated to the Director of Resources, in consultation with the Leader of the Council and the Lead Member for Financial Management, to complete final sign off of the business case as being compliant with legislation, due diligence and commercially sustainable.

(11)       That authority be delegated to the Director of Resources, in consultation with the Leader of the Council and the Lead Member for Financial Management, to approve the financing of acquisition and development costs through a mix of state aid compliant equity investment and loans (funded from prudential borrowing) in accordance with the Council`s Investment Strategy.

(12)       That authority be delegated to the Director of Resources, in consultation with the Lead Member for Financial Management to ensure that there is no adverse impact on the Council`s revenue budget during the initial years of the project when the company will not be generating profits and that the establishment of  the Graven Hill Equalisation Reserve which will be included in the 2013/14 out turn report at the Executive meeting on 23 June 2014 be noted.

(13)       That a simultaneous completion of the acquisition of Graven Hill and the onward sale to the Graven Hill Village Development Company be approved.

(14)       That authority be delegated to the Director of Resources, in consultation with the Head of Law and Governance / Monitoring Officer, to approve the articles of association of the companies.

(15)       That agreement be given to further work being undertaken by officers to develop a detailed implementation plan for pre-development and phase one delivery of Graven Hill including a communications strategy to be presented at the October 2014 meeting of the Executive.

(16)       That agreement be given to finance the balance of match funding of up to £697,000 related to the Capacity grant received from DCLG in 2014/15 in relation to the delivery of growth in Bicester as set out in Paragraph 7.4 of the report (annex to the Minutes as set out in the Minute Book).

(17)       That agreement be given to passport any grants received (e.g. capacity grant) obtained for pre-development costs or sales promotion at Graven Hill to the company if the grant provider agrees and subject to state aid compliance as detailed in Paragraph 7.5 of the report (annex to the Minutes as set out in the Minute Book).

(18)       That the amendments required to the Council`s Treasury Strategy as detailed in Paragraph 7.3 of the report (exempt annex to the Minutes as set out in the Minute Book) be noted.

(19)       That  the procurement of required consultants to continue to provide technical support and the pre-development work necessary to support the acquisition whilst the company is being incorporated be approved and it be noted all procurement would be in accordance with procurement rules and fully funded from the capacity funding.

(20)       That authority be delegated to the Director or Resources, in consultation with the Lead Member for Financial Management, to appoint any officer(s) or Member(s) to represent the Council’s interest as shareholder at general meetings of the Graven Hill Village Holding Company and the Graven Hill Village Development Company.

The Director (Bicester) submitted a report which set out the options available and a recommendation for the optimum delivery model that will deliver the Graven Hill Vision set out in the March 2014 report that approved the acquisition of the MOD land in order to deliver housing and employment opportunities.

Resolved

(1)          That the comprehensive piece of work undertaken including the utilisation of industry experts to assist in determining the optimum delivery model for delivering the Graven Hill vision set out in the report to the March 2014 Executive be noted.

(2)          That the powers being used to set up the company and provide funding as detailed in exempt Appendix 3 (exempt annex to the Minutes as set out in the Minute Book) be noted.

(3)          That the creation of companies (limited by shares) comprising Graven Hill Village Holding Company - wholly owned by the Council and Graven Hill Village Development Company – owned 99% by the Graven Hill Village Holding Company and 1% by the Council to own and deliver Graven Hill as set out in exempt Appendix 2 (exempt annex to the Minutes as set out in the Minute Book) be approved.

(4)          That the Company Boards be established as set out in exempt Appendix 2 (exempt annex to the Minutes as set out in the Minute Book).

(5)          That authority be delegated to the Director of Resources, in consultation with the Leader of the Council to identify and approve the appointment of four elected Members as Directors of one or both of the companies detailed in exempt Appendix 2 (exempt annex to the Minutes as set out in the Minute Book) and to appoint replacement elected Member Directors should any vacancies arise in the future.

(6)          That authority be delegated to the Director of Resources to invite three members of the Joint Management Team (JMT) to become Directors of one or both of the companies detailed in exempt Appendix 2 (exempt annex to the Minutes as set out in the Minute Book) and to approve and confirm their appointment to the roles and that such delegation should also extend to appointing replacement Officer Directors should any vacancies arise in the future.

(7)          That the protocol on dealing with conflicts of interest at exempt Appendix 5 (exempt annex to the Minutes as set out in the Minute Book) be adopted on behalf of the Council.

(8)          That  the establishment of a Partnering Board comprising the Company Directors, three elected members (to be nominated by the Director of Resources / Section 151 officer in consultation with the Leader of the Council), the section 151 officer and the Council’s Monitoring Officer be approved and it be noted this group would have responsibility for safeguarding the Council’s equity investment and lending to the Company by undertaking more detailed monitoring of the Business Plan and providing advice and recommendations to Executive. 

(9)          That the financial implications for the Council and Companies as detailed in exempt Appendix 6 (exempt annex to the Minutes as set out in the Minute Book) be noted.

(10)       That the draft business case for the companies detailed in exempt Appendix 2 (exempt annex to the Minutes as set out in the Minute Book) be approved and authority be delegated to the Director of Resources, in consultation with the Leader of the Council and the Lead Member for Financial Management, to complete final sign off of the business case as being compliant with legislation, due diligence and commercially sustainable.

(11)       That authority be delegated to the Director of Resources, in consultation with the Leader of the Council and the Lead Member for Financial Management, to approve the financing of acquisition and development costs through a mix of state aid compliant equity investment and loans (funded from prudential borrowing) in accordance with the Council`s Investment Strategy.

(12)       That authority be delegated to the Director of Resources, in consultation with the Lead Member for Financial Management to ensure that there is no adverse impact on the Council`s revenue budget during the initial years of the project when the company will not be generating profits and that the establishment of  the Graven Hill Equalisation Reserve which will be included in the 2013/14 out turn report at the Executive meeting on 23 June 2014 be noted.

(13)       That a simultaneous completion of the acquisition of Graven Hill and the onward sale to the Graven Hill Village Development Company be approved.

(14)       That authority be delegated to the Director of Resources, in consultation with the Head of Law and Governance / Monitoring Officer, to approve the articles of association of the companies.

(15)       That agreement be given to further work being undertaken by officers to develop a detailed implementation plan for pre-development and phase one delivery of Graven Hill including a communications strategy to be presented at the October 2014 meeting of the Executive.

(16)       That agreement be given to finance the balance of match funding of up to £697,000 related to the Capacity grant received from DCLG in 2014/15 in relation to the delivery of growth in Bicester as set out in Paragraph 7.4 of the report (annex to the Minutes as set out in the Minute Book).

(17)       That agreement be given to passport any grants received (e.g. capacity grant) obtained for pre-development costs or sales promotion at Graven Hill to the company if the grant provider agrees and subject to state aid compliance as detailed in Paragraph 7.5 of the report (annex to the Minutes as set out in the Minute Book).

(18)       That the amendments required to the Council`s Treasury Strategy as detailed in Paragraph 7.3 of the report (exempt annex to the Minutes as set out in the Minute Book) be noted.

(19)       That  the procurement of required consultants to continue to provide technical support and the pre-development work necessary to support the acquisition whilst the company is being incorporated be approved and it be noted all procurement would be in accordance with procurement rules and fully funded from the capacity funding.

(20)       That authority be delegated to the Director or Resources, in consultation with the Lead Member for Financial Management, to appoint any officer(s) or Member(s) to represent the Council’s interest as shareholder at general meetings of the Graven Hill Village Holding Company and the Graven Hill Village Development Company.

Reasons

The work which has been undertaken to develop the business case in exempt Appendix 2 and the Financial Implications in exempt Appendix 6 (exempt annexes to the Minutes as set out in the Minute Book) concludes that the proposal set out in this report is financially viable as far as can be reasonably tested against a range of assumptions and sensitivities.

The business case demonstrates that if we don’t take on direct responsibility for developing Graven Hill then the likelihood of the vision being diluted, delays in delivery and reduced return (financially and socially) becomes a greater risk.

This proposal will enable the Council to deliver its vision for Graven Hill, which fully meets the objectives of all of the Council`s Strategic Objectives:

– District of Opportunity - housing growth, employment and infrastructure

– Thriving Communities – affordable housing, self-build

– Safe Green and Clean - sustainability measures, reduce carbon footprint, Bicester “One Vision”

– Sound Budgets and Customer Focused Council - financial returns on investment that can be used to fund other projects district wide, deliver New Homes Bonus and business rates.

It is also at the heart of the wider vision for the district set out in the Submission Local Plan and Cherwell’s Sustainable Communities Strategy.

“A diverse economy with opportunities for all, vibrant communities connected by a sense of pride, place and purpose.”

Cherwell is an innovative forward thinking Council and if the Council wants to continue to maintain momentum for successful growth it needs to stay ‘ahead of the curve’ and keep a competitive advantage. This proposal has the necessary ‘ingredients’ to make this happen.

The Graven Hill Project Board has reviewed the work undertaken and scrutinised the outcomes. They believe there continues to be a compelling legal, financial and strategic case to set up the company and implement the proposal.

There are a number of pieces of work underway that need to be completed ahead of completing the acquisition of the land. The recommendations in section 1 are in essence ‘building blocks’ to take this proposal forward and are therefore viewed as necessary.

Section 8 of the Business Case in exempt Appendix 2 (exempt annex to the Minutes as set out in the Minute Book) provides a table indicating the work / deliverables that will be required if the recommendations are approved during the next 4 months.

A further report to Executive in October 2014 will provide an update on the completion, company incorporation and a detailed implementation plan for pre-development and phase one delivery of Graven Hill including a communications strategy.

Alternative Options

Appendix 1 of this report (annex to the Minutes as set out in the Minute book) sets out the different options that were considered and the reason why the proposal for the Council to act as Strategic Developer through a 100% owned Company Limited by Shares is considered by the Project Team to be viable from a commercial, regulatory and constitutional perspective and is thus the recommended structure underpinning the proposal in this report.