Decision details

Approval was given to a procurement strategy for the delivery of the Friar Park Urban Village scheme utilising the Homes England DPS Framework in March 2023 (Cabinet Minute 35/23 refers), and delegated authority was given to the Cabinet Member for Regeneration and WMCA and the Director of Regeneration and Growth, to progress the preferred route for developer selection. This included the preparation of appropriate documentation and defined parameters against which the scheme will be assessed.

The Joint Venture partnership between WMCA and SMBC has progressed this work, with agents (Cushman and Wakefield) appointed to undertake this work on behalf of the Joint Venture. Associated with this legal advisors (Browne Jacobson) were also jointly appointed to ensure the proposed approach utilised by the Joint Venture would be compliant with procurement, subsidy control and best value considerations, especially given the confirmation of the Levelling Up Partnership funding in September 2023.

The approach to the disposal and ultimate development of the site anticipates the progression of the scheme on a gap-funding style basis, with the details of the funding and associated requirements being progressed through a Development Agreement. The funding secured by WMCA and SMBC to support the scheme will be utilised to address the gap identified.

1.1 That approval be given to the proposed structure of the disposal of the Friar Park site on the following basis:

• The preferred developer is granted licence to undertake the
remediation works with all liabilities/responsibilities for the site
transferring at the point the licence is granted.

• The LUP/WMCA Funding is utilised to pay for the remediation works
being undertaken, based on a market price being established in the
tender process, and drawn down on terms agreed in the
Development/Funding Agreement.

• Developer seeks detailed planning consent for the housing scheme
whilst the remediation works are being progressed.

• Upon completion of the remediation works, either:

o the developer purchases the freehold of the site based on the
remediated site value;
OR

o the developer is granted a licence/lease to build out the
scheme, for which a premium is paid, with the freehold transfer
taking place directly to 3rd party purchasers, subject to overage
arrangements upon practical completion of each phase.

1.2 That the procurement timescales are acknowledged.

1.3 That subject to approval of 1.1 above, the Expression of Interest is released, which will start the overall procurement process.

2.1 The proposed development of the Friar Park Urban Village has been identified as a strategic priority based on ensuring local housing needs are being met, in addition to regenerating the Friar Park area and the wider Wednesbury area.

2.2 A Joint Venture Agreement for the delivery of the scheme was entered into with the West Midlands Combined Authority in October 2019. The scheme has progressed over that time and is now in a place where clear objectives for the scheme are identified through a masterplan and a funding strategy is in place. Progressing the procurement of a developer to undertake the scheme is the next logical step in delivering this strategic scheme.

2.3 The proposed structure for the transaction has now been identified following due consideration of a range of regulatory and compliance requirements. The proposed structure has been considered and is supported by the Joint Venture Board.

i) JV Partners undertake direct delivery of the scheme in its entirety

SMBC and WMCA could decide that they wish to deliver the scheme directly. However, whilst the Council does have its own house-building programme, the size and complexity of this scheme is such that significant resources would be required to support the scheme’s implementation, which have not been secured.

Additionally, this would require the undertaking of the remediation works directly. Neither authority have the necessary expertise in undertaking remediation of this scale and nature, and the risks associated with this approach would be significant.

This approach has therefore been discounted.

ii) Remediation works are undertaken separately to the Development contract

SMBC and WMCA could consider directly appointing a remediation contactor to undertake the remediation works utilising the funding available, and then seek to dispose of the site on the open market at a later date.

Undertaking this option would require the remediation strategy to be determined in advance of a developer for the site being identified. There is a risk, therefore, that the remediation scheme implemented would not meet developer requirements, resulting in either a less competitive offer being made, or significant re-work of the site, delaying the ultimate delivery of the scheme.

Additionally, progressing this option would result in any liability for cost overruns arising from unforeseen ground condition resting with the landowners. In addition, the costs associated with rectification of any liability arising from the undertaking of the works would also rest with SMBC and WMCA. The associated financial risks with this option are potentially significant.