Agenda item

To approve and authorise the Director of Finance to allocate adequate resources from the Council’s Housing Revenue Account to deliver the scheme as previously approved.

Agreed:-

(1)     that the Director of Finance be authorised to allocate adequate resources from the Council’s Housing Revenue Account to deliver the scheme as previously approved at 2.1 below, subject to being satisfied that the proposal provides value for money and enable the agreed Homes England delivery programme to be met utilising grant funding offered under the extended Homes England Strategic Partnership 1 Programme 2016 to 2021 and the Black Country Local Enterprise Partnership (LEP) Land Property Investment Fund (LPIF) Sandwell Housing Gap Project.

(2)     that approval be given to authorise the necessary steps for the delivery of the proposed project, including:

a)      that subject to receiving the necessary Strategic Investment Unit appraisal approval mark of 65 or above for the site at Stanhope Road, the Director of Regeneration and Growth in consultation with the Director of Finance and the Director of Housing be authorised to accept the Financial closure offer for the construction of Council new build properties, in accordance with any statutory regulations and the Council’s the Director – Monitoring Officer be authorised to enter into or execute under seal any documentation in relation to award of the contract for the development of the site at Stanhope Road and/or development/partnership agreement, any consents or applications required for Planning or Highways appertaining to the delivery of the schemes and any other agreements with the procured contractor(s),as may be deemed necessary to facilitate development of the site with housing a scheme on terms and conditions to be agreed and implemented by the Director of Regeneration and Growth;

b)      to enter into or execute under seal any financial agreement in relation to the Homes England grant and the Black Country Local Enterprise Partnership (LEP) Land Property Investment Fund (LPIF) Sandwell Housing Gap Project on terms and conditions to be agreed by the Director of Finance;

c)      the Director of Regeneration and Growth in consultation with the Director of Housing and the Director of Finance be authorised to accept a fixed cost price from Speller Metcalf at RIBA stage 4 of up to 10% above the approved estimated costs as a contingency to mitigate uncertain market conditions and inflationary cost uplifts.

d)      to appropriate approximately 7317.0 m2 of land at Stanhope Road Smethwick from the General Fund to the Housing Revenue Account for housing purposes and the Director of Finance be authorised to adjust the accounts accordingly.

e) Subject to the practical completion of each property, the Director of Housing be authorised to manage and let the properties built in accordance with the Council’s housing allocation policy.

Approval was sought for the necessary steps for the delivery of the proposed Council new build homes on land at Stanhope Road, Smethwick project. The new homes would provide high quality housing stock to replace Council Housing lost to the right to buy scheme.

Reasons for recommendations

On 26 June 2019, the Cabinet report “Funding for remediation works at King Street and Mounts Road, Wednesbury, and Stanhope Road, Smethwick” approved the submission of a funding bid to the LEP and the development of approximately 7317.0 m2 of land at Stanhope Road, Smethwick with new Council housing for affordable rent (minute number 69/19 refers). This scheme now has planning permission and it is proposed to develop this site with 33 homes, as part of the new strategic approach to provide more and better housing in the borough.

Alternative options considered

Option A – Dispose of the Site on the Open Market

The site would be suitable for private sector residential development. As the development would be in excess of 15 units, then it would be subject to planning policy HOU3 where consideration must be given to the provision of up to 25% affordable housing on site.

However, if this option is pursued it could result in the disposal of the land for market sale units only. Owing to very difficult ground conditions (the levels and the ground remediation) costs are relatively high and with current market conditions and inflationary costs the site is unlikely to provide commercial developers with the profit margins they require. Planning policy HOU3 where consideration must be given to the provision of up to 25% affordable housing on site is very likely to be challenged on viability grounds but it is likely that developers will overlook this site in favour of more viable options.

This option would also offer nil contribution to the Council’s new build programme.

Option B – Work in partnership with a Registered Provider Partner with the assistance of Homes England to build new affordable homes for rent.

Indications are that Homes England funding may be available through various Homes England Shared Ownership and Affordable Homes Programmes which could provide grant funding for a Registered Provider Partner to deliver affordable rented homes. This would give the Council nomination rights to the new properties but would not increase the Council owned housing stock or replace properties lost through RTB and would result in the disposal of a council owned asset (land) that could be used for this purpose.

As with option A above the high build costs and viability issues may render this site less attractive to Registered Providers.

Option C – Leave the site undeveloped.

An option to consider would be not to build out the site and to leave it as it is. There are ongoing maintenance costs to the Council around litter

picking and grounds maintenance. These are difficult to quantify as they are carried out as part of larger services, although we anticipate costs would be significantly reduced if the site were developed for housing. This would also result in an under-utilised Council asset.

This option would offer nil contribution to the Council’s new build programme.

Agreed:-

(1)          that the Director of Finance be authorised to allocate adequate resources from the Council’s Housing Revenue Account to deliver the scheme as previously approved at (2) below, subject to being satisfied that the proposal provides value for money and enable the agreed Homes England delivery programme to be met utilising grant funding offered under the extended Homes England Strategic Partnership 1 Programme 2016 to 2021 and the Black Country Local Enterprise Partnership (LEP) Land Property Investment Fund (LPIF) Sandwell Housing Gap Project.

(2)          that approval be given to authorise the necessary steps for the delivery of the proposed project, including:

a)   that subject to receiving the necessary Strategic Investment Unit appraisal approval mark of 65 or above for the site at Stanhope Road, the Director of Regeneration and Growth in consultation with the Director of Finance and the Director of Housing be authorised to accept the Financial closure offer for the construction of Council new build properties, in accordance with any statutory regulations and the Council’s the Director – Law and Governance  be authorised to enter into or execute under seal any documentation in relation to award of the contract for the development of the site at Stanhope Road and/or development/partnership agreement, any consents or applications required for Planning or Highways appertaining to the delivery of the schemes and any other agreements with the procured contractor(s),as may be deemed necessary to facilitate development of the site with housing a scheme on terms and conditions to be agreed and implemented by the Director of Regeneration and Growth;

b)   to enter into or execute under seal any financial agreement in relation to the Homes England grant and the Black Country Local Enterprise Partnership (LEP) Land Property Investment Fund (LPIF) Sandwell Housing Gap Project on terms and conditions to be agreed by the Director of Finance;

c)    the Director of Regeneration and Growth in consultation with the Director of Housing and the Director of Finance be authorised to accept a fixed cost price from Speller Metcalf at RIBA stage 4 of up to 10% above the approved estimated costs as a contingency to mitigate uncertain market conditions and inflationary cost uplifts.

d)   to appropriate approximately 7317.0 m2 of land at Stanhope Road Smethwick from the General Fund to the Housing Revenue Account for housing purposes and the Director of Finance be authorised to adjust the accounts accordingly.

e) Subject to the practical completion of each property, the Director of Housing be authorised to manage and let the properties built in accordance with the Council’s housing allocation policy.