Agenda item

Context:

To undertake pre-decision scrutiny on the proposal to sell Crick Road to Melin Homes to enable the construction of 285 residential units.

Key Issues:

Crick Road is a 10.95 ha site allocated within the Local Development Plan as a strategic development site. The site is owned by Monmouthshire Council and a third party.

Cabinet gave approval in June 2016 to enter into discussions with Melin Homes for the sale of this site on the basis that the development would support the creation of a cohesive community that has regard to its place and local context, whilst still observing the legal requirements that bind the Council when disposing of assets to achieve best consideration.

Council Officers and Melin Homes have been working collaboratively to design a scheme that has regard to its rural context, applies Poundbury principles, creates a sense of community and belonging and is underpinned by dementia friendly principles. The outcome is a design that will provide 285 homes, 71 of which will be affordable, embodies green infrastructure principles and has a mix of residential designs and scale. The houses for sale will be developed by Melin’s trading arm, Now Your Home, with the remainder being retained and managed by Melin Homes.

Surveys have been commissioned to establish development constraints and abnormal development costs so that the residual land value could be calculated. To date, abnormal development costs have been identified in the region of £3,000,000 which relate to drainage, utilities, ground conditions and ecological issues. It is intended that as these costs are finalised, the parties will share in any savings on an equal basis.

Discussions are underway with the owners of the third party land on the basis of an equalisation agreement. This will reflect the net value of the site, less costs and the benefit then apportioned on the basis of the size of the land holding.

There is a Service need to re-provision a new dementia friendly residential care facility and this site has been identified as the preferred location. A separate report is being presented by Social Services to consider the business case for this proposal. However, it is worth noting that the design prepared has allocated 2.3 acres to the care facility. In the event that this does not proceed it is expected that the land will be incorporated within the residential scheme, subject to the necessary planning consents.

Provisional heads of terms have now been agreed which will be the subject of an independent valuation to determine that the terms meet the obligations of Section 123 of the Local Government Act.

Member Scrutiny:

·         Melin Homes will be paying the market value for the land and an external valuer has been appointed. 

·         In terms of the legality of the process, significant scrutiny has taken place and external advisers have been brought in to provide a level of assurance. Officers are comfortable that any obligations will not be breached. 

·         Section 123 requires that best price is obtained and not prescribe the method of obtaining that.  Therefore, the Authority does not need to go and test in the open market but does need the independent scrutiny of the deal that has been agreed which has been tested via case law. Legal advisers are comfortable that the correct procedure is being followed.

·         Other companies are interested in purchasing the site. However, market value is being obtained which will be a capital receipt that will be ring-fenced to the 21^st Century Schools Programme.

·         Melin is a long term partner and will remain on the site.

·         The design is place shaping and has regard to its community.

·         Subject to Cabinet consent on 6^th December 2017 and that the Melin Board is in agreement with the Cabinet decision, public consultation will commence early in the new year.  Planning permission is anticipated to be achieved around late spring / early summer of 2018 with work commencing at the end of 2018.

·         The scheme, as currently proposed, does not include a G.P. surgery.  The hub of the scheme will be the social services facility.

·         A report will also be presented to Cabinet on 6^th December 2017 regarding Severn View with a view to develop this scheme and to produce a full business case for it by the late spring of 2018.

·         In response to questions raised regarding the risks involved with working with Melin Homes, it was noted that Melin Homes’ trading arm is delivering a number of sites and have developed expertise. It has also developed its own supply network which has enabled them to build in some quantum and reduce the construction costs. The trading arm has employed people who have worked for PLCs and therefore have the same level of acumen and development skills that PLCs would have. Officers have attended all of the development meetings to ensure that the plans being prepared are being scrutinised. The arrangement is directly with Melin Homes and will share the benefit of any uplift payment. The 25% affordable homes will be achieved with Melin Homes.  In the open market, this cannot always be guaranteed.

·         The Capital receipt will be covered via a three phase payment.  The first payment will be received at the point of exchange on the contract.  Receipt of the remaining two payments has not yet been set.

·         The design and community feel is breaking new ground.  The scheme is very good for residents and for Monmouthshire as a whole.