Agenda item

Report of the Cabinet Member Development and Safety

The Leader introduced the report on the property matter in the absence of the Cabinet Member Development and Safety.

 

Members asked questions which were answered by the Leader and the Managing Director Place and Growth and then debated the report in full.

 

RESOLVED (unanimously)

 

To adopt the recommendations.

 

 

RESOLVED (unanimously)

1. That a budget allocation of £44,000,000 be approved to be funded via prudential borrowing, for the purchase of land that forms part of the allocated land as set out in the JCS located at Fiddlers Green. This will include provisions for :

i)             £40,000,000 for the purchase of the land, including fees/charges etc

ii)            £1,000,000 to fund project management procurement of professional services including legal, planning and real estate and the procurement of a master developer as well as other related activities to support the delivery and development of the project

iii)           £3,000,000 for potential enabling works or infrastructure costs if required.

2. That it be noted that under the authority granted by Council on 23 July 2018 for the Appropriate Officer to spend against the programme budget, the Managing Director Place and Growth, will undertake the necessary due diligence and financial assessment and modelling and prepare a report for Cabinet setting out the case for purchase prior to the exchange of contracts, or at a relevant point as appropriate.

 

On behalf of the Cabinet Member Development and Safety the Leader

introduced the report. He made reference to the pre-Council briefing Members

had received and the decision made by Council on 23 July 2018 to approve the

allocation of £250k towards the creation of a multi-disciplinary team to consider

how to maximise the economic and social benefit for Cheltenham and the wider

region by realising the growth potential of the cyber industry as a commercial

anchor for the West Cheltenham urban extension.

The Leader explained that the council had some concerns regarding the speed

of progress and vision of the existing promoter of the site. West Cheltenham

was key for the town and a vital site for the future. However, he stressed that

the process of acquiring a strategically important site was not risk free. This

represented a massive opportunity for the benefit of the town as a whole.

Council approval was now being sought to authorise a budget for the purchase

of land at West Cheltenham and the progression of the programme to bring

forward a comprehensive development of the wider strategic allocation

including these land interests. The actual purchase would be progressed only

following Cabinet approval of a report informed by detailed due diligence,

financial modelling and risk analysis.

Approval by Council was therefore being sought on the following:

i) Purchase price of £40 million for the purchase of the land including fees

and charges etc.

ii) £1 million to fund project management procurement of professional

services including legal, planning and real estate and the

- 2 -

Draft minutes to be approved at the next meeting on Monday, 25 March 2019.

procurement of a master developer as well as other related activities

to support the delivery and development of the project

iii) £3million for potential enabling works or infrastructure costs if required.

The Leader reminded Members that initial access to the cyber park/employment

land would be provided through Growth Deal 3 which had an allocation of

£22million.

He wished to put on record his thanks to all officers involved. There was much

more work to do and the acquisition was subject to an ongoing due diligence

exercise relating to finance, planning and development considerations and risk

analysis. When complete a further report would be presented to Cabinet to

proceed with the purchase.

The following questions were raised by Members and responses given:

 Interest cost of holding land –Members were referred to paragraph 2.17

of the report by the Executive Director Finance and Assets. As the

Council was purchasing land which was not considered to depreciate

there was as a consequence no requirement at this stage to make

statutory Minimum Revenue Provision (MRP) for debt repayment.

Therefore the council’s exposure to cost at this stage was cost of carry

for interest payments. There was a mid-point range of 1% to service the

debt and 0.3 % upflift for prudency on current interest rates.

 Given the motion passed earlier in the meeting would future properties

to be built or funded by the authority be carbon neutral/sustainable - the

Leader explained that the motion which had been passed was a wish for

Cheltenham to become carbon neutral but did not represent a target for

Cheltenham as a whole.

 How would sustainable be defined-the Leader acknowledged that this

was an important point and explained that this would be outlined in the

report coming forward by defining explicitly what elements were included

in the definition.

 Would the infrastructure be put in place first?-The Managing Director

Place and Growth explained that £22million had been secured for the

cyberpark. This GD3 fund, was in the process of being implemented and

would fund highway improvements for the cyber park. There would be a

planning requirement for necessary infrastructure in place prior to

commencement.

In the debate that ensued the following comments were made by Members and

responses provided by officers:

 Members welcomed the fact that the council had the opportunity to

influence a major development and this should not be missed.

 Members recognised the significant risks highlighted in the report and by

officers in their presentations, but suggested that the risks of not doing it

were far greater.

- 3 -

Draft minutes to be approved at the next meeting on Monday, 25 March 2019.

GCHQ are a very important employer to Cheltenham and the wider

region. CBC has an opportunity to help support and develop their future

as part of the economy

 Concern was expressed with regard to traffic gridlock at the end of

Telstar Way to junction 11 and it was questioned whether the issues,

which were of great significance to residents of West Cheltenham, were

understood. The right infrastructure to facilitate the development was

vital. In response the Leader explained that Growth Deal 3 would

address the issue at the end of the Golden Valley. He hoped that the

likelihood of receiving government support for junction 10 was high

given the cyberpark and the location within one of the most deprived

wards of the town.

 The Leader highlighted that it was essential that the whole of West

Cheltenham benefitted otherwise the project would deem to have failed.

This represented one of the single most important things the Council

had undertook.

 Scope existed to promote the delivery of the Cheltenham West

Regeneration Project-(CBH led) if the housing land identified were

purchased along with the employment land.-

 Timeline following Council agreement- The MD Place and Growth

explained that there were a number of delivery related risks which had

yet to be ascertained. Generally speaking the council would complete on

the purchase then there would be an overall planning brief and

procurement exercise to select development / investment partners. The

priority if to progress the first cluster of buildings / hub around the Cyber

Innovation Centre. Challenges regarding housing were higher as these

were relevant to junction 10 for which the outcome was expected in

June/July, thus the risks relating to this aspects greater. Whilst the

planning application was progressed procurement of a joint venture

partner would be sought (twinned tracked). He estimated therefore that

work could commence 18 months-2 years hence. He reiterated that

there were currently a lot of unknowns, and members needed to be

aware of this as a risk of purchasing land without planning consent.

However, in any event the aim would still be to deliver housing around

the innovation centre.

 John Griffiths highlighted to Members that the most pressing issue was

to meet the needs of GCHQ by accommodating additional space for

them. Timescales were already a cause of concern for them last

summer therefore there was an urgency to those conversations. Whilst it

was important to put the council in the strongest possible position to

deliver to important timescales this urgency had to be recognised.

 With regards to the price being paid for the land, members were advised

that the overall figure both housing and commercial land and reflected

the fact that CBC are seeking to acquire this land, when not being

marketed . As this was an ‘off-market’ sale, the council is paying what is

considered to be a full market value. The inclusion of the housing land

- 4 -

Draft minutes to be approved at the next meeting on Monday, 25 March 2019.

has increased the overall cost, however does provide greater scope and

covers the two corners of the strategic allocation.

 When asked what risks there were to investment in light of Brexit the

MD Place and Growth emphasised that the cyber industry was the main

driver behind this project and there was no doubt that given the current

instability internationally (surrounding Brexit) cyber security is likely to be

an industry whose development and growth would be more robust in

uncertain times. For CBC investment that supported this growth with

GCHQ as a potential anchor offered some investment confidence as

GCHQ represent the kite mark for standards in this industry. In terms of

the Brexit impact on housing he stated that there remained a significant

housing requirement in Gloucestershire. Cheltenham through its housing

strategy was committed long term and this opportunity could be a game

changer for the town and one which the council could control. However,

seeking to deliver such ambitions comes with risk.

In summing up the Leader reiterated that this represented a unique investment

opportunity for Cheltenham.

RESOLVED (unanimously)

1. That a budget allocation of £44,000,000 be approved to be funded

via prudential borrowing, for the purchase of land that forms part of

the allocated land as set out in the JCS located at Fiddlers Green.

This will include provisions for :

i) £40,000,000 for the purchase of the land, including fees/charges etc

ii) £1,000,000 to fund project management procurement of

professional services including legal, planning and real estate

and the procurement of a master developer as well as other

related activities to support the delivery and development of the

project

iii) £3,000,000 for potential enabling works or infrastructure costs if

required.

2. That it be noted that under the authority granted by Council on 23

July 2018 for the Appropriate Officer to spend against the

programme budget, the Managing Director Place and Growth, will

undertake the necessary due diligence and financial assessment

and modelling and prepare a report for Cabinet setting out the case

for purchase prior to the exchange of contracts, or at a relevant

point as appropriate.