Meeting documents

1 THE ISSUE

1.1 The negotiations of a Development Agreement (DA) between Crest Nicholson Regeneration Limited (Crest) and Bath and North East Somerset Council for the Bath Western Riverside West (BWR West) development are now advanced and mean that the Agreement is close to completion. Cabinet approval is therefore now sought to proceed to exchange the DA.

1.2 The Council's Development Control Team is currently concluding negotiations with Crest on the statutory planning agreement (Section 106) for BWR West, but the Outline Planning Permission for BWR West can only be issued once the DA is in place. This is because the DA will ensure the delivery of comprehensive development of BWR West as is required by Council policy set out in the Council's Adopted Local Plan and Supplementary Planning Document.

2 RECOMMENDATION

The Cabinet agrees that:

2.1 The Chief Executive is authorised to enter into the Development Agreement for BWR West between the Council and Crest Nicholson Regeneration Limited, in consultation with the Executive Member for Economic Development, the Director of Resources and Support Services and the Council Solicitor, subject to his being satisfied that financial, technical and regulatory compliance issues have been resolved.

3 FINANCIAL IMPLICATIONS

3.1 The Agreement commits the Council to:
- invest in match funding the affordable housing on site plus other minor elements in the scheme (approximately £14 M); and
- the funding of future project-team costs.

It is intended that this expenditure will be funded the affordable housing from Right-To-Buy Receipts. The Project team costs will be funded from unsupported borrowing.

3.2 In addition the Agreement secures an appropriate agreed consideration for the Council's land holdings.

3.3 The detailed financial implications are outlined in Appendix 3 (exempt).

4 CORPORATE PRIORITIES

The development of BWR West will help to achieve the Council's following priorities:

· Building communities where people feel safe and secure

· Improving school buildings

· Sustainable growth

· Improving the availability of Affordable Housing

· Improving transport and the public realm

5 THE REPORT

5.1 Background
Since the last report to Cabinet in April 2006 the Director of Development and Major Projects, the Executive Member for Economic Development and the Development and Major Projects Directorate of the Council have progressed the negotiations on the DA with Crest Nicholson. The DA is now close to agreement, and Cabinet approval to the exchange of the DA is therefore requisite at this time.

5.2 Crest is currently concluding negotiations on the Section 106 with the local planning authority which will allow a planning permission for the whole of the site (Outline Planning Application No: 06/01733/EOUT) to be granted. It is intended that a DA and the Section 106 agreement relating to this planning permission be entered into simultaneously.
The DA is integral to the issue of the issue of the planning permission as it will ensure the comprehensive delivery of BWR West. All planning obligations pursuant to planning agreements can be appealed and many of these will be repeated in the DA so as to ensure that any potential relaxation will be granted only with Bath & North East Somerset's voluntary agreement.

5.3 It is proposed that Bath and North East Somerset Council enters into a DA with Crest Nicholson Regeneration Limited, which entity will be guaranteed by its parent company, Crest Nicholson plc.

5.4 It is proposed that the development of the site will be carried out in phases and the developer will be under an obligation to complete a phase upon commencing that phase.

5.5 The developer and Bath and North East Somerset Council will agree on any alterations to the different phases.

5.6 The developer is to cooperate with regard to the location of the RTS corridor within the development site.

5.7 Pros - why have a Development Agreement?
A) Proceeding with comprehensive development:
Subject to satisfaction of conditions precedent the DA will require Crest to continue with comprehensive development.

B) Securing development in accordance with an overall master plan:
The DA will fix the general concept for the development to the master plan and subsequent revisions to the development will be governed by provisions contained in the DA.

C) Safeguarding planning obligations:
Refer to 5.2 above.

D) Ensuring high delivery standards
The Council will have greater involvement in the design of the development.

E) Share of profit to increase affordable housing levels
One third of profits made through the development after a priority return for the developer will be made available to the Council to increase the amount of affordable housing up to 30% of total housing at the development.

5.8 Cons - risks in entering into the Development Agreement

A) Commitment - Bath and North East Somerset Council will be tied to development of the site by Crest until the DA expires or is terminated and will be tied in to:
- supporting Crest as a development partner;
- supporting Crest's specific development proposals.

B) Market Failure
As with all private sector developments, at present there is a risk of developer default.

5.9 There are a limited number of issues within the DA which need to be resolved before the agreement can be signed. Details of these issues are included in Appendix 1, 3 and 4 (exempt).

6 RISK MANAGEMENT

6.1 The report author and Lead Cabinet member have fully reviewed the risk assessment related to the issue and recommendations, in compliance with the Council's decision making risk management guidance (refer to Appendix 1(exempt)).

7 EQUALITIES

7.1 An equalities impact assessment in relation to the development agreement will be carried out before it will be signed.

8 RATIONALE

8.1 Planning permission for BWR West can only be granted after the DA with Crest is signed. The planning permission is essential for the development to start on site and for resultant outputs for the Council to be delivered.

8.2 By moving to secure a planning permission through entry into the Section 106 and the DA the Council is in a position to crystallise the progress made to date on this major development project. It is also a demonstrable step highlighting Bath and North East Somerset Council's commitment to the delivery of this strategic regeneration site which in itself will act as a catalyst by unlocking the potential of adjacent sites through infrastructure investment.

9 OTHER OPTIONS CONSIDERED

9.1 The Council could dispose of its land element into the project by a straight freehold sale and therefore not need a DA. However this has been considered inappropriate in this case, as the public interest is better served by securing positive obligations on the developer via the Development Agreement.

9.2 If a DA can not be signed then Crest (if successful in planning terms) could progress development on their land alone, not providing comprehensive development of the whole site nor enabling infrastructure for the wider area. Due to the reduced positive outputs of this option for the public it is considered inappropriate.

10 CONSULTATION

10.1 Cabinet members; Other B&NES Services (Planning, Education, Transport); Section 151 Finance Officer; Chief Executive; Monitoring Officer.

10.2 Consultation and updates on the progression of the DA negotiations have been held regularly:
A formal Cabinet report was presented in April 2006.
Strategic Directors' Group and Informal Cabinet have been updated on progress on a regular basis.

11 ISSUES TO CONSIDER IN REACHING THE DECISION

11.1 Sustainability; Property; Corporate; Other Legal Considerations.

12 ADVICE SOUGHT

12.1 The Council's Monitoring Officer (Council Solicitor) and Section 151 Officer (Strategic Director - Support Services) and the Senior Planning Officer have had the opportunity to input to this report and have cleared it for publication.

12.2 Throughout the negotiations of the DA the Council has received, considered and followed legal advice concerning the Agreement.