Meeting documents

1 BACKGROUND

2 THE ISSUE

2.1 Grosvenor wrote to the Council on 24 January 2005 requesting formal approval for the introduction of Crest Nicholson as Joint Master Development Partner for the Bath Western Riverside Project. This does not represent any change to the role or influence of the Council and the South West of England Regional Development Agency in taking the Project forward as Grosvenor and Crest propose to jointly share the role of Master Development Partner on a 50:50 basis. The full content of Grosvenor's request to the Council is included in Exempt Appendix 1. However, in summary, Grosvenor's rationale for the joint appointment of Crest Nicholson states that:

Grosvenor and Crest Nicholson have developed a strong and positive working relationship on the project over the past six months or so, through the period that Crest have been negotiating to acquire Landscape Estates' key strategic property interest at BWR. This acquisition has now been completed.

Grosvenor believe that the two developer's interests and objectives are 93entirely aligned94.

Grosvenor believe the partnership will be able to offer 93very real comfort94 to both B&NES and the SWERDA on the delivery of the scheme.

Heads of Terms negotiations are underway, with Grosvenor and Crest working together under the terms of a collaboration agreement that the two organisations signed in October 2004.

2.2 The mechanics for introducing Crest will be by amendment to the existing Co-Operation Agreement, to the effect that Crest will be Master Development Partner jointly with Grosvenor, with joint and several liabilities. No other changes of principle are anticipated to the Co-Operation Agreement and Crest's introduction will otherwise be consistent with the terms of the Co-Operation Agreement. Grosvenor's request has been considered by the Council's external property and legal advisers for the Bath Western Riverside Project. A report from Donaldsons (property) is attached at Exempt Appendix 1 and the conclusions of the advice from Berwin Leighton Paisner (legal) are set out below. Further background information about Crest Nicholson in support of the proposed appointment is attached at Appendix 2.

3 RECOMMENDATIONS

3.1 To agree in principle that Crest Nicholson are formally appointed as preferred joint Master Development Partner, alongside Grosvenor, for the Bath Western Riverside Project, in accordance with regulation 10(2)(e) of the Public Services Contracts Regulations 1993 ("Services Regulations").

3.2 To give delegated authority to the Bath Western Riverside Regeneration Manager in consultation with the Major Projects Director and the Executive Member for Economic Development, to obtain all necessary further information and resolve any outstanding actions and due diligence required to formally introduce Crest Nicholson to the Project Partnership.

4 FINANCIAL IMPLICATIONS

4.1 There are no financial implications for the Council as a result of the proposed appointment. Crest will share 50% of Grosvenor's costs up to Development Agreement stage and it is currently envisaged that the joint venture between the two parties will then be on a 50:50 basis.

5 THE REPORT

5.1 The report from Donaldsons attached at Exempt Appendix 1 covers the following issues:

Background;

General observations on Grosvenor's request;

Specific analysis on the merits of the request (see item 6, Rationale, below);

Other options open to B&NES and SWRDA at this point (see item 7, Other Options, below and Section 4 of Donaldson's report at Exempt Annex 1);

Recommendations.

5.2 The advice on procurement provided by Berwin Leighton Paisner states that it could be construed that the introduction of Crest to the Co-operation Agreement constitutes an offer for services and could be potentially caught by the Public Services Contracts Regulations 1993 ("Services Regulations"). However, regulation 10(2)(e) of the Services Regulations does allow a contracting authority to appoint a provider of its choice (without a competitive procedure) in certain limited circumstances when for reasons connected with exclusive rights, the services to be provided may only be provided by a particular party. Berwin Leighton Paisner conclude that Crest qualifies for reasons connected to its ownership of the Landscape Estates land (which has the potential to release at least 500 houses of the total 800 which the must be achieved pursuant to the draft Local Plan by 2011), its critical importance to the timely delivery of the Project and its role and experience as a volume house builder with a track record of delivery of regeneration housing schemes.

5.3 A summary of Crest Nicholson's relevant experience, approach to major development schemes and their latest report and accounts are attached at Appendix 2.

6 RISK MANAGEMENT

6.1 The scale of BWR and the level of associated risk contained within it is such that the Parties are working actively to reduce the risk profile. Securing the `in principle' commitment of arguably the key strategic landowner has and will deliver a number of significant benefits to the Project. This has already been evidenced through the withdrawal of Landscape Estates' Section 78 Appeal at the behest of Crest Nicholson. It should also be emphasised that the Crest Nicholson land has the potential to release 500 houses of the total of 800 which must be achieved under the Local Plan by 2011. This satisfies one of the main criteria of the SPG and is critical to the policy objectives for BWR.

6.2 It is noted that Crest will be brought into the project as Master Developer jointly with Grosvenor. There could be concerns that B&NES will be dealing with two parties, rather than one. This can be catered for to a large extent in the legal documentation, which will deal with the mechanics of project liaison and provide that Grosvenor and Crest have only one joint "vote" in any decision-making process. Also, the disadvantage of dealing with two parties must be weighed in the balance with the advantages which Crest bring to the project.

7 RATIONALE

7.1 The Donaldsons report at Exempt Appendix 1 outlines the details of the rationale for recommending that the Council appoints Crest Nicholson as joint Master Development Partner for Bath Western Riverside, alongside Grosvenor. This includes the following reasons:

CN's acquisition of Landscape Estates' interest;

Crest Nicholson's (CN's) track record and underlying company strength (see also Annex 2);

Strong team;

Collaboration Agreement between Grosvenor and CN;

Ability to create additional partnerships (see also Annex 2).

8 OTHER OPTIONS CONSIDERED

8.1 A full assessment of other options is contained in Section 4 of Donaldson's report at Exempt Appendix 1. This concludes that the appointment of Crest Nicholson to the Project Partnership alongside Grosvenor represents the best option for the Council.

9 CONSULTATION

9.1 The Council's partner (the South West RDA), the Council's legal advisers (Berwin Leighton Paisner) and the Council's property advisers (Donaldsons) have been consulted in the preparation of this report.