Meeting documents
Cabinet
Wednesday, 6th April, 2005
Files\Microsoft Office\Templates\dkletter.dot
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Ms Jean Hinks Director of Resources Bath & North East Somerset Council Guildhall High Street Bath BA1 5AW PLEASE REPLY TO DAVID KEETON |
4 April 2005 |
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Your Ref: |
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Our Ref: DK/LSP-01 |
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COMBE DOWN STONE MINES
ADDITIONAL AND MAIN SCHEME PRE-TENDER FUNDING APPROVAL
LAND STABILISATION PROGRAMME
1 I refer to your letter dated 16 March 2004 enclosing your application (which together constitute the "Project") for additional funding from English Partnerships.
2 The Urban Regeneration Agency (known as English Partnerships) acting on behalf of the First Secretary of State has determined that the site defined on Drg. No D104703-210-1002 of the application as (the "Site") could become derelict or neglected due to the potential for collapse of abandoned former non-coal workings and accordingly that Bath and North East Somerset Council (the "Council") is eligible for investment under the Derelict Land Act 1982 and hereby offers to reimburse the Council 100% of the Costs (as defined below) subject to the Council's acceptance of and in accordance with the terms and conditions set out below (the "Offer").
Costs
3 (a) Without prejudice to English Partnerships' absolute discretion to provide investment with respect to the carrying out of the Project, the costs set out in the second column of the table below (the "Costs") are eligible for English Partnerships' investment in respect of the corresponding activities set out in the first column of the table below (the "Works"). The Council will be provided separately with a breakdown of the individual elements of the Works.
The costs set out in the table below are gross costs and are inclusive of all previous approvals.
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Description |
£ |
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Land Acquisition & Associated Fees |
1,264,514 |
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Site Surveys & Investigations |
1,704,151 |
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Pre treatment Monitoring |
66,045 |
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Works - Emergency/Treatment/Infilling |
91,701,709 |
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Post Treatment Monitoring |
2,589,372 |
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Admin Costs - B&NES Council |
7,489,518 |
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Consultants Fees - Engineering/Ecology/Archaeology/Hydrogeology etc |
15,457,435 |
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Contingency - Risk Allowance |
24,000,000 |
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Inflation * |
10,319,799 |
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Grand total |
154,592,543 |
*The total gross funding has been converted to nominal process using a cost inflation factor derived from BCIS' All-in Tender Price Index. The BCIS Quarterly Report July 2004 was the latest available at the time of the economic appraisal and provided forecasts until Q2 2006. The likely tender price index has been projected from Q2 2006 to the end of the project resulting in the inflation figure shown.
Details of previous approvals related to the Project are detailed in appendix 1.
(b) It is acknowledged that (as at the date of this Offer) the acceptance of this Offer by the Council is the only means by which the Council can procure the carrying out of the Project. It is further acknowledged that the withdrawal of the investment provided by English Partnerships to the Council in accordance with the terms of this Offer may (in the absence of any alternative sources of investment reasonably available to the Council) lead to the Council terminating the Main Scheme Stabilisation Works Contract. For the purposes of this Offer Letter 'Main Scheme Stabilisation Works Contract' means the engineering contract or contracts between the Council and the Engineering Works Contractor(s) that relate to the main scheme stabilisation work and shall include, but not be limited to, the Initial Main Scheme Engineering Works Contract and 'Engineering Works Contractor' means any contractor engaged from time to time by the Council to carry out part or whole of the Main Scheme Stabilisation Works Contract.
(c) English Partnerships agrees that where it notifies the Council either that it approves an Agreed Termination Event or that the investment provided by English Partnerships to the Council for the carrying out of the Project is to be withdrawn in full and there is no reasonable prospect that it will be able to provide such investment in the foreseeable future, and as a result the Council terminates the Main Scheme Stabilisation Works Contract and any Key Consultant Contracts, English Partnerships shall pay to the Council an amount equal to the Termination Costs (as defined in paragraph 3(d)) PROVIDED always that the Council shall ensure that the Main Scheme Stabilisation Works Contract and any Key Consultant Contracts contain an obligation on the counterparty to mitigate any losses consequent on termination and the Council shall use all reasonable endeavours to ensure that such obligation is complied with. For the purposes of this Offer Letter an 'Agreed Termination Event' will be an event or circumstance that English Partnerships approves and agrees in writing gives the Council reasonable just and proper cause to terminate the Main Scheme Stabilisation Works Contract and Key Consultant Contracts.
(d) "Termination Costs" means the reasonable costs paid or incurred by the Council in respect of the termination of;
(i) the Main Scheme Stabilisation Works Contract; and/or
(ii) those other contracts with consultants which have been provided to and approved by English Partnerships (the "Key Consultant Contracts")
PROVIDED always that the Termination Costs shall not include, and English Partnerships shall not be required to pay, any amount as may be payable by the Council to the Engineering Works Contractor and/or the consultant in respect of:
(i) loss of profit of the Engineering Works Contractor and/or the consultant;
(ii) any indirect or consequential losses suffered by the Engineering Works Contractor and/or the consultant;
(iii) any liabilities incurred by the Engineering Works Contractor and/or the consultant as a consequence of the termination of the Main Scheme Stabilisation Works Contract and any Key Consultant Contracts in respect of which the Engineering Works Contractor or the consultant has the benefit of insurance (whether taken out in accordance with the relevant contract or otherwise) to the extent that the amount of any losses is recoverable under such insurance, save where the Engineering Works Contractor or consultant has any rights of subrogation against the Council.
(e) Where English Partnerships notifies the Council that it will be unable to provide sufficient investment to fund all or any eligible works during the period of the current financial year (the "Available Investment"), the Council shall use its best endeavours to agree with the Engineering Works Contractor or the consultant (as the case may be) an adjustment to the programme for the Works (the "Adjustment") to enable the Main Scheme Stabilisation Works Contract and/or the Key Consultant Contracts to continue in view of the Available Investment. If the Adjustment requires funding in excess of the Available Investment, or if the Adjustment is not agreed, the Council shall use reasonable endeavours to provide funding from its own resources to enable the Main Scheme Stabilisation Works Contract and/or the Key Consultant Contracts to continue. If the Council, having used reasonable endeavours, fails to provide the funding required from its own resources, it shall use reasonable endeavours to procure funding from other commercially available sources to enable the Main Scheme Stabilisation Works Contract and/or the Key Consultant Contracts to continue for the duration of such period.
(f) If at or before the end of the period referred to in paragraph 3(e), English Partnerships is able to resume funding 100% of the eligible works, English Partnerships shall reimburse any funding provided from the Council's own resources and any Financing Costs incurred by the Council in obtaining the funding required to procure the continuation of the Main Scheme Stabilisation Works Contract and any Key Consultant Contracts. "Financing Costs" means the reasonable costs incurred by the Council in obtaining a commercial loan pursuant to paragraph 3(e), provided that the rate of interest payable by the Council on such loan shall be agreed with English Partnerships in advance.
(g) If the Council obtains alternative financing under paragraph 3(e), and English Partnerships subsequently notifies the Council that its investment in the Project will be withdrawn in full, English Partnerships shall reimburse the Council any Termination Costs in accordance with and subject to the limitations set out in paragraph 3(c), together with any Financing Costs.
(h) Such amount (if any) as may be determined in accordance with paragraph 3(c) shall be reduced to the extent that the withdrawal of investment by English Partnerships arose out of, in consequence of or in connection with the failure of the Council to comply with any of its obligations under this Offer or the Main Scheme Stabilisation Works Contract or the Key Consultant Contracts.
Conditions
4 Acceptance of this Offer by the Council is subject to the following conditions:
Commencement of the Main Scheme Stabilisation Works Contract
(a) The Works fall into three categories: emergency works, enabling works and the main stabilisation works. The Project includes an extension of the investment in emergency and enabling works which are already underway.
(b) The main stabilisation works shall be specified in Main Scheme Stabilisation Works Contract. The first such contract to be entered into between the Council and an Engineering Works Contractor shall be designated by English Partnerships as the Initial Main Scheme Engineering Works Contract and shall commence no later than the date for commencement in the Initial Main Scheme Engineering Works Contract which shall in any event be no later than 31 March 2006 or such later date that is confirmed in writing by English Partnerships. The Council shall forthwith upon entering into the Main Scheme Stabilisation Works Contract, notify English Partnerships of the date on which the main stabilisation works shall commence and shall further notify English Partnerships forthwith upon the commencement of such main stabilisation works.
(c) The Council shall demonstrate to the reasonable satisfaction of English Partnerships that it has a suitable structure and project leader in place to ensure the delivery of the Project over its lifetime.1
Completion of the Project
(d) The Council shall, forthwith upon entering into the Main Scheme Stabilisation Works Contract, notify English Partnerships of the date on which the Works are expected to be completed and shall further notify English Partnerships forthwith upon the completion of such Works. Copies of any and all certificates and notices served on the Council by the contractor shall be sent to English Partnerships within 30 days of receipt by the Council.2
Changes to the Project
(e) English Partnerships shall determine, in its absolute discretion, whether to invest in or contribute towards any increase in the Costs notwithstanding that it may have approved, consented to or had prior knowledge of any changes or variation to the Project or the Works.
(f) Without prejudice to paragraph 4(e), the Council shall not consent to, permit, instruct or initiate the following changes or variations to the Works or the Project without English Partnerships' prior approval:
(i) any change to the terms and conditions of the Main Scheme Stabilisation Works Contract;
(ii) any change or variation that exceeds £25,000 and all further changes or variations once the cumulative value of such changes or variations exceeds that which is provided for in a protocol that provides for the notification and treatment of changes and variations (the "Early Warnings Protocol")3 .
(g) Without prejudice to paragraphs 3 and 4, any proposed changes in or variation to the Project or the Works (other than those referred to in paragraph 4(f)) will only be considered by English Partnerships if:
(i) the change or variation is identified and justified when claims for payment are submitted;
(ii) the change or variation is eligible for funding within the scope and authority of the Land Stabilisation Programme; and
(iii) the Project and the Works still offer Best Value.
For the purposes of this Offer Letter, a definition of 'Best Value' is attached at appendix 2.
Claims
(h) The Council shall, when returning the acceptance of this Offer, submit to English Partnerships a fortnightly profile of the claims for payment to be submitted to English Partnerships by the Council in relation to the Project. A revised fortnightly profile shall be provided at quarterly intervals thereafter.
Submission of claims for payment
(i) The Council shall submit claims for payment together with full substantiation fortnightly on the basis of gross expenditure and in accordance with the profile submitted pursuant to 4(h) and the Claims Protocol attached in draft at appendix 3.
(j) Without prejudice to paragraph 3, all claims submitted by the Council in accordance with this paragraph 4(j) shall be paid by English Partnerships in full (notwithstanding that the Council will withhold from counterparties such amounts (if any) by way of retention as are provided for in the respective contracts) until the value of such payments in respect of costs arising from the Main Scheme Stabilisation Works Contract equals a sum equivalent to the total payments due minus the retention in the Main Scheme Stabilisation Works Contract (the "Offer Letter Retention"). Thereafter, only those claims that relate in whole or in part to costs other than those arising under the Main Scheme Stabilisation Works Contract will be paid in full. For the avoidance of doubt, funding of claims for costs other than those arising under the Main Scheme Stabilisation Works Contract will not be subject to the Offer Letter Retention. If English Partnerships requests clarification, justification or any further information from the Council with respect to any claims for payment in accordance with the Claims Protocol, the Council shall supply such information as may be necessary to English Partnerships within two weeks from the date of the request from English Partnerships. To the extent that any claim for payment is not substantiated to the reasonable satisfaction of English Partnerships within two weeks from the date of the request from English Partnerships the element in dispute shall be deducted from the payment of the next claim for payment submitted by the Council (or such subsequent payments until the amount previously paid by English Partnerships is received or reimbursed in full). Where there are no further claims, English Partnerships reserves its right to recover the sum as a debt from the Council.
(k) All payments to be made by English Partnerships to the Council, including those for consultants, shall be based on actual costs incurred and time expended.
(l) The Council shall account to English Partnerships for the full amount of any sums received by the Council from the Main Scheme Stabilisation Engineering Works Contractor under the Main Scheme Stabilisation Works Contract.
(m) Without prejudice to paragraph 3, the Offer Letter Retention will be held until English Partnerships receives a signed copy of the Final Claim Form4 from the Council's external auditor. The Final Claim Form for the Works shall be submitted to the Council's external auditor as soon as possible or in any event no later than 12 months after the defects liability period relating to the Main Scheme Stabilisation Works Contract unless an extension is agreed and confirmed by the parties in writing. The Council shall supply English Partnerships with a copy of the Final Claim Form which is submitted to the external auditor.
After use of the Site
(n) On completion of the Works, all Council owned land on the Site shall continue to be used for its existing purposes.
(o) On disposal (including lease or any other transfer of title) or the bringing into use (including change of use) of any Council owned land on the Site (the "Relevant Land") within fifteen years from the date of practical completion of the Works, the Council shall pay to English Partnerships any and all After Value. For the purposes of this Offer Letter, "After Value" shall mean:
(i) subject to paragraph 4(o)(ii), a sum equivalent to the total sale proceeds net of reasonable legal costs following disposal of the Relevant Land or market value in respect of any other form of transfer of the Relevant Land or its being brought into use; and
(ii) where the Relevant Land was not originally acquired with the aid of funding by English Partnerships, a sum equivalent to the total sale proceeds net of reasonable legal costs following disposal of the Relevant Land or market value in respect of any other form of transfer of the Relevant Land or its being brought into use minus the market value at the date of this letter as adjusted by the relevant property price index5 .
(p) The Council shall submit all valuations, certified by a professionally qualified valuer in accordance with the RICS Appraisal and Valuation Standards (as amended), no later than 30 days after the disposal or bringing into use.
(q) The Council shall pay the After Value to English Partnerships within 45 days of receipt of disposal proceeds or the date of the land's being brought into use.
Duty of care
(r) The Council acknowledges and agrees that this Offer sets out the terms upon which English Partnerships is willing to provide investment in relation to the Project and the Works and that English Partnerships' has no further duties or obligations with respect to the Project or the Works whether as a consequence of the acceptance of this Offer by the Council or otherwise.
(s) The Council shall exercise and contractually oblige the Engineering Works Contractor (and any other parties retained by the Council in connection with the Project) to exercise the degree of skill and care reasonably to be expected with respect to projects similar in scope and complexity to the Works and the Project and that, once completed, the Works and the Project represent Best Value.
Other grants and contributions
(t) Without prejudice to paragraph 3, English Partnerships may revise its investment including the repayment of sums already paid if any other grant, financial contribution, or sum is received or realised by the Council with respect to the Project or the Works. The amount paid or to be paid by English Partnerships will be recalculated on the basis of the costs to the Council of carrying out the Project, taking into account the other grant or financial contribution. The Council shall refund to English Partnerships any over-payments.
Supply of information
(u) Upon request the Council shall deliver up as soon as reasonably possible to English Partnerships either before or after the execution, satisfaction or termination of this Project or the Works, a copy of any data, documentation, reports or other information in writing or electronic format relevant to, connected with or arising from, the Project or the Works and/or the after use of the Site including but not limited to any final and/or draft investigation results and reports, drawing, specifications, plans, approvals, audits or reviews.
(v) Notwithstanding English Partnerships general rights to require delivery of information under paragraph (u) above, the Council shall supply English Partnerships with a copy of the results of surveys and/or investigations of the Site as soon as is reasonably practicable after completion of the same.
Confidential information
(w) English Partnerships does not seek in any way to obstruct the Council's disclosure duties and recognises that the disclosure burden will be greatly increased after the Freedom of Information Act 2000 comes into force in 2005. Further, in the interests of achieving Best Value, English Partnerships recognises the benefit of sharing all material pertaining to the Project with the Council. Unless stated otherwise in writing, all such material that English Partnerships provides to the Council shall not be confidential. However, in circumstances where English Partnerships wishes to keep material confidential, it will discuss the issue with the Council and agree the basis upon which the Council shall lawfully maintain confidentiality (if at all) before providing such material.
(x) The Council shall not release or disclose any material or make any statements to third parties in relation to the Project that refer to English Partnerships except where:
(i) the material has been provided under paragraph 4 (w);
(ii) the Council first seeks the written permission of English Partnerships; or
(iii) it is in accordance with paragraph 4 (y).
Site signage, publicity and public relations
(y) The Council shall display prominently on the Site, temporary and, where requested by English Partnerships, permanent signs approved by English Partnerships indicating the nature of the Project and the role of English Partnerships. Any other public relations or publicity in relation to the Project or the Works, or marketing material prepared in connection with the disposal of the Site shall refer to the role of English Partnerships' in a form to be approved by English Partnerships.
Breach of Conditions
5 (a) Without prejudice to paragraph 3, English Partnerships may by prior written notice to the Council:
(i) withdraw investment if the main stabilisation works are not commenced by the date specified in paragraph 4(b) (provided that no investment in the main stabilisation works has been made by English Partnerships in which case 5(a)(ii) will apply);
(ii) withdraw or reduce future investment or require repayment of amounts previously paid by English Partnerships to the Council in accordance with this Offer if the Project or the Works are not completed by 31st December 2010 or are abandoned by the Council or the Engineering Works Contractor at any time. English Partnerships may not require repayment of amounts previously paid if the reason for the Project or the Works not being completed by such time is: Force Majeure; Agreed Termination Event; or that the Engineering Works Contractor has become insolvent, or has gone into administration or liquidation, and in such circumstances the Council shall not be taken to have abandoned the Project or the Works, PROVIDED that it uses all reasonable endeavours to appoint a suitable replacement Engineering Works Contractor as soon as reasonably practicable. For the purposes of this Offer Letter "Force Majeure" means war, civil war, rebellion, revolution, insurrection, military or usurped power, strikes, riots and civil commotion not confined to the contractor's employees, or radioactive contamination;
(iii) withdraw or reduce future investment or require repayment of amounts previously paid by English Partnerships to the Council in accordance with this Offer which are equivalent to the losses suffered by English Partnerships and/or the First Secretary of State that arise from the Council's breach of conditions 4 (q), (s), (x) and/or for Cumulative Breach (as defined in paragraph 5(c));
(b) Where English Partnerships notifies the Council verbally of a breach of any term or condition (other than conditions 4(q), (s) and (x)) of this Offer by the Council and the Council fails to remedy any such remediable breach within such reasonable time as English Partnerships may in its absolute discretion require, English Partnerships may issue a notice in writing to the Council stating that such breach has occurred (a "Breach Notice"). In the case of a breach which in the opinion of English Partnerships is irremediable English Partnerships may issue a Breach Notice without prior verbal notification to the Council.
(c) Where English Partnerships has issued two Breach Notices within any six month period, any further breach of any term or condition (other than conditions 4(q), (s) and (x)) of this Offer by the Council within that six month period shall be a Cumulative Breach.
Response
6 If the Council wishes to accept this Offer, this Offer should be signed and returned to English Partnerships, Arpley House, 110 Birchwood Boulevard, Birchwood, Warrington WA3 7QH within 4 weeks of the date of this Offer. For the avoidance of doubt, this Offer shall only be capable of acceptance after such date with the prior written approval of English Partnerships (acting in its absolute discretion).
Law
7 This Offer shall be governed and construed in all respects in accordance with English law.
Health and Safety at Work Act 1974 - Construction (Design and Management) Regulations 1994 (the "CDM Regulations")
8 For the avoidance of doubt it is hereby declared by English Partnerships and the Council accepts as a condition of its acceptance of this Offer that (i) English Partnerships is not, for the purposes of the CDM Regulations, initiating the Project and (ii) insofar as the CDM Regulations may provide that English Partnerships is a client for the purposes of the CDM Regulations, English Partnerships hereby appoints the Council pursuant to the terms of regulation 4(1) of the CDM Regulations, to act as the client in respect of the Project and the Council shall, forthwith upon such appointment, notify the HSE of its appointment in accordance with regulations 4(4) of the CDM Regulations. The Council shall provide English Partnerships with a copy of the HSE's official notice of receipt thereof.
Disclaimer
9 Save for English Partnerships review of the Council's application for the sole purpose of considering eligibility for funding, English Partnerships has not inspected or approved or reviewed any of the documentation submitted as part of the Council's application. Any failure or omission by English Partnerships to inspect or review or to disapprove the Council's application shall not place any duty or liability upon English Partnerships under or in connection with the Project or the Works and no approvals, consents, proposals, comments, inspections or testings made by English Partnerships or anyone acting on its behalf with regard to any part or parts of the Council's application in respect of the Project or the Works or the carrying out of the Project or the Works shall not in any way affect or diminish the responsibility of the Council or anyone acting on its behalf (including the Engineering Works Contractor and any other parties retained by the Council with respect to the carrying out of the Works or the Project).
Trevor Beattie
Corporate Strategy Director
Signed: ................................................................................
On behalf of: Bath & North East Somerset Council
Name: ................................................................................
Position: ................................................................................
Date: ................................................................................
1 In regard to suitability, amongst other matters, English Partnerships will expect the Council to demonstrate that it will:
(1) ensure that the site is adequately maintained while in its control;
(2) conform to the requirements of the EC Public Works Regulations and any other relevant European directives;
(3) prior to commencement of the Works, secure the approval in writing of the necessary statutory bodies and agencies to the proposed Works and shall comply with all the requirements of those bodies and agencies in carrying out the Works. A copy of these approvals will be submitted to English Partnerships prior to the works commencing; and
(4) have responsibility for and further that it has management control of the Project for the purposes of the Health and Safety at Work Act 1974 and any Regulations enacted thereunder.
2 This Offer Letter will be signed and accepted prior to the negotiation of the Main Scheme Stabilisation Works Contract. It is anticipated that an NEC form of contract will be used as the basis for the Main Scheme Stabilisation Works Contract and that this will provide for sectional completion of the main stabilisation works. The procedure for sectional completion will therefore be reflected in a claims protocol (the "Claims Protocol") that will be agreed by the parties after the Main Scheme Stabilisation Works Contract is finalised.
3 The Early Warnings Protocol will be completed once the Main Scheme Stabilisation Works Contract is finalised.
4 The Final Claim Form will be produced by the Council using document number LSP LA-FIN 8/00 as amended from time to time.
5 For the purposes of After Value calculations, 'market value' shall be assessed in accordance with RICS Appraisal and Valuation Standards from time to time.