Decision details

Date of Decision:

03/06/2019

Decision Maker:

(Including Job Title)

Paul Woodcock, Strategic Director, Regeneration and Environment, in consultation with Councillor Denise Lelliott, Cabinet Member for Jobs and the Local Economy.

Specific Delegation:

(If any)

Resolved by the Cabinet 17/12/18: -

(1) That the entering into a development agreement and the granting of the long lease of the Forge Island development site to the selected developer, Muse Developments Ltd. be approved.

(2) That the outlined financial approach to deliver the Forge Island development be approved and the Strategic Director for Regeneration and Environment be authorised to approve the final proposal in consultation with the Cabinet Member for Jobs and the Local Economy; subject to confirmation by the Strategic Director for Finance and Customer Services that the final proposal is affordable within the Budget and Financial Strategy and within the following parameters:

• The initial rents the Council is entitled to receive from occupiers are greater than the initial head lease rent and
• The financial modelling over the 35 year period shows that the Council’s anticipated income from the development exceeds the total anticipated head lease costs.
• That the Assistant Director of Legal Services be authorised to agree the final legal documentation.

Brief Description of Decision:

Agreement of terms for the Agreement for Lease and the Lease of Forge Island to Muse Developments Limited.

Reasons for the Decision:

The terms in the Agreement for Lease, and the Lease, include legal agreements for the lease to be drawn down that ensure that the final proposal will be compliant with the Cabinet resolution of 17 December 2018. This includes the following

·     For the Council to take an over-riding lease (head-lease), the initial head-lease rent payable by the Council must be no more than 75% of the initial rents the Council is entitled to receive following the expiry of any rent free periods and disregarding any other landlord incentives to be provided to prospective occupational tenants.

·      For the Council to take an over-riding lease (head-lease) a financial appraisal must be provided (based on actual agreed lease terms and prior to the Council entering into the over-riding lease)  that demonstrates that anticipated income from the development over a 35 year period exceeds the total anticipated rent payable under the over-riding lease (head–lease).

·      The other terms that have been negotiated are considered to be satisfactory and will deliver a high quality redevelopment of Forge Island.

·      In the event of disagreement on either of the above matters the Agreement for Lease contains satisfactory robust provisions for dispute resolution including the appointment of an independent expert if required.

·      This decision is not the agreement of the final financial approach but puts in place contractual arrangements to ensure that the Council retains control of the site if the Developer cannot bring back a viable overall proposition that meets the terms of the Cabinet recommendation on 17^th December 2018..

Details of alternative options considered and rejected:

The agreement of these terms has been subject to extensive negotiation. Alternative options would not have delivered the requirements set down by Cabinet. 

Conflicts of interest declared by any Executive Member consulted by the decision maker which relates to the decision:

Dispensations Granted:

(If any)

Not applicable

Reports or parts of reports considered

Forge Island Agreement for Lease and Lease