Agenda item

Report from the Strategic Director of Regeneration and Environment.

Recommendations:

1.    That Cabinet notes the positive progress towards delivery of the Forge Island scheme and, to allow successful negotiation of commercial terms for construction of the development to start, it reaffirms the agreement of December 2018 to authorise the Strategic Director of Regeneration and Environment and 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) to agree the final proposal for the scheme to be funded through a head-lease arrangement with an investor.

2.    That a provision is made from the remaining balance of the Town Centre Investment Fund to provide a potential capital contribution to the scheme, as detailed in the exempt appendix 1.

Consideration was given to the report which provided an update on the positive progress towards delivery of the Forge Island Scheme which was a key regeneration priority. If approved, the recommendations would allow for a successful negotiation of commercial terms for the construction of the development to start.

The Council had entered into a development agreement with Muse Developments Ltd. In December 2018 and since then, work had been undertaken to bring forward viable proposals to develop a leisure hub on the site within the agreed parameters. Planning permission had been granted in June 2020 and enabling works had been completed. Pre-let agreements had been secured with The Arc Cinema and Travelodge and Heads of Terms had been agreed with 2 restaurants. Other significant achievements included flood alleviation works, demolition and site clearance.

Following discussions, it was reported that it may be possible to enhance the investment value of the Scheme through variations on the head lease terms. The first variation would allow the Council to have an option to “buy out” the investor’s leasehold interest at the end of the head lease for a nominal sum. The second variation would allow for flexibility in relation to the head lease length to maximise the investment value. A further variation would include moving away from the Retail Price Index (RPI) to Consumer Price Inflation or Consumer Prices Index including Owner Occupiers Housing Costs in relation to rent review provisions. This was due to the expectation that the Bank of England would phase out the RPI from 2030.

It was reported at the meeting that work was expected to start on the site later in 2022 ready for the scheme to be open in early 2024.

Resolved:-

1.    That Cabinet notes the positive progress towards delivery of the Forge Island scheme and, to allow successful negotiation of commercial terms for construction of the development to start, it reaffirms the agreement of December 2018 to authorise the Strategic Director of Regeneration and Environment and 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 was affordable within the Budget and Financial Strategy) to agree the final proposal for the scheme to be funded through a head lease arrangement with an investor.

2.    That a provision be made from the remaining balance of the Town Centre Investment Fund to provide a potential capital contribution to the scheme, as detailed in the exempt appendix 1.