Agenda item

(CSP:2 and 4)

Purpose:  To note that Strutt & Parker are able to make a clear recommendation to the Council as to whom the Council should choose as its development partner in order to secure both enhanced revenue and regeneration of the London Road Industrial Estate (LRIE) and subject to satisfactorily agreeing the terms of any development agreement, that the Council will be in a position by mid Summer to enter into contract with its preferred development partner.

Resolved that:

1.         Strutt and Parker’s recommendation to enter into contract negotiations with the Council’s recommended development partner be approved.

2.         Authority be delegated to the Chief Executive to enter into and complete negotiations with the recommended development partner in consultation with the Portfolio Member, the Head of Legal Services and Head of Finance – and where the terms of any agreement have been successfully agreed between the development partner, Officers, Portfolio Member and the Council’s appointed consultants, the terms of the agreement be brought back to the Executive for approval prior to signing of contracts.

3.         The process to procure external legal consultants be completed in order to support the Council during contract negotiations with the recommended development partner.

This decision is eligible to be ‘called-in’.  However, if the decision has not been ‘called-in’ by 5.00pm on 3 April 2014, then it will be implemented.

The Executive considered a report (Agenda Item 12) concerning Strutt & Parker's recommendation to the Council as to whom the Council should choose as its development partner in order to secure both enhanced revenue and regeneration of the London Road Industrial Estate (LRIE). Subject to satisfactorily agreeing the terms of any development agreement, the Council would be in a position, by mid Summer, to enter into contract with its preferred development partner.

Councillor Pamela Bale explained that the process for selecting a development partner had been very thorough and well managed by Strutt & Parker. She also expressed thanks to Members and Officers for their involvement in this work. The process had resulted in a firm recommendation from Strutt & Parker to appoint St Modwen as the development partner from a final shortlist of three development companies. A key objective in the considerations and for the proposed redevelopment had been to maintain and enhance the existing Council revenue from the LRIE.

Councillor Tony Vickers queried the contact to be made with Bayer which was highlighted as one of the next steps in the report, pending approval of the recommendations. Councillor Gordon Lundie explained that Bayer could potentially be located in the LRIE.

RESOLVED that:

1.      Strutt & Parker’s recommendation to enter into contract negotiations with the Council's recommended development partner be approved.

2.      Authority be delegated to the Chief Executive to enter into and complete negotiations with the recommended development partner in consultation with the Portfolio Member, the Head of Legal Services and Head of Finance - and where the terms of any agreement have been successfully agreed between the development partner, Officers, Portfolio Member and the Council's appointed Consultants, the terms of the agreement be brought back to the Executive for approval prior to signing of contracts.

3.      The process to carry out and complete procuring external legal consultants in order to support the Council during contract negotiations with the recommended development partner be agreed.

Reason for the decision:

1.      Strutt & Parker confirms that a preferred partner has been unanimously identified by Consultants, Members and Officers through an extended and thorough selection process. The preferred partner will provide long term contractual commitment to the Council in order to deliver increased income from the LRIE and also deliver high quality regeneration on the LRIE.

2.      Any development partnership contract will pass development risk to the appointed partner and thus there is now no development risk to the Council in completing the development partner appointment process.  Where the development partner funds infrastructure improvements in order to deliver future development, the partner will have no right under any development agreement to seek funds from the Council in the event infrastructure costs cannot be recouped by the developer.  Similarly, where the development partner redevelops existing properties on the basis of new leases from the Council, the Council will be paid the existing ground rent for that property during the redevelopment period for that plot.

Other options considered:

1.      Not to take any further action in appointing a development partner for the LRIE.  However, this course of action would be to ignore Strutt & Parker’s clear recommendation and to avoid addressing a significant Council policy objective.

2.      For the Council itself to undertake the redevelopment of the LRIE without a development partner.  This course of action not only presents a considerable financial risk to the Council, the Council itself has neither the expertise nor resources to undertake itself the redevelopment of the LRIE.

3.      Through the planning process and piecemeal lease extension negotiations, allow the LRIE to redevelop on an ad hoc basis.  However, this non-strategic approach will cause the Council to lose any opportunity to substantially increase Estate income and will prevent any opportunity to see the LRIE redeveloped as a unified whole with new appropriate infrastructure and harmonized architecture and open space which itself will continue to have a negative impact on the town centre.