Item 3

Glasgow City Council 29th August 2019

Contracts & Property Committee

Report by Executive Director of Regeneration and the Economy

Contact: Richard Brown Ext: 76000

PROPOSED OFF-MARKET DISPOSAL OF THE FORMER PRIMARY SCHOOL AND SCHOOLHOUSE AT 200 ROAD, , G51 4EH TO LINTHOUSE HOUSING ASSOCIATION LIMITED

Purpose of Report:

To seek Committee approval of the provisionally agreed terms and conditions for the off-market disposal of the former Drumoyne Primary School and Schoolhouse, 200 Shieldhall Road, Glasgow, G51 4EH to Linthouse Housing Association Limited.

Recommendations:

That Committee:

1. notes the content of this report;

2. approves the off-market disposal of the former Drumoyne Primary School and Schoolhouse, 200 Shieldhall Road, Glasgow, G51 4EH to Linthouse Housing Association Limited, subject to the terms and conditions outlined in this report;

3. notes that the land shown cross hatched on the attached plan is intended to be excised from the Public Private Partnership (PPP) project agreement for High School to be included in the proposed disposal; and

4. authorises the Executive Director of Regeneration and the Economy in consultation with the Director of Governance and Solicitor to the Council to progress the sale to Linthouse Housing Association Limited.

Ward No: 5 – Govan Citywide:

Local member(s) advised: Yes  No  consulted: Yes  No 

Report to: Contract & Property Committee

From: Managing Director of City Property (Glasgow) LLP

Date: 29 August 2019

Subject: To seek Committee approval of the provisionally agreed terms and conditions for the off-market disposal of the former Drumoyne Primary School and Schoolhouse, 200 Shieldhall Road, Glasgow, G51 4EH to Linthouse Housing Association Limited.

1 Description

1.1 The subject comprises the former Drumoyne Primary School, a Category ‘B’ listed 2-storey red sandstone building and the 2-storey former School House building which is also included in the listed status.

1.2 The subject site extends to 1.76 hectares (4.36 acres) or thereby. This includes both properties in the land shown hatched and cross hatched on the attached plan. The cross hatched area comprises a red blaes pitch which currently forms part of the Public Private Partnership (PPP) project agreement. The PPP project agreement is a public /private partnership between and its private partner 3Ed.

1.3 Both buildings are in a very poor condition and the school building has been the target of several arson attacks, which resulted in a large portion of the building being exposed as the roof had to be removed for safety.

2 Planning

2.1 Glasgow City Council’s Planning Department has granted planning permission, subject to conditions, for the partial demolition of the school building, erection of a residential development comprising of 48 residential units and the refurbishment of the schoolhouse, to provide a 4 bedroom house. The planning reference number is 18/02762/LBA.

3 Background

3.1 The school closed and the schoolhouse became vacant in January 2010, the properties were subsequently declared surplus to the Council’s

operational requirements in February 2010 following the procedural non- operational process with no notes of interest being received.

3.2 Both the areas shown hatched and cross hatched black on the attached plan are referred to in a report by Development and Regeneration Services, Housing and Regeneration Services approved at the meeting of the Neighbourhoods, Housing and Public Realm City Policy Committee on 4 June 2019. The report was seeking approval to progress the nominated disposal of 23 sites to Registered Social Landlords. Link to Report: http://www.glasgow.gov.uk/councillorsandcommittees/viewDoc.asp?c=P6 2AFQDN0G0GNTDNDN

3.3 The properties were first marketed in 2013 but all offers received involved the demolition of the property so the offers were non-compliant with planning guidance as the building is listed. The bidders were given an opportunity to revise their bids but no offers were progressed. The properties were then re-marketed for a second time in 2014 and the top offer for a hotel development was progressed, however negotiations became protracted and Glasgow City Council withdrew from the sale in December 2016 as no response had been received by a deadline date set by Glasgow City Council.

3.4 Due to the deteriorating condition of the buildings and two unsuccessful marketing campaigns, Glasgow City Council instructed City Property (Glasgow) LLP to progress the disposal of the properties, off-market, to a Registered Social Landlord.

3.5 Development and Regeneration Services, Housing Services instructed City Property (Glasgow) LLP to negotiate Heads of Terms with Linthouse Housing Association Limited in February 2017.

3.6 As the properties had fallen into disrepair due to continued vandalism, extensive property surveys and site investigations were required. An application to Historic and Glasgow City Council’s Planning Department was also required to determine the likelihood of partial demolition being permitted as this would substantially improve the development feasibility. Following confirmation that partial demolition would be permitted, on the condition the central façade was retained, Linthouse Housing Association instructed Grant Murray Architects to carry out a feasibility study for 34 residential units.

3.7 Linthouse Housing Association Limited confirmed that they would only proceed with the acquisition and development if the red blaes pitch, to the rear of the subject site, shown cross hatched on the attached plan was included in the disposal. The acquisition of the additional land, shown cross hatched on the attached plan, would allow for the development of a further 15 residential units, which would make the development more viable.

3.8 The red blaes pitch (shown cross hatched on the attached plan) is within the PPP project agreement for Govan High School but is not utilised by the school. Consent is required from the Council’s private partner 3Ed to excise the land from the lease. Property and Land Services are currently progressing negotiations to finalise this.

3.9 Heads of Terms were agreed on 4 July 2019, a top up approach was agreed as the demolition and retention system contracts are still at tender stage and therefore actual costs have not been confirmed. Full details of the top up calculation are contained under item 5.8 below.

3.10 Linthouse Housing Association Limited is keen to acquire the property as quickly as possible to avoid it falling into further disrepair and has programmed a construction start date of Spring 2020.

3.11 The subject site is not currently included in the Council’s Log of Opted to Tax Property.

3.12 The property is not considered to form part of the Council’s common good. It was acquired by The Education Authority of the Burgh of Glasgow in 1926 using statutory powers as local authority under the Education (Scotland) Acts 1872 to 1925. There are no conditions in the title that would suggest the property was being acquired to be held as part of the common good. There are no other factors to suggest that the property would form part of the common good of the Council.

4 Purchaser

4.1 Linthouse Housing Association Limited

5 Terms and Conditions

5.1 The subjects comprise the site shown hatched and cross hatched black on the attached plan, extending to 1.76 hectares (4.36 acres) or thereby. The attached plan is for indicative purposes only.

5.2 The gross purchase price shall be Five Hundred and Eighty Eight Thousand Pounds Sterling (£588,000), exclusive of Value Added Tax, if applicable.

5.3 The net purchase price shall be One Hundred and Forty Seven Thousand Pounds Sterling (£147,000) exclusive of Value Added Tax, if applicable. The purchase price is based on the submitted planning application 18/02493/FUL for a development of 49 residential units.

5.4 The area shown cross hatched black on the attached plan is included in the PPP project agreement for Govan High School and extends to 0.68 hectares (1.69 acres) or thereby. All reasonable endeavours shall be made by Glasgow City Council (‘the Seller’) to have the land shown cross hatched black excised from the PPP project agreement prior to the Date of Entry. It is an essential condition of the contract to follow hereon that the Leased

Area is excised from the PPP project agreement and if not so excised the Purchaser shall be entitled, but not bound, to resile from the contract to follow hereon without any sums being due to or by either party.

5.5 The net purchase price shall be payable upon the Date of Entry.

5.6 The Date of Entry is to be agreed between both parties.

5.7 The Purchaser will not be entitled to assign in whole or in part its rights under the contract of sale without the Seller’s consent which shall be granted at its absolute discretion.

5.8 A ‘remaining balance’ (as hereafter described) shall be payable on or before 30 June 2020. The ‘remaining balance’ will be the sum, in pounds sterling, arrived at by applying the following formula:-

Remaining Balance = GP – NP – AC

Where:

GP (Gross Price) = £588,000

NP (Net Price) = £147,000

AC = Abnormal Costs/ Works, that are more than reasonably anticipated to be required to carry out the proposed development. In the event that the parties are unable to agree on the matters that should be included as Abnormal Costs/ Works, then the dispute shall be resolved by an Independent Expert, who will be professionally qualified for at least ten years in the field in which the dispute arises.

For the avoidance of doubt, no sum will be payable in the event that the formula produces a negative figure.

5.9 The Purchaser shall provide the Seller with an itemised breakdown of all the Abnormal Costs/Works as soon as they are available but in any case not later than 31 January 2020.

5.10 The subjects, shown hatched and cross hatched black on the attached plan, shall be used solely for accommodating a residential development of up to 49 residential units and for no other use whatsoever without the prior written consent from the Seller which shall be granted at their absolute discretion.

5.11 The Purchaser shall be responsible for the Seller’s reasonable legal expenses in connection with this transaction, together with City Property’s fee of £1,500, plus Value Added Tax.

5.12 All third party determination in the contract of sale shall be by an independent expert and not by way of arbitration.

5.13 In the event that the Purchaser instructs ground investigation works, site surveys, habitat surveys, EIA surveys or any other such survey or report, prior to the Date of Entry then the costs of such works/surveys shall be borne by the Purchaser. For the avoidance of doubt, the Seller shall not reimburse the Purchaser for any costs whatsoever whether the sale completes or not.

5.14 In the event that the Purchaser dispones the subjects prior to the commencement of proposed development to the subjects then the Purchaser shall pay to the Seller 100% of all sales proceeds in excess of the sale price of One Hundred and Forty Seven Thousand Pounds Sterling (£147,000), subject to all reasonable marketing costs incurred by the Purchaser during the sale process.

5.15 In the event that planning consent is obtained for a development of more than 49 residential units on the combined site, shown hatched and cross hatched black on the attached plan, then the Purchaser shall pay to the Seller a sum of £12,000 gross, for each and every additional unit constructed thereon, subject always, to the deduction of any Additional Abnormal Costs incurred as a direct result of any increase in unit numbers. For the avoidance of doubt, Additional Abnormal Costs will be limited to £9,000 per each additional unit and will be subject to verification as detailed at clause 5.9.

5.16 The Purchaser must provide the Seller with an itemised breakdown of all Additional Abnormal Costs within three months of planning consent being granted. Payment of an ‘Additional Balance’ arrived at by applying the following formula shall be made no later than six months from the date of any revised planning consent.

AB = (AU*£12,000) – (AAC)

Where:

AB = Additional Balance

AU = Additional Units in excess of 49 for the combined site shown hatched and cross hatched black on the attached plan.

AAC = Additional Abnormal Costs

5.17 The Purchaser shall notify the Seller within 14 days of granting of planning permission for additional units.

5.18 The Executive Director of Regeneration and the Economy, in consultation with the Director of Governance and Solicitor to the Council shall be authorised to conclude all other matters pertaining to the disposal of the subjects and to enter into the necessary legal agreements on terms which are in the best interest of the Council.

6 Policy and Resource Implications

Resource Implications:

Financial: This transaction will generate a capital receipt of £147,000 for Glasgow City Council.

Legal: The Director of Governance and Solicitor to the Council shall conclude the appropriate legal agreements in line with the reported terms.

Personnel: No direct personnel issues.

Procurement: No relevant procurement issues.

Council Strategic Theme: Resilient and Empowered Plan: Neighbourhoods. Outcome: Glasgow’s housing meets the needs of its growing and diverse population. Priority 81: Support registered social landlords and the private sector to provide 15,000 new homes across the city.

Equality and Socio- Economic Impacts:

Does the No specific housing related outcome. proposal support the Council’s Equality Outcomes 2017- 22

What are the Priorities are informed by Glasgow’s Housing potential equality Strategy 2017 to 2021 and an EQIA of Housing impacts as a Strategy completed and published March 2017: result of this report? http://www.glasgow.gov.uk/CHttpHandler.ashx?id= 37514&p=0

Please highlight if Not applicable the policy/proposal will help address socio economic disadvantage.

Sustainability Impacts:

Environmental: The sale of the subject will enable the development of a derelict listed building.

Social, including The disposal of the subject site will provide the Article 20 community with job creation and skills opportunities: development.

Economic: No direct economic impacts.

Common Good: The property is not considered to form part of the Council’s common good.

It was acquired by The Education Authority of the Burgh of Glasgow in 1926 using statutory powers as local authority under the Education (Scotland) Acts 1872 to 1925. There are no conditions in the title that would suggest the property was being acquired to be held as part of the common good.

The subjects are not on the list of common good assets.

There are no other factors to suggest that the property would form part of the common good of the Council.

Privacy and Data No Privacy and Data Protection impacts identified. Protection impacts:

7 Recommendations

That Committee:

7.1 notes the content of this report;

7.2 approves the off-market disposal of the former Drumoyne Primary School and Schoolhouse, 200 Shieldhall Road, Glasgow, G51 4EH to Linthouse Housing Association Limited, subject to the terms and conditions outlined in this report;

7.3 notes that the land shown cross hatched on the attached plan is intended to be excised from the Public Private Partnership (PPP) project agreement for Govan High School to be included in the proposed disposal; and

7.4 authorises the Executive Director of Regeneration and the Economy in consultation with the Director of Governance and Solicitor to the Council to progress the sale to Linthouse Housing Association Limited.