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Brownfield Land Fund.Pdf LIVERPOOL CITY REGION COMBINED AUTHORITY To: The Metro Mayor and Members of the Combined Authority Meeting: 26 February 2021 Authority/Authorities Affected: All EXEMPT/CONFIDENTIAL ITEM: No KEY DECISION: Yes REPORT OF THE PORTFOLIO HOLDER HOUSING AND SPATIAL FRAMEWORK AND INTERIM DIRECTOR OF STRATEGIC DELIVERY BROWNFIELD LAND FUND YEAR ONE 1. PURPOSE OF REPORT 1.1. This report requests approval of the projects that constitute the year one spend of the Brownfield Land Fund. 2. RECOMMENDATIONS 2.1. It is recommended that the LCR Combined Authority: (a) Approve the provision of grant funding of up to £280,000 for the Denford Road scheme in Liverpool to Liverpool City Council and up to £1.05m to the Buckley Hill scheme in Sefton to Sandway Homes. (b) Approve the provision of grant funding of up to £4.378m for the Paddington Scheme, Liverpool to Liverpool City Council, up to £1.785m for the Halton Court Scheme, Runcorn to be apportioned between Magenta Living and Wirral Housing Partnerships (Developments) Limited, up to £0.4m to Halton Council for the first phase of Foundry Lane scheme and up to £2.19m for Wirral Council in the purchase of the House of Fraser Building. (c) To note, as set out in paragraph 3.6 that this request for approval by Members is in advance of consideration by the External Investment Panel and does not accord with the usual sequence of steps undertaken and outlined in the Assurance Framework. (d) Note that delegated authority to the Chief Executive already granted 31 July 2020 will be used to finalise negotiations of detailed funding terms and associated agreements for all the above schemes, in consultation with the Head of Commercial Development and Investment, Combined Authority Monitoring Officer and Combined Authority Treasurer. 3. BACKGROUND 3.1. The Brownfield Land Fund was announced in the March 2020 budget. The total fund is £400m. On 30th June 2020 the Ministry of Housing, Communities and Local Government (“MHCLG”) confirmed that £45m of the fund would be allocated directly to Liverpool City Region, starting this financial year. The fund must deliver land suitable for at least 3,000 and preferably 4,000 homes to be developed and house building needs to start on each site by 31 March 2025 at the latest. Each project requires standard due diligence in terms of proving market failure; meeting Value for Money; a benefit-cost ratio of at least one and passing a Greenbook appraisal. The detailed fund guidance was received at the end of December 2020. 3.2. The first year‟s expenditure of the fund was set by MHCLG as £9m and the funds were transferred to the Combined Authority on 4th January 2021. This is the first specific housing funds devolved to the Combined Authority and addresses a Mayoral commitment to bring forward more brownfield land for housing. 3.3. Those Combined Authorities that accelerated expenditure above a flat yearly profile were offered resource funding in addition to the capital funds. The Combined Authority was allocated £1.34m to spend this financial year to support the development of housing projects. A list of projects approved to date is listed in the report under section 3.15. Fund allocation 3.4. A housing pipeline for the city region, developed by constituent Local Authorities, Homes England, and the Combined Authority was used to identify suitable sites for the fund. Extensive consultation with all Local Authorities determined a list of projects which have been developed over the intervening months with deliverability a core requirement given the extremely short timescales. 3.5. The Housing Investment Strategy approved by the Combined Authority in November 2020 is also used to provide context for bids to be assessed against. 3.6. Officers determined that the funding decisions should follow a similar approval process to SIF funds, which means progressing a full business case. This is appropriate due to the commissioned nature of the projects rather than a project call. All projects have been considered by the Combined Authority‟s Internal Investment Panel. As per the recommendation above, there has been insufficient time for these projects to be presented to the External Investment Panel. This is a departure from the process outlined in the Assurance Framework. The reasons for this departure are the tight timescales of delivering this funding and the readiness of the projects to bid for funds. Members are asked to note the position accordingly. Schemes 3.7. Moss Nook, St Helens – The Combined Authority previously approved a brownfield land residential development scheme at Moss Nook, St Helens on 24th January 2020. Whilst this scheme was approved prior to the inception of the Brownfield Land Fund, the timing of the remediation works in this financial year has meant that part of this year‟s allocation of Brownfield Land Funding can be applied to these works. 3.8. Denford Road, Liverpool – Liverpool City Council is seeking £280,000 to support the delivery of 105 residential on 2.1 hectares bordered by Denford Road, Ackers Hall Avenue, Dunchurch Road and Murcote Road. There are abnormal ground costs associated with the site which is partially driving the gap funding in the project. The funding will also directly support the construction costs of the units. Once completed, Liverpool City Council will retain 20 units as socially rented accommodation and 54 units for affordable rents. The balance of the units will be transferred back to Riverside Homes. 3.9. Buckley Hill, Sefton – this project is being brought forward by Sandway Homes (a housing development company wholly owned by Sefton Council) and will deliver 70 new residential units on a brownfield site in Netherton. Ten homes will be sold as affordable homes to „‟Together Housing‟‟. Sandway Homes are seeking £1,050,000 to directly support the construction of the residential units and close a viability gap on the project. 3.10. Paddington Village, Liverpool – Liverpool City Council are seeking up to £4.378m towards specific and associated site wide infrastructure to bring forward up to 285 new residential units on plot 8 of the Paddington Village development scheme. Once the extensive ground works for the plot have been completed, Liverpool City Council propose to select a developer partner to undertake the construction of these units. 3.11. Halton Road, Halton – The applicants, Magenta Living and Onward Housing, require funding to remove abnormal ground conditions on this previous commercial site. Once remediated, the site will deliver 119 new residential units for a mix of both affordable and open market homes. 3.12. House of Fraser building, Wirral – as part of the Left Bank project Wirral Council very recently purchased this key building to demolish and deliver new housing on. The grant is for acquisition costs and will be used to offset any future viability gap identified when a final scheme and developer are confirmed. 3.13. Foundry Lane, Halton – Halton Council have a regeneration initiative in this area with an ambition to delivery c600 homes. One issue with the scheme is multiple land ownerships with existing commercial occupants. The Council have just appointed a master developer to lead on the land assembly and housing delivery on the site. There is the opportunity in this financial year to grant aid the Council to purchase a key site as an early part of project delivery. The grant requirement is up to £409,500 for the purchase and associated costs. The wider scheme will require further work to develop a full application to the Brownfield Land Fund in the next financial year. 3.14. The table below summarises the projects, housing numbers and the estimated expenditure for each scheme this financial year. The profile is over-programmed to ensure that the first year expenditure target is met. FUNDING 20/21 TOTAL Spend SITE HOMES £m £m Moss Nook, St Helens 258 2 1.67 Buckley Hill, Sefton 70 1.05 0.5 Denford Road, Liverpool 105 0.28 0.28 Halton Road, Halton 119 1.785 1.785 Paddington Village, Liverpool 224 4.378 4.378 Foundry Lane, Halton 22 0.4 0.4 House of Fraser, Wirral 84 2.19 2.19 TOTAL 882 12.083 11.203 Resource funding 3.15. The Brownfield Land Fund resource funding budget has been allocated to a combination of pre-development funding and costs incurred by the Combined Authority. Pre-development funding has been allocated from the Brownfield Land Fund to various housing projects that are at the early stage of development. This funding has been approved by the Combined Authority‟s Internal Investment Panel in accordance with its delegated authority and pre-development funding guidelines. The table below sets out the pre-development funding that has been approved, along with resource funding allocated to cover the Combined Authority‟s internal and consultancy costs: Project Applicant Amount Stonebridge Cross, Liverpool Liverpool City Council 210,000 Hind Street, Wirral Wirral Borough Council 182,000 Halton Stock Modelling Exercise Halton Borough Council 32,140 Wirral Waters Heat Network Wirral Borough Council 60,000 Small Sites consultancy LCR Combined Authority 35,313 Internal Staff & consutlancy costs LCR Combined Authority 185,000 704,453 Further bids are in progress or anticipated from LA partners to ensure the remaining £640,000 funds are spent prior to the end of the financial year. These will be reported to the Housing & Spatial Planning Advisory Board and CA as appropriate. 4. EXTERNAL INVESTMENT PANEL CONSIDERATIONS 4.1 The Combined Authority‟s External Investment Panel is considering all the projects at its March 2021 meeting. Any recommendations will be considered as part of the Grant Funding Agreements and actioned accordingly. A presentation is due to be given on the overall Brownfield Land programme to the February 2021 External Investment Panel.
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