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Homes England – Accelerated Funding Programme

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Homes England – Accelerated Funding Programme North Yorkshire County Council Business and Environmental Services Executive Members Briefing Note 24 May 2019 Homes England – Accelerated Funding Programme Report of the Assistant Director – Growth, Planning and Trading Standards 1.0 Purpose of Report 1.1 The purpose of the report is to: 1.2 Brief executive members on the progress of the Homes England Accelerated Funding Programme. 1.3 To seek authorisation from the Corporate Director Business and Environmental Services (BES) and in consultation with BES Executive Members to authorise Corporate Director, Strategic Resources the following: a) To contract with Homes England for the grant funding in accordance with their objectives and contract requirements. b) To procure the services of a principle planning consultant to lead the planning process and undertake necessary enabling works. c) Acknowledge that the constitutional requirements of consultation and delegation have been met through this report. 2.0 Background 2.1 Homes England established a £450m Accelerated Funding Programme in 2017. The principle aims of the programme are to: Support local authorities to develop their land so that it can be disposed of for housing; See homes built faster on these sites than the market would alone (pace) and the use of Modern Methods of Construction (MMC); Encourage diversification through support for low and medium volume house builders, and new entrants. 2.2 Homes England ran an expressions of interest exercise and NYCC submitted the following 5 sites for consideration on 28th February 2017. 1. Land at Cliffe 2. High Street Whixley 3. Sands Lane, Osgodby 4. Minskip Grange, Minskip 5. Woodbine Grange Farm, Ryther 2.3 All sites are owned by NYCC and tenanted at low value to farms. Details of the tenancies and break clause requirements are at table 8.4 NYCC – 24 May 2019 – Executive Members Homes England – Accelerated Funding Programme/1 2.4 Expressions of Interest were submitted on the basis of size, and units and unallocated planning status. Also on the basis of the site’s need for the funding, the absence of other government funding and the local development context including that houses wouldn’t displace other developments in the area. NYCC determined the requirements for the land that were put forward. 2.5 Homes England carried out further due diligence to establish viability and technical constraints. NYCC has the reports produced by a variety of multi-disciplinary consultants. The Technical studies formed the basis for the grant offer from Homes England totaling up to approximately £2.4million. 2.6 The following sites have been approved for progression by Homes England. Detail of the sites is set out at para 6: 1. Land at Cliffe 2. Minskip Grange, Minskip 3. Woodbine Grange Farm, Ryther 2.7 The required outcome from the funding is a ‘clean site’ by March 2021. This is to be done by obtaining a successful planning outcome by March 2020 and that all infrastructure and enabling works funded must be completed and funding drawn down by March 2021. 3.0 Next Steps – Contract with Homes England 3.1 NYCC will need to enter into a Funding Agreement with Homes England to draw down grant funding for the sites. The full list of requirements of the Funding Agreement are attached at Appendix 1. Its main elements include: 1. A commitment to hit the key project milestones set out in section 2.6 above 2. An estimated funding profile for each site including NYCC staffing costs. 3. A commitment to bring forward schemes: a) At the agreed pace (units constructed per month, between start of first unit and completion of final unit) b) Using the agreed MMC (recorded as a % of units to be delivered using each MMC category) c) In ways which help promote diversification in the industry (eg attracting new entrants and promoting growth in smaller to medium sized house builders) 4. If the disposal receipt achieved in the market is higher than the ‘clean site’ value in (table 6.1) then Homes England is entitled to claw back its grant from that surplus. Where Homes England has funded 100% of the identified costs they may claw back 100% of that surplus, up to the total grant paid. 3.2 A Funding Profile will be added to each of the sites. This will include estimates and costs from the principal consultant and NYCC time costs. 3.3 Grant is to be claimed in arrears, with evidence of works having been carried out and/or costs incurred on eligible items, and with Section 151 officer sign-off. Grant should be paid within 12 working days of a successful claim. 3.4 The costs NYCC will look to claim back through establishing the funding profile will include: Project costs – Assistant Director Growth, Planning and Trading Standards and Senior Policy Officer (Infrastructure) Procurement Costs- project support officers Finance – Assistant Director Strategic , capital accountants and s151 officer time Legal costs- First North Law or Internal Legal officers NYCC – 24 May 2019 – Executive Members Homes England – Accelerated Funding Programme/2 4.0 Next Steps – Procurement of Principle Planning Consultant 4.1 Homes England have established a Multi-Disciplinary Framework from which to procure a principal planning consultant. There are 20 organisations on the Framework. 4.2 Due to the potential size of the contract it is necessary to run a full competition against the framework. 4.3 The forward plan notice was published on 2 April 2019 and we have run an expressions of interest exercise with the intention of reducing the list of 20. Following that, at the end of April we will run the full procurement exercise with the intention of getting on to contract with the principle planning consultant and Homes England by June. 5.0 Next Steps – legal requirements 5.1 Regard must be had to: 1. Paragraph 6 (a) of the Executive Members delegations scheme authorising the submission of bids for grants in excess of £100,000 in consultation with the Corporate Director and Corporate Director – Strategic Resources; and 2. to accept any offer of grant over £100,000 in consultation with the Corporate Directors, Corporate Director Strategic Resources and Assistant Chief Executive (Legal and Democratic Services) 5.2 Regard must be had to Financial Procedure Rule 8 requiring Authorisation prior to the submission or acceptance documents being signed. 5.3 Regard must be had to the officers’ delegation scheme. 5.4 The approvals sought in this report will comply with these requirements. 6.0 The Sites 6.1 The sites are all owned by NYCC. 6.2 A Grant offer of £2.4m has been offered by Homes England to advance delivery of the sites, this is allocated to each site on the following basis: Table 6.1 Site Planning No Total Est Grant Offer Estimated Balance % Claw Authority of Costs (Due (profile to clean site Surplus / Back Units Diligence) be agreed) value (Shortfall) Land at Selby DC 113 £526,000 £536,520 £760,000 £770,520 100% Cliffe Minskip Harrogate 93 £948,000 £976,440£3,950,000 £3,978,440 100% Grange, BC Minskip Woodbine Selby DC 106 £1,559.750 £929,996 £595,000 (£34,754) 60% Grange Farm, Ryther 6.3 All developments will require 40% affordable housing units as a requirement of the Homes England funding. This is in line with local housing policy. NYCC – 24 May 2019 – Executive Members Homes England – Accelerated Funding Programme/3 6.4 The estimated clean site value comes to the Council on completion of the sale of the land to any potential developer. The claw back is what Homes England will claim from any funds achieved above the clean site value (up to the value of the grant). 6.5 The estimated clean site values have been determined by Cushman and Wakefield on behalf of Homes England. The valuations are based on the special assumption that planning is secured and all "abnormal" development costs (eg infrastructure installation) has been paid for by the HE grant. In all cases the valuation assumptions taken are sensible and therefore the potential for significant land value increase to NYCC is considered low. In this context the likelihood of the clawback to HE operating is also considered low. 6.6 The likely costs have been identified through the due diligence reports carried out by Homes England consultants. Where the costs incurred are greater that the value of the grant, NYCC will bear the cost of the shortfall. 6.7 The process, liability for costs and beneficiary of land receipts is set out in Appendix 2 and Appendix 3 7.0 The Timetable Table 7.1 Date Stage Principal Consultant tender process undertaken. NYCC and March 2019 - May 2019 Homes England Contract documents completed June 2019 Principal Consultant Appointed together with sub-consultants July 2019 Planning application materials prepared August 2019 Planning Submissions Planning Outcomes achieved. Infrastructure and Enabling August 2019 - March 2020 Works packages concept design, programme and budget developed. Subject to planning outcomes, Infrastructure and Enabling March 2020 - March 2021 Works packages undertaken. Infrastructure and Enabling Works packages completed and March 2021 and beyond site available to develop. March 2021 and beyond Subject to construction schedule. 8.0 Risk Analysis 8.1 There is a risk of shortfall. As in paragraph 6.5 NYCC will bear the cost of any shortfall between cost of bringing the site forward to a clean site and the grant received from Homes England. After sale of the land, the risk of financial loss to the Council is minimal in the cases of Minskip Grange and Land at Cliffe. On the basis of the figures in table 6.1 there is likely to be a cost to the Council to bring the Woodbine Grange Farm site forward of £34,754.
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