Agenda item
Reference from Council - Watts Grove Depot Project
Minutes:
Please note that a significant element of OSC deliberations relating to this item of business took place in Part Two of the proceedings or “closed session” (Exempt/ Confidential Section of the agenda), for the reasons outlined by the Chair below. However, for ease of reference, the deliberations/ decision taken that pertain to the unrestricted report are set out below in the order detailed in the agenda.
The Chair informed the OSC that the report comprised of two parts: an unrestricted report now before the OSC for consideration, and several appendices thereto which contained exempt/ confidential information, the consideration of which was required in “closed session” (Exempt/ Confidential Section of the agenda: agenda Item 15.1). After an initial introduction of the unrestricted report and any discussion thereof in “open session”, it would therefore be necessary to exclude the public and press during consideration of the exempt/ confidential appendices. However he considered it was important that as much of the discussion as possible took place in “open session”.
Councillor Rabina Khan (Cabinet Member for Housing) and Councillor Alibor Choudhury (Cabinet Member for Resources) in introducing the report, which provided:-
· An explanation of why this matter had been referred to OSC to investigate and report back to full Council.
· All relevant information on the matter to enable OSC to undertake full scrutiny of the issues and reach an informed conclusion as requested by OSC (October meeting).
summarised the salient points contained therein and highlighted key points for the information of the OSC. Ann Sutcliffe (Service Head Strategic Property), Dave Clark (Acting Service Head Resources D&R), Paul Leeson (Finance Manager D&R), Paul Thorogood (Interim Service Head Finance & HR Development) were also in attendance for this item.
The following points were highlighted:-
· The Mayor had found it particularly difficult to take the decision not to proceed with the scheme to redevelop Watts Grove Depot, the way it had been structured. He considered that changed circumstances made the scheme unsustainable:
o The Council’s financial position had changed during the procurement process due to Government Policy, in particular the Comprehensive Spending Review announced in June 2013 resulting in less funding for the Council, and also the announced reduction in funding through the New Homes Bonus.
o The costs of the first model for delivering the Watts Grove Depot scheme had risen significantly from the first stage of the process (when they were benchmarked) to the point final bids had been received.
o If the scheme had proceeded as originally planned this would have impacted on the Budget, and significant and continued compensatory savings would have been required which were considered likely to impact on the Council’s delivery of frontline services.
o However the Mayor and the Cabinet Member for Housing continued to examine ways to deliver the scheme and in particular the 4000 new homes it had been expected to deliver.
· The Dame Colet House and Poplar Baths schemes had been developed on a different model designed to give cost certainty to the Council in uncertain financial times with any cost fluctuation falling on the developer. Both involved the lease of Council land for 35 years and were a way of bringing back a grade II listed building into community use as well as delivering new homes. The schemes had been agreed some time ago, with adequate capital and revenue funding set aside in the Budgets agreed by full Council over the past two years.
A comprehensive discussion followed which focused on the following points:-
· Clarification sought as to the Officer rationale for recommending Bidder A / Bidder C as a reserve and recommending progressing the procurement process to the final stage. Clarification also sought and given as to the rationale for the Mayor’s decision contrary to this advice. The Government Comprehensive Spending Review had taken place in June and the Mayor’s decision made in July after a month’s consideration. The Mayor had been concerned at the loss of Government funding and how this would impact on delivery of the scheme or collaterally. The decision was an objective one based on financial prudence.
· In the context of Corporate Director Development & Renewal sign off of the scheme in mid-June, and Corporate Director of Resources sign off in mid-July, Clarification sought and given as to what the Mayor elicited from discussions with Officers to determine in mid- July that their advice had been erroneous. Ultimately the final decision was for the Mayor, and he considered that the scheme should not proceed in the context of the Council’s financial position.
· Commented that Government reduction of funding to the Council had been anticipated and significant resources (money and Officer time) already expended to progress the scheme, so clarification sought as to the change in circumstances resulting in the Mayor’s decision not to proceed, Noting the Lead Member comments that delivery models for Watts Grove and Dame Colet/ Poplar Baths were very different, commented that Watts Grove would also have delivered significant numbers of new homes so was the difference the sentimental value of returning Poplar Baths to use.? The Poplar Baths scheme had been approved a long time previously when the Council’s financial position was very different. The Watts Grove Depot scheme was .no longer financially sustainable and the Mayor had acted prudently in halting further progression of it. Given that the Mayor’s opponents continually highlighted the large impending Budget Gap for the Council such financial prudence should be welcomed not criticised. The Council had a number of regeneration schemes underway which would deliver new homes eg Ocean Estate. The Poplar Baths and Haileybury schemes would deliver new homes in addition to other beneficial outcomes for the community. Watts Grove Depot was different, however the Administration was looking at alternative delivery vehicles for it eg partnership working with RSLs. However if RSLs accepted grant funding for such a scheme they would be required to charge 80% rent, which local residents could not afford. This highlighted the importance of maintaining the Councils own housing stock.
· Clarification sought as to the rationale for the 35 year lease element of the Watts Grove Depot proposal. Did this result in an automatic right to buy the freehold for the land at the end of the period? OSC requested a briefing note be circulated to all OSC members. Ownership of the land had not been a driver in this matter as it had been proposed that the land transfer back to the Council at the end of the period, effectively a lease-back.
· Commented that many local residents would be greatly disappointed at the loss of new homes resulting from scrapping the Watts Grove Depot scheme, particularly in Bromley by Bow Ward. Consideration therefore that it would be appropriate for the Cabinet Member for Housing to accompany ward councillors to convey the rationale for scrapping the scheme and apologise for this. Councillor Khan, Cabinet Member for Housing responded that she would be amenable to such a ward visit. The Administration continued to look at alternative ways to deliver the outcomes of the Watts Grove Depot scheme.
The Chair Moved and it was:-
Resolved
That the contents of the report be noted.
Action by:
Ann Sutcliffe (Service Head Strategic Property, D&R) [OSC request for briefing note]
Please note that the remainder of the OSC deliberations relating to this item of business took place in Part Two of the proceedings or “closed session”. Please see summary of exempt proceedings at the foot of the minutes.
Supporting documents:
- 8.1a Overview and Scrutiny - Watts Grove Depot, item 8.1 PDF 115 KB
- 8.1b Appendix 1 - Watts Grove OAS finance, item 8.1 PDF 63 KB
- 8.1c Appendix 2 - Watts Grove OAS, item 8.1 PDF 74 KB
- 8.1d 1, item 8.1 PDF 59 KB
- 8.1e 2, item 8.1 PDF 19 KB
- 8.1f 3, item 8.1 PDF 106 KB
- 8.1g poplar Baths Cabinet report Part 1 4th July2012 v6, item 8.1 PDF 110 KB
- 8.1h decision sheet, item 8.1 PDF 17 MB
- 8.1i Appendix 1 - July 2012 Cabinet approval minutes, item 8.1 PDF 108 KB
- 8.1j Poplar Baths FINAL with CFO and Legal comments, item 8.1 PDF 100 KB
- 8.1k decision sheet, item 8.1 PDF 17 MB
- 8.1a OSC Cover Ref - Watts Grove Depot 301013, item 8.1 PDF 115 KB
- 8.1b Appx 1 - Watts Grove OAS finance, item 8.1 PDF 63 KB
- 8.1c Appx 2 - Watts Grove OAS, item 8.1 PDF 74 KB
- 8.1d EMD1, item 8.1 PDF 59 KB
- 8.1e EMD2, item 8.1 PDF 19 KB
- 8.1f EMD3, item 8.1 PDF 106 KB
- 8.1g poplar Baths Cab rept Part 1 4th July2012 v6, item 8.1 PDF 110 KB
- 8.1h Relevant Cabinet Decisions 4th July2012 301013, item 8.1 PDF 90 KB
- 8.1j Poplar Baths Final & CFO & Legal comments 9th Jan 2013, item 8.1 PDF 100 KB
- 8.1k Relevant Cabinet Decisions 9th January 2013 301013, item 8.1 PDF 88 KB