Issue - meetings

Councillors noted that Weyside Urban Village ("WUV") was a major 41-hectare brownfield regeneration scheme that the Council had anticipated could deliver approximately 1,500 homes across a range of tenures, as well as 2,000 square metres of community space and 6,500 square metres of employment space.

In February 2020, the Council had committed £334.9 million to fund the site assembly and infrastructure construction to enable the development of the WUV site.  It was expected that this sum would be fully recovered from the sale of ten land plots to housing developers, together with grant funding from Homes England and Enterprise M3 LEP.

Full Council approval had been based on financial modelling information which had demonstrated that the project would at least break even after undertaking activities such as securing planning consents and funding to ensure that the project would have greater or equal value to the receipts received.

Over 44% of the site was currently in Council ownership, and 100% would be achieved on completion of land transfers with Thames Water Utilities Ltd (“TWUL”). The conditional contract with TWUL had been signed on 25 April 2019 to fund and enable the relocation of the existing sewage treatment works on the Council's former landfill site freeing up the land for development.

The Council had secured £52.3m grant funding from Homes England and had signed a Grant Determination Agreement with Homes England in July 2020 to draw down the grant expenditure associated with the implementation of the infrastructure works, that were now in progress. In October 2021, the Planning Committee had issued a Resolution to Grant for the hybrid planning application for Weyside, with the decision notice to approve the application issued in March 2022.

Councillors noted that the broader economic landscape and its impact on the construction industry over the past 12 – 18 months had been profound. At the end of 2021, the Building Cost Information Service (BCIS) – which provided cost and price data for the UK construction industry – had reported that the annual growth in its material cost index reached a forty year high. Since then, pressures on supply chains had persisted and labour shortages had become more acute. Although the lifting of Covid restrictions led to a return to high activity levels, the war in Ukraine and high rates of inflation had put the construction industry in further turmoil. The impact of these issues was being felt at a local level, with forecast construction and financing costs also increasing significantly.

It had been agreed with the Executive that the project team would report the financial position to the Executive on an annual basis. The Council considered a report, which had been considered by the Executive at its meeting on 5 January 2023 and had outlined the financial forecast to the end of the programme, as well as the proposed mitigation to address the potential financial deficit that had arisen as a result of macro-level factors. 

Council noted that the Executive had endorsed the recommendations in  ...  view the full minutes text for item 108

The report is to follow.

Decision:

(1)    To note the current forecasted eventual deficit in 2033 (year 10 of the project delivery programme), as set out in exempt Appendix 1 to the report submitted to the Executive, and resulting General Fund revenue implications, noting that this is based on a number of variables outlined within Section 4 of this report (Financial Implications).

(2)    To recommend that Full Council (at its extraordinary meeting on 16 January 2023) approves the continuation of the project until officers have completed the required due diligence described in recommendations (3) and (4) below and report back to Full Council in July 2023.

(3)    To request officers to provide alternative risk assessed option appraisals other than to proceed with the original Full Council approved scheme, including all possible mitigations and alterations to the current funding and specifications, indicating by use of a range of values where specific data is not available, and a full explanation of assumptions with reasons, sufficient to enable Members to make a fully informed decision on how it wishes to proceed at Full Council in July 2023.

(4)    To request officers to update the project with the latest assumptions, indices and valuations and report back to the July 2023 Full Council.

(5)    To approve the transfer of £72.062m from the provisional capital programme to the approved capital programme for payments which the Council is obliged to make to TWUL under the TW Agreement for 2022/23 and 2023/24, for costs necessary to meet the milestones set within the Homes England HIF agreement and design cost necessary to prepare the planning application for the SCC Waste Transfer Centre and construction of the New Council Depot.

(6)    To delegate to the Strategic Director of Place, in consultation with the Lead Councillor for Regeneration, and Lead Councillor for Finance and Planning Policy, authority to enter into such other contracts and legal agreements connected with the WUV as may be necessary in compliance with Procurement Procedure Rules and within the approved budget.

Reasons:

The projected deficit, and significantly wide variation and uncertainty of the outcome of this project, renders the project as no longer compliant with the Full Council approval to break even at zero cost to the Council, i.e. the project has greater or equal value to the receipts received. At this point Officers do not have Full Council authority to incur any further expenditure until councillors have considered their full options and implications. However, temporarily stopping expenditure is not realistic due to contractual commitments.

The recommendations will:

·      Ensure that there is sufficient understanding of the projected financial forecast of the programme.

·      Ensure that there is sufficient funding in the approved programme to cover the phase 1 & 2 infrastructure costs, SCC Waste Transfer Centre design cost, construction of the new Council Depot and the payments which the Council is obliged to make to TWUL under the Thames Water Agreement for 2022/23 and 2023/24.

·      Ensure that statutory service agreements and construction agreements can be entered into for the delivery of services and infrastructure  ...  view the full decision text for item 72

Weyside Urban Village was a major 41-hectare brownfield regeneration scheme that the Council anticipated would bring significant benefits to Guildford including approximately 1,500 homes across including 600 affordable homes, 2,000 square metres of community space and 6,500 square metres of employment space.

During the last three years the Council had committed significant funding to progress the site assembly and infrastructure construction to enable the development of the WUV site. It was intended that the funding would be fully recovered from the sale of ten land plots to housing developers and secured grant funding from Homes England and Enterprise M3 LEP.Over 44% of the site was currently in Council ownership, and 100% would be achieved on completion of land transfers with Thames Water Utilities Ltd. The Council had additionally secured £52.3m in grant funding from Homes England and signed a Grant Determination Agreement with Homes England to draw down the grant expenditure associated with the implementation of the infrastructure works, which was in progress. In October 2021, the Planning Committee issued a Resolution to Grant for the hybrid planning application for Weyside, with the decision notice to approve the application issued in March 2022.

It was agreed with the Executive that the project team would report the financial position to the Executive on an annual basis. The Executive considered a report that set out the financial forecast to the end of the programme, as well as proposed mitigation to address the potential financial deficit that has arisen because of macro-level factors.

The Executive heard that the broader economic landscape and its impact on the construction industry over the past 12 – 18 months had been profound. At the end of 2021, the Building Cost Information Service (BCIS) – which provided cost and price data for the UK construction industry - reported that the annual growth in its material cost index had reached a forty year high. Since then, pressures on supply chains had persisted and labour shortages had become more acute. Although the lifting of Covid restrictions had led to a return to high activity levels, the war in Ukraine and high rates of inflation had put the construction industry in further turmoil. The impact of these issues was being felt at a local level, with forecast construction and financing costs also increasing significantly.

The Executive noted that the report was thorough and transparent and that such detailed reporting would support sound decision making now and in the future. Officers should continue to provide a range of mitigating options for the Council going forward. The Lead Councillor for Regeneration confirmed that all councillors, not only Executive members, would be kept informed as the situation evolved. Consequently, the Executive,

RESOLVED:

(1)    To note the current forecasted eventual deficit in 2033 (year 10 of the project delivery programme), as set out in exempt Appendix 1 to the report submitted to the Executive, and resulting General Fund revenue implications, noting that this is based on a number of variables outlined within Section 4  ...  view the full minutes text for item 72

Decision:

a)    That the current financial position of WUV at the planning committee meeting gateway be endorsed.

b)    That the Director of Strategic Services,in consultation with the Leader of the Council and the Lead Councillor for Regeneration, be authorised to finalise heads of terms in accordance with those attached to the report and thereafter to negotiate, sign and complete the legal agreement with Surrey County Council in accordance with the finalised heads of terms and to proceed with implementation of the relocation of the Waste Transfer Facility accordingly.

c)     That the Director of Strategic Services, in consultation with the Lead Councillor for Regeneration, be authorised to enter into such other contracts and legal agreements connected with the Weyfield Urban Village (WUV) project as may be necessary at reasonable costs within the approved budget.

d)    That the commencement of infrastructure procurement following receipt of a satisfactory planning consent pursuant to Hybrid planning application submitted on 15 December 2020 (Reference No 20/P/02155) be endorsed. 

e)    That the transfer of £67.185m from the provisional capital programme to the approved capital programme for payments which the Council is obliged to make to Thames Water under the TW Agreement for 2021/22 and 2022/23, for costs necessary to meet the milestones set within the Homes England HIF agreement and design cost necessary to prepare the planning application for the SCC waste transfer facility be approved.

Reasons:

a)    It was agreed that the project team would report the financial position of WUV at the planning committee meeting gateway.

b)    To ensure that there is sufficient funding in the approved programme to cover the phase 1 Infrastructure costs, SCC waste transfer design cost and the payments which the Council is obliged to make to TWUL under the TW Agreement for 2021/22 and 2022/23.

c)     To inform the Executive of the Commencement of Infrastructure Procurement following receipt of a satisfactory planning consent. 

Other options considered and rejected by the Executive:

None.

Details of any conflict of interest declared by the Leader or lead councillors and any dispensation granted:

None

The Leader reminded the meeting that all of the appendices attached to the report before the Executive were designated as exempt by the Monitoring Officer. Consequently, if the exempt material were to be discussed the press and public would need to be excluded from the meeting.

The Lead Councillor for Regeneration introduced the report as the latest update on the 41-hectare brownfield regeneration scheme that the Council anticipated could deliver approximately 1,500 homes across a range of tenures as well as 2,000 square metres of community space and 6,500 square metres of employment space.  The Council owned 44% of the site. At the full Council meeting on 10 February 2021, a total capital budget of £334.947 million had been approved to enable the infrastructure phase of the project to proceed. The updated cost was £328m. 

The Executive was asked to endorse the current financial position of the project at the planning application gateway stage and to agree to transfer £67.185m from the provisional capital programme budget to the approved capital programme budget for payments which the Council was obliged to make for costs necessary under the Thames Water Agreement and to meet the milestones set within the Homes England HIF agreement and design cost necessary to prepare the planning application for the SCC waste transfer facility. The Council had been awarded £52m in grants from Homes England Housing Infrastructure Fund and £7.5m from the M3 Local Enterprise Partnership with a further £500,000 awarded for the relocation of community facilities.

On 15 December 2020 a hybrid planning application had been submitted to the Council seeking outline consent. The ‘hybrid’ application was so called as part of the application sought outline permission for housing, employment and community space etc. whilst full permission was sought for access roads and associated utilities etc. Heads of terms with Surrey County Council was in the process of being agreed and once agreed the new waste facility could proceed. The budgeted costs were set out in the report.

The Executive agreed that under Section 100A(4) of the Local Government Act 1972 (as amended) and Regulation 5 of the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012, the public be excluded from the meeting for consideration of the exempt Appendices referred to in agenda item 9 on the grounds that they involved the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A to the 1972 Act.

The meeting discussed the restricted material and returned to public session for the vote on the recommendations.

The Executive

RESOLVED:

(1)   That the current financial position of WUV at the planning committee meeting gateway be endorsed.

(2)   That the Director of Strategic Services,in consultation with the Leader of the Council and the Lead Councillor for Regeneration, be authorised to finalise heads of terms in accordance with those attached to the report and thereafter to negotiate, sign and complete the legal agreement with Surrey County Council in accordance with the  ...  view the full minutes text for item 25

The Council noted that Weyside Urban Village (formerly the Slyfield Area Regeneration Project (SARP)) was a major 41-hectare brownfield regeneration scheme that the Council had anticipated could deliver 1,500 homes across a range of tenures as well as 2,000 square metres of community space and 6,500 square metres of employment space.  As such, the Government had designated it as one of its national Housing Zones.

The Council had been working for over 15 years to de-risk the infrastructure delivery and site assembly process.  Over 44 per cent of the site was currently in Council ownership, and 100 per cent would be achieved on completion of land transfers with Thames Water. The conditional contract with Thames Water had been signed on 25 April 2019.

Housing was of great significance to the Borough and formed a major theme to the Adopted Local Plan. There was an ongoing shortage of affordable housing, particularly for first time buyers which in turn contributed to a skill shortage in the Borough.

The Council considered a report which sought approval of a capital budget of £359.504 million to enable the infrastructure phase of the Weyside Urban Village Project development to be carried out. The Council had been awarded a £52.3 million grant from the Housing Infrastructure Fund (HIF).

An EM3 Local Enterprise Partnership (LEP) grant of £7.5 million had also been awarded.

At its meeting on 7 January 2020, the Executive had considered this report and had authorised the Managing Director, in consultation with the Leader of the Council, to sign and complete the Grant Agreement with Homes England to implement the infrastructure works and draw down the grant expenditure.

The Executive had also endorsed the recommendation to Council as set out in the report.

Upon the motion of the Leader of the Council, Councillor Caroline Reeves, seconded by the Lead Councillor for Finance and Assets, Customer Service, Councillor Joss Bigmore, the Council unanimously:

RESOLVED:

(1)   That an additional capital supplementary estimate of £274.057 million be approved to allow a total capital budget of £359.504 million to enable the Council to deliver the infrastructure phase of this scheme.

(2)     That £5.781 million of the additional capital budget be placed on the approved capital programme to progress the allotment relocation and funding of the Thames Water agreement costs during 2019-20.

(3)     That the Council acts as Infrastructure Developer until completion of the Thames Water Infrastructure in 2026.

Reasons:

The reasons for recommendation cover financial, economic and social benefits.

The budget will enable the Council to deliver the infrastructure for the development ensuring deliverability and control.

The land value will be increased by the infrastructure phase being delivered upfront and ahead of Land Parcel Sales.

The project will also deliver:

·        1500 new homes including 600 Affordable Homes

·        2000 square metres of community space

·        6500 square metres of employment space

·        A new relocated fit for purpose Thames Water Sewage Treatment Works

·        Extensive infrastructure improvements

·        This scheme contributes to the delivery of the adopted Local Plan

·        This scheme contributes  ...  view the full minutes text for item 103

The Executive

RESOLVED: That the Managing Director be authorised, in consultation with the Leader of the Council, to sign and complete the Grant Agreement with Homes England to implement the infrastructure works and draw down the grant expenditure.

The Executive further

RECOMMEND (to Council):

(1)        That an additional capital supplementary estimate of £274.057 million be approved to allow a total capital budget of £359.504 million to enable the Council to deliver the infrastructure phase of the Weyside Urban Village Development.

(2)        That £5.781 million of the additional capital budget be placed on the approved capital programme to progress the allotment relocation and funding of the Thames Water agreement costs during 2019-20.

(3)        That the Council acts as Infrastructure Developer until completion of the Thames Water Infrastructure in 2026.

Reasons:

There are financial, economic and social benefits:

The budget would enable the Council to deliver the infrastructure for the development ensuring deliverability and control.

The land value would be increased by the infrastructure phase being delivered upfront and ahead of Land Parcel Sales.

The project would also deliver:

·       1500 new homes including 600 Affordable Homes

·       2000 square metres of community space

·       6500 square metres of employment space

·       A new relocated fit for purpose Thames Water Sewage Treatment Works

·       Extensive infrastructure improvements

·       This scheme contributes to the delivery of the adopted Local Plan

·       This scheme contributes £233 million in economic impacts for Guildford

The project has significant infrastructure to be put in place to enable the above critical success factors to be delivered. Allocating the capital budget would enable all of the infrastructure phase to be delivered and would de-risk the site in readiness for the next stage to facilitate the delivery of homes.

Alternative options considered and rejected by the Executive:

To cease the project retaining the site in its existing state.

Details of any conflict of interest declared by the Leader or lead councillors and any dispensation granted:

None

The Executive was asked to consider an update on the progress of the Weyside Urban Village Project (formerly known as the Slyfield Area Regeneration Programme) and to authorise the Managing Director, in consultation with the Leader of the Council, to sign and complete the grant agreement with Homes England to implement the infrastructure works and to draw down the grant expenditure.

The Executive was also requested to recommend to Council a capital budget to enable the council to act as Infrastructure Developer and to deliver the infrastructure phase of the project.

The project had been in development for a period of fifteen years and was described as one of the most discussed projects for the council. An increase in project costs was noted and the project team would seek to mitigate and make savings wherever possible as the project progressed.

The Executive

RESOLVED:

That the Managing Director be authorised, in consultation with the Leader of the Council, to sign and complete the Grant Agreement with Homes England to implement the infrastructure works and draw down the grant expenditure.

The Executive further

RECOMMENDED (to Council):

(1)       That an additional capital supplementary estimate of £274.057 million be approved to allow a total capital budget of £359.504 million to enable the Council to deliver the infrastructure phase of the Weyside Urban Village Development.

(2)       That £5.781 million of the additional capital budget be placed on the approved capital programme to progress the allotment relocation and funding of the Thames Water agreement costs during 2019-20.

(3)       That the Council acts as Infrastructure Developer until completion of the Thames Water Infrastructure in 2026.

Reasons:

There are financial, economic and social benefits:

The budget would enable the Council to deliver the infrastructure for the development ensuring deliverability and control.

The land value would be increased by the infrastructure phase being delivered upfront and ahead of Land Parcel Sales.

The project would also deliver:

·         1500 new homes including 600 Affordable Homes

·         2000 square metres of community space

·         6500 square metres of employment space

·         A new relocated fit for purpose Thames Water Sewage Treatment Works

·         Extensive infrastructure improvements

·         This scheme contributes to the delivery of the adopted Local Plan

·         This scheme contributes £233 million in economic impacts for Guildford

The project has significant infrastructure to be put in place to enable the above critical success factors to be delivered. Allocating the capital budget would enable all of the infrastructure phase to be delivered and would de-risk the site in readiness for the next stage to facilitate the delivery of homes.