Lea Bridge Station Sites - Developer Partner

Descriptions

The Council does not consider that by the proposed variation it will be awarding a new contract for the purposes of the Public Contracts Regulations 2015, the Concession Contracts Regulations 2016, nor the Procurement Act 2023. it is voluntarily publishing a Transparency Notice and observing the 8 working day standstill period in order to provide transparency of an intended modification and to mitigate risk if the variation is held to give rise to a contract award under the Procurement Act 2023.The Transparency Notice accompanies a Voluntary Transparency Notice to be published under the Public Contracts Regulations 2015. The original development agreement involved the Council granting a short-term building lease followed by the grant of a long lease of 250 years on completion. The Greater London Authority (GLA) now requires schemes involving GLA funding for shared ownership housing to be leased for at least 990 years. The number of residential units to be delivered by the scheme will be varied to increase from 320 to 379 and the number of affordable units varied from 120 to 379. The original development agreement involved the Council granting a short-term building lease followed by the grant of a long lease of 250 years on completion. The Greater London Authority (GLA) now requires schemes involving GLA funding for housing for sale, including shared ownership housing to be leased for at least 990 years. Additional works are now required to be delivered by the developer to relocate high voltage cables and gas infrastructure detected on the site. The estimated cost of additional and revised utilities works is £4.79m. The Council would have received a guaranteed land payment under the original scheme on the commercial basis of the developer receiving a profit on cost of 14.5%. This payment was to reimburse land assembly costs of £2.5m plus a land value. The overage provision in the original scheme was 55 / 45 in favor of the Council on sales overage above a £ per sq. ft. threshold. It has become necessary to adjust this considering inflationary build costs pressures and regulatory changes following the passing of the Building Safety Act into law. The varied scheme will reduce the developer’s profit on cost to 11.7% and remove the guaranteed receipt. Half of any additional profit will be shared by the developer with the Council up to a cap of £2.5m plus the cost of borrowing incurred by the Council to assemble the required land. The Council considers that the proposed modifications to the development agreement and scheme structure fall within the permitted modification grounds set out in Regulation 72 of the Public Contracts Regulations 2015 (or alternatively the corresponding principles in Section 43 of the Concession Contracts Regulations 2016). The Council considers that the proposed changes in the commercial structure of the scheme are not substantial and therefore permitted under Regulation 72(1)(e). The commercial structure of the scheme includes the increase and variation to the residential units to affordable units; the restructuring of the land arrangements to a 990-year lease (whilst retaining forfeiture mechanisms, and as per the GLA funding requirements) with subsequent freehold transfer on golden brick; and also the revisions to the land payment, profits and overage provisions. The character of the scheme in terms of a developer-led housing development on Council land is maintained and the Council does not consider that it is likely that had these changes been part of the original procurement that different candidates would have resulted nor that it would have attracted additional participants to the original procurement. The Council considers that the additional and varied works arising from the utilities diversions now required are permitted under Regulation 72(1)(b) in that it would be economically and technically challenging for this to be provided by any contractor other than the developer.