Agenda item

Consideration was given to a report of the Executive Director, Place and Economic Growth which sought approval of the disposal of three vacant plots in Derker and the approval of a Brownfield Housing Land agreement for Derker completed between Hive Homes and the Greater Manchester Combined Authority.

There were a number of vacant sites in Derker that were cleared as part of the Housing Market Renewal Programme and had remained vacant for over 10 years.  The sites included a number of individual Council owned plots totalling approximately 4 hectares and cover land at the former Cromford Mill, Abbottsford Road and former Derker Hotel site, London Road and Evelyn Street, as shown at Appendix 1 to the report.

In July 2020 the Greater Manchester Combined Authority was awarded an initial allocation of £81.1 m over a 5-year period following a Government announcement with regards to a national pot of £400 m Brownfield Housing Land Fund (BHLF).  

The Ministry of Communities, Housing and Local Government (MCHLG) commenced a further bidding round in August 2020 for the remaining 10% of the £400 m allocated as BHLF grant.  The £40 m was retained by MCHLG as a competitive element to help support the most ambitious projects. The focus of the bidding process and assessment was on identifying and supporting those Mayoral Combined Authorities that could demonstrate they had ambitious proposals and were ready to receive funding and where the funding could be utilized within 2 years. The grant for Derker was funded from this ‘10%’ pot and in order to complete the funding agreement, a series of tight the milestones outlined in the report were required to be met.  

The BHLF provided grant support to bring forward residential development on brownfield sites.  The grant can be used to address remediation issues, access works or service diversion and provision required in order to make sites deliverable. The funding cannot be used as revenue.

In September 2021, Cabinet approved that a provisional BHLF allocation for the sites in Derkerof up to £2 m should be accepted. Derker had capacity for circa 150 homes and the grant would be used to help support zero carbon/highly energy efficient housing.

The funding needed to be spent (i.e. works completed up to the value of the grant) by March 2023 and in order to spend the grant the following development milestones had been agreed with GMCA.  Whilst there was some flexibility with the milestones up to March 2023, if the project did not progress in accordance with the dates below, there is a risk the funding will be lost.

• Cabinet approval to dispose – March 2022
• Planning application submitted – June 2022
• Start on site – November 2022
• Works (to value of the grant) completed – March 2023
• Housing completed – early 2025

In order to achieve these tight deadlines, and based on advice from CBRE, it is proposed that the BHLF Grant Agreement should be completed directly between GMCA and Hive Homes. This approach has no financial impact on the council, as the grant would have subsequently been novated over to the developer partner in its entirety in any event. 

Options/Alternatives considered

Option 1 - Procure a delivery partner through a compliant procurement process

By using this option, the Council would not be able to complete the process in time to draw down the BHLF Grant which would greatly affect the overall viability of the proposed development and the quality of the homes being built.  This option, with the luxury of a longer time period, would however allow for the Council to enter into a Works Contract and therefore have more control over the type of homes being built.

Option 2 - Market the site on the open market for disposal

The site could also be marketed for sale on the open market. This option would give the Council no certainty around the type of homes built (other than via the Planning Process) or on when the homes would be built.  It was likely that the development would be only Policy Compliant in terms of affordable homes (i.e. 10%) and only be built to Building Regulations standards.  The homes would not be low or zero carbon.   Whilst it was possible this option would generate a capital receipt, none of the council’s or GMCA’s wider strategic objectives would be met.  The terms and objectives around the BHL Grant, including timescales and ‘Build Back Better’ Agenda would also be seriously jeopardised, therefore under this option the grant would likely be lost  

Option 3 - Direct disposal to Hive Homes

This option would enable a high-quality scheme to be built in accordance with the Council’s aspirations for Derker and also enable Hive to access the allocated BHLF Grant. A buy-back agreement will be in place if the scheme is not built out in time or if Hive fail to meet any of the other requirements of the BHLF Grant Agreement. 

RESOLVED – That the Cabinet would consider the commercially sensitive information at Item 21 before making a decision.