Agenda item

The Cabinet gave consideration to a report of the Executive Director, Place and Economic Growth which sought approval for the Council to carry out a competitive land sale of vacant and derelict brownfield land at Southlink together with land owned by Greater Manchester Passenger Transport Executive (GMPTE) to enable the site to be developed for new housing. 

The report provided details in relation to the redevelopment of the unutilised and vacant brownfield land to the south of the former Oldham Mumps Metrolink Station. The site, known as ‘Southlink’ previously contained the original Oldham Mumps Railway Station which closed completely in 2009 and has since been demolished.  Covering around 3.5 hectares, the site is owned by Oldham Council and TFGM, (approximately 54% and 46% respectively).  

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 (BHL).  

BHL 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 to make sites deliverable.  The grant was used to support schemes that would otherwise be unviable.  The funding cannot be used as revenue.

Bids were submitted in a number of tranches and GMCA agreed the prioritisaition criteria focusing on deliverability, value for money and strategic fit.  Under Tranche 2, Oldham Council and Transport for Greater Manchester (TFGM) were provisionally allocated up to £4.502M BHL Grant funding based upon a GMCA led proposal (working directly with TfGM) to develop 265 apartments at Southlink.   

In September 2021, Cabinet approved that the grant for Southlink should be provisionally accepted. In order to meet the grant requirements, set by Greater Manchester Combined Authority (GMCA) for Tranche 2 applications, the following development milestones must be met, or the Grant risks being re-allocated to other schemes within Greater Manchester:

CBRE were appointed in September 2020 to prepare a development brief and provide delivery strategy and developer selection advice to the council for the proposed developments at Derker and Southlink in order to meet the requirements of the BHL Grant Funding timetables.

The CBRE Advice explored three options for bringing the site at Southlink forward for development which were: 

1.    Direct development by the Council.

2.    Procurement of a private sector development partner under the public contract regulations 2015.

3.    Land sale to a Developer.

The first option was discounted because of the risk it would place on the council and the significant resources, both expertise and finance, that would be required. 

A fully compliant procurement exercise to appoint a developer partner in accordance with the Public Contracts Regulations (PCR) 2015 through a competitive tendering process is a tried and tested route. However, using this approach, the Council would be highly unlikely to complete the procurement exercise and other steps necessary, such as secure full Planning Permission, in time for the preferred partner to be on site by March 2023. CBRE have provided a timetable detailing this option and the earliest start on site date would be after April 2023. This would mean that the BHL grant offer would be withdrawn and reallocated to another scheme within GM. 

A land sale to a preferred developer would sit outside the PCR (2015).  It would require due diligence to be undertaken by the Council on the suitability of the developer and appropriate contractual arrangements being put in place, including a buy back agreement, to ensure that the project is delivered in accordance with the BHL grant requirements.

A competitive process was proposed to be undertaken to ensure the Council secures the best value offer for the site. 

A Planning Development Brief had been drawn up to provide a planning and design framework to guide the redevelopment of the site. The brief included an illustrative concept plan, provisional development schedule and indicative viability assessment to inform the disposal exercise so that any offer is aligned with the Councils, TFGM’s and GMCA’s delivery expectations and requirements. 

The viability work showed that an apartment led scheme, even with BHL Grant support would simply not be viable due to the low rents and values in the area, combined with the high abnormal construction costs relating to the former use and topography of the land. As such it was likely that any proposed scheme would be high-density low-rise housing with a revised density of around 50 dwellings per hectare, giving a scheme of around 120 homes. The exact proposals would not be known until the competitive land sale process was completed and the final revised BHLF allocation would also not be determined until an agreed scheme has been approved by both Oldham Council and TfGM as landowners. 

The competitive land sale process offers developers an opportunity to:

• Effectively utilise vacant brownfield land
• Embed zero/low carbon technologies and construction methods to create highly sustainable new homes
• Deliver quality homes to meet the acute market and affordable housing needs in Oldham
• Deliver new homes in a highly accessible location close to public transport provision, shops, amenities, services and facilities; and
• Generate significant economic, social and environmental benefits locally.

Options/alternatives considered

Option 1 - Dispose of Southlink via a Competitive Market Sale Exercise

The CBRE report confirms that a development partner can be selected to bring forward residential development on the Southlink site via a market sale process which can commence on the 8^th April 2022 (or preferably earlier) as soon as all the relevant site information is available for the marketing prospectus.

Option 2- Dispose of Southlink site using a procurement framework.

CBRE considered alternative procurement routes to select a development partner in accordance with the Public Contracts Regulations (2015), through a competitive tendering process.

Procurement routes included the Homes England Dynamic Purchasing System and the Pagabo Framework. The relative merits of both routes were considered in the report together with the respective timescales against the project milestones.

The analysis concluded that while this is a tried and tested approach to select a development partner that would achieve all the project objectives, the complexity of the Southlink site and the time that it is taking to assemble all the relevant site information that would inform such as process (which is still ongoing), has meant that there is insufficient time in the project programme to undertake a procurement process as this will require a minimum of 3 months.

In summary, there is insufficient time in the project programme to run a procurement process that would also meet the BHL grant deadline. This means under this option, Southlink would remain undeveloped.

Option 3 - Dispose of Southlink via a Council led procurement exercise.

CBRE highlighted in their report that there would be no time savings with a Council led procurement exercise when compared to Option 2 above, which means that the outcome would be the same, i.e. insufficient time to meet the BHL grant deadline. The Southlink site would not be developed.

Option 4 - Do not dispose of the site.

‘Do nothing’ is not the preferred option for the site as this would not meet the Council’s ‘Creating a Better Place’ regeneration and housing development objectives. The availability of the BHL grant is in place for a specific purpose which is to off-set the viability gap and bringing forward challenging brownfield sites such as Southlink for residential development, and every opportunity should be taken to draw down the funding to make development happen.   

RESOLVED – That the Cabinet would consider the commercially sensitive information contained at Item 22 of the agenda before making a decision.