Agenda item

To receive a report by the Head of Resources and Lead Housing Strategy Manager regarding an update on the redevelopment of Langley Court St Ives, seeking approval to transfer a piece of land to Luminus to enable the redevelopment to proceed and to update Members on the terms of the loan to Luminus.

That the Cabinet agrees:

 i.  to the transfer of the grassed area (as identified in Appendix 1 of the Officer’s report) at the front of Langley Court to Luminus, subject to a clawback arrangement as detailed in paragraph 3.5 of the Officer’s report.

ii.  to the continued support of the Langley Court development by the provision of loan finance at nil cost to the Council.

iii.  that the Head of Resources, as the Section 151 Officer, be authorised to make the loan following consultation with the Executive Councillor for Resources (and a satisfactory Due Diligence report from the Council’s Treasury Management Advisors).

The Cabinet gave consideration to a report by the Head of Resources and Housing Strategy Manager (a copy of which is appended in the Minute Book) regarding the transfer of a grassed area to Luminus and the provision of loan finance to Luminus at nil cost to the Council.

The need for extra care for older people in St Ives was a priority in the Council’s Housing Strategy 2012-15.  Luminus had an outdated sheltered scheme in Langley Close, Ramsey Road, St Ives and wanted to demolish the scheme and redevelop a new extra care scheme in its place consisting of 55 one and two bedroom flats.  Luminus had supported residents to move out of the original building, the new building had planning permission and ground works had commenced.

There was a grassed area to the front of the site, bordering the car park which was owned by the Council.  To make best use of the site, Luminus wanted to use the area to form part of the car park and green space for the scheme. To enable this to happen, the Council needed to transfer ownership of the green space to Luminus.  It was noted that the transfer would be subject to a clawback arrangement so that if the site was ever sold in the future, the monetary equivalent of the land value reverted to the Council.  It was explained that the grassed area did not have any standalone development potential, given its proximity to the street and the surrounding buildings, and therefore transferring it to Luminus would be in line with the Council’s forthcoming Asset Strategy. 

Legal advice had been obtained to give assurance of the Council’s legal position in relation to the loan.  A specialist consultant had been appointed by the Council to help arrange the loan facility for Luminus.  The heads of terms for the legal agreement had been drafted and the due diligence was underway.  The fees would be reimbursed by Luminus. 

The specific loan details were yet to be finalised.  However, the loan would not have a negative financial impact on the Council as Luminus would be repaying the loan in full including a margin of 1.5% over the 30 year term of the loan.  The net loan finance to be arranged by the Council in respect of the development itself was £5m.  It was anticipated that Luminus would draw down their loan at various stages of the development process and consequently the Council would draw down the loan from the Public Works Loan Board in similar tranches.

Financial security during the development phase would be Brook House, which was owned by Luminus Finance Limited.  As the development came to a completion the intention would be to transfer financial security to the Langley Court development.

The Cabinet were keen to support the proposals as a need for additional care for older people in the area had been identified as a priority in the Council’s Housing Strategy.  The Cabinet were satisfied that the risks regarding the loan to Luminus were well mitigated.

The Cabinet subsequently

RESOLVED

 i.  to the transfer of the grassed area (as identified in Appendix 1 of the Officer’s report) at the front of Langley Court to Luminus, subject to a clawback arrangement as detailed in paragraph 3.5 of the Officer’s report.

ii.  to the continued support of the Langley Court development by the provision of loan finance at nil cost to the Council.

iii.  that the Head of Resources, as the Section 151 Officer, be authorised to make the loan following consultation with the Executive Councillor for Resources (and a satisfactory Due Diligence report from the Council’s Treasury Management Advisors).