The report of the Strategic Director (Growth and Development) is attached.

Having introduced this item of business Councillor Leese left the meeting at this point. Deputy Leader Councillor N Murphy took the Chair.

In March 2017 we had authorised the City Solicitor, City Treasurer and Strategic Director (Development) to enter into an agreement with the Council’s preferred investment partner for the regeneration of the Northern Gateway lands, Far East Consortium International Limited (FEC). We had also delegated authority to the Chief Executive to dispose of the Council’s interest in land at the Northern Gateway Site (Minute Exe/17/064).

The Council had entered into the Joint Venture (JV) with the Far East Consortium (FEC) in April 2017 for the comprehensive redevelopment of the Northern Gateway for housing and ancillary development. As part of the delivery arrangements, the Council and FEC established a JV company, Northern Gateway Operations Limited (OpCo), to have strategic input into and oversight of the development of the Northern Gateway.

In February 2019 we approved the Strategic Regeneration Framework for the Northern Gateway, the 155 hectare land area made up of the adjacent neighbourhoods of New Cross, the Lower Irk Valley and Collyhurst. This Framework was to support the opportunity to deliver up to 15,000 new homes over a 15-20 year period (Minute Exe/19/25).

In June 2019 consideration was given to the preferred approach to facilitating strategic land acquisitions within the Northern Gateway SRF area, and approval given to making a loan of up to £11 million to FEC (Minutes Exe/19/52 and Exe/19/57).

A report now submitted by the Strategic Director, Growth and Development described in outline the Strategic Business Plan for the Joint Venture. A copy of the plan was appended to the confidential Part B report on this item of business (Minute Exe/20/32). The purpose of the plan was to set the strategic context for the Northern Gateway and to set the parameters for the subsequent Development Area Business Plans. The Strategic Business Plan was to be updated annually to ensure that it could take account of any changes in national and local policy, market sentiment or wider economic implications. It was to be used to monitor the progress of the Northern Gateway project.

The report explained that the Financial Model contained in the Strategic Business Plan was currently showing a minimal return against the overall projected Gross Development Value. The overall plan would not be at a sufficiently viable for a developer to undertake the overall development without additional external public sector investment. This low level of return and high level of development risk was a consequence of the costs associated with the huge site-wide infrastructure requirements which needed to be addressed to tackle abnormal costs and support the delivery of housing at the scale set out in the plan. In total the investment into necessary “place-making” infrastructure to support development across the entire Northern Gateway was currently estimated at circa £165m. A bid of £51.6m to the Government’s Housing Infrastructure Fund (HIF) would, if successful, support the delivery of such infrastructure, but additional investment would still need to be secured from a range of sources including Section 106 developer contributions. It was however fully anticipated that the initial Development Area Business plan would be financially viable.

The initial Development Area Business Plan had to be for not less than 1,000 homes. Development Area 1 comprises three development phases:

·         Collyhurst Phase 1 (Collyhurst Village and Collyhurst South)

·         Former Angelgate site

·         Addington Street

The total number of homes to be delivered within Development Area 1 was anticipated to be around 1,045 with a mixture of type and tenure, and the majority of homes being provided as open market for sale. The Development Area was to provide a mix of one, two, three and four bed properties in the form of apartments, maisonettes and townhouses. The Joint Venture was committing to delivering 20% affordable homes across Development Area 1. That would include around 130 social rented dwellings delivered in Collyhurst and on-plot shared ownership homes at the former Angelgate site.

The plan assumed that where capital receipts were generated within the Northern Gateway area that those would be ring-fenced for re-investment into supporting the delivery of the Northern Gateway SRF objectives.

Councillor Flanagan addressed the meeting as a councillor for the Miles Planning and Newton Heath ward. He welcomed the significant investment in regeneration, redevelopment and place-making that was to come to the ward and the wider area. He also welcomed the opportunity that local residents were to have to stay in the area, occupying new homes so as to allow the demolition and redevelopment of existing properties. He suggested that a new name for the overall programme be considered as ‘Northern Gateway’ did not have the same relevance for the local community as the names already in use for their neighbourhoods.

It was noted that the Economy Scrutiny Committee had also considered the report at a recent meeting of the committee and had endorsed the recommendations (Minute ESC/20/13).

Decisions

1.         To note the summarised content of the Strategic Business Plan, the detail of which was explained in another report (Minute Exe/20/32 below).

2.         To note the summary of the intended content for the production of the initial Development Area Business Plan which was to focus on the delivery of up to 1,000 homes in the neighbourhoods of New Cross, Red Bank and Collyhurst.

3.         To delegate authority to the Chief Executive in consultation with the Leader, Deputy Leader and the Executive Member for Finance and HR, to approve the full initial Development Area Business Plan.

4.         To agree to the principle of ring-fencing Capital Receipts or overage generated from the disposal of Council-owned land through the Northern Gateway Joint Venture for re-investment into supporting the delivery of the Northern Gateway SRF objectives.

5.         To note the intention of the Development Manager to appoint a Registered Provider partner to assist with the delivery of affordable housing on JV land within the Red Bank and New Town neighbourhoods to help meet the commitment of providing 20% affordable housing within the initiative.

6.         To note that the Northern Gateway is currently characterised by large tracts of vacant and underutilised brownfield land and that for development of any scale to be delivered, significant “place-making” infrastructure interventions will be required and consequently a strategic approach towards leveraging investment from a range of sources will be necessary, including the capture of S106 developer contributions for the purposes of place-making infrastructure.

7.         To note the intention to explore options for the preparation of a costed “place-making” infrastructure strategy for the Northern Gateway against which Section 106 developer contributions can be sought, with any such strategy being the subject of a future report and public consultation.

8.         To note the current situation with regard to the funding submission of £51.6m to the Government’s Housing Infrastructure Fund and the significant potential impact of this funding on the overall viability of the initiative.

9.         To note the significant contribution that the Northern Gateway initiative can make to the City’s affordable housing delivery ambitions and the various means available to the Council such as the Housing Affordability Fund through which investment can be leveraged to deliver affordable housing at scale within this area.

10.       To note that, subject to a positive announcement from Government relating to the Housing Infrastructure Fund, a further report will be made regarding the specific terms and conditions applicable in advance of any decision to enter into a Funding Agreement.

11.       To note that a Social Value strategy will be developed specifically for the Northern Gateway given the value of contracts/works to be carried out and the anticipated duration of the Joint Venture Partnership.