To approve the appointment of a developer to work in partnership with the council in delivering the development and regeneration programme.

The cabinet member for contracts and assets introduced the report. He noted that the announcement of the development partner was the culmination of many months of work. He stated that this was one of the most important areas that the council could consider at a time when there was a need both to protect the future of the council and to look at ways of best investing significant resources the council may be obtaining.

The programme director housing and growth noted that the procurement process had taken around 12 months. The partnership was being promoted as a huge opportunity for the council to raise capital, deliver revenue receipts and to contribute towards housing growth targets. The partnership would support the One Public Estate programme and economic development.

The interim procurement manager announced that as a result of the final tender evaluation Keepmoat Homes Limited were recommended as the preferred bidder.

The programme director housing and growth explained that a standstill period would follow the announcement during which all the bidders would be able to review the results and place challenges. As a result only limited information could be released at this stage. The council would look to sign an overarching agreement with the development partner in September 2017. A development programme would be put together, taking account of known land opportunities already discussed. The final say on which sites were included in the programme would remain with the cabinet.

It was noted that the contract with the development partner would place the financial risk on the developer. The programme would be managed by the programme director housing and growth and supported by both internal resources and commissioning of tasks through the property services department on a case by case basis. The longer term aim would be to fund any additional capacity needed through appropriate capitalisation of costs. The programme director was confident that the resources would be in place to manage the programme effectively.

The group leaders were invited to make comments on behalf of their group.

The leader of the Herefordshire Independents asked if Keepmoat Homes Limited had been involved in similar schemes elsewhere in the country. It was confirmed that the model proposed for Herefordshire had been used by other councils such as Flintshire and Liverpool City Council and that a number of councils were in the process of setting up such models. Keepmoat Homes had a reputation for making long term regeneration commitments. Details of areas where they had worked previously would be supplied in writing.

The group leader commented that the programme would need a considerable amount of officer time and resource to ensure that it was properly managed. The leader of the council agreed with this assessment and stated that the programme director would have the necessary support.

The group leader asked who would set the profit level under the proposed contact. The interim procurement manager explained that the developer had bid a fixed level of profit as their reward for taking on the risk but the profit level could be varied depending on the final contractual model used. The current model in the contract set out a guaranteed land value for the council which would only increase if sales increased or costs decreased. If sales decreased or costs increased, this would be borne by the development partner.

It was confirmed that the contract with the development partner would not preclude the council pursuing independent development opportunities outside the programme. The cabinet would have the final say on which sites were included in the programme.

The cabinet member for financial management and ICT stated that the issue of sufficient resource to manage the programme had been discussed by cabinet members and would continue to be kept under scrutiny. He asked for clarification that while the development programme would contribute to the target of 800 homes for Hereford city, it was not specifically a Hereford city centre contract and would be used across the county.

The cabinet member for contracts and assets confirmed that the programme would include sites across the county.

The group leader of It’s Our County made the following points:

·         his group were pleased to see that local labour and supply chains would be targeted, he hoped that these targets would be achieved;

·         he asked if it was possible to say what the extent of the development partner’s contribution would be towards the housing target for Hereford city centre; and

·         whether the development partner would have preferential treatment over other developers when sites across the county came forward for development.

The programme director responded that the volume of work to be undertaken by the development partner was down to the council. A lot of the land in the area designated for the urban village was privately owned and would come to the market as development happened. Other opportunities would therefore exist for the wider development market to access these pieces of land. The development partner could also acquire additional land themselves but they would not wish to overstretch themselves in terms of their development programme and there was no automatic right to every piece of land in the council’s ownership. The target of 800 homes was quite widely spread and would not all be delivered on land in the urban village.

The programme director confirmed that performance indicators would be agreed with the development partner in terms of local labour contracts and that there would be ongoing monitoring.

The leader commented that there needed to be a focus on what gave the best return and best value for money. The council would use local contractors where possible but the scale of some pieces of work might require contractors of a certain size.

The cabinet member for financial management and ICT queried whether the exempt appendix 5 would be able to be published once the contracts had been signed. The monitoring officer confirmed that the exempt appendices would be made public as far as possible once the information contained in them was no longer confidential.

Resolved that:

a)    the highest scoring tender Keepmoat be appointed as the preferred bidder to work in partnership to deliver the council’s development and regeneration programme;

b)    the director for economy, communities and corporate having consulted with the chief financial officer and cabinet member contracts and assets, and having received satisfactory confirmation of tender commitments, be authorised to complete contractual arrangements with Keepmoat for a period of 10 years;

c)    in the event that satisfactory confirmation of tender commitments is not received from the preferred bidder, the director for economy, communities and corporate, following consultation with the chief financial officer and cabinet member for contracts and assets and having received satisfactory confirmation of tender commitments, be authorised to enter into the contract for the development and regeneration programme with the second highest bidder (‘the reserve bidder’);

d)    following completion of contractual arrangements options appraisal and business cases for development of the former Bromyard depot and the Hereford station approach sites be brought forward for consideration as the first phase sites; and

e)    thanks are extended to all bidders for the courteous, prompt and productive way in which they have all participated in the procurement.