Agenda item

Pendle Drive Litherland

Report of the Executive Director of Corporate Resources and Customer Services

Minutes:

The Cabinet considered the report of the Executive Director of Corporate Resources and Customer Services advising that in January 2020 Cabinet approved the disposal of the first phase of surplus assets to generate capital receipts in support of the Growth and Strategic Investment and Framework for Change Programmes; that officers were provided with the authority to negotiate terms and conditions for each disposal in line with delegated authority set out in the Council’s Asset Disposal Policy; that Brooklea House, Pendle House, and Pendle Drive were three unoccupied buildings located on the site known as Pendle Drive, Litherland (“Pendle Drive”); that this site was in the first phase of the disposal programme; that in 2019, the Council was approached by a retail operator to acquire part of the site; that this represented an opportunistic disposal to provide a new food store, which was permissible under the processes approved within the Asset Disposal Policy; and that the remainder of the site would be redeveloped for housing, most likely via an informal tender exercise marketing it to interested Registered Providers and similar Companies.

 

The report also advised that the COVID19 pandemic led to discussions between the Council and retail operator stalling for a time; but however, following recent contact the basis of a deal had been resurrected and principal Heads of Terms agreed; and that the purchaser had agreed to demolish the three unoccupied buildings with the cost of demolition to be deducted from the gross land price as set out in Appendix 1.

 

The report concluded that the Council would market the balance of the site to Registered Providers, so that a small affordable housing residential development scheme could be brought forward; but that it was not expected to generate a significant capital receipt.  

 

Decision Made:

 

That:

 

(1)

the disposal of 2.40 acres of land at Pendle Drive Litherland at a gross purchase price as set out in the Heads of Terms in Appendix 1 to the report be approved; that the disposal to be subject to the purchaser demolishing the three unoccupied buildings and the receipt of satisfactory planning consent for a new food store; and that the final land price be subject to deductions for the cost of the demolition works;

 

(2)

the deduction of up to 4% of the eventual capital receipt to cover the professional fees and incidental costs of disposal as set out in Capital Accounting Regulations be approved;

 

(3)

the Chief Legal and Democratic Officer be authorised to finalise a Licence Agreement to enable the purchaser to progress all technical due diligence and building surveys to support demolition works and to draw up the appropriate legal documentation to document the Transfer; and

 

(4)

authority be granted for the Executive Director of Corporate Resources and Customer Services to market and dispose of the remainder of the land in the Council’s ownership to Registered Providers for residential development, with terms of the disposal to be delegated to the Cabinet Member - Regulatory Compliance and Corporate Services.

 

Reasons for the Decision:

 

(1)

Disposal of the land will provide capital funding in support of the Growth and Strategic Investment Programme. The disposal will maximise the land receipt that the Council can secure for Pendle Drive. Alternative use value (residential) will not generate a capital receipt of a comparable level. The opportunity cost will be the loss of a capital receipt as currently projected in the disposal programme.

 

(2)

Incidental costs of disposal such as Consultant’s fees and valuation reports can be deducted from a capital receipt in accordance with Local Authority Capital accounting Regulations.

 

(3)

The disposal of land adheres to two criteria: that each capital receipt forecasted represents financial “best consideration” and where the loss of other opportunities is quantifiable and does not undermine wider service delivery and economic development/ regeneration priorities.

 

(4)

The agreed Heads of Terms require that the purchaser demolishes all buildings across the site, including Pendle House which is located on the retained land. This ensures that the Council has no capital expenditure ask to progress demolition work and is left with a de-risked opportunity.  

 

(5)

The agreed disposal price, as set out in Appendix 1, meets best consideration requirements in accordance with Section 123 of the Local Government Act 1972 and complies with the approved processes within the Council’s Asset Disposal Policy.

 

Alternative Options Considered and Rejected:

 

(1)

Dispose of site to Registered Provider: The Council can look to market all the Pendle Drive site to Registered Providers. The site has marginal financial viability for residential use and this option is discounted as it secures only a nominal land receipt. The Council would likely have to commit capital up front to progress demolition works to de-risk the site. Redevelopment of part for a retail store is the only way to secure a significant capital receipt to the Council.  

 

(2)

Demolish buildings to reduce management liability and risk of antisocial behaviour on the site and retain land as an area of recreational amenity. This option is not favoured as there would be ongoing management and maintenance costs to the Council. The asset is in the disposals programme – its disposal has previously been approved for the very purpose of generating a land receipt to support the delivery of the Framework of Change programme.

 

(3)

Dispose of site for residential development: a financial appraisal completed in 2019 estimated that the site would generate a land receipt of no more than £150,000 for redevelopment for this alternative use, given its location in a lower sales value area. The appraisal did not factor in any deductions for demolition or other site abnormal costs, so any land receipt for residential development would in reality only generate a nominal capital receipt, which would not comply with achieving Best Consideration, which is more expressly set out in Section 3 of this report.

 

 

 

Supporting documents: