Agenda item

Report of the Executive Director – Corporate Services and Commercial

The Cabinet considered the report of the Executive Director – Regeneration, Economy and Assets requesting approval to enter into a conditional contract for the asset disposal of land and buildings at Pendle Drive, Litherland to Aldi Stores Ltd. Following the disposal, a new food store development would be brought forward pending planning approval. The report indicated that in January 2020, the 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. 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. Brooklea House, Pendle House, and Pendle Drive were three unoccupied buildings located on the site known as Pendle Drive, Litherland (“Pendle Drive”). The site was in the first phase of the disposal programme. In 2019, the Council was approached by a food store operator to acquire part of the site, however the operator withdrew from the deal in June 2023. Since that date a separate approach had been made by Aldi Stores Ltd in January 2024 to acquire part of the site for a food store scheme. Principle Heads of Terms had been agreed subject to Council approval and intrusive site investigations were in progress as part of the feasibility work to inform a planning application.

The following exempt appendices were attached to the report:

·       Appendix 1 – Heads of Terms for Freehold Disposal

·       Appendix 2 – Site Plan – Land to be acquired by Aldi Stores Ltd

Decisions Made:

That

(1)           the sale of the Council’s freehold interest in land at Pendle Drive (shown edged red on the plan within Appendix 2) to Aldi Stores Ltd on the basis of the Heads of Terms detailed within Appendix 1 of the report, be approved;

(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 complete the necessary legal formalities in relation to the completion of land sale contracts;

(4)           it be noted that demolition of all buildings at Pendle Drive (including those on the land to be retained by the Council) will be demolished under licence agreement in autumn 2024; and

(5)           it be noted that officers in Property Services and Housing and Investment Services are exploring options for the disposal of the remainder of land (c.1.14acres) in the Council’s ownership for housing development. A proposal will be brought forward to Members in line with delegations for future consideration.

Reasons for the Decisions:

The disposal would maximise the land receipt to support the Growth and Strategic Investment Programme. Alternative use value (residential) would not generate a capital receipt of a comparable level. The opportunity cost would be the loss of a capital receipt as currently projected in the disposal programme.

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

The Heads of Terms required that Aldi Stores Ltd demolished all buildings across the site, including Pendle House which was located on the retained land. This ensured that the Council had no capital expenditure ask to progress demolition work and was left with a de-risked opportunity.

The final disposal price would meet best consideration requirements in accordance with Section 123 of the Local Government Act 1972 and complied with the approved processes within the Asset Disposal Policy. An independent valuation would be commissioned once abnormal costs had been confirmed.

Alternative Options Considered and Rejected:

Option 1 – “Dispose of the whole site to a Registered Provider”: market all the Pendle Drive site to Registered Providers/ housing developers.

Risk: The site had marginal financial viability for residential use and this option was discounted as it secured 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 was the only way to secure a significant capital receipt to the Council.

Option 2 – “Do minimum - demolish buildings”: to reduce site management liability and risk of antisocial behaviour.

Risk: This option was not favoured as there would be ongoing management and maintenance costs to the Council. The asset was in the disposals programme – the disposal of the site had previously been approved for the very purpose of generating a land receipt to support the delivery of the Framework of Change programme.

Option 3 – “Market the site more widely for sale”: the Council would commence a formal marketing process seeking financial offers.

Risk: a financial appraisal showed that a residential development scheme would only generate a modest land receipt. Officers commissioned a marketing report completed in 2023, which provided no substantive evidence that there were any alternative credible purchasers.