Acquisition and Development of Land - North West Quadrant, Slough

Concepts

• coventry
• residential homes
• nwq llp
• development agreement
• north west quadrant llp
• north west quadrant
• slough borough council
• months of acquisition of the nwq site
• development of land - north west quadrant
• development of the nwq site

Location

United Kingdom:

Description

Homes England is an executive non-departmental public body, sponsored by the Department of Levelling Up, Housing and Communities and is the trading name of the Homes and Communities Agency, a statutory corporation established by the Housing and Regeneration Act 2008. In line with its statutory objectives, Homes England intends to acquire the freehold of a site currently owned by Slough Borough Council (the Council) at William Street, Slough (known as North West Quadrant (the NWQ Site)), to enter into a novated option agreement with Community Solutions for Regeneration (Slough) Limited (CSR) as described below, and subsequently to enter into a development agreement with CSR to develop the NWQ Site. To the extent that this transaction would otherwise require a call for competition pursuant to the Public Contracts Regulations 2015 (PCR) or the Concession Contracts Regulations 2016 (CCR), then entry into it is permitted by PCR reg 32(2)(b)(iii) or CCR reg 31(6)(b)(iii) because of the exclusive rights enjoyed by CSR or associated entities.

Total Quantity or Scope

The proposed transaction comprises two stages: (1) the acquisition of the freehold site by Homes England, and the novation to Homes England (with amendments) of an existing option agreement by which the Council granted certain exclusive rights to North West Quadrant LLP (NWQ LLP); and (2) the intention that Homes England and CSR will enter into a development agreement in respect of the NWQ Site within 12 months of acquisition of the NWQ Site. NWQ LLP is a development subsidiary of Slough Urban Renewal LLP (SUR). SUR was set up in March 2013 as a joint venture between the Council and CSR. SUR’s role was to acquire and develop various sites owned by the Council. NWQ LLP was established in November 2019 specifically in relation to the NWQ Site, and on the terms of specific arrangements set out in a partnership deed concluded at that time. At the same time, the Council entered into an option agreement which granted to NWQ LLP, subject to the satisfaction of certain conditions, an option to acquire the NWQ Site through the grant of leases on a phased basis, and with a view to development. The period of the option was until 22 March 2028. Significant preparatory work has been undertaken by CSR or associated entities but, in light of financial pressures on the Council, further work on the development of the NWQ Site has currently been suspended. Homes England wish to progress the development of the NWQ Site in furtherance of its statutory objectives to improve the supply and quality of housing in England; to secure the regeneration or development of land or infrastructure in England; to support in other ways the creation, regeneration or development of communities in England or their continued well-being; and to contribute to the achievement of sustainable development and good design in England, with a view to meeting the needs of people living in England. This transaction also supports the Government’s ambition for Homes England to respond to the long-term housing challenges facing this country by facilitating the delivery of new homes, where they are most needed, and to deliver a sustained improvement in affordability, using its funding and powers to play a more active role in the housing market, working with partners across the wider housing sector and increasing the pace, scale and quality of delivery. Slough is an area of significant housing need in which there has been significant underperformance in housing delivery. The NWQ Site is a c10 acre key gateway site in Slough, prominent in the town centre, and unlocking this stalled development will significantly increase supply and help to bring forward a significant number of new affordable homes. Homes England also considers that development of the NWQ Site will act as a catalyst and help to bring forward other schemes within the wider area securing regeneration of the town and driving quality housing supply. The existing option agreement prohibits the transfer of the Council’s freehold interest without a covenant by the transferee to observe and perform the Council’s obligations under the option agreement. CSR would require NWQ LLP to stand upon its rights under the option agreement, which means in effect that Homes England would not be able to enter into arrangements for the development of the NWQ Site otherwise than with NWQ LLP or an associated entity acceptable to NWQ LLP and to CSR. Given that NWQ LLP is unable to function effectively under the existing partnership agreements, the option agreement will be novated from the Council to Homes England and from NWQ LLP to CSR, rather than Homes England simply covenanting to observe and perform the Council’s obligations. It is the intention of Homes England and CSR to enter into a development agreement in respect of the NWQ Site within 12 months of acquisition of the NWQ Site, failing which the novated option agreement would terminate. During the 12 month period the obligations on both parties under the novated option agreement are suspended.

Award Detail

CPV Codes

• 45215214 - Residential homes construction work

Legal Justification

The proposed novated option agreement would not itself amount to a public works contract within the meaning of the PCR (or works concession within the meaning of the CCR), but it reflects Homes England’s intention to enter into a development agreement and leases of the NWQ Site to CSR. Either those leases, or the contemplated development agreement between Homes England and CSR, may (depending upon their eventual terms) amount to a public works contract or a works concession. Grant of leases on a phased basis pursuant to the development agreement will be subject to satisfaction of conditions precedent including planning and financial viability and entering into of the relevant build contracts. However, the existing option agreement has created an exclusive right within the meaning of PCR reg 32(2)(b)(iii) or CCR reg 31(6)(b)(iii). Although certain long-stop dates contained in the original option agreement may have expired, the suspension of work on the development has occurred at the request or with the concurrence of the Council and in circumstances such that the Council and Homes England would not be entitled to terminate the existing option agreement or treat NWQ LLP’s rights under the option agreement as at an end. As set out above, this means that the works required for the development of the NWQ Site can only be supplied by CSR as a party acceptable to NWQ LLP. No reasonable alternative or substitute exists. There are no other sites in the Slough area which would offer a reasonable alternative for Homes England; there is a severely limited number of other sites of a broadly comparable size and those are either being developed by third parties or would take significant work to make them comparably ready for development and, in any event, these sites are not considered comparable in terms of location (including proximity to the railway station) or regeneration impact.

Other Information

** PREVIEW NOTICE, please check Find a Tender for full details. ** The value given in Section II.1.7 (and repeated at V2.4) is an indicative figure in respect of the acquisition and the final cost of the acquisition and development will significantly exceed that figure. The date given at V.2.1 is the date this notice has been submitted. The novated option agreement has not yet been entered into. Note the previous references to EU Procurement Directive 2014/24/EU are legacy references and should be ignored.