Funding and development agreement South Coalville Primary School

Concepts

• primary school
• leicester
• leicestershire county council
• school site
• development cost
• development agreement
• developer
• new build delivery of south coalville
• wider housing development scheme
• site of the school

Location

Leicestershire CC and Rutland:

Description

Leicestershire County Council (“LCC”) is entering into a supplementary funding and development agreement (“DFA”) to support the new build delivery of South Coalville primary school (“School”) to fulfill s.106 obligations. The School site is owned by the developer, Harworth Estates. The site is subject to planning obligations imposed by North West Leicestershire District Council in its capacity as local planning authority and LCC in its capacity as local highway authority and local education authority in the s.106 agreement of 26 September 2016 (as varied). Under the s.106 agreement the developer is required to build a two-form entry primary school. The freehold to the site of the School will be transferred by the developer to LCC for nominal consideration at or around the time the DFA is entered into. Under a Deed of Variation to the s.106 agreement made on 21 March 2023 the developer is not obliged to build the School if the development cost is above £9m but is instead obliged to pay a contribution cost and transfer the site to LCC. Continues II.2.4 below.

Total Quantity or Scope

Continues from II.1.4 above. The developer must consult with LCC if the development cost is in excess of £9m on possible alternatives and has absolute discretion as to whether to agree alternative routes to deliver the School. The LCC intends to enter into the DFA with the developer which will provide up to £3m support funding if the School development cost exceeds £9m in order to facilitate its delivery. The DFA will also address specification requirements, certification and step-in rights to protect LCC’s interests relating to making the funding contribution available. The developer is delivering a wider housing development scheme of up to 2,700 dwellings in the area as consented for in the relevant outline planning permission and the School forms part of the planning requirements under the s.106 agreement. Additional information: The date in V.2.1 below relates to the approval by LCC to proceed with the DFA.

Award Detail

CPV Codes

• 45214210 - Primary school construction work

Legal Justification

The primary obligation for the developer to deliver the School derives from obligations under the s.106 agreement. S.106 agreements are recognised as being a different kind of agreements from public works contracts under the Public Contracts Regulations 2015 (as amended) (“PCR”). Its purpose is to regulate the development of land so its essential object is to ensure the proper planning in the local planning authority’s area rather than the delivery of the specified works. Consequently, such agreements are not governed under the PCR as per the principle in Faraday Development Ltd v West Berkshire Council [2018] EWCA Civ 2532. There is no positive obligation for the developer to deliver the School with costs in excess of £9m under the terms of the s.106 variation. If the developer elects to deliver the School with costs in excess of £9m and wishes to access LCC’s funding, then the DFA contains an enforceable obligation to deliver works specified by LCC in order to define and regulate the expenditure of LCC’s contribution towards discharging the s.106 obligations. LCC considers that the DFA is incidental and ancillary to the performance of the pre-existing s.106 agreement and is not intended to form a separate project to deliver a work in its own right. The DFA will provide for LCC to have: the benefit of step-in rights through the Collateral Warranties to enable LCC to step-in and instruct the completion of the build should the developer default; a Performance Bond from the building contractor; and payment of liquidated damages for late delivery to reflect LCC’s anticipated cost of procuring temporary alternative school accommodation. LCC does have an economic benefit in the School being transferred to it on completion. However LCC does not consider that the DFA forms a public works contract for the purposes of the PCR given its primary purpose is to provide supplemental funding and any perceived works obligations are incidental and ancillary to the performance of the s.106 agreement which is exempt from the PCR.

Other Information

** PREVIEW NOTICE, please check Find a Tender for full details. ** The estimated value in V.2.4 and II.1.7 relates to the current projected capital cost of the School. The developer is obliged under the DFA to fund the delivery of the School save for LCC’s contribution which is capped at £3M under the DFA.