A report from the Leader and Cabinet Member for Finance and Growth is attached.
Appendices attached:
· Appendix 1: Transactional and Pricing Report (CBRE)
· Appendix 2: Technical Due Diligence Surveys (Mace)
· Appendix 3: Legal Title & Asset Report (Addleshaw Goddard)
· Appendix 4: Asset acquisition Heads of Terms
· Appendix 5: Joint venture agreement
· Appendix 6: Joint venture Business Plan
· Appendix 7: Loan Agreement
· Appendix 8: Managed Services Agreement
· Appendix 9: Financial Model
· Appendix 10: Joint venture structure report – commercial (CBRE)
· Appendix 11: Joint venture structure report – Legal (Addleshaw Goddard)
· Appendix 12: Procurement advice (Addleshaw Goddard)
· Appendix 13: General advice report (GMCA)
Supplementary report and appendix also attached.
Minutes:
Councillor Eamonn O’Brien, the Leader of the Council and Cabinet Member for Finance and Growth, presented the Part B report and appendices which set out the full financial and legal details for the proposed acquisition and development of the Mill Gate estate.
Decision:
Cabinet:
1. Approved entering the joint venture vehicle with Bruntwood in accordance with the commercial terms included within Part B of this report;
2. Approved the acquisition of the Mill Gate estate in accordance with the commercial terms included within Part B of this report;
3. Approved the funding arrangements for the acquisition in accordance with the terms set out in Part B of this report;
4. Delegated any further approvals relating to additional due diligence work to the Chief Executive in consultation with the Monitoring Officer and Section 151 Officer;
5. Instructed the Monitoring Officer to enter into and complete all necessary documents to give effect to the acquisition and the delivery of this proposal through the joint venture partnership;
6. Noted the detail around the head lease;
7. Delegated authority to the Director of Regeneration to undertake an independent valuation; and
8. Noted that a further report in respect of the head lease will come to Cabinet.
Reasons for the decision:
· To create a delivery vehicle that is funded through commercial rental receipts, to develop the Mill Gate estate and unlock new opportunities for employment, leisure, serviced offices, food and beverage outlets and hundreds of new affordable homes whilst positively contributing to efforts to support the economic resilience of the town centre. The Mill Gate estate developments will also create enhanced public realm areas.
· To avoid the shopping centre being acquired by an ‘income-investor’ who would potentially extract surpluses from the centre for short term gain rather than re-investing in the estate. To secure its long-term future, thus necessitating public sector intervention further down the line at potentially great cost. In many locations Local Authorities end-up under enormous pressure to intervene when a facility is being mis-managed, and often this will require a premium above market value to be paid and a series of rectification works following potentially many years of neglect.
· Bury Town Centre Masterplan identifies further development opportunities to the south of Angouleme Way as well as other areas of Bury East ward. The acquisition of the Mill Gate estate will also facilitate physical reconnection and attract investment that will have a positive impact on the surrounding communities.
Other options considered and rejected:
· Council to not act and leave the matter to market forces. This option was rejected because if the shopping centre were to be purchased by a third party, they may not be motivated to reinvest income to maintain the centre to a high standard. This may contribute to the condition of the centre declining, thus resulting in a further detrimental effect on the wider town centre.
· Working with the vendor was originally an option, assisting in their search for a development or investment partner. However, this was discounted as an option as the vendors desired disposal timeframe.
· Council to purchase the Millgate estate for strategic development without a partner. This was discounted as the Council does not have sufficient inhouse capacity or expertise to deliver on this scale and level of ambition.