Report to Cabinet
17 February 2015
Portfolio Holder Presenting: Cabinet Member
for Property, Finance and Commissioning
Subject:
EXCLUSIVITY AGREEMENT – LEISURE PARK
Status:
OPEN
Ward(s):
ALL
Key Decision:
No
Key Decision / Ref:
n/a
Report of:
Cabinet Member for Property, Finance and
Commissioning
Contact officer:
Mike Bovis - Direct Line (01256) 845360 ext. 2360 or
Email:mike.bovis@basingstoke.gov.uk
Appendices:
None
Papers relied on to
None
produce this report:
1
Executive Summary
1.1
This report seeks Cabinet approval to enter into an exclusivity agreement with
the preferred development partner for the Leisure Park for a six month period.
1.2
The report does not commit the council to the Leisure Park redevelopment or
to the appointment of the development partner at this stage.
1.3
A future report will be presented to Cabinet, for Member decision, after the
exclusivity period which will detail the results of the work undertaken and
present options for the way forward.
2
Recommendation
2.1
It is recommended that:
2.1.1
Cabinet approves the entering of an exclusivity agreement with NewRiver
Retail REIT (NRR) and that the detailed terms are delegated to the Head of
Resources in consultation with the Head of Governance and Commissioning
and the Portfolio Holder for Property, Finance and Commissioning.
2.1.2
Cabinet also approves a budget carry forward of £70,000 to cover the external
fees incurred during the Exclusivity Period
PRIORITIES, IMPACTS AND RISKS
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Contribution to Council Priorities
This report accords with the council’s Budget and Policy Framework and directly
supports the Council Plan priority/priorities of improving economic vitality and
maintaining a reputation for quality arts and leisure.
GLOSSARY OF TERMS
Term
Definition
REIT
Real Estate Investment Trust
MAIN CONSIDERATIONS
3
Background
3.1
In October 2012 Cabinet, following an endorsement of the strategy by
Community and Wellbeing OSCOM, agreed to a regeneration delivery
strategy for the Leisure Park.
3.2
The basis of the strategy is to encourage regeneration of existing facilities and
reinvestment into the Park by attracting new leisure uses. The provision of
new uses should provide an opportunity to drive up overall visitor numbers to
the Park and enhance expenditure on the Park generally, in turn, incentivising
existing tenants to invest in current facilities.
3.3
The four principles of the strategy are set out below;
3.4
1.
To seek innovative proposals from parties to create a regional leisure
destination within the Council’s landholdings at the Leisure Park and
encourage re-investment within existing facilities.
2.
To enable the whole of the Leisure Park, to include Saunders Field, to be
part of any regeneration proposal.
3.
To secure a development partner to bring forward holistic development
on the Park and offer that party a long term partnership to incentivise
them to deliver.
4.
To control and steer the nature of development through retention of the
Park’s ownership and through a governance structure to manage the
partnership.
The whole Leisure Park site plus the land known as Saunders Field was
included as part of the development opportunity. The previous Cabinet report
recognised that any proposals for Saunders Field would be expected to be
treated sensitively and have full regard to the land’s flood plain status, the
impact on the River Loddon and the impact/ contribution to the green
infrastructure of the surrounding area.
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4
Development Partner Procurement
4.1
An OJEU contract notice was issued advising of the development partner
opportunity in June 2013. This was accompanied by a comprehensive
marketing campaign, which included adverts being placed in the key national
property press (Estates Gazette and Property Week), a supporting marketing
brochure and a dedicated web page were also produced.
4.2
52 expressions of interest were registered through the web site although
many were by supporting consultants rather than developers; 2 compliant bids
were received from potential development partners.
4.3
Following an evaluation of these bids in accordance with the Council’s agreed
evaluation criteria both companies were selected to progress to the Stage 2
Detailed Submissions part of the procurement. This involved a dialogue
process with each potential bidder.
4.4
At the conclusion of the process, it was decided to continue discussions with
NewRiver Retail REIT (NRR)
4.5
The NRR proposal for Basingstoke Leisure Park is built around a concept of
developing a broad mixture of complementary leisure uses in the shape of
physical “zones” and these are currently envisaged to include; Entertainment,
a Market Square, Outdoor, Sport/Adrenalin, Water based, Fitness, Health and
Speciality and a Learning zone. Saunders Field would be designated as an
ecology zone. The bidder proposes that upon practical completion of the
development, it be granted a 250 year lease of the entire Park, to ensure a
whole site approach to management. As freeholder, the council would receive
a percentage of the total rent roll and the detail of this will be finalised during
the exclusivity period.
5
Exclusivity Agreement
5.1
The Exclusivity Period is required to establish the detailed scheme proposals,
including a refinement of the Leisure Park redevelopment masterplan, the
terms of a development agreement and the detailed financial structure, before
Members can be provided with a detailed report to consider whether or not to
progress with the redevelopment and enter into a development agreement
with the preferred development partner.
5.2
The Exclusivity Period will provide the bidder with recognition in the market
enabling them to carry out more detailed discussions with potential operators
around occupying new floor space built at the leisure park. The bidder would
also engage with key stakeholders to test out the appropriateness of the
refined scheme.
5.3
It will also enable the council and the bidder to further develop the financial
structure and development appraisal, including the possibility of capped
council funding for site assembly and to work on the detailed legal terms of a
potential development agreement.
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5.4
At the end of the Exclusivity Period, the content of the refined scheme and all
of the implications (financial and non-financial) will be reported again to
Cabinet for further consideration and a decision on whether to commit to a
development agreement (assuming a viable scheme can be recommended).
At the point of this next report, neither party will be under any obligation and
the parties can cease discussions if either so decide..
6
Options Analysis
6.1
The Council has two main options: (i) to continue to refine the existing
proposals with NewRiver Retail REIT via an exclusivity agreement as
recommended in this report; or (ii) to end the current development partner
procurement process now and re-advertise.
6.2
Advice from the Council’s appointed leisure market specialists is that it would
be unlikely to see an increased level of developer interest if it went back to
market immediately. Their advice is that Council should not immediately take
the opportunity back to market even if ultimately no agreement can be
reached with the current bidder. In these circumstances the Council is advised
to take stock and review its options including defining what it would be
seeking from developers.
7
Corporate Implications
7.1
Financial Implications
7.1.1
Each party will be responsible for their own costs during the exclusivity period.
7.1.2
The Council is likely to incur legal and valuation consultancy costs associated
with formulating a development agreement and evaluating the financial terms
proposed by the developer. The Council’s costs can be met from the agreed
and approved £90,000 budget for the Leisure Park redevelopment scheme in
2014/15. However, as most of the work on the agreement will now take place
in 2015/16 a carry forward of £70,000 is requested to be approved.
7.1.3
The Council will need to ensure that detailed financial proposals refined during
the exclusivity period comply with best consideration s123 requirements.
7.2
Risk Issues
7.2.1
There is a risk that the work undertaken during the exclusivity period could be
abortive.
7.3
Equalities
7.3.1
None
7.4
Legal Implications
7.4.1
Under the proposals set out in this report, a legal exclusivity agreement would
be completed and entered into by the council and the bidder.
The period of the Exclusivity Period will be six months but this could be
extended by mutual agreement if positive progress is still being made.
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8
Comment from Portfolio Holder
8.1
I am pleased that after so many months work we are in a position to
recommend entering into an exclusivity agreement with NewRiver Retail. The
6 months exclusivity period will enable the 2 parties to work together to
establish if a compelling, deliverable and financially sound regeneration of the
leisure park can be structured. The potential win for the borough and its
residents is enormous in terms of new and improved leisure attractions, more
jobs and more business and visitor numbers generally if we can succeed in
our aspiration to make Basingstoke Leisure Park a regional magnet. I hope
that the exciting potential our leisure park offers will be fully realised over the
next 6 months.
9
Communication and Consultation
9.1
The outline Leisure Park redevelopment scheme proposals were presented by
New River Retail to the Leader and Portfolio Holder mid 2014 and to the
Leisure Park MAP on 4th September 2014.
9.2
Once the work has been concluded in the exclusivity period a further report
will be taken to Cabinet via the appropriate Overview Committee.
10
Conclusion
10.1
The proposals from the preferred development partner, NewRiver Retail, have
significant potential to discuss further on a non-commitment basis and it is
recommended to enter into discussions and bring back a report and
potentially a proposed development agreement to Cabinet in 6 months.
Entering an exclusivity agreement enables the bidder to have more
meaningful discussions with existing and potential scheme occupiers and will
help ensure that the most robust proposal is worked up prior to future
consideration by Cabinet.
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