Decision details

To accept a capital sum in return for the Council to release the purchasers of the T11 site from a clawback provision relating to the development use.

To enter into an agreement with Polofind Limited for development of the Shopping Park.

Update report on progress with project.

Update report on progress with project.

To seek approval and funding for the purchase of the T11 site and construction of the Shopping Park.

Update report on progress with project.

Update report on progress with project.

Update report on progress with the project.

To agree the award of the contracts for the Main Build and Section 278 works.

Update report on progress with the project.

Update report on progress with the project.

Update on progress with the project.

Appointment of Contractor to carry out the construction works & increase in contract for S278 works.

Update report on progress with the project.

Update report on progress with the project.

Authority to enter into lease agreements with retail tenants.

Update report on progress with the project.

The Portfolio Holder for Asset Management & Economic Development introduced a report concerning the Epping Forest Shopping Park.

The Portfolio Holder reminded the Cabinet that, in accordance with previous policy decisions to derive best value from the Council’s assets and to generate revenue from the investment of capital resources, a number of development projects on Council owned land were currently being progressed. The most significant of these was the Epping Forest Shopping Park in Langston Road, Loughton, which had the capacity to generate employment for local people, provide a significant boost to the local economy, and ensure that retail spend was retained within the District. 

The Portfolio Holder reported that, having obtained the necessary planning consent, and appointed a project team, who had undertaken the necessary development appraisal and cost estimate work, the Cabinet was being requested to  agree a number of important considerations in progressing the project. The first of these was the buying out of the interest of the current joint venture partner, Polofind Limited, for a negotiated sum of £10.25million plus £410,000 for stamp duty and £153,750 for agents fees. The purchase price would include no further liability by Polofind Limited for the clawback provision of £2.25million. The second of these was obtaining the capital provision required to construct and let the shopping park, which it was estimated would cost a further £19.181million. The third consideration was the retention of the existing project team, who would be engaged directly by the Council once the purchase was complete, through the waiver of Contract Standing Orders C5 and C6, and the confirmation of the appointment of DAC Beachcroft as specialist construction lawyers.

The Portfolio Holder highlighted that the European Union procurement requirements (OJEU) would apply to the main building contract, but not to the Section 278 Highways Works Contract, and the Cabinet was requested to authorise the tendering of the Highways works as detailed in the Section 278 agreement to include any advance utilities costs to be met within existing resources allocated to the project to date. It was stressed that the additional procedures to comply with OJEU would make completing the project in time for a Christmas 2016 opening more challenging.

The Cabinet noted the current position on the marketing of the retail park and the potential anchor tenants, as well as the latest Development Appraisal for the project as provided by the Council’s consultants. Whilst it was acknowledged that there was an element of risk if the Council became the sole owner operator, this would enable the Council to have full control of the tenant mix and retain all future income generated by the Shopping Park. It was also emphasised that the Cabinet would continue to receive regular monitoring reports at future meetings.

Local Members from Loughton asked a number of detailed questions concerning the development of the Shopping Park and its potential effects on nearby town centres. The Cabinet noted that there was a lack of such smaller centres inside the area bounded by the M25 motorway, and that the potential anchor tenants all had stores at nearby locations which indicated their belief that a presence at the Shopping Park would be profitable. It was highlighted that the move of the Museum store from the depot at Langston Road was being funded by the National Lottery, and that the Council’s refuse contractor no longer required space at the depot. Although enabling costs had not been included in the Development Appraisal, the savings for the Council from the Clawback provision almost offset the cost of building the new depot at Oakwood Hill, considered earlier in the meeting. The Portfolio Holder agreed to provide additional information on the project to Members at the special Council meeting scheduled for 23 June 2015, which had been arranged to consider the request for the necessary supplementary finance to progress the project.

Decision:

(1)        That the buy out of the interest of Polofind Limited in the Epping Forest Shopping Park development by the Council be agreed and in particular, the site known as T11 for the sum of £10,250,000 plus £410,000 for stamp duty and £153,750 for agents fees in accordance with the Heads of Terms attached as an Appendix to the report, which included no further liability by Polofind Limited for the clawback provision of £2,250,000 plus reimbursement of Professional Fees incurred in bringing the site forward;

(2)        That a Capital Supplementary Estimate be recommended to the Council for approval at the Extraordinary Meeting on 23 June 2015 in the sum of the £10,250,000, plus £410,000 for stamp duty and £153,750 for agents fees for the purchase and an estimated £642,000 for professional fees, plus a sum of £19,180,530 making a total of £30,636,280 based on the latest Development Appraisal to enable the Council to construct and let the Epping Forest Shopping Park;

(3)        That Contract Standing Orders C5 and C6 be waived to enable the Council to retain the existing project team, who would be engaged directly by the Council under new contracts developed by DAC Beachcroft, whose provisional appointment as specialist construction lawyers would be confirmed; and

(4)        That a temporary licence of 12 months for two units at Oakwood Hill Industrial Estate be entered into by the Council, to facilitate the vacating of the depot pending the completion of the Council’s new depot facilities at Oakwood Hill, at a cost of £69,000 including internet, utilities and building insurance but not business rates, to be contained within existing provision.

Reasons for Decision:

A considerable amount of urgent work was necessary to bring forward the development of the Epping Forest Shopping Park, in order to achieve an opening for the Christmas period in 2016.

In addition, the Council’s joint venture partner, Polofind Ltd, had conditioned their agreement to sell their interest at the proposed price, on the basis of a final decision being taken by the end of June 2015. 

Other Options Considered and Rejected:

To not proceed with the purchase of Polofind’s interest at this time; however, this could delay the project and the opening of the Shopping Park.

To enter into the formal Joint Venture Agreement with Polofind Limited and continue the development in partnership. However, the Council would not then have sole control over the project or the expected financial return.

To dispose of the Council’s interest in the depot site to Polofind Limited, or to market the depot site with the benefit of the retail planning permission on the open market. However, this option had been previously rejected by the Council and although it would provide a capital receipt, it would not provide a revenue stream to support the provision of future Council services.