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RESOLVED:
 
1. 
The acceptance of the grant of £6,594,250 from
the Department for Energy Security and Net Zero’s Public
Sector Decarbonisation Scheme (PSDS4) managed by Salix Finance to
support decarbonisation of a portfolio of Corporate properties and
agreement to enter into a grant agreement and associated documents
with the applicable parties in respect of such funding was
approved.
 
2. 
The investment of £3.7m from the Capital
Programme in undertaking the projects to match the award of
£6.6m as set out in para 3.1 above was approved.
 
3. 
The acceptance of an additional funding allocation of
£1.1m from the Local Authority Housing Fund Round 3 and
approval of the amendment to the existing Memorandum of
Understanding (MOU) with the Ministry of Housing, Communities and
Local Government (MHCLG) were approved. 
This amendment is included as Exempt Appendix 6 in this
report.
 
4. 
The acceptance of the part-surrender by ISHA of the
land leased to them at 82 and 82A Weymouth Terrace shown for
identification purposes edged red on the plan at Appendix 2, was
authorised.
 
5. 
Authority was delegated to the Group Director, Finance
and Corporate Resources to agree all commercial terms relating to
this surrender.
 
6. 
Authority was delegated to the Director of Legal,
Democratic and Electoral Services to agree, settle and sign legal
documentation to effect proposals contained in this report and to
enter into any other ancillary legal documentation as required.

 
7. 
The Council entering into the Letter of Indemnity with
NU Technology and Learning Centres (Hackney) Limited in respect of
refurbishment works at Hackney Central Library, in the form annexed
to this report at Exempt Appendix 7, was approved.
 
8. 
Delegating to the Director, Legal, Democratic and
Electoral Services the authority to make and accept any amendments
required to finalise the letter on the basis that these amendments
do not materially change the financial or risk profile.
 
9. 
The s106 scheme summarised below and set out in section
11 was noted:

S106

2025/26 £'000

2026/27 £'000

Total

Capital

41

41

82

Total
S106 Capital for noting

41

41

82

 
 
REASONS FOR DECISION
 
The decisions required are necessary in order
that the schemes within the Council’s approved Capital
programme can be delivered and necessary to approve the property
proposals as set out in this report.
 
In most cases, resources have already been
allocated to the capital schemes as part of the budget setting
exercise but spending approval is required in order for the scheme
to proceed. Where, however, resources have not previously been
allocated, resource approval is requested in this report.
 
To facilitate financial management and control
of the Council's finances.
 
Acceptance of Public Sector
Decarbonisation Scheme Grant award: The Council has declared a
Climate Emergency and is committed to achieving net-zero carbon
emissions in Council operations by 2030.  An important part of achieving this commitment
will be to decarbonise heat in Council operated buildings. The
Climate Action Plan (CAP) adopted in 2023 included specific action
on decarbonisation of heat and the project funded by this grant
will save 659 tCO2e per year across 9 schools. Accepting this grant
and implementing a further PSDS project will represent a further
step to implementing the CAP. The overall project will also renew
the heating systems in these buildings which would have been
required in any case over the next 2-5 years and therefore this
proposal represents an advance of capital investment to facilitate
receipt of grant which lowers carbon and reduces the overall cost
of the capital investment.
 
Local Authority Housing Fund Round
3 (LAHF3) Grant Additional Funds: LAHF3 funding is being
provided to support local authorities to acquire good quality, and
better value for money TA for families owed a homelessness duty by
local authorities, all properties acquired must be within the
borough. This is aimed at reducing the usage of poor-quality bed
and breakfast accommodation and to enable local authorities to grow
their asset base and help manage local housing pressures on an
ongoing basis. Hackney has forecast a net spend on temporary
accommodation rental expenditure alone to exceed £28m in the
financial year 2024/25, in comparison to £8m for 2023/24 and
£2.5m for 2022/23. Purchasing properties through the LAHF3
scheme will go some way to alleviating this pressure and rising
costs.
 
The Council has the existing budget,
authorities and workforce in place through the existing LAHF
programme to accommodate these additional units.
 
Proposed Part surrender of lease
by Islington & Shoreditch Housing Association (ISHA) for car
parking land at 82 and 82A Weymouth Terrace, Haggerston:,  This
approval is requested for the part-surrender of an existing long
lease held by ISHA (Title number EGL342452) for the purpose of
assembling land for the Council’s Weymouth Court housing
development project. The lease comprises residential properties and
adjacent land (all of which is in Council freehold ownership under
Title numbers LN245452, EGL454526 and EGL454525) known as 82 to 92
Weymouth Terrace in St Marys Estate, Haggerston. The piece to be surrendered is a small
area of land comprising two car parking spaces adjacent to 82 and
82A Weymouth Terrace. See Appendix 1. Consolidation of this piece
of land will unify the Council’s control of the project site
known as Weymouth Court within Hackney’s New Homes Programme
(NHP), and secure the associated benefits. See Appendix 2 for the
project redline boundary.
 
The payment and costs associated shall be
funded from the £10m pre-development budget approved by
Cabinet in December 2022 (Key Decision CHE S142) for the NHP. To
form the NHP, a comprehensive ‘Asset Review’ of all the
Council’s housing land was undertaken, identifying fifteen
‘anchor’ locations with the potential for new Council
homes. The parameters of the review “to focus on Council
owned land not requiring the demolition of existing dwellings, and
with no net loss of green space” generally means that land
acquisition is not expected to be required. That said, a small
number of opportunities have arisen to gain control of land in
order to optimise the development sites, of which this is one.
 
The land in question comprises two former car
parking spaces directly to the rear of 82 and 82A Weymouth Terrace.
The land is within the demise of ISHA’s long lease, the
underlying freehold of which is owned by the Council. It is not
proposed that the piece of land itself is built open, but the
removal of the parking spaces and associated rights from the ISHA
lease enables the vehicular route accessing the land to be
redeveloped in line with the scheme design. It has the further
benefit of creating a car-free residential courtyard to be enjoyed
by residents of both the existing and new-build homes. 
 
This approach responds to the need to optimise
Council housing development proposals, in the context of
increasingly scarce developable Council-owned land and the
increasing cost and complexity of residential construction. It will
also have the benefit of clarifying the public realm extent to
enable high quality, accessible and safe improvements to the areas
around the anticipated development, thereby preventing the land
becoming a magnet for ASB such as fly tipping, and prevent ongoing
vehicular access compromising the proposed development size and
layout.
 
This proposal supports the Council’s
priorities for social housing delivery, the creation of liveable
and safe neighbourhoods, and making best use of Council
resources.
 
ISHA has been engaged and a price for the
part-surrender has been negotiated subject to governance by both
parties. The agreed premium is £20k plus costs estimated in
the region of £10k. This is in the context of a housing
development delivering 18 new social homes and surrounding
improvements, at an estimated total development cost in the region
of £10.9m.
 
Hackney Central Library
Refurbishment - Authority to enter into a Letter of Indemnity:
The Hackney Central library opened to the public in 2002, and while
the building and facilities have been subject to the maintenance
regimes of the PFI contract, the internal library facilities have
not received any investment since then, and as a consequence, the
fabric, layout and facilities are in need of being updated.
 
In 2022, LBH successfully applied to the
Levelling Up Fund (LUF) for funding for a number of complementary
projects aimed at transforming Hackney Town Centre. The
refurbishment of the library is one of the projects and it was
awarded a grant of £385,000. This amount has been augmented
by other Council funds to give a total of £810,000 for the
refurbishment works.
 
The TLC was designed, built, funded and is
operated under a PFI type contract. This means that although LBH is
the freeholder, the building is under the control of a SPV and in
order for LBH to deliver significant refurbishment works, it is
required to enter into a legal agreement with the SPV
beforehand.
 
Entering into the LoI will allow LBH more control over the design and
instalment process, in particular, the ability to appoint its
preferred design and installation contractor, and achieve greater
value for money compared to the alternative outlined below. It is
acknowledged that choosing this option does transfer additional
contractual and financial risk to the Council, however taking a
holistic perspective, the recommended option is the most
appropriate option to progress with.
 
DETAILS OF ALTERNATIVE OPTIONS CONSIDERED AND
REJECTED
 
Successful Decarbonisation Grant award
Regarding the proposal to accept £6,6m of funding from the
Public Sector Decarbonisation Scheme (PSDS), the alternative is not
to accept this grant. This would mean missing out on this
opportunity, and important decarbonisation projects would either
not go ahead as planned or we would need to reprioritise and
displace existing projects on the capital programme.
 
Local Authority Housing Fund Round
3 (LAHF3) Grant Additional Funds: Due to the significant
financial pressures placed upon the Council by temporary
accommodation, the Council is seeking additional grant to be used
for the acquisition of properties. If we chose not to proceed, we
would forgo this grant funding which could go some way in
alleviating the financial pressures faced by the Council both
currently and in the long term.
 
Proposed Part surrender of lease
by Islington & Shoreditch Housing Association (ISHA) for car
parking land at 82 and 82A Weymouth Terrace, Haggerston: The alternative option is not to
acquire control over the land in question. This option has been
rejected because it risks unacceptably compromising the
regeneration and new homes potential of the site. It would fail to
maximise the financial and non-financial benefits of the
opportunity, including optimising the number and quality of new
homes and surrounding improvements to the public areas on the
estate. Further, it would prevent the Council from making optimum
use of its existing land asset at St Marys Estate.
 
Hackney Central Library
Refurbishment - Authority to enter into a Letter of
Indemnity:  A detailed exercise was
undertaken in 2024 to consider the most appropriate option to
design and deliver the refurbishment works. This was to ensure that
there was sufficient flexibility to select LBH’s preferred
designer, which party would be responsible for both design and
construction risk, as well as procurement, delivery and overall
value for money.
 
The alternative option would have been for the
SPV to carry out the detailed design, procure a contractor and
deliver the works. This option would have transferred more
contractual and financial risk to the SPV, but at a significant
financial cost and loss of control to LBH.
 
A critical factor to note in making the
assessment is the type of works proposed. The more complex the
works, the more opportunity there is for risk to arise. The
proposed works are largely limited to the replacement of the
existing Furniture, Fixtures & Fittings (FF&E), the
installation of a new meeting room and the relocation of floor
boxes and small power. There are no structural works, no major
changes to either the existing building systems or services, nor
impacts on fire compartmentation. All these types of works would
have resulted in a higher risk profile and the alternative option
most likely being selected.
 
The recommendation at paragraph 3.7 of this
report is made after consideration of the scope of the proposed
works, the risks, and the mitigations available to the Council. In
summary, the recommended option has been selected due to the
principal reasons set out below:
 
· 
It reduces the risk that LBH would fail the value for money
requirement set out by the Department for Leveling Up Housing and Communities (DLUHC). If the
Council failed this criteria, the LUF grant would have
been  withdrawn leaving a shortfall of
£385,000. The alternative option set out below would have
cost the Council between £130k - £150k more in delivery
costs which would have been challenging to justify to DLUHC. These
additional costs are a consequence of the existing PFI structure
and how the SPV would have procured the works.  The financial risks associated with LBH’s
preferred option, are not relevant to DLUHC’s value for money
assessment.
 
· 
It reduces the risk of the Council not being able to select its
preferred specialist design and installation contractor. The type
of specialist design and installation contractor preferred by the
Council for the works proposed, tend to be small, nimble, niche
companies and it is known that these types of companies sometimes
have difficulty in passing a SPV’s procurement criteria. SPVs
tend to appoint larger, generalist type companies who can accept
the more onerous contractual terms resulting from the PFI
structure. Not being able to select the Council’s preferred
design and installer would likely impact on the final design and
quality of fit out.
 
· 
The proposed works are limited in scope, complexity and crucially
do not include any structural works nor material upgrades to the
existing building systems or services, nor changes to the existing
fire compartmentation.
 
· 
The works are limited to a discrete area within the building,
reducing the opportunity for damage to the wider building.
 
· 
The most prevalent risk likely to occur is damage to the building
beyond the scope of works and any financial costs arising. The
Public Liability policies held by both the proposed contractor and
the Council, are principally designed to respond to these heads of
loss and it is anticipated that these policies would respond.
 
· 
The proposed contractor has agreed to purchase additional Public
Liability insurance up to the £50m reinstatement value of the
building. It is anticipated that this policy would pay out in the
event the worst case scenario occurred due to the works or as a
consequence of the works. The proposed policy has been reviewed by
Insurance Services and is deemed to be acceptable. Note that LBH
the Council carries a Public Liability policy with a limit of
£50m which could be called on.
 
· 
Taking into consideration the scope of the works, the discrete area
the works are taking place in and the insurance policies in place,
the risk of the uncapped liability manifesting itself to its full
extent is low as is the likelihood that the full financial
liability will rest with the Council and not be recoverable, to an
extent, from insurances.