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RESOLVED:
 
1. 
That the scheme for Finance & Corporate Resources
Directorate as set out in section 12.1 was given approval as
follows:
 
Security Services
Modernisation: Resource and spend approval of £1,460k (£892k in 2024/25 and £568k in
2025/26) is requested to enable Council Officers to proceed
with investment in modernisation of the Council’s Corporate
Campus CCTV infrastructure, technology and control room.
 
2. 
That the scheme for Climate, Homes & Economy
Directorate as set out in section 12.2 was given approval as
follows:
 
Tomlinson Centre
Lift Replacement: Virement and
spend approval of £40k in 2024/25 and
resource and spend approval of £68k in
2024/25 is requested to replace the current Stannah lift which is near to end-of-life and has
been decommissioned due to faulty and unrepairable control
system.
 
3. 
That the s106 Capital scheme summarised below and set
out in section 12.3 was approved:
 

S106

2024/25 £'000

Capital

422

Total
S106 Capital for Approval

422

 
4. 
Authorised the acquisition of a leasehold interest for
a term of 299 years at a peppercorn rent of Unit A, Hartingtons Court, Coster Avenue, N4 2QW (aka Block D, Woodberry
Down).

 
5. 
Authorised the grant of a sublease to the Mill Co.
Project Limited for a term of up to 15 years.

 
6. 
Delegated authority to the Interim Group Director of
Finance, in consultation with the Group Director of Climate, Homes
and Economy, to agree all commercial terms of the
transactions.

 
7. 
Authorised the Acting Director of Legal, Democratic and
Electoral Services to settle, agree and enter into all primary and,
where necessary, ancillary documentation necessary for these
transactions.

 
8. 
That the Outturn for capital programme for the year
ending 31 March 2024 in section 13 was noted.

 
9. 
That the recommendations contained in Exempt Appendix 4
to this report were approved.
 
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.
 
Proposed Acquisition of
299 year lease of Unit A, Hartingtons Court, Coster Avenue, N4 2QW (aka Block D, Woodberry
Down): In July 2022 Cabinet gave approval to enter into the
Block D Supplemental Agreement to the Woodberry Down Principal
Development Agreement (PDA). This variation permitted the Council
to enter into the Block D Supplemental Agreement in consideration
of the option to acquire a lease of Block D as a community facility
for a term of 299 years.
 
The acquisition of the lease will realise
community and political ambitions that have been in the planning
stage for a number of years. It will provide the Council with a
long term legal interest and control over the space to ensure it is
ultimately used for the benefit of the community. If the Council
does not acquire the lease, the interest will remain with Berkeley
Homes, without any assurances that it will benefit the
community.
 
On completion of the lease, the building will
be fitted out by Berkeley Homes, meaning it will be handed over to
the Council in a tenantable condition, subdivided into four
separate units, each complete with electric installation, heating
and ventilation systems installed, fully compliant with statutory
requirements and to a very high standard of energy efficiency,
subject only to specific fit out works required by
occupiers. 
 
There are risks to the acquisition and these
are explored in more detail later in this report but mitigation
measures have been identified and are also set out in this report.
In the event that the use by Mill Co. Project fails, and the lease
is surrendered, the Council retains a number of options for
remarketing and finding alternative uses for the property. There
was a wide range of interest in the property at both soft marketing
and marketing stages, including from well-established enterprises
and charities. It is therefore anticipated that should the building
need to be re-let, although there would need to be a marketing
process, there are likely to be a number of options for
re-letting.
 
Furthermore the
legal agreements enable the Council to assign / transfer the lease,
if the property was to become vacant and a suitable new tenant
could not be identified within an acceptable time frame. This would
still benefit the community, as the funds from any premium paid for
a lease assignment would be reinvested into Woodberry Down. Whilst
the Council would need to manage the local community’s
perceptions and expectations about the space if there were to be
changes to how the space is used, the legal agreements provide
flexibility for these alternative approaches, if they are necessary
in the future.
 
Proposed and Subsequent Grant of a
Sublease to Mill Co Project Limited for a term of up to 15
years: Having a suitable sub-tenant in place to take a sublease
as soon as possible after the Council acquisition of the
299 year lease from Berkeley Homes will
minimise empty property costs to the Council and allow the new use
and benefits to the community to commence swiftly.
 
Successful operation of the building within
the principles of the supplementary agreement will create an
innovative commercially funded community hub with the possibility
of further funding of community projects in Woodberry Down, through
any surplus rental income generated from operation of the
building.
 
The Regeneration Partners have engaged with
Mill Co. Project who have a good track record of managing similar
facilities in the borough and they are working with the partners to
develop plans for a flexible and responsive community facility with
the ability to adapt to community needs. The community can benefit
from a single vision for delivery and engagement with the community
that will be brought by Mill Co. Project, rather than as a series
of disconnected individual tenants, and Council officers will have
the ability to audit delivery of services to the community and
manage change as necessary through the legal framework of the
sub-lease. A longer lease term enables Mill Co. Project to invest
in longer term projects within Block D.
 
DETAILS OF ALTERNATIVE OPTIONS CONSIDERED AND
REJECTED:
 
Proposed Acquisition
of 299 year lease of Unit A,
Hartingtons Court, Coster Avenue, N4 2QW (aka Block D, Woodberry
Down):
 
Acquisition of the
long leasehold interest - allow the option to lapse.
 
The Council could allow the option to acquire
the head lease to lapse and therefore not proceed with the
transaction. This would remove any risk of the property becoming a
future financial liability to the Council, particularly if it
became vacant. It is unknown what Berkeley would do with the
building instead; they have indicated it would be let commercially,
to a use allowed for within the planning permission, but as this
scenario has not been discussed there is no proposal.
 
This option has been rejected because the
benefits of acquiring the asset outweigh the risks, which can be
mitigated to an acceptable level.
 
Considerable time has been invested by
Councillors, officers and the partners in developing this scheme
and achieving consensus as to the future of this building as a
community resource. Failure to progress at this point would be seen
as a wasted opportunity particularly within the Woodberry Down
community. There is also a strong risk of reputational damage to
the Council, and with the regeneration programme set to continue
for at least a further 15 years, not proceeding may damage the
Council's position as a credible partner in future negotiations
with Berkeley Homes, NHG and WDCO.
 
In practical terms, not taking up the head
lease would mean that the Council loses all opportunity to utilise
the asset to the benefit of the Woodberry Down community, whether
through the operations and activities of the building under a
sublease, through realising a commercial rent that is reinvested
locally, or through gaining a capital sum from a reassignment of
the lease, which is also invested locally.
 
Subletting to Mill
Co. Project - withdraw from lease negotiations.
 
The Council could withdraw from negotiations
with Mill Co. Project and consider alternative subletting options
or uses.
 
This option has been rejected because Mill Co.
was selected as the preferred operator through an extensive
marketing exercise in close discussion with the regeneration
partners, after careful scrutiny of its operational and financial
model.  Mill Co. itself is an
experienced operator, which has been delivering similar types of
workspace in other parts of the borough, and its proposal for Block
D demonstrates sufficient flexibility to ensure on-going financial
sustainability.
 
Continuing negotiations with Mill Co. provides
the best opportunity for the Council to have a subtenant in place
following or shortly after the acquisition of the head lease, and
an opportunity to implement a successful operation of the building
from the outset. Key principles have been agreed with Mill Co.
through draft Heads of Terms.
 
If negotiations with Mill Co. stall and
ultimately fail at a future date, the Council will have to come
back to considering this option, although it should be recognised
that any alternative approach will take time to implement and will
not be ready at the point that the head lease is acquired.