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Subject: |
Moulsecoomb Neighbourhood Hub & Housing Schemes: Update Report |
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Date of Meeting: |
17 November 2021 Policy & Resource Committee, 2 December 2021 |
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Report of: |
Executive Director: Housing, Neighbourhoods & Communities Executive Director: Economy, Environment & Culture |
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Contact Officer: |
Name: |
Steve Hartley Laura Webster |
Tel: |
01273 290336 01273 292705 |
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Email: |
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Ward(s) affected: |
All |
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FOR GENERAL RELEASE
1. PURPOSE OF REPORT AND POLICY CONTEXT
1.1 The report provides an update on the Moulsecoomb Neighbourhood Hub and Housing Schemes initially presented to Housing committee and Policy & Resources committee in April 2020 with a further update at their meetings in March 2021.
1.2 The report seeks approval to proceed with the submission of a planning application for the Moulsecoomb Hub and Housing development.
1.3 The report shows how the masterplan has further developed following feedback from local residents and community groups through a series of Planning for Real sessions, as well as review by the Design: South East panel and pre-application planning advice.
1.4 The report also provides an update on the financial position of the programme, accounting for changes to the masterplan and design development.
2. RECOMMENDATIONS:
2.1 That the Housing Committee recommends to Policy & Resource Committee that Policy & Resources Committee: -
2.1.1 Authorises officers to progress the submission of a planning application for the Moulsecoomb Hub and Housing development.
2.1.2 Agrees the anticipated budget for this stage of £2.1m to be funded by HRA Borrowing and included as part of the 2021/22 HRA Capital Programme.
3. CONTEXT/ BACKGROUND INFORMATION
Programme Overview
3.1 Since the last committee report, the project has focussed on developing the design to the Royal Institute of British Architects (RIBA) Plan for Work Stage 2 (light). This has incorporated feedback received from residents, planning and the Design: South East panel. Feedback from these consultations have resulted in changes to all three elements of the scheme: Housing, Neighbourhood Hub, and the Public Realm (including Sports Facilities).
3.2 The updated masterplan is included as an appendix to the report. The March Committee reports set out the changes within each element, and the rationale for those changes.
3.3 The table below shows the high-level milestones for the scheme:
|
Task/event |
Date |
|
Housing Committee |
17th November 21 |
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P&R |
2nd December 21 |
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Submit Planning |
February 22 |
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Submit Homes England Bids |
February 22 |
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Budget Committee agreement |
March 22 |
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Planning decision |
June 22 |
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Start on site (enabling works only) |
September 22 |
|
Construction commences |
May 23 |
3.4 It is still anticipated that the project will be delivered in two phases during the construction period which reflects the dependencies of decanting existing buildings and ensuring existing services can be maintained throughout the build. The project will be submitted as one full planning application opposed to the hybrid application set out in the previous report. This is due to design development being successfully completed across the whole site with sufficient detail in both phases.
3.5 The Moulsecoomb Hub and Housing scheme is a complex project, requiring a governance structure that ensures a co-ordinated approach to delivery, is aligned with the priorities of multiple stakeholders, and manages the various dependencies of the construction project. The project will be taken through a gateway review process before planning is submitted and final budget approval sought.
Housing
3.7 The housing elements of the design as well as the wider masterplan are now “fixed” meaning there will be less design changes moving forward. This will allow the design team to work on more detailed proposals including elevational treatments and floorplans.
3.8 The revised schedule of accommodation for both phases of housing is below and subject to change:
3.9 There is high demand for all sizes and types of affordable rented homes in the city. The highest level of need on the city’s Housing Register is for one and two bed homes and this project will help to meet that need. There is also pressure on larger family homes and local residents asked that larger family homes be included at the Planning for Real consultations, particularly as a number of larger former family homes are now used for student accommodation in the area. The number of wheelchair accessible homes has increased to 15 homes bringing the project further in line with the affordable housing brief.
3.11 Homes England have emphasised support for the project and are willing to engage positively with the Council as the details are developed further. They have suggested that the council submit ‘shadow bids’ once the planning application is prepared to test different scenarios in terms of rent levels and tenure mix.
3.12 The council was notified in August that it has been successful in its bid to the Department for Levelling Up, Housing & Communities for Brownfield Land Release Funding of £1.694m as part of their One Public Estate Programme. This will support ground works and infrastructure costs associated with the project and off-set some of the high abnormal work’s costs associated with the site. The grant is for the housing element of the project only.
3.13 The current designs have been costed by the council’s cost consultants Potter Raper. The designs are now at the end of RIBA stage 2, known as concept design, and significant items such as the building frame have been decided. This costing has indicated that costs have increased, primarily due to increases in the wider construction market.
3.14 Potter Raper have advised that they are currently experiencing increases up to 5.8% on the build costs of projects they are involved with. They have therefore applied a figure of 6% risk to the housing and HUB build costs “within the cost plan”. This excludes the preliminaries allocation and is based on the fact that materials prices are increasing.
3.15 Consideration should be given to the higher costs associated with this scheme due to the improvements to public realm and local infrastructure which bring significant regeneration benefits to the Moulsecoomb area. These costs impact on the average home and square meter build rates, whilst not being directly related to the housing blocks. The sustainability elements such as Ground Source heating that move the home towards the council’s Zero Carbon 2030 target and also significantly increase project costs when compared to a traditional specification.
3.16 The original business plan in April 2020 outlined an initial construction cost which has increased and includes additional risk allowances factoring in a fluctuating construction market. This is a considerable increase and factors in rising material prices, limited materials supply, labour shortages and supply chain issues including transportation. These issues have been reported widely in the national press and are impacting construction projects considerably. Part 2 of this report outlines the differences in cost, the land appropriation has been funded using existing HRA resources.
3.17 As the construction market is currently volatile it is recommended the project is progressed to the planning submission and worked up to RIBA stage 3 with further works undertaken to de-risk the site. This would mean underwriting fees outlined in recommendation 2.1.2 to reach the planning submission with further budget approval sought later to provide a more accurate budget proposal. Although this is a change to the usual approval routes all housing projects are subject to planning permission and fees are “at risk” until that permission is achieved.
3.18 The financial viability modelling in Part 2 sets out to show whether the scheme can pay for the initial investment itself by using the new rental stream only and grant funding (net of service charges, management, maintenance, and major repairs and voids costs) over a 60-year period. Assessing the project viability over a 60-year period matches the estimated life of the homes post completion.
3.19 This demonstrates that the project is currently viable at rent set at Local Housing Allowance but would require additional investment from the HRA at other rent levels. A number of sensitivities such as increases in management and maintenance costs, increased construction costs and reduction in grant rates have also been tested which highlight potential for increased investment requirements should these risks be realised.
3.20 The rent levels are yet to be set for this project and will depend upon final detailed build costs and levels of grant received from Homes England. A rent decision for the project will consider housing need and investment required in tandem.
3.21 Brighton & Hove has been identified as an area with high affordability pressures meaning the council can apply for grant for socially rented homes. Social rents as defined by Homes England are higher than social rents charged for existing Brighton & Hove council homes and are roughly equivalent to 27.5% Living Wage rents that have been modelled for some previous council schemes and are included in part 2 of this report. The suggested grant levels from Homes England are not high enough to balance the capital costs of construction against the lower rents charged and therefore leave a significant investment requirement. However, the construction market is currently experiencing a peak in costs and if costs reduce in the near future there may be opportunity to explore this further.
3.22 The sensitivities can be found in Part 2 to this report, which sets out the Investment, financial appraisals results, assumptions and financial risks associated with the housing development. The sensitivities show that this project is highly sensitive to cost change and that is the key risk alongside support from Homes England in the form of grant. A 10% increase in costs would require additional investment at all rent levels.
3.23 This sensitivity analysis supports the need to keep reviewing the scheme proposal and costs associated with any change in the market conditions, scheme design changes and discussions with Homes England regarding the level of grant available following the shadow bids.
Neighbourhood Hub
3.24 Proposals for the Neighbourhood hub remain largely unchanged from the previous update report. In response to pre-planning advice, the location of the Hub building has been moved 10 meters to the North of the site, so that it is closer to Hodshrove Lane and helps to provide more active frontage for the entrance to the site. This also creates additional space in front of the existing children’s centre for play facilities and outdoor seating for the proposed community café.
3.25 The hub accommodates a variety of services including:
· GP Surgery
· Community Health Facilities
· Pharmacy
· Library
· Youth Centre
· Adult Learning provision
· Community space
3.26 To supplement the library space, the project is currently exploring the option of including a local Business & Intellectual Property Centre (BIPC) to act as a ‘spoke’ to the main service in Jubilee Library. The BIPC provides:
· Access to business information resources and IP support.
· Face-to-face services and physical hubs where people can come together to learn, network and support each other in an easily accessible and inspiring space.
· Non-judgmental, impartial support offered by library staff and carefully selected expert partners and local business support providers.
3.27 The addition of a Local BICP in the Neighbourhood hub will offer a strong response to the feedback received in the Planning For Real workshops held during the scoping phase of the project. Additional support for local businesses was one of the key themes to emerge from the early consultation exercise.
3.28 The financial position of the hub’s business case is largely unchanged, and it remains a viable project. As previously reported, the hub will be funded through a combination of existing capital budgets, capital receipts associated with the appropriation of land from the General Fund to the HRA, and borrowing against the hub’s income.
3.29 The existing Capital budgets are made up of £1.5m previously allocated to the project and three annual contributions of £0.7m (totalling £2.1m) from the Asset Management Fund over three financial years (21/22 – 23/24). The appropriation value is unchanged from the previous report and represents the opportunity cost of the project. Borrowing will be funded against new income from the hub.
3.30 Part 2 shows the initial high-level costs presented in the previous committee reports, alongside the costs associated with the current masterplan, up to RIBA stage 2.
3.31 The increase from the scoping estimates is within the tolerances of the programme’s governance and risk contingency. Changes to the costs are a result of more refined designs allowing more confident pricing, additional elements being added to the scope of the project (skate park and new school toilets to replace existing facilities), and greater clarity of the various professional fees and survey costs payable.
Former Portslade Sixth Form Redevelopment
3.32 Following consent from the Department for Education’s Secretary of State for a
change of use of the former Portslade Sixth Form site, a tendering process was completed for a Design & Build contract. This resulted in Willmott Dixon being appointed as lead contractor for the redevelopment of the site into new council offices.
3.33 Willmott Dixon are on site and work is progressing to schedule and budget. The
project is on track to complete in April 2022, after which the social work offices
currently based in Moulsecoomb will be relocated, releasing the land for housing
development.
3.34 The new offices will form a part of the council’s post-Covid accommodation
strategy, supporting the Future Ways of Working programme. Extensive
consultation and engagement with staff groups has informed the design
proposals. The site will be designed to enable hybrid and collaborative working.
Public Realm & Sports Facilities
3.35 A range of ideas were put forward by residents and community groups as part of
the consultation process in terms of public realm facilities surrounding the new
Hub and Housing scheme. New football pitches, a skatepark, children’s play
areas, and community gardens were the most popular suggestions. These
suggestions have been incorporated into the masterplan (appendix 1).
3.36 The Public Realm working group are working with an Urban Design consultant (RegenCo) to finalise the scheme and ensure it aligns with the Hub & Housing developments, enhancing the overall area, and can be delivered within budget.
3.37 The public realm will emphasise biodiversity and landscape enhancements which
will create a variety of external spaces for use by the residents and users of the new hub building. Early design concepts include pocket parks, children’s play areas, and green parking.
3.38 The football pitches are proposed to be relocated from their current position near
the school to the playing field opposite the leisure centre. This is following consultation with Moulsecoomb Primary school who suggested the current location would overly impact upon the nursey provision.
3.39 This amendment is subject to a section 77 application to the Secretary of State
which could take several months to decide. The schools existing governance arrangements have indicated they would support this application if submitted. Sports & Leisure also support this amendment as the relocation of the pitches would assist with their management of the pitches over the longer term.
3.40 Officers have taken these proposals to further pre-application meetings and
received positive feedback from planning officers.
Risk analysis and management
3.41 The table below provides a summary of the strategic risks being managed by the
programme governance, and an outline of the mitigation measures in place.
|
Risk Description |
Potential Consequences |
Likelihood |
Impact |
Mitigating Controls & Actions |
|
Increasing construction costs due to impacts of Brexit, the pandemic and global supply chain issues |
Impact on viability of project and need for increased funding |
4 |
4 |
Morgan Sindall as construction partner is a Tier 1 company and have good stocks of materials and good access to supply chain due to their national buying power. Continue to monitor. |
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Covid pandemic is ongoing |
A prolonged recovery may impact delivery timescale. Stricter controls on risk assessments may increase logistics complexity and cost. Limits the capacity of key stakeholders (particularly health) and compounds the complexity of additional risks included in this table |
3 |
3 |
The strategic construction partnership comprises of organisations with a significant amount of experience delivering construction projects safely during the pandemic. |
|
Housing scheme viability is uncertain at LHA/social rents |
Unable to deliver scheme at 100% LHA/social rents. Homes England funding levels may be reduced. |
4 |
4 |
Continuing discussions with Homes England regarding development and rent levels. Review scheme costs and potential savings. |
|
May need to decide on rent levels before Strategic Housing Needs Assessment is complete |
Agreed rents or tenure does not reflect or meet housing need |
4 |
3 |
Work with Housing colleagues to ensure evidence based approach and undertake shadow bid exercise on different rent levels and mixes. |
|
Health partnership business case is still in development |
Health partners decide not to relocate into the new hub, impacting the hub’s financial viability due to loss of rental income. The overall aim of an integrated hub will also not be achieved. |
2 |
4 |
Council support being provided to develop and inform the health partnership business case. Letter of commitment in principle issued by SCFT’s Director of Finance. |
|
Relocation of sports pitches requiring S77 agreement and alignment with Sports England requirements |
If the Secretary of State were to refuse permission to relocate the pitches to the school playing field it would lead to a fall-back position with reduced housing numbers (c. 20 homes) and planning complexities. If Sports England are not satisfied with proposals, they may object to Planning. |
3 |
4 |
Ensure that the submission is detailed and through with school’s input. Continue to engage with Sports England to ensure proposals align with their expectations. |
|
Works to refurbish former Portslade Sixth Form site now underway despite a budget not being approved for the Moulsecoomb housing scheme. |
Enabling works in Portslade are progressing at risk, and if the housing scheme in Moulsecoomb does not go ahead this will be a cost to the General Fund |
3 |
3 |
Offices at Portslade will form an important part of the post-Covid accommodation strategy regardless of the Moulsecoomb project. Alternative options for the Moulsecoomb site will need to be identified if the scheme cannot progress under current proposals |
4 ANALYSIS & CONSIDERATION OF ANY ALTERNATIVE OPTIONS
4. The previous iteration of the masterplan has been superseded following consultation and engagement with community groups, residents, the Design: South East panel and planning officers. The options considered during the scoping phase of the project were set out in previous committee reports and have not changed.
4.1 A range of alternative locations for the 3G sports pitches have been assessed with the playing-field being identified as the most favourable option.
4.2 The housing element of the scheme could be funded through Right to Buy receipts; however, these are currently allocated to other projects within the housing supply programme. Due to the construction value of the Moulsecoomb project it is unlikely enough would be available to fully subsidise the scheme as proposed and the council is not able to use them on a project in receipt of Homes England funding.
5. COMMUNITY ENGAGEMENT & CONSULTATION
5.1 Changes to the masterplan were made following an extensive consultation and engagement exercise with residents and community groups. Consultation was based on the Planning for Real model.
5.2 Officers are currently developing content for the interactive website, which will provide access to the masterplan, the engagement reports and recommendations, and provide further opportunity for local residents to engage with the process. The website will incorporate learning from the recent successful Whole Estate Plan consultation process, as well as look to similar schemes such as Preston Barracks.
5.3 A quarterly community stakeholder group is being established to discuss the details of the project and ensure further local engagement with the project.
6. CONCLUSION
6.1 This report provides an update to members on the Moulsecoomb Neighbourhood Hub & Housing scheme. Changes to proposals are based on the feedback received from local residents through a series of engagement sessions, and pre-application planning meetings.
6.2 Enabling the planning application to be submitted at this stage will allow further work to be undertaken to finalise design, assess funding options and ensure accurate cost, funding and viability information can be assessed to inform the final budget decision.
7. FINANCIAL & OTHER IMPLICATIONS:
Financial Implications:
7.2 The appropriation of the land will be carried out over three phases. The first appropriation has been actioned and was for £3.000m with the remaining amount reviewed in line with the latest funding arrangements and appropriated in line with the programme delivery timeline.
7.3 The appropriation of land is to be funded from HRA borrowing, the cost of borrowing will be funded from existing resources as outlined in the committee paper from April 2020. The financing expenditure has been included in the HRA’s 30-year business plan, which was noted by Housing Committee on 13 January 2021 as part of the 2021/22 HRA budget paper.
7.5 Part 2 to this report sets out the financial appraisal undertaken, accompanied by a sensitivity analysis on the project to provide an indication of the potential investment required.
7.6 On 18th March 2021 budget of £0.820m for costs incurred to that point and to bring the project up to the point of RIBA stage 2 was approved. Of this £0.710m has been incurred leaving a budget of £0.110m available to fund the next phase of costs to get to Planning. These have been considered within the professional fees allowance in the financial appraisals.
7.7 The estimated costs to bring the proposal up to planning and give more cost certainty is a further £2.210m. After considering the remaining budget of £0.110m a further budget of £2.100m will be required.
7.8 This budget will be included in the 2021/22 HRA Capital Investment programme and assumed to be funded by HRA borrowing. Any decision around the borrowing requirement for this project will be made in consultation with the council’s Treasury Management team to ensure that it is undertaken in accordance with the council’s borrowing strategy, authorised borrowing limits and prudential indicators. These costs will form part of the full budget approval. If the scheme does not receive full approval these costs will be sunk investment costs to the HRA.
7.9 One source of funding has already been secured in the form of the Brownfield Land Release Funding grant of £1.694m, this grant will contribute to funding the significant infrastructure and ground works required to bring the scheme forward. This has been included within the financial appraisals in part 2 of this report.
7.10 The cost to the General Fund, outlined in the part 2 report, for the Neighbourhood Hub, refurbishment of Portslade 6th form, sports facilities, skatepark and the school toilets, will be met from a combination of corporate capital funding, borrowing and the capital receipts value associated with the appropriation of the land from the HRA. The General fund scheme costs includes professional fees, project management costs and risk allowances. The corporate capital funding will be met from annual contributions from the Asset Management Fund (AMF) which have had approval at this committee but will require future years AMF contributions to be approved at future years P&R Committees. The cost of borrowing will be met from new income generated at the Hub from rental of office and commercial space. Negotiations are ongoing with potential occupants of the new space.
7.11 The change of use consent for the former Portslade Sixth Form site development requires the provision of a new play area for children in the local area, and a financial contribution to local schools based on pupil numbers within the radius of the site. This cost has been factored into the latest cost assumption cost for the General Fund.
7.12 The annual premises running costs for the Neighbourhood Hub and the former Portslade sixth form site will be met from existing revenue budgets associated with the sites that will be vacated and appropriated to the HRA plus commercial and rental income generated from the new Hub.
Finance Officer Consulted: Rob Allen / Craig Garoghan Date: 22/10/21
Legal Implications:
7.13 There are no legal implications with regards to recommendation 2.1.1.
7.14 The budget approval recommendation in 2.1.2 must be in line with standing orders and in line with the statutory position on HRA borrowing. However, it is noted that this is an anticipated budget and should this change then further consideration will be needed by committee.
Lawyer Consulted: Simon Court Date: 25/10/21
Equalities Implications:
7.15 Equalities Impact Assessments will be completed for all elements of this project as part of the design and planning stage of proposals. Feedback from communities and residents gathered through the Planning For Real sessions that relates to Equalities issues has been incorporated into proposals
7.16 The housing scheme currently delivers 15 wheelchair accessible homes. This is under review to increase the numbers further as the scheme develops. Each fully wheelchair accessible home will have their own allocated parking space.
7.17 The new hub and the surrounding public realm spaces will all be fully accessible and designed for people with disabilities. Careful consideration is being given to colour and material selection for people with visual impairments both inside the building and in the design of external spaces, for example in providing raised beds for growing vegetables for people in wheelchairs.
Sustainability Implications:
7.18 This project supports corporate sustainability priorities by investing in sustainable construction methods and low carbon energy supply such as solar panels, and ground source heat pumps avoiding the use of gas for heating. The project is also engaged in the Circular Economy work. Opportunities to promote bio-diversity are also being considered by the Design Team for example using recycled materials from the buildings which are being demolished in gabion walls to create ‘insect hotels’. It is also proposed to use timber from the demolished buildings to create benches or other features in the new public realm areas.
7.19 A Whole Life Carbon Assessor has been appointed to the project so a full understanding of the carbon impacts of the project will be understood and strategies developed for meeting the council’s Zero Carbon New Homes Policy. A carbon design calculator is also being used during the design process which will inform a more sustainable choice of building materials. As part of the planning submission a full energy strategy will be submitted and will be assessed against planning policy requirements.
7.20 Sustainable and low carbon elements of the existing infrastructure will be reused or repurposed. For example, the project is currently exploring the feasibility of relocating the solar panels on the roof of Moulsecoomb Hub north & South to the refurbished former Portslade Sixth Form site.
Brexit Implications:
7.21 Construction and labour costs may be affected by Brexit and this risk is considered in the main body of the report.
Crime & Disorder Implications:
7.21 Providing dedicated Community and Youth space in the new neighbourhood hub
supports the local agenda to reduce antisocial behaviour.
Risk and Opportunity Management Implications:
7.22 The project follows corporate guidance and practice in terms of risk and opportunity management. Risk registers are in place for all elements of the project, and project/programme governance is in place to oversee mitigation and escalation as required.
Public Health Implications:
7.23 Issues relating to Public Health are aligned to priorities in the Moulsecoomb Bevendean Neighbourhood Action Plan and data from the Local Insight report relating to Moulsecoomb & Bevendean. Additional risk assessments are in place where relevant and in relation to the coronavirus pandemic.
The project is incorporating public realm spaces which will encourage exercise and promote a healthy lifestyle, for example the all weather football pitch, a skate park, children play area and various spaces for walking and cycling.
All relevant elements of the scheme are subject to full risk assessments to ensure covid-safe working environments for council staff, residents and contractors.
The design of the Health element of the new Neighbourhood hub accommodates the space required to support recovery from the current pandemic and safeguard against any potential future pandemics.
Corporate / Citywide Implications:
7.24 These proposals support corporate and citywide priorities relating to Housing, Carbon Neutral targets, and Community Wealth building as described in the body of the report.
SUPPORTING DOCUMENTATION
Appendices:
1. Masterplan: Moulsecoomb Neighbourhood Hub & Housing Scheme
2. PART 2 Confidential Appendix – Cost Update and Financial appraisal of housing development