Conditional Purchase Agreement for Linear Blocks

Description

This notice relates to an arrangement which includes a series of agreements, with the main object being a land transaction which the Council considers is exempted under paragraph 8, Schedule 2 of the Procurement Act 2023, (an agreement for the acquisition of land and buildings). The Council considers that the land transaction pursuant to the Land Swap Agreement (as further detailed below) will not meet the definition of public "works contract" as Berkeley will not be obligated to complete any works pursuant to it. The arrangements do include a series of ancillary agreements, as further set out below. This includes an agreement for the conditional purchase and development of Linear Blocks. Should any of the arrangements ultimately be considered caught within the definition of a public works contract, the Council considers it has reasonable grounds for a direct award under Schedule 5 of the Procurement Act 2023 in the circumstances (as explained below). By way of background, Bath Western Riverside is a major component of the Council's SHLAA and housing delivery trajectory. The project was committed in 2010 and has successfully delivered 854 new homes with 25% affordable housing within phase 1. Bath Western Riverside Phase 2 (the Site) is the former Bath gas works site. The Site is part owned by the Council (which owns 31.5%), and part owned by St William Homes LLP (part of the Berkeley Group) (Berkeley) (which owns 68.5%). The Council intervened to acquire its part of the Site in 2019 for regeneration purposes with the objective to maximise the provision of affordable housing delivered given the viability challenges faced from the former land uses and site conditions. To date the Council has carried out a series of staged initial gas rationalisation and remediation and enabling works, funded predominantly by Homes England, across the Site. In order to comply with both planning and strategic housing aims, the Council must obtain a minimum number of affordable housing units across the Site as a whole and therefore has the option to either: procure the construction of such units itself, being restricted to its own part of the Site; or to increase provision by acquiring units from Berkeley (additionality) which will be constructed on Berkeley's land. The total "land swap" transaction will be contracted for in phases as follows: Primary Agreement: 1. Land Swap Agreement - Subject to achieving a satisfactory planning permission and Berkeley (at its own volition) building to a "golden brick" level on the part of the Site known as "Block G" (currently owned by Berkeley), Berkeley will transfer the freehold interest in Block G to the Council in return for the Council transferring its part of the Site to Berkeley. There will be additional balancing payments paid by each party to ensure the agreed price is received for each party's land. 2. Block G - Following completion of the land swap, Berkeley will obtain a permissive licence from the Council to continue to occupy Block G for the purposes of completing the construction of Block G (at its own volition) in accordance with the relevant planning permission, being the planning permission with reference 22/03224/EFUL for the construction of 92 dwellings, being the "Block G Planning Permission"). Note that the Council do not consider that this arrangement meets the definition of a public works contract. 3. Fit out works - Within the Land Swap Agreement, the Council will also have an option (but not an obligation) to call for Berkeley to enter a contract to upgrade the finish for Block G at an additional cost. The Council considers that if it chooses to enter into such an agreement in the future, the value of this contract will be below the threshold for a public works contract under the Procurement Act 2023. Ancillary Agreement/s 4. Conditional Purchase Agreement for Linear Blocks - subject to completing the Land Swap Agreement, the site for the Linear Blocks will then be owned by Berkeley. Subject to funding and therefore at its option, the Council may purchase c140 dwellings known as the "Linear Blocks" from Berkeley to golden brick should Berkeley choose to build them. The transfer will be conditional on the Council obtaining the relevant funding and Berkeley reaching golden brick 5. Conditional Development Agreement for Linear Blocks - the parties will also be entering into a conditional development agreement to deal with the development of the Linear Blocks from golden brick level to practical completion. Due to ownership and access limitations only Berkely could complete these development works. In order to achieve the outputs above Berkeley will in addition undertake initial planning services to secure satisfactory planning permission over the current Council land which does not yet have planning permission. Berkeley has already secured planning permission over its part of the Site. To the extent Berkeley receives consideration for these services from the Council, such sums will be below the threshold for the services under the Procurement Act 2023. The main object of the Land Swap Agreement is to enable each party to acquire land and/or buildings from the other. In any event the Land Swap Agreement will contain no express obligation on Berkeley to undertake any works and therefore is not a public works contract for the purpose of the Procurement Act 2023. To the extent that a Court were to determine that one or more of the agreements does fall within the remit of the Procurement Act 2023, including the Conditional Purchase Agreement for Linear Blocks, to which this Notice specifically relates, then the Council considers that the direct award justification set out in paragraph 5 (Single suppliers) and/or paragraph 6 (absence of competition) of Schedule 5 of the Procurement Act 2023 may also apply to the award of the Land Swap Arrangement (alongside the ancillary agreements) because Berkeley has exclusive rights over the Site by virtue of its existing land ownership, coupled with its unique knowledge and understanding of the challenges associated with the development of the Site on account of its historic usage and ownership. Only Berkeley is in the position to be able to deliver the volume of affordable housing provided via the Land Swap Agreement (or the opportunity for the same) alongside its own development scheme on the Site. In addition, B&NES have received formal confirmation from their property advisors, Carter Jonas, that the overall value for money and linked best consideration terms in purchasing the units from Berkeley are materially better than could be obtained by B&NES in the open market, directly due to Berkeley's adjoining land interests here, and the linked property and funding terms too. Subject to satisfaction of conditions linked to funding and planning consent the Land Swap Agreement shall be signed in August 2026 with the target date for completion of the legal transfer being March 2027 with construction of Block G completing in December 2029 and construction of the Linear Blocks completing in 2032.