A report was received from the Property and Regeneration Section Head.  Following legal agreements made three years ago between the Council, Kier and West Watford Hospitals National Health Service Trust, it had become necessary to make a number of amendments to them to reflect changes in circumstances coupled with a better understanding of issues relating to the regeneration of the site.

The Managing Director commented that the report was regarding making amendments to various agreements in the Health Campus partnership.  There were four technical adjustments to the agreement which had already been to the partnership board:

1.         The council’s ability to lend into the health campus scheme, subject to due diligence.

2.         Following being successful in acquiring Local Enterprise Partnership (LEP) funding there was a need to reprioritise how that would be repaid.

3.         To allow the partnership to take account of abnormal costs in a way that costs are apportioned in development zones.  This would allow more flexibility to look at site wide abnormal costs to ensure each zone was viable.

4.         To vary the Campus Agreement with West Hertfordshire Hospital Trust so rather than carrying out sharing in the value of the land under the land equalisation agreement for every scheme, as hospital plans are unclear on timing, there would be a reconciliation between Council and Trust when their plans are finalised.

The Managing Director continued that these changes would have no impact on the outcomes of what was being delivered.

The Shared Director of Finance explained that the council would be providing loans to increase the council’s returns which was relatively safe and would yield a better return than just leaving the funds in the bank.

Councillor Bell commented that it was right that the changes should come before Cabinet.  He asked a question regarding the covenant strength of Kier.

The Property and Regeneration Section Head responded that with regards to the financial security of Kier they were highly rated to be able to make the repayments.

The Mayor commented that she had met with Kier following the result of the referendum and they had provided assurances that they were still committed.  The future for the council was about being more commercial.

RESOLVED

That Cabinet:

1.         agrees to an amendment of the Members Agreement allowing the Council to lend Senior Debt to the project, similar to a bank.  This debt would carry a priority return from development receipts.

2.         agrees in the Members Agreement to the prioritising of the return of an additional tranche of Growing Places Funding (GPF) which has been invested in the scheme’s infrastructure.

3.         agrees to delegate decisions to the Partnership Board regarding the allocation of site specific abnormal costs to site wide costs where appropriate to crate viable development zones.

4.         agrees to an amendment of the Campus Agreement relating to the land equalisation agreement with West Hertfordshire Hospital Trust (WHHT) so that payment from the Council is deferred until plans for the hospital and its development land are further progresses and that a reconciliation mechanism is entered into when WHHT plans are finalised.