The Leader of the Council outlined the report of the Head of Property (oneSource), Garry Green, detailing the Loan to and Acquisition of Land from Havering College, to Cabinet.

A previous report on this matter was considered by Cabinet in January, 2017.  However it has been necessary for the College to propose a different approach to the transaction which involves the Council acquiring the Quarles Campus immediately rather than having an option to do so.  The sale will allow the College to secure match funding to secure the development of a proposed Construction and Infrastructure Skills and innovation Centre together with improvements to an existing building at the Rainham Campus, New Road, Rainham.  This is viewed as the best option for the Council in facilitating and improving further education provision in the Borough.

The Council’s own company Mercury Land Holdings may become involved and further development will be dealt with in conjunction with that company.

It was noted that access to further education in the Borough needs improvement as it was difficult for residents to travel from Harold Hill to go to Rainham.  North /south connections will be development with the Borough working with Transport for London and the GLA to secure improved infrastructure.

Other options had been considered in that:

•  There was a do-nothing option. However, it was possible in this position that the Quarles Campus site would be disposed of by HCF&HE to a third-party, subject to restrictive covenants on the site in the Council’s favour; however, the Council’s influence on the site’s future may well be limited in that circumstance.

• Additionally, if the immediate acquisition of the freehold interest in the Quarles Campus and a loan of up to £2,800,000 (if required in addition) had not been offered by the Council to enable the HCF&HE to discharge existing bank and DfE loans to HCF&HE and to meet the match funding requirement for the LEP / LEAP grant allocation of up to £5,446,191, then the opportunity to provide a state of the art construction facility in Rainham could be lost.  An important education facility for the future of the Borough’s residents would not be able to go ahead and this would be detrimental to the interests of the Borough, and its residents.

For the reasons set out in the report,

 Cabinet:

1.     AGREED ‘in principle’, the following revised proposals –

(a)      in respect of the Quarles Campus –

(i)       for Havering Council to immediately purchase from Havering College the freehold interest in the Quarles Campus, Harold Hill site on the terms set out in the Exempt part of this Report and to acquire and hold the property for ‘planning purposes’ under the Town & Country Planning Act 1990; and

(ii)      the Council will simultaneously lease back the Quarles Campus site to HCF&HE for a term up to September 2019 at a peppercorn rent, contracted outside of the security of tenure provisions of the Landlord & Tenant Act 1954, with a provision for HCF&HE to be able to break the lease early once they have vacated the site; and

(iii)      that the possible involvement of the Council’s wholly owned company, Mercury Land Holdings Limited (MLH), in seeking planning permission and/or acquiring and redeveloping the site to be the subject of a future report.

(b)      In respect of a loan to the College –

(i)       The Council entering into a Loan Agreement, if required, for a loan of up to a total of £2,800,000 (two million & eight hundred thousand pounds) from the Council to HCF&HE; and that

(ii)      The Council’s security for such a loan will be a first legal charge against the freehold title of the entirety of HCF&HE’s Ardleigh Green Campus, Hornchurch.

All on the terms set out in the Exempt part of the Report.

2.       AGREED to meet the capital financing costs associated with the acquisition of the Quarles Campus from the Transformation Reserve (formerly Strategic Reserve) in 2017/18 and future budgetary provision to be built into the proposed base budget for 2018/19 to be subsequently considered for approval by Council.

3.               DELEGATED to the Section 151 Officer:

(a)      the carrying out of the degree and extent of due diligence they consider necessary having regard to the proposals, in particular having regard to assessing the ability of the College to repay any loan provided to it by the Council;

(b)      the release of loan monies to the College in accordance with the terms of the proposed Loan Agreement which, irrespective of the amount of the loan, will be protected by a first legal charge against the title of the entirety of the College’s Ardleigh Green Campus in favour of the Council, as security.

4.      DELEGATED to the Head of Property, oneSource, following consultation with the Director of Legal and Governance and the S.151 Officer and after undertaking any necessary property due diligence the preparation and entering into all necessary legal documentation to bring the proposed arrangements in Recommendation 1 (above) into effect.