The report sought Cabinet approval for the Council to enter into an option for the acquisition of the Quarles site owned by Havering College in Harold Hill, the option would be assignable by the Council. In addition, it sought authority for the provision of a loan to Havering College. The potential acquisition and loan were to assist the college to undertake an estate relocation and capital investment plan.
It was reported that Havering College had been successful in gaining funding through the London Enterprise Panel (LEP)/GLA of £5.4m to develop their construction based site in Rainham, for which they require 50% match funding of £5.4m. Havering College aimed to use the proceeds of the disposal of their Quarles site as match funding and to support the further rationalisation of their estate. A loan from the Council would provide the match funding in the interim period until the sale of the site took place and funding to initiate the wider estate rationalisation Havering College have planned.
It was added that Havering College were looking to concentrate education provision on their main campus at Ardleigh Green, with a construction focused education provision in Rainham and a more limited provision in Harold Hill. This would place the College in a far better position economically. In order for the College to sell and rationalise their estate, Havering College would need to redeem a loan with a commercial bank.
Reasons for the decision:
That a loan (or loans) to ensure that Havering College has the funding in place to redevelop their Rainham facility and initiate work on the wider estate redevelopment would ensure that the College was in a stronger position to continue to provide educational provision in the borough and would assist in securing suitable and sustainable further education provision for residents of the Borough.
The provision of a loan (or loans) to HC would also assist them to improve their facilities and improve the provision of further education in the borough.
The acquistion of the Quarles Campus by the Council (or a body selected by it) would enable that site to be redeveloped for a suitable purpose in accordance with the Council's policies and with the objective of supporting the local economy in order to benefit, improve and develop the Borough.
The interest on any loan and repayment of principal would not commercially disadvantage the Council i.e. the terms of the loan would as a minimum meet the Council costs.
Other options considered:
In the event that no decision was made, it was likely that the Quarles site would be disposed of to a third party subject to restrictive covenants on the site in the Council’s favour, however, the Council’s influence on future may well be limited. If the loan was not made available in the short term to allow the redemption of an existing loan to Havering College, to initiate the Quarles site rationalisation and meet match funding requirement for the LEP grant, then the opportunity to provide a state of the art construction facility in Rainham was likely to be lost. Therefore an important education facility for the future of the borough’s residents would not be able to go ahead, which would be detrimental to the interests of the borough and its residents.
Cabinet:
1. Agreed in principle:
a. for an option from Havering College to acquire the Quarles Campus site (which can be assignable to another body or party of the Council’s choice);
b. the provision of a loan(s) up to £10 million from the Council to Havering College.
2. Noted that the Leader (after consultation with the the Section 151 Officer, the Director of Legal and Governance and the Head of Property (OneSource)) shall finalise the terms of the proposed arrangements and if he is satisfied as to their terms (and such other matters as he deems relevant) authorise the Council to enter into such agreements as may be necessary to give effect to the the proposed option and loan.
3. Delegated to the Section 151 Officer the undertaking of financial due diligence on the proposals and for the Section 151 Officer to report to the Leader as to the outcome of such due diligence including:
a. the ability of Havering College to repay such loan;
b. such other matters as the Section 151 Officer deems appropriate.
4. Delegated to the Head of Property – OneSource (after consultation with the Director of Legal and Governance) the undertaking of property due diligence in relation to the Quarles Campus and to report to the Leader as to the existence and removal of any impediments which would prevent the option agreement being entered into and/or limit the future uses of that site.
Cabinet:
1. Agreed in principle:
a. for an option from Havering College to acquire the Quarles Campus site (which can be assignable to another body or party of the Council’s choice);
b. the provision of a loan(s) up to £10 million from the Council to Havering College.
2. Noted that the Leader (after consultation with the the Section 151 Officer, the Director of Legal and Governance and the Head of Property (OneSource)) shall finalise the terms of the proposed arrangements and if he is satisfied as to their terms (and such other matters as he deems relevant) authorise the Council to enter into such agreements as may be necessary to give effect to the the proposed option and loan.
3. Delegated to the Section 151 Officer the undertaking of financial due diligence on the proposals and for the Section 151 Officer to report to the Leader as to the outcome of such due diligence including:
a. the ability of Havering College to repay such loan;
b. such other matters as the Section 151 Officer deems appropriate.
4. Delegated to the Head of Property – OneSource (after consultation with the Director of Legal and Governance) the undertaking of property due diligence in relation to the Quarles Campus and to report to the Leader as to the existence and removal of any impediments which would prevent the option agreement being entered into and/or limit the future uses of that site.