Scrutiny Committee Minutes

Date:
Monday, 22nd February, 2010
Time:
7.30pm
Place:
Hitchin Town Hall, Brand Street, Hitchin
 
 

Attendance Details

Present:
Councillor Lawremce Oliver (Chairman), Councillor Ray Shakespeare-Smith, Councillor David Billing, Councillor Judi Billing, Councillor John Bishop, Councillor S.K. Jarvis, Councillor Marilyn Kirkland, Councillor H.M. Marshall and Councillor Michael Paterson.

Note: councillor John Bishop left the meeting at 9.30 p.m.
In attendance:
Councillor Paul Clark, Councillor Joan Kirby, Councillor Martin Stears - Handscomb and Councillor R.A.C. Thake.

The Strategic Director of Finance, Policy and Governance, The Head of Finance,Performance and Asset Management, The Acting Legal Corporate Manager, Solicitor, Principal Planning Officer, Planning Projects Manager, Scrutiny Officer and Member and Committee Services Officer.
Representatives from DTX Consulting
Representatives from Eversheds
Also Present:
Approximately 30 members of the public.
Item Description/Decision
PART I
93 APOLOGIES FOR ABSENCE
An apology for absence was received from Councillors: Allison Ashley, Alan Millard, Elliot Needham and Lorna Kercher.
94 SUBSTITUTION
An apology for absence had been received from Councillor Lorna Kercher and Councillor Judi Billing confirmed that she would be the substitute in accordance with the agreed procedures of North Hertfordshire District Council.
95 NOTIFICATION OF OTHER BUSINESS
There were no other items of business presented to the meeting.
96 PUBLIC PARTICIPATION
The Chairman welcomed the following speakers who would make presentations to the Scrutiny Committee.
Mr B. Foreman - Voluntary Advisor to the Churchgate Association.
Mr R. Dartington - Nominated representative of Keep Hitchin Special.
Mr C. Parker - on his own behalf.
97 CHAIRMAN'S ANNOUNCEMENTS
The Chairman welcomed everyone to the meeting including the Hitchin Committee and invited the Hitchin Councillors to participate during debate on the Churchgate Development. He confirmed that Hitchin Councillors (who were not members of the Scrutiny Committee) would not be able to vote at any time during the meeting of the Scrutiny Committee. The Chairman advised all present that the Hitchin Committee may convene on closure of the Scrutiny Committee.
98 PUBLIC PARTICIPATION
MR B.FOREMAN
VOLUNTARY ADVISOR TO CHURCHGATE RETAILERS ASSOCIATION

Mr Foreman thanked the Chairman for the opportunity to address the Scrutiny Committee and confirmed that he was here at the meeting as a voluntary advisor to the Churchgate Association which was an association of retailers in the Churchgate Shopping Centre.

Mr Foreman advised the Committee that the retailers were concerned about their future in the current economic climate as footfall only increased during Market Days. The retailers were anticipating a prompt start to the refurbishment of Churchgate which had planning permission and Landlord's consent.

Mr Foreman considered that the proposed redevelopment would be a high risk strategy in the current economic development and that the retailers considered this development to be a threat to the independent retail outlets and the Market which had recently become a success and awarded Market of the Year in 2009.

Mr Foreman urged the Scrutiny Committee to protect the needs of the Council Tax payers and seek to delay any decisions on the award of a contract as many local authorities have held back developments.

In conclusion Mr Foreman requested that the membership of the Churchgate Liaison Forum be expanded to include the Chair of the Chamber of Commerce and Town Centre Manager and that Hammersmatch should be encouraged to commence their refurbishment programme as soon as possible.

The Chairman thanked Mr Foreman for his presentation.
99 PUBLIC PARTICIPATION
MR R. DARTINGTON
REPRESENTATIVE OF KEEP HITCHIN SPECIAL

Mr Dartington thanked the Chairman for the opportunity to address the Scrutiny Committee and confirmed that he was here at the meeting as a representative of Keep Hitchin Special.

Mr Dartington commented on the two reports presented under Part 1 Conditions with reference to the consultation on the Hitchin Town Centre Strategy in 2004 which had been good and the consultation on the Churchgate Brief in 2005 had also been good. But, Mr Dartington was critical of the procedures adopted since. He opined that it had been an error to omit public and local business consultation in the subsequent progress to date. Mr Dartington was also critical that The Hitchin Town Centre Working Party had rejected the refurbishment of Churchgate by Hammersmatch as an option even though the Planning Brief had allowed for the refurbishment or redevelopment of Churchgate. Mr Dartington also criticised the Council for pursuing the Competitive Dialogue process despite only one remaining bidder, the bid could not be compared and that the Council did not understand the meaning or value of public participation.

With regard to Agenda Item 5 Mr Dartington urged the Scrutiny Committee to consider the following: Whether proceeding with the bid if opposed by the community would be an appropriate approach to community relations; That if the risks that public opposition would add to delays and costs had been identified and costed; That Scrutiny should challenge the competence, transparency and validity of the two Part 1 reports; That investigations should be made as to why the relationship between NHDC and Hammersmatch had deteriorated and why NHDC in his opinion showed prejudice against Hammersmatch; That Scrutiny should endorse the community view that the Hammersmatch proposal for refurbishment was reasonable; That Scrutiny should request a time limit on any development by Simons and propose a District Valuation of the scheme. Mr Dartington concluded his comments on Agenda Item 5 that in respect of his considerable experience in the Royal Opera House, Covent Garden Development he considered that NHDC had little understanding of management input to minimise inevitable difficulties during the development of Churchgate.

With regard to Agenda Item 6, Mr Dartington urged the Scrutiny Committee to consider the following: Scrutiny should consider a recommendation that the NHDC Chief Executive should be nominated as the Chairman of the Churchgate Project Board and that the full membership of the Hitchin Area Committee (13) should be appointed to the Churchgate Liaison Forum.

Mr Dartington concluded his presentation with reference to an email dated 22 February 2010 from Hammersmatch setting out their views concerning Simons Developments Limited and their own plans for the refurbishment for the Churchgate Centre,

The Chairman thanked Mr Dartington for his presentation.
100 PUBLIC PARTICIPATION
MR C. PARKER
PERSONAL CAPACITY

Mr Parker thanked the Chairman for the opportunity to address the Committee and confirmed that he was speaking in a personal capacity. Mr Parker advised the Committee that he had extensive experience as a Property and Estate Management Director in the public sector and as a Consultant/Partner within the Financial Services Industry.

Mr Parker advised the Committee that although Simons Developments Limited had recently completed excellent town centre re-developments in Witney, Carmarthen, Neath, Dorchester, Peterborough and Cheshire Oaks their current financial position as sourced from Companies House showed a loss in 2009 in excess of £2M and a drop in turnover of some 26 per cent. Therefore as there were no results yet for the year 2009-2010 Mr Parker suggested that it would be difficult for a decision to be made by Council on 25 February on the award of a contract to Simons pending a more detailed analysis of the financial status of this development company.

Accordingly Mr Parker urged the Scrutiny Committee to request that the Council should defer a decision on the award of a contract for the development of Churchgate and Surrounding Area pending an analysis of Simons audited accounts for 2009-2010. This would ascertain the financial ‘health’ of Simons to undertake a lead role, within a pre-determined time limit and without the need for bank borrowings during the duration of the project.

The Chairman thanked Mr Parker for his presentation.
101 CHURCHGATE AND SURROUNDING AREA - CHURCHGATE PROJECT, PROCUREMENT AND NEXT STEPS
The Solicitor presented the report of the Strategic Director of Finance, Policy and Governance and provided a resume of the process prior to award of contract which included inter alia: The Competitive Dialogue Process, Pre-qualification questionnaire, Outline Solution Stage, Further Dialogue, Single Bidder and Tender Stage. The Solicitor advised the Committee that even though several Committees would be reviewing and scrutinising the outcomes of scoring of the single bid and value for money it would ultimately be the decision of Full Council on the award of a contract as it related to land valued at above the threshold of £2.5M laid down in the Council’ constitution - procurement standing orders. The Solicitor referred the Committee to Appendices A, B, and C for additional information.

The Solicitor advised that if the Council did award a contract for the development of Churchgate and Surrounding Area the scheme would be subject to an extensive pre - planning application public consultation which could commence in May 2010 and last approximately 12 months. The winning bidder would be required to hold a public exhibition of their proposed scheme in a suitable venue in Hitchin for consultation and comment. With regard to consultation the Solicitor advised the Committee that the Hitchin Town Centre Working Party (Minutes Passim) had agreed a minimum of three levels of community engagement: A Churchgate Liaison Forum, a dedicated section on the NHDC website for the Churchgate Project and Public exhibition. The Committee noted that additional consultation would probably take place with key stakeholders such as Hitchin BID, Hitchin Markets Limited, Herts Highways and English Heritage.

The Solicitor provided details of the planning application process, the need for an Environmental Impact Assessment and Transport Assessment. There would also be requirements under the Council’s Statement of Community Involvement required under The Planning and Compulsory Purchase Act 2004 adopted in July 2006 and NHDC would encourage the developer to engage with local interest groups and residents as much as possible.

In conclusion, the Solicitor clarified advice for Members who sat on the NHDC Planning Control Committee and any involvement in decision making on the award of the Churchgate contract and any potential bias and predetermination. The Solicitor advised that there was unlikely to be any valid perception of predetermination for a Member of the Planning Control Committee who took part in the contract award. And if the Planning Control Committee proceeded to determine any future planning application there was likely to be a considerable difference in the decision and the nature of the decision to be made.

During the ensuing debate there were several questions on the project, procurement and next steps. Discussion took place as to the assessment of the proposed scheme during the tender process compared to the Planning Brief prepared several years ago which had included public consultation. In response to this enquiry the Planning Projects Manager proposed and it was agreed that this comparison could be presented to Council on 25 February 2010. A proposal was also made to defer signing the contract in order to allow a full design to be worked up for a planning application. The Solicitor advised the Committee that it was very unlikely that any developer would proceed with detailed design unless they had the certainty of a signed contract as an application for mixed use of retail and residential would require a major commitment of staff and resources.

Comment was also made as the financial viability of not only of the proposed development project but the financial ‘health’ of the single bidder, the retail economy had changed and what consideration of outside influences had been undertaken by the Project Board. There had been many comparable town developments that had been suspended or cancelled. The representative from DTZ Consulting agreed that UK retail was a very challenging environment and the approach made by the single bidder had been considered as acceptable. Comment was also made as to the lack of public consultation and if the public considered that the scheme was unacceptable it should not be agreed. Another Member queried the approach by the Council should the single bidder either not be awarded the contract or the bidder withdrew. The Solicitor advised that should this happen then the matter would be referred to the Project Team and Hitchin Town Centre Working Party for consideration. Comment was also made as to the provision of ‘recreation’ in the Planning Brief and the Projects Manager advised that recreation per se was not part of the design proposals but that the public realm areas in the proposed development would include opening up the River Hiz and expanding the walkway.

A Member opined that it was difficult to reach any conclusion on the procurement when there were outstanding issues, more information was required on potential Compulsory Purchase Orders ability to make major changes to the scheme, impact on continuity of trading and the lack of any public consultation. The release of design proposals was very important and reference was made again to the value of public participation in the Hitchin Planning Brief. Comment was also made as to the viability of the project and to Simon Developments financial standing referred to in the Public Presentations made at the commencement of the meeting. A request for more information concerning compliance with the Competitive Dialogue in respect of single bidders was necessary and the Strategic Director for Finance, Policy and Governance confirmed that the whole process would be subject to ongoing monitoring.

The Chairman thanked Members for their comments, questions and suggestions and it was agreed unanimously that officers should be requested to provide additional information for consideration and review by Council at the meeting to be held on 25 February prior to any decision on the award of contract.

RESOLVED: That the information in the report be noted.

RECOMMENDED TO COUNCIL: That prior to any decision on the award of contract for the development of the Churchgate Shopping Centre and Surrounding Area officers be requested to provide the additional information below for review by Council on 25 February 2010.

1. Regarding the potential award of contract to a single bidder that evidence of the effectiveness of assuring transparent competition in the bidder’s supply chain be provided;

2. Further clarification of the prospects and outcomes regarding possible Compulsory Purchase Orders be provided;

3. Request for an update and assessment of the current financial standing of Simons Developments Limited as to their ability to undertake this development of Churchgate and Surrounding Area should they be awarded the contract;

4. Confirmation that post contract award the submitted design proposal can be changed or rejected in a major way following assessment by Members, stakeholders, local interest groups and members of the public;

5. That prior to the award of contract the matter of continuity of trading during the construction phases of Churchgate and Surrounding Area be assessed by officers and presented to Council;

6. That an assessment be made of the agreed components of the Planning Brief for Hitchin compared to the proposals by Simons Developments Limited and presented to Council before a decision is made on award of contract.

REASON FOR DECISION:
To enable the Scrutiny Committee to comment on the report entitled “Churchgate and Surrounding Area - Churchgate Project, Procurement and Next Steps ”, prior to consideration by Council on 25 February 2010.
102 CHURCHGATE AND SURROUNDING AREA - FUTURE GOVERNANCE OF THE CHURCHGATE PROJECT
The Solicitor presented the report of the Strategic Director of Finance, Policy and Governance and confirmed that any proposed and agreed governance arrangements would only take effect if the contract was awarded for the re-development of the Churchgate Centre and Surrounding Area.

The Solicitor advised the Committee that decisions had to be made by the Council with regard to the Development Agreement and that the Hitchin Town Centre Working Party was unable to make such decisions. Accordingly it was proposed that a Churchgate Project Board be established that would include Members and Officers to act on behalf of the Council. The Committee noted that Project Boards had been used before and membership would consist of; Leader, Portfolio Holders for Finance, Planning and Transport and Chairman of the Hitchin Committee. Officer membership would comprise: The Strategic Director of Finance, Policy and Governance (Project Executive), Head of Finance, Performance and Asset Management, Solicitor, Principal Planning Officer and Planning Projects Manager (Project Manager on day to day basis).

The Solicitor also proposed that a Churchgate Liaison Forum should be set up (Agreed in principle by the HTCWP on 7 July 2009 - Minute 20 refers) and would be constituted as per the draft terms of reference provided at Appendix B and made up of three representatives of the following four groups, of members (from the Hitchin Committee), residents/amenity associations, business associations (including Hitchin Markets Limited) and the Developer. The forum would be supported by officers from the Project Team. Although the Forum would have no decision making powers it would provide an excellent source of ideas, help to shape the project and communicate effectively within Hitchin. The Committee noted that unfortunately not all of the interest groups in Hitchin would be able to join the Forum but could attend the public meetings should they so wish.

In conclusion the Solicitor confirmed that the Forum would not represent the full extent of public consultation but, public consultation would be extensive and as wide ranging as indicated in the previous report (Minute 101 above).

During the ensuing debate the principles of both the Project Board and the Churchgate Liaison Forum were discussed and agreed. The possibility of the Project Board reporting to Full Council with its recommendations was proposed but following a short discussion it was ultimately agreed that the Leader of the Council should be the Chairman of the Project Board. A request was also made to offer more opportunity for public involvement with the Forum and should be formally stated in the Terms of Reference for the Forum and it was agreed that there should be early consultation with stakeholders. Following this suggestion Councillor Judi Billing proposed and it was agreed that a new paragraph 3.4 concerning public participation in advance of meetings of the Forum should be inserted.

A Member also suggested that the Project Board should include more Hitchin Councillors in addition to the current proposal of just the Chairman of the Hitchin Committee. It was also proposed and agreed that officers on the Project Board should be named with their job titles and in support of this the Strategic Director of Finance, Policy and Governance advised the Committee that under PRINCE2, decisions had to be made by an individual officer not the Project Board but the decision could be influenced by the Project Board.

RESOLVED:

(1)That the information in the report be noted;
(2)That the proposal to cease involvement of the Hitchin Town Centre Working Party in the Churchgate Development Project be noted;
(3)That the proposal to set up a Churchgate Project Board be noted and supported;
(4)That the proposal to set up a Churchgate Liaison Forum be noted and supported.

RECOMMENDED TO COUNCIL:

(1)That Item 2.2 of the Terms of Reference be amended so that the Leader of the Council be the Chairman of the Churchgate Project Board;
(2)That the there should be a new Paragraph 3.4 inserted in the Terms of Reference for the Churchgate Liaison Forum:
3.4 That consultation with local stakeholders, local interest groups and members of the public who were not members of the Churchgate Liasion Forum be undertaken prior to meetings of the Forum to allow their views to be received and considered by the Forum;
(3)That the Terms of Reference for the Project Board and Churchgate Liaison Forum be amended to make provision for the substitution of Members, Officers and representatives of local stakeholders and local interest groups.

REASON FOR DECISION:
To enable the Scrutiny Committee to comment on the report entitled “Churchgate and Surrounding Area - Future Governance of the Churchgate Project ”, prior to consideration by Council on 25 February 2010.
103 EXCLUSION OF PRESS AND PUBLIC
RESOLVED: That under Section 100A of the Local Government Act 1972, the Press and Public be excluded from the meeting on the grounds that the following reports will involve the likely disclosure of exempt information as defined in Paragraph 3 of Part 1 of Schedule 12A of the said Act.

Prior to the commencement of the two Part 2 Items the Acting Monitoring Officer stressed the need for all Members and Officers to maintain the confidentiality of the information provided. This was highly confidential financial information and as NHDC were still within the procurement process any disclosure of information could lead to the risk of legal challenge to the Council.
PART II
104 CHURCHGATE AND SURROUNDING AREA - FINANCIAL CONSIDERATIONS OF THE TENDER
  • Report
  • |
    Appendix A
  • |
    Appendix B
The Head of Finance, Performance and Asset Management (HF) provided a detailed description of the NHDC position with regard to the requirements for Value for Money, Section 123 - Best Consideration and State Aid which the Hitchin Town Centre Working Party agreed had been met (Minute 47 refers). The HF confirmed that the Value for Money assessment was critical as one of the two remaining bidders had withdrawn at a late stage in the Competitive Dialogue process. The HF advised that the Project Board were pleased to advise the Scrutiny Committee that they and DTZ Consulting were satisfied that Simons Developments Limited had met the requirements of the three criteria.

The HF referred the Scrutiny Committee to Appendix A prepared by DTZ Consulting which contained their findings on the three criteria and the implications of proceeding with a single bidder. Following the meeting of the HTCWP on 27 January 2010 additional information was now presented at Appendix B that gave more context to the financial offer from Simons Developments concerning increases or decreases in income and the affect on income stream for the Council. The HF confirmed that if the single bidder was approved by Council and awarded a contract that monitoring of these three criteria would continue for the duration of the development and at key points during the development programme.

The HF clarified the process of proceeding with a single bidder regarding Value for Money and the income derived from rental income, commercial income, contribution to NHDC professional fees and a sliding scale of additional income if the scheme was more profitable than estimated. The financial estimates were discussed by the Scrutiny Committee and the HF with support from DTZ and Eversheds considered that the offer from Simons was acceptable and that if there was an upturn in the economy NHDC would receive additional income due to increased rents. The HF advised that the scheme would also include improvements to the public realm areas within the town centre.

In response to an enquiry it was confirmed that if it was required a Compulsory Purchase Order would not have any effect on the application of State Aid criteria. It was also confirmed that any income derived from ground rent fitted well within the criteria for Best Consideration. A Member enquired as to the outcomes should the financial offer move downwards against estimates and was advised that this would not be grounds for terminating a contract and that it would be very unusual to terminate a contract under such circumstances.

RESOLVED:

(1)That confirmation of no State Aid be noted and that if Simons were selected the ongoing State Aid position would be monitored throughout the evolution of the scheme with regular appraisal to ensure that State aid issues did not arise in the future also be noted;

(2)That confirmation that the scheme did represent best consideration be noted and that if Simons were selected the ongoing S123 position would be monitored throughout the evolution of the scheme with regular appraisal to ensure that the Council was able to fulfil its S123 obligations;

(3)That the measures taken to achieve Value for Money and that the proposed scheme did deliver on a number of the Council’s aspirations outlined in the planning brief be noted;

REASON FOR DECISION:
To enable the Scrutiny Committee to comment on the report entitled “Churchgate and Surrounding Area - Financial Considerations of the Tender”, prior to consideration by Council on 25 February 2010.
105 CHURCHGATE AND SURROUNDING AREA - TENDER SCORING
  • Report
  • |
    Appendix A
  • |
    Appendix B
The Solicitor provided a comprehensive description of the evaluation of tenders commencing with the 12 bidders who provided pre qualification questionnaires, the four short listed bidders, two bidders who de-selected themselves, the scores for the two final bidders, response to Outline Solutions, the de-selection of one of the two final bidders and the final scoring for the remaining bidder. The Solicitor confirmed that none of the companies involved right down to the final single bidder had been advised of any of the scores and consequently the information placed before the Scrutiny Committee must not be disclosed to any third party.

The Solicitor advised the Committee that Simons Developments had been assessed at all stages against the criteria fixed in the Invitation to Participate in Dialogue at August 2008.

The Committee extensively reviewed the scores allocated by the Project Board for the tender submitted by Simons Developments supported by the report from DTZ Consulting and Eversheds covering: Scheme Design, Financial Model and Legal Agreements and noted that the score against the tender criteria was high enough to proceed with award of the contract to Simons Developments Limited. Comment was also made as to the Planning Strategy for Hitchin Town Centre as being appropriate to the current turn down in the economy and the Strategic Director of Finance, Policy and Governance advised that it might not be possible to include every item included in the Planning Brief within the final approved development cum design aspects. The Solicitor confirmed that NHDC would be a Development Partner and NHDC as Landlord would have to approve any scheme before a planning application and therefore could continue to influence the design.

During discussions the Committee looked at specific aspects of the proposal, agreed that consultation was critical, that there would be an extensive planning process, and noted that The Hitchin Working Party agreed to recommend to Council the appointment of Simons Developments Limited (Minute 48 refers).

The Solicitor advised that with post award consultation the scheme would evolve going forward. With regard to certain aspects of the proposal the Solicitor confirmed that Simons Developments would have to reach agreement with the Council acting independently as the Local Planning Authority.

The Chairman sought the views of the Committee as to the award of Contract and following a short final debate it was agreed to note the tender scoring made by the Project Board. It was also agreed that at this juncture the Scrutiny Committee were not in a position to endorse the approval of Simons Developments Limited as the request for additional information (Minute 102 above refers) had to be met first.

RESOLVED: That the tender scoring for Simons Developments Limited be noted;

RECOMMENDED TO COUNCIL: That prior to any decision on the award of contract for the development of the Churchgate Shopping Centre and Surrounding Area the additional information requested by the Scrutiny Committee (Minute 102 above) should be reviewed and debated by Council on 25 February 2010.

REASON FOR DECISION:
To enable the Scrutiny Committee to comment on the report “Churchgate and Surrounding Area - Tender Scoring”, prior to consideration by Council on 25 February 2010.
106 HITCHIN COMMITTEE
On completion of business the Scrutiny Chairman invited Councillor Judi Billing as Chairman of the Hitchin Committee to address those present. Speaking specifically to the members of the Hitchin Committee Councillor Judi Billing sought the views of Hitchin Councillors as to the need of convening a meeting of the Hitchin Committee immediately following the closure of the Scrutiny Committee.

The Hitchin Councillors present agreed that sufficient debate had taken place on issues concerning the development of Churchgate and Surrounding Area, that their views and comments had been heard and noted and confirmed to Councillor Judi Billing that there was no need to convene the Hitchin Committee.
Published on Thursday, 11th March, 2010
11.00 p.m.