Economic Stimulus Plan: Allocation of funds for the delivery of the Le Squez development project

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A decision made on 14 June 2010 to approve allocation of funds from the Economic Stimulus Plan for the delivery of the Le Squez development project

Decision Reference: MD-TR-2010-0076
Decision Summary Title:	Fiscal Stimulus Budget Allocation and Approval of Drawings - Housing Department		Date of Decision Summary:	11th June 2010
Decision Summary Author:	Interim Treasurer of the States		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Allocation of fiscal stimulus funding and approval of drawings for the Le Squez development, Phase 2a		Date of Written Report:	11th June 2010
Written Report Author:	Acting Fiscal Stimulus Programme Manager		Written Report : Public or Exempt?	Public
Subject: Economic Stimulus Plan: budget allocation to the Housing department for the delivery of the Le Squez development project, Phase 2a, together with approval of the drawings as required under Standing Order 168 Paragraph 1(d).
Decision(s): 1. The Minister approved the allocation of £8,137,962 for the Le Squez Phase 2a project, to be awarded to the Housing department and to be transferred to its budget as soon as possible. This will enable the contract to be let to the contractor which submitted the preferred tender. 2. The Minister further instructed the Construction and Maintenance project group to report on spend of all stimulus monies, and project progress/performance, on a monthly basis in accordance with guidelines set by the Treasury, and return any unspent monies on completion of the projects. 3. In accordance with paragraph 1 (d) of Standing Order 168, the Minister approved the drawings numbered 405/07/P05, Planning Permit PP/2009/0780, Building Permit Number (under Building Bye-laws (Jersey 2007) B/2009/0876/ Property Number 2884/14670, all showing Phase 2 of the proposed development at Le Squez estate to construct 76 units of residential accommodation for letting to social housing tenants.
Reason(s) for Decision: A discretionary fiscal stimulus allocation from the Stabilisation Fund of £44m has already been approved. The project meets the key criteria for fiscal stimulus being timely, targeted and temporary and will benefit local business and individuals. The £8,137,962 allocation to the project will enable the housing department to deliver this project in accordance with its critical path. The Housing Minister has committed his department (as documented in Housing Department Ministerial Decision reference MD-H-2010-0044) to repayment of the full fiscal stimulus funding allocation of £8,137,962 with the proceeds from sales of social (and private) housing in the future as set out in the accompanying report. It is also noted that the repayment to the fiscal stimulus allocation may take place sooner than in 2014 - 2016 because the Treasury and the Housing department have undertaken to work together to identify alternative means of repayment at an earlier date, through a refinancing of the fiscal stimulus “loan”. Under Standing Order 168 (1) (d), it is a requirement for the Minister for Treasury and Resources to approve plans for the construction of buildings where the work is to be funded wholly or partly by money voted by the States.
Resource Implications: No financial resource implications other than those explained above and in the accompanying report. No manpower resource implications.
Action required: Treasury to be informed of decision to release necessary funds to the Housing department’s budget.
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Economic Stimulus Plan: Allocation of funds for the delivery of the Le Squez development project

Treasury and Resources

Ministerial Decision Report

Allocation of fiscal stimulus funding and approval of drawings for the le squez development, phase 2a

1. Purpose of Report

The tenders for the Le Squez phase 2a development project to construct 49 new residential units for rent to social housing tenants have now been received and evaluated by the Housing department. This tender evaluation process has been subject to review by the Fiscal Stimulus Steering Group (the “Steering Group”) to ensure that the Fiscal Stimulus criteria continue to be met. This paper summarises the resulting recommendation.

2. Background

Support for the Housing department’s capital programme, in the form of the Le Squez development project, phase 2a, is included in the Treasury and Resources Minister’s “amber light” programme of fiscal stimulus projects. The Housing capital programme is part funded through receipts from the sale of properties (both open market and to social housing tenants) and as a result of the economic downturn the level of sales are much reduced, meaning that without support from the fiscal stimulus fund some significant capital projects would not be able to proceed at this time.

The department acknowledged in its bid that this presented a medium term cash flow problem and as a result the substance of its fiscal stimulus funding request was an interest free loan to enable it to continue with its capital programme at previously planned levels. The Housing department planned to repay the fiscal stimulus fund in equal instalments from 2014 to 2016, which is reflected both in its bid documents and Housing department Ministerial Decision report reference MD-H-2010-0044, signed on 20 May 2010.

The project will provide work for local business and labour, and is a 65 week programme due to begin in July 2010. This project is the largest single scheme to be funded from fiscal stimulus monies and will significantly increase public sector spending on construction and the States’ investment in social housing stock for which there is a waiting list of eligible occupants.

This paper seeks green light approval for the project for which tenders have been returned and evaluated by the Housing department. The work being undertaken is the construction of 49 residential units, with a further 11 units to be brought forward into the Phase 2a contract with funding from the Housing department’s existing available resources. It also recognises that Standing Order 168 (paragraph 1(d)) requires the Minister for Treasury and Resources to approve the plans for the construction of buildings where the work is funded wholly or partly from monies voted by the States.

3. Tender Process and Results

The fiscal stimulus contribution to the project, which includes the contract and associated costs (such as utility connections) and project contingency is £8,137,962. Any unspent monies in relation to the scheme, including contingencies, are required to be returned to the fiscal stimulus programme on completion of the project.

In accordance with the housing department’s fiscal stimulus bid, and Housing Ministerial Decision MD-H-2010-0044, the full amount of funding of £8,137,962 is due to be repaid to the fiscal stimulus allocation by the Housing department with the proceeds from sales of social (and private) housing in the future. The repayment is forecast in equal instalments from 2014 to 2016 based on the department’s current expectations of future sales, together with its planned capital programme over that same period, as set out in the Housing Department’s business plan and capital programme.

The Housing department has followed a pre-determined process in conducting the tender which they confirm to be compliant with Financial Directions and Procurement Principles for the Fiscal Stimulus Programme. The process and outcomes have been subject to review by the Steering Group, which has resulted in the recommendation below.

4. Recommendation from the Fiscal Stimulus Steering Group

The Steering Group recommends that the Minister for Treasury and Resources allocates funding of £8,137,962 to the Housing department for delivery of the project. The budget allocation to the Housing department will be in the amount of £8,137,962, representing construction and associated costs and appropriate contingency in order to proceed in accordance with the critical path of the project.

5. Reason for Decision

A discretionary fiscal stimulus allocation from the Stabilisation Fund of £44m has already been approved. The projects meet the key criteria for fiscal stimulus being timely, targeted and temporary and will benefit local business and individuals. The £8,137,962 allocation to the project will enable the Construction and Maintenance project group to let the contract and deliver the scheme in accordance with the programme.

The Housing Minister has committed his department (as documented in Housing Department Ministerial Decision reference MD-H-2010-0044) to repayment of the full fiscal stimulus funding allocation of £8,137,962 with the proceeds from sales of social (and private) housing in the future. As explained above the repayment is forecast in equal instalments from 2014 to 2016 based on the department’s current expectations of future sales, together with its planned capital programme over that same period, as set out in the Housing Department’s business plan and capital programme.

It is also noted that the repayment to the fiscal stimulus allocation may take place sooner than in 2014 - 2016 because the Treasury and the Housing department have undertaken to work together to identify alternative means of repayment at an earlier date, through a refinancing of the fiscal stimulus “loan”.

Under Standing Order 168 (1) (d), it is a requirement for the Minister for Treasury and Resources to approve plans for the construction of buildings where the work is to be funded wholly or partly by money voted by the States.

6. Resource Implications

No financial resource implications other than those explained above.

No manpower resource implications.