Development Proposals for Field 40, St. Clement.

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A decision made (02/02/2007) regarding: Development Proposals for Field 40, St. Clement.

Subject:	Development Proposals For Field 40 St Clement
Decision Reference:	MD-H-2007-0011	Exempt clause(s):
Type of Report: (oral or written)	Written	Person Giving Report (if oral):		n/a
Telephone or e-mail Meeting?	n/a	Report File ref:
Written Report – Title	Les Vaux Housing Trust - Development Proposals For Field 40 St Clement	Written report - author		C Mavity
Decision(s): The Minister has agreed to lend his support to the Les Vaux Housing Trust’s participation in the scheme. However only on the basis that the Trust do not require any letter of comfort for their lenders.
Reason(s) for decision: The proposal is consistent with the States ongoing policy to facilitate the development of social rented housing in conjunction with Housing Trusts. The scheme is considered to provide reasonable value for money and meets the priority housing requirements identified in the revised Planning for Homes report (RC94/2006). There will be no interest subsidy required by the Public.
Action required: Les Vaux Trust to be notified of outcome.
Signature: (Minister/ Assistant Minister)			Date of Decision: 2 February 2007

Development Proposals for Field 40, St. Clement.

REPORT FOR MINISTER FOR Housing

les vaux housing trust - development proposals for

field 40 st clement

Purpose

The Minister is asked to support proposals by the Les Vaux Housing Trust (the Trust) to develop social housing in Field 40, St Clement and to approach the Treasury & Resources Minister on behalf of the Trust to issue a letter of comfort that agrees to provide interest subsidy to the Trust should interest payable exceed 6%.

Background

1. The Trust has agreed in principle to purchase 10 three-bed houses to be developed in Field 40, subject to the availability of funding. The site is earmarked for development of social rented and first time buyer properties under Policy H2 of the 2002 Island Plan.

2. These ten units will provide the required 45% Social Rented Housing with a further 13 units providing the corresponding 55% First Time Buyer properties.

3. Other than planning issues, which have been resolved, the States have no direct interest in this development.

4. The Trust will seek a total facility £1.8 million, subject to the support of the States, through a letter of comfort, to underwrite interest payments above 6%.

Comments

1. The housing mix is considered appropriate to meet need requirements identified for social rented housing.

2. The developer has obtained development consent (14 September 2006). Receipt of written confirmation of building regulations consent is anticipated this week.

3. The Trust will purchase the land and enter into a development agreement, with anticipated completion in January 2008 assuming the project commences without delay.

4. The overall land acquisition and development cost can be analysed as:

· Land cost (including fees etc.) £450,000 (£45,000 per plot)

· Development costs (including fees etc) £1,220,000 (£122,000 per unit)

· Financing Charges and other costs £119,000 (£11,900 per unit)

· Estimated Total Cost £ 1,789,000 (£179,000 per unit)

5. The sale price of £167,000 per unit, net of fees and financing costs, is in line with developments on rezoned sites elsewhere. A financial model is included as Appendix A, which takes a prudent view of rental inflation as averaging 3% per annum over the 25 year loan repayment period.

6. Funding would require the support of the States through the provision of a letter of comfort with an interest subsidy should the effective interest rate exceed 6%. The loan is based on a variable rate of 1.25% during construction and 0.75% on completion above base (currently 5.25%) over a 25 year repayment period.

PROPOSED DECISIONS

That the Minister lend his support to the Les Vaux Housing Trust’s participation in the scheme. However, only on the basis that the Trust do not require any letter of comfort for their lenders.

REASONS FOR DECISIONS

1. The proposal is consistent with the States ongoing policy to facilitate the development of social rented housing in conjunction with Housing Trusts, through the provision of capital and interest subsidy where required.

2. The scheme is considered to provide good value for money and meets the priority housing requirements identified in the revised Planning for Homes report (RC94/2006).

3. There will be no interest subsidy required by the Public.

Housing Department

1st February 2007