I have today announced that the Council will be terminating the William Hunter Way deal with the developer, Stockland.
The decision has been taken for one reason alone: Continuing was not in Brentwood’s best interests and I will explain why.
Over the last 2 years, extensive negotiations have taken place between the Council and Stockland to renegotiate parts of the original agreement, following the downturn in the economy, which had an impact on the deliverability of the deal from a commercial standpoint.
We have received independent professional and legal advice at each step to ensure we are operating within the law, in line with our contractual obligations and whilst minimising the exposure of Brentwood to the threat of litigation costs based on a test of “acting reasonably.” I stress this for important reasons, which I will come on to later.
This approach has safe guarded Brentwood’s position and has led to a revised deal between the Council and Stockland, primarily in terms of the guaranteed ground rent and income levels to the Council.
Had negotiations not been conducted in a “reasonable” way, we would have left the Council open to a significant risk of litigation at a potential cost of millions.
In addition, contrary to claims made by Lib Dem and opposition Councillors, opening discussions with any other interested developer would have seriously compromised the Council’s position.
This isn’t me saying this, it is the professional advice that we have received and the same advice that the opposition have been calling on us to ride rough shod over and ignore.
Now don’t get me wrong, I have shared their frustrations over the last few months. However, frustration should not lead to recklessness and irresponsibility, which is exactly what their calls to simply “walk away” were.
So given the above, what has changed and why can we now terminate the deal? Well, the Full Council decision last December gave a deadline of the 31st January 2014 to conclude the heads of terms and to include penalty clauses (these were omitting from the original deal)
Whilst penalty clauses were accepted and figures agreed, Stockland also requested that RPI (inflation) linked to the ground rent be removed from the agreement.
Without such an anchor, the £225k annual ground rent would in effect diminish over time. Linking it to inflationary increases is, I’m sure you’d agree, a basic and reasonable request, especially as the lease was for 150 years! The true value of that income must clearly be protected for years to come.
However, its inclusion, makes the deal unviable for Stockland and from our perspective, signing up the Council to a further change in the original deal that would have such a detrimental impact for generations to come, was not acceptable. Again, our independent professional advice, both legal and commercial, supports this position and based on the situation has deemed that we are acting “reasonably” to insist RPI remains in the contract, opening the way for us to terminate the deal without it.
So, we had a deal, we could have signed it and frankly, it would have been the easy thing to do but as I have always said, I will not sign Brentwood up for a deal that is not in our interests. Yes, the process has been protracted and frustrating but I stand by the final decision and the approach taken – we have protected the public purse, worked within the constraints of the current legal arrangements to deliver a commercially viable deal and mitigated costs to Brentwood taxpayers and therefore without doubt, done the right thing by our residents.
So what happens now? We are still committed to delivering a cinema for Brentwood but via a deal that is good for our Town. I will be bringing a paper forward to councillors in a few weeks time in order to move the project forward and I can guarantee that it will be subject to full and open procurement. Securing the best deal for Brentwood is paramount and that opportunity is now here.