WINCHESTER’S acting political leader has refused to postpone a meeting to discuss affordable housing in the Silver Hill scheme.
The developer Henderson proposes to drop plans for 100 affordable units in the £150 million scheme for shops and flats in Winchester city centre, saying the scheme would be unviable.
That proposal has sparked strong opposition from councillors and members of the public who fear the scheme will become a rich man’s ghetto.
A Council meeting on July 16 agreed to review affordable housing.
But now a report to the Cabinet meeting on Wednesday August 6 reveals that any money for affordable housing will have to come from the city council’s share of the profits.
Leading campaigner Kim Gottlieb called for the August 6 Cabinet to be postponed as many councillors are currently away.
Deputy council leader, Vicki Weston has written to Cllr Gottlieb.
She says: “Thank you for your emails to the Leader, copied to all Members. I am replying on Rob’s behalf in his absence on holiday, having sought advice from officers.
In response to your first email of July 27: Following the city council decision officers have sought to obtain the best possible outcome from the scheme in relation to affordable housing. CAB2607 sets out the outcome of the discussions with Henderson clearly and transparently. Cabinet has the authority to make the decision and will do so on the basis of the full picture provided in CAB2607.
The proposal in CAB2607 differs from that discussed at Cabinet/Council because it does not propose the use of a ‘claw back mechanism’ separate from the overage provisions contained in the Development Agreement. The use of an additional claw back mechanism is no longer acceptable to Henderson because they cannot obtain funding for the development if one is included. That is clearly set out in the report.
CAB2607 sets out how the Council can, as a developer profiting from the scheme, assign some of that profit to affordable housing. If the scheme grows in profitability then the council’s overage will increase and the amount available for affordable housing will increase.
The underlying principle for ensuring that development profit is available for affordable housing remains in place because there is a mechanism to capture the profitability of the scheme which rewards the council as profit grows. Above each ‘hurdle’ percentage the council’s share of development profit represents a good return given our risk and capital contribution. The report proposes that we assign a percentage of this to affordable housing so that actual contribution will be linked directly to the overage the council achieves.
Henderson will not assign any of their profit to affordable housing because the scheme funder requires a level of return in order to be willing to fund the scheme – a matter of risk and reward which I am sure you will be very familiar with.
Every Member who attended one or other of the three meetings where we discussed Silver Hill will recall an open and honest acknowledgement that there might be no affordable housing contribution. You were very keen to press the point that the claw back mechanism might produce no money because it would only work if the scheme is profitable. I therefore disagree with you that Cabinet will be discussing a possibility that councillors were unaware of.
In response to your second email of July 30 on Silver Hill to the Leader, copied to all Members, I am again replying on Rob’s behalf.
I do not accept your description of “missing money”. The issues were fully dealt with in the advice given to Members by Leading Counsel, and Deloittes. This is contained in CAB2603 and its exempt appendices 5-7.
Exempt Appendix 5 refers to the work undertaken at the date of the report on verifying invoices to confirm that they are properly charged to the Development Account. This work is continuing and progress is being made.
You suggest that no one in the commercial world would accept Thornfield’s historic costs being charged to the Development Account. The advice from Leading Counsel in Appendix 6 is that as the council is still dealing with the same legal entity such costs can be properly charged. However, he recognised it was a negotiating point. In this connection it is important to look at the wider picture of the deal as a whole, not just isolating one aspect as you are still seeking to do. The Cabinet spent some time at its meeting on July 10 exploring whether the council had maximised its negotiating position. This is dealt with in the exempt appendix to the minutes. This occurred after you left the meeting, so you were not present to hear this part of the session. The exempt minute shows that Mr Owen of Deloittes confirmed that the overall package which was before Cabinet, “went beyond what Deloittes thought might be achieved by the Council. It went beyond what was necessary to reflect the inclusion of 153 High Street in the scheme and represented a good deal.” He confirmed that the Council, as of the date of the meeting, had achieved best consideration. He will also be available to advise Cabinet at its meeting on August 6.
The points you are making have already been considered by Cabinet, which did not accept them. You also proposed an amendment at Council to the same effect so council has also considered the points you seek to make. Your amendment was lost – 37 votes against with 7 in favour.
In these circumstances I do not agree to your request.”