Breckland approves new form of local asset backed vehicle
0A Norfolk council has given the green light to a new form of “incremental” property development joint venture requiring its private sector partner to prove delivery capabilities before the signing of a long-term contract.
Breckland Council has devised a new version of the local asset backed vehicle (LABV), a model which sees developers match fund the value of land donated by councils, and which has had mixed success elsewhere in the country.
The new joint venture, Breckland Bridge, will initially run for between three and five years to develop three council-owned sites, before a decision is taken to extend the partnership to the longer period normally associated with such models.
Julie Kennealy, director of place and section 151 officer at the council, told Room151: “With a normal LABV, you can find yourself stuck with a commercial partner for between 15 to 25 years.
“For us to jump into a very long contractual arrangement was a big risk. This arrangement is predicated on ongoing success.”
And unlike most LABVs, where councils and developers take a 50/50 share, the council will own 90% of the new vehicle, with developer Land Group holding 10% of the shares.
The council will fund 100% of development costs on the first scheme – a mixed use leisure scheme aimed at regenerating the riverside area in the town of Thetford.
On two subsequent schemes aimed at providing a total of 23 homes, the council will loan its land to the LABV with the developer matching 10% of its value. Development costs and profits will be split on a 90/10 basis.
Kennealy said that development costs would be largely funded through borrowing, possibly through the Public Works Loans Board, with the exact amount to be determined at a later stage.
After the development is completed, the developer will be repaid its investment, and the council will resume ownership of the land, with any profit after interest shared between the two parties.
The council says it expects to make a profit of £517,000 on the two housing schemes.
If the scheme is successful, a business plan for a longer partnership will be drawn up, Kennealy said.
Image: Building Partnerships
