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Waverley Borough Council Committee System - Committee Document

Meeting of the Council held on 16/10/2007
Structure of the Contract



ANNEXE 4

Structure of the Contract

The Contract entered into in April 2003 is a “Conditional Contract” i.e works cannot commence until the preconditions are met (or waived by mutual agreement).

The conditions are:-
1. Receipt of a satisfactory planning permission.
2. Completion of all necessary site assembly.
3. Securing any necessary highways or stopping up orders
4. Financial viability

The contract imposes certain obligations on both parties to acquire parts of the site:-
1. Waverley is responsible for securing the site of the former cinema, acquired by Friends Provident and now held by their subsidiary Foreign and Colonial (F&C).
2. CNS are responsible for securing the “Marlborough Head”, owned by the Greene King brewery.

A compulsory purchase order (CPO) may need to be sought under the provisions of planning legislation. And will, of necessity, need to be in support of a specific scheme. Officers are advised that, until the Council is certain which scheme it is pursuing, it should not seek to progress CPO action further at this stage.

Longstop Date

By definition, this is the date by which the four pre-conditions referred to earlier need to be fulfilled. Originally this date was 31st December 2006. Given that the contract was signed in April 2003, this was not reasonable.

By mutual agreement the longstop date has been extended to 30th September 2007.

By strict interpretation, following expiry of the longstop date, either party can bring the contract to an end by serving a required amount of written notice on the other party.

However there are provisions whereby the longstop date can be “passively” extended. Most notable among these is an outstanding planning appeal. A similar provision for a “passive” extension exists where there is an outstanding inquiry into a proposed CPO. CNS have appealed the decision on the current application, thereby extending the longstop date.

Finally it should be noted that, as with any other clause in the contract, both parties could by mutual agreement choose to alter or waive the condition.

Financial Viability

The Conditional Contract with CNS includes a ‘Viability Test’ which specifies how the final judgement will be made about whether the development is financially viable for CNS and the Council. This judgement will be made after the planning and other tests have been completed satisfactorily. In financial terms for Waverley, the viability test should ensure that the capital receipt is at least the Minimum Land Value. The Minimum Land Value included in the current contract variation is a safeguard to aim to ensure that the capital premium covers the costs that the Council has to incur to delivering the scheme and the associated works at Riverside. These costs are set out in Exempt Annexe 5.

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