What was our brief?
We advised Stonebridge Housing Action Trust on its public private partnership succession project with Brent Council and Hyde Housing Association Ltd. This enabled the HAT to complete the regeneration of Stonebridge and re-house the HAT’s remaining secure tenants. Since the project involved contracts with both the HAT and the Council, those contracts were procured jointly under the EU procurement rules.
HATs were limited life regeneration organisations, set up mainly to improve Council houses, which were transferred to them when the HATs were set up. At the end of the HAT’s life, HAT secure tenants could choose whether their properties transferred to a landlord proposed by the HAT or back to the Council. Hyde created a community based housing association (CBHA) Hillside Housing Trust as its subsidiary, with a tenant majority on its Board, to act as the alternative successor to the Council.
Completing the HAT’s development programme involved Hyde constructing 313 new houses and flats and 6 new shops. The development was financed by a £15 million grant from the HAT and £55 million private finance raised by Hyde. This private finance was raised partly on the basis of a contract with the Council for the long-term maintenance and management of those properties that transfer to the Council at the end of the HAT’s life. The private finance is repaid from rent receipts (from those properties which transfer to the CBHA) and payments under the contract with the Council. So as to keep the private finance off the Council’s balance sheet, the contract with the Council was a PFI contract.
Residents’ confidence in the CBHA was built up through the CBHA managing all the HAT’s housing for 2 years before the tenants had to choose their successor landlord. The HAT’s economic and social regeneration team was also transferred to the CBHA.
We subsequently advised Hyde on the construction of Stonebridge’s multi-use hub building, containing a community centre, supermarket, health centre, 60 shared ownership and provide apartments.
What did we do?
We drafted all the documentation for the succession project including:
• the Development Agreement (based on PFI principles and including the succession arrangements);
• the Housing Management Agreement (for management of the HAT’s housing);
• the draft PFI contract (which we drafted for Brent’s legal advisers because the HAT and Brent had to be separately represented);
• Grant Conditions and a Transfer Agreement (transferring economic and social regeneration activities to the CBHA);
• all the procurement documentation; and
• the Funders Direct Agreement and all collateral warranties and other ancillary documents.
The project also involved extensive due diligence over the HATs building contract and professional appointment documentation. It required a dedicated team of lawyers across the legal disciplines of construction development and regeneration; PFI; property; finance; compulsory purchase, EU procurement and governance, constitutional and public law.
Work on the Hub involved drafting and agreeing pre-let agreements, including securing Brent Primary Care Trust as an anchor tenant. The £20 million construction contract was complex, with the building being divided up into sections which had to be completed in a certain order. The contracts included different consequences for the contractor missing the contractual completion deadlines for different sections. These consequences were linked to the Hyde’s obligations under the pre-let agreements.
How did we add value?
We masterminded the structure of the documentation for the succession project, turning an idea from the HAT’s funding advisers into a practical reality. Funders’ concerns over the HAT’s legal powers meant it was not practically possible for the HAT to enter into a PFI contract, which would have been the usual approach for this kind of project. Our innovative solution to overcome these difficulties, devised in conjunction with the HAT’s funding advisers, was crucial to the success of the project.
The close involvement of tenants in the process was crucial to its success. We involved tenant representatives closely in agreeing how the project was tendered and overseeing and agreeing the contracts to be entered into. Resident representatives played a key role in the procurement, particularly in evaluating bids from the housing associations who wished to become the HAT’s successor.
For the Hub we project managed both legal and interface issues. The strong teamwork allowed the client to relax in the knowledge that the construction and property documents would, as far as possible, transfer “back-to-back” obligations which exposed the client to minimum liability.
The succession project was managed by Andrew Millross who can be contacted on 0121 212 7473 or andrew.millross@anthonycollins.com. Rob Hallott managed the Hub project and can be contacted on: 0121 212 7466 or rob.hallott@anthonycollins.com.