ITEM 5(c) MKDP Quarterly Update June Executive Summary

Transcription

1 ITEM 5(c) MKDP Quarterly Update June 2018 Executive Summary Milton Keynes Development Partnership (MKDP) is an independent legal entity wholly owned and accountable to Milton Keynes Council. The publication of MKC s annual Accountability Framework in Dec 17 sets out the expectations of MKC in creating and owning MKDP. MKDP s overarching strategic objective as confirmed within the Accountability Framework is to generate commercial activity that delivers long-term commercial, social and financial value to MKDP, Milton Keynes Council and Milton Keynes as a place. MKDP is requested to respond to MKC annually through its Business Plan and provide regular updates about MKDP s proposed activities for the year with reference to the Accountability Framework. MKDP has achieved stage 1 of its development; financial stability. It has developed a steadily increasing trend of both profit and capital receipts so as to repay the 32m loan to MKC by March It is now moving to stage 2 which is to produce a steady income and continual profit stream by investment in property. In addition, by 21/22 it will have contributed nearly 10m to MKC. Key outputs and Achievements MKDP has made significant progress towards achieving MKC s expectations set out in the Accountability Framework. This progress will be used to inform its annual business plan that will be published in September 18. Since receipt of the Accountability Framework in Dec 17 MKDP has delivered the following: 1. Management 1.1 Appointed a new independent board chair in Bob Green. 1.2 Appointed three new independent board members bringing a significant range of additional skills and experience. They are Bernadette Conroy, Huw Rhys Lewis and Stephen Mallen.

2 1.3 Re-constituted working sub committees of the Board to ensure an effective framework for reviewing strategies, policies, procedures and governance. They are: (a) Finance, Audit and Governance (b) Property and Projects (c) Investment and development (d) Nominations and Remunerations Sub committees will do most of the detailed work so that Board can focus on decision making and strategy 2. Housing 2.1 Approved its first scheme that will deliver 36% of the homes created as affordable units. 2.2 Secured tender submissions for a second housing scheme that will also deliver 36% affordable units. 2.3 Secured outline planning consent for up to 148 dwellings at Kents Hill Park that will be marketed under a condition to deliver a minimum of 36 % affordable units 3. MK Futures 3.1 Learning (a) Approved in principle land allocation in support of MK:U 3.2 CMK:Rennaisance (a) Secured Planning consent for Hotel La Tour a luxury landmark c250 bed hotel overlooking Campbell Park. (b) Instigation of reviews and feasibility studies on key CMK development sites including Midsummer boulevard East and Station Square 4. Finances Site updates 4.1 In Q4 generated capital receipts from land sales of nearly 6.5m ( 8m for the year) 4.2 Delivered a net profit (including 1m exceptional items) for the year to March 18 of 1,506, Total reserves ( revenue and capital) increased significantly in the year to c 23m CMK and Campbell Park B3.3N: New City Place, pre-app and marketing has commenced on this prime grade A office lead scheme with associated private rented sector housing. A landmark scheme

3 of over 20 storeys promoted under the CMK Renaissance banner to stimulate high quality office demand in CMK D4.4N: Preferred developers have been selected for a gateway scheme on the site of the former Wyvale Gardens facility. The scheme is set to provide c 300 high quality PRS units spread over 11 floors above commercial units around a central square. Campbell Wharf, Campbell Park: Construction has started on Campbell Wharf a scheme comprising 383 new homes, of which 115 will be affordable, along with a range of other amenities. These include a new 117 berth marina, canal-side pub, café, restaurant and a footbridge to link the two sides of the canal. Construction will continue throughout 2018 and The marina and bridge should be complete by summer 2019 and the first residents are expected to move in during October Campbell Park Northside: Crest Nicholson and a joint venture between Urban Splash and Places for People have been appointed preferred development partners for this 12 hectare (29.6 acre) site to the north of Campbell Park. A residential, mixed-use scheme that will frame the northern edge of Campbell Park providing a high quality urban scheme comprising around 1,500 private and affordable homes, a local centre with food and beverage outlets, hotel with associated facilities and office/employment accommodation. Detailed proposals will be developed over the next few months in preparation for extensive stakeholder engagement and public consultation before final designs are prepared for submission. Suburban Sites Blue Light Hub: Construction has started in the new 14m Blue Light Hub on land acquired from MKDP at West Ashland. As a linked transaction to assist redevelopment in Bletchley, MKDP has secured an option to purchase Buckinghamshire and Milton Keynes Fire Authority s existing facility adjacent to Bletchley railway station. Walnut Tree, Lichfield Down: Contracts have been exchanged with McCarthy & Stone, the retirement home specialists, to develop a scheme which will provide around 50 apartments of various sizes including 15 affordable homes. Subject to planning permission being granted by Milton Keynes Council, construction will start in late Medbourne, Pascal Drive: MKDP Board have approved terms for a 19 unit residential scheme including 7 Affordable Units (achieving 36% affordable target). Scheme subject to planning Rooksley: Deltic Trade Park, construction has started on a 7 unit 4,600m² builders merchant and trade counter development. Pre-lets include MKM Building Supplies, which has more than 50 branches across the UK. Shenley Brook End: MKDP Board have approved terms for a 33 unit residential scheme and convenience store at Manifold Lane. Scheme subject to planning

4 Shenley Wood: Integral Powertrain has applied for planning permission to build a 5,500m² Technical Centre to support the company s current business needs as well as its ambitious growth plans. Wolverton Mill: BLU Milton Keynes, a new 2,926m² production and warehouse facility with sector-leading performance in sustainability giving Milton Keynes its first factory with an Energy Performance Certificate rating of A and a BREEAM Excellent rating for its environmental, social and economic performance. Work Streams Going Forward MKDP has actioned initiatives to deliver the expectations set out within the Accountability Framework while also looking to progress a pipeline of property transactions and preserve the longer term benefits of objectives and projects. A key initiative is in response to MKC s request for the delivery of 36% of affordable units on new schemes. MKDP is currently progressing residential schemes at Medbourne and Walnut Tree that indicate the schemes are viable at 36% affordable in suburban locations (although this will result in aa significant reduction in land receipts). MKDP is currently assessing the viability and sustainability of similar levels of affordability in CMK as there are concerns that it may not work alongside the ambitions of Renaissance: CMK and recent changes to the Planning Obligations SPD Preliminary work is commencing to review and establish a Corporate Social Responsibility Fund to assist in the provision of locally identified needs MKDP and MKC are currently undertaking a joint review of the economic development function to better articulate objectives and focus particularly in the context of support to Renaissance CMK Community and Stakeholder Engagement continues to grow building on Ward Member and Business briefing sessions in June. Engagement with borough councillors, parish councils and other stakeholders at the earliest stages of projects is being enhanced to encourage dialogue, feedback and comment to ensure that local needs are responded to. In support of Renaissance CMK MKDP is evaluating opportunities for the redevelopment of key sites in CMK including land adjacent to the Point, Midsummer Boulevard East and Station Square. We will continue to focus on the generation of commercial activity that delivers commercial, social and financial value to MK and increasingly so investment opportunities that create long term revenue streams. MKDP will play a significant role in key elements of the MK2050 strategy eg developing Milton Keynes as hub of the Cambridge to Oxford corridor, supporting development of a new city centre university, taking a leading role in the development of the city centre through Renaissance: CMK and other.

5 Financial Update: The pipeline of property transactions continues to grow providing added assurance that MKDP will meet its loan obligations to MKC and other stakeholders, including the HCA. In addition MKDP will using these receipts to provide increasing investment returns for the benefit of MKC. Revenues to the year to March 2018 are up on the previous year, reflecting the receipt of a 1m option fee and enhanced car parking receipts, offset in part by a shortfall in rental income from events at the Bowl. There have been some unbudgeted increases in expenses, largely arising from supporting MKC activities, and unbudgeted maintenance contributions. A summary of the revenue account results are shown below: Profit and Loss Year to March 18 Total Income 4,302,054 Total Cost 2,795,852 Profit (Loss) 1,506,202 The capital position improved during the year with capital receipts of c 8m for the year. Total reserves as of 31 st March stood at m Balance Sheet March 18 Long term fixed assets 36,472,607 Total current assets 21,662,359 Total current liabilities ( 4,052,579) Long term fixed liabilities ( 30,992,046) Net Assets 23,160,341 The adoption of the formal 2018/19 Budget has been delayed due to MKC Finance work pressures and other obligations. Draft budgets disclose Trading Profits for the financial year 18/19 of c 700,000, and forecast capital receipts from land sales in the year of c 13.5m. The Board have yet to approve and agree the structure for the repayment of the loan from MKC, as well as the Capital Reserve distribution to MKC, which is anticipated to be in the region of 4 million. Cash flow continues to be strongly positive, sufficient to meet these liabilities, in accordance with the previously lodged Business Plan.

6 MKDP s planned contributions to MKC as set out in the current business plan are as follows: Contribution to MKC Planning & project contributions (Revenue) b/f 2018/ / / /22 836, , , , ,000 Tariff Risk Reserve (Capital) 580, , , ,000 One off Contribution (Capital) 4,000,000 Additional Contributions (Revenue)* Total Annual Contributions to MKC 550, , ,000 4,789,000 1,339,000 1,339,000 1,339,000 Cumulative Contributions to MKC 836,000 5,625,000 6,964,000 8, ,642,000 Additional contribution by way of MKC s margin on the additional loan facility. It assumes full utilisation of an additional 10m loan facility by MKDP. Loan facility to be for a minimum 5 year term Management Commentary The last 12 months has been a busy and eventful period as MKDP worked through the findings of the independent review, MKC s Action Plan and Accountability Framework. The last 6 months has seen significant progress in the reconstitution of the Board, the successful recruitment of three new independent members and the formation of new sub-committees. Throughout this period the executive have remained focussed on the progression of property transactions, building a strong pipeline and generating significant capital and revenue reserves as evidenced above. MKDP is responding positively to the challenges set out within MKC s Accountability Framework and has already instigated initiatives to meet priority objectives eg the delivery of 36% affordable units on new schemes. We have appointed additional resource with specialist planning and urban design skills to help us better understand and engage with placemaking objectives particularly in CMK and Campbell Park. As MKDP evolves beyond its start-up phase and expands its commercial activity to include investment and development activities better financial management is essential. To achieve this MKDP has appointed a Chief Financial Officer to enhance key policies and procedures, management reporting, forecasting and budgeting.

7 Company Secretarial services have been reviewed and a new appointment made. A review of reserved matters, schemes of delegation together updates and revisions to the Members Agreement, Partnership documents and other governance matters are proposed in forthcoming months. MKDP continues to assist MKC on strategic property matters and are actively engaged in respect of Tickford Field Farm, the Western Expansion Area, Renaissance CMK and MK:U. MKDP is partnering with MKC in respect of Saxon Court and continues to work closely with Your:MK and other partner organisations to assist the delivery of temporary housing and address homelessness issues. MKDP s role and potential greater involvement in inward investment and economic development activities is currently under consideration with MKC and MKDP having recently instigated a review of activities. MKDP has continued to make both substantial progress and demonstrate its ability to manage a varied and demanding property portfolio. Performance to date and growing confidence that MKDP will exceed its obligations to MKC provides an opportunity to evolve the Business Plan and introduce a step change in the delivery of housing and investment and development activities. Further details will be provided when MKDP s annual Business Plan is reviewed in September 18.