Timescales

Our interpretation of contractual timescales

  • The CEC cabinet met on the 3 May 2011 and agreed there should be significant variation to the previous 2007 agreement with the developer. Remember that this scheme had been ongoing since 2004, with the then intention of it being completed in 2011. In 2007 its timetable had been revised to a completion in 2013. Now, in May 2011, the cabinet decided to put the scheme back onto the drawing board with an even later timetable. This contemplated a scheme completion in early 2016, but we now know that if the scheme is ever completed it will be much later than that. It could be up to 2019, by which time the local businesses and residents will have been under this planning blight for 15 years.
  • CEC recognised that this was a “highly conditional deal” meaning that the developer would have to fulfil a number of preconditions before the scheme could go ahead. The CEC recognised that this might further delay the timetable beyond 2016, which has indeed been the case. There was nothing in the agreement to prevent the CEC and the developer from agreeing further delays.
  • Preconditions were already in the original 2007 agreement. These included that the developer had to get funding for the scheme and it had to satisfy pre-let conditions for a department store and multi screen cinema before the deal could go ahead. Indeed the developer stated publicly that it had signed an agreement with Debenhams in 2007, whereby the latter was to be the anchor tenant. The preletting of the cinema and the department store were pre conditions that could not be waived.
  • The Prelet conditions remained unchanged in the 2011 Amended Agreement, but the previous requirement for the developer to satisfy the funding condition by the same deadline as the other pre-conditions was altered. Instead it was agreed that the developer might now have an extension of 12 months from the “deadline date” (not disclosed!) to find funding to build and let the development, provided an independent investment surveyor determined there was reasonable prospect of the developer acquiring funding in that extended period.
  • The Agreement provides for a “satisfacton date” and a “deadline date”. The latter concerns the date by which all the developer’s pre-conditions must be satisfied. Under the 2011 revised agreement the date can be extended in order to give the developer another 12 months to get funding, but it can also be extended by any “public inquiry” or “planning proceedings” which can include CPO inquiries and proceedings. We are now told in the Macc Express (Jan 2014) that a decision whether to make a CPO decision is delayed.
  • If the developer fulfils the preconditions earlier than the “deadline date”, then the description “satisfaction date” will apply to that earlier date. The satisfaction of the preconditions cannot extend beyond the “deadline date” (hence the provisions allowing this to be extended!). As implied by the term “deadline”, if the preconditions have not been fulfilled by that date then the Agreement can be terminated.
  • The actual deadline date has been redacted (blacked out) from the disclosed information. It is to be calculated by reference to what is termed an “effective date”. The definition of “effective date” is “the date following the grant of Satisfactory Planning Permission”, plus an allowance of a further 3 months period to allow for a legal challenge. There has been no legal challenge, so the “effective date” can be calculated. Had there been a legal challenge to the grant of planning permission then the “effective date” would have extended further. Written planning permission was given on the 6th September 2013, therefore, after adding on the further three months, we deduce that the “effective date” from which other contractual dates are calculated, is 7th December 2013.
  • If the “deadline” date is, for example, 1 year from the “effective date”, then an extension of 12 months to fulfil the funding condition would take it to December 2015. If CPO proceedings occur, then the time period for those also extends the date. Moreover, the extension of time for the funding condition would be available on top of that. Thus, for example , if the “deadline date” is 12 months from the effective date, and CPO proceedings took up to a year longer than that to resolve, this would take the deadline date to December 2015 and on top of this there could be an extension of time of another 12 months for the funding to be in place, taking us to December 2016.
  • It is intended that the developer will start work on site 6 months after the “satisfaction date” (ie the date when all pre-conditions have been satisfied, which might end up being the same date as the deadline date, but it cannot be later than the “deadline” date). As indicated there is provision for extension due to e.g. CPO proceedings.
  • The Agreement requires that the “viability” of the scheme is to be tested six months after the date of the CEC letter giving planning permission, which is 6th September 2013. Thus the “viability” precondition is expected to be fulfiled by March 2014. However, the actual terms of this pre-condition are a source of concern as explained below.
  • Within 3 months after the viability pre-condition is satisfied, the developer will tell CEC whether it requires CEC to make a CPO in order to acquire those parcels of land that are needed for the development but which are not owned by CEC (called “relevant interests”). The developer must pay the costs of the acquisitions, which will be conveyed to CEC. When the scheme is completed, this land will be leased to the developer, together with the rest of the Council land used for the scheme.
  • It is envisaged that the Developer will try to acquire the non-council land without the need for a CPO, so that is why time has been built into the agreement for the developer to do this. Indeed, the developer’s spokesman envisaged in June 2013, following the strategic planning committee’ meeting, that CPOs would be sought. The timescales in the agreement indicate that the developer has until this June to tell the CEC whether CPOs are required (ie within 3 months following the satisfaction of the “viability” pre-condition).
  • The acquisition of the required “third party land” is one of the pre-conditions which has to be fulfilled before the development can proceed. Once all the preconditions, bar funding, are satisfied, the developer will give notice to CEC. The CEC will give the developer authority to enter onto the land to start construction. As stated above, it is envisaged that this will be no later than 6 months after all preconditions have been satisfied. It may be that the satisfaction of the funding condition is not required for this purpose, but this is not clear from the redacted agreement.
  • The agreement provides for the construction period to be three years from the “satisfaction date” which cannot occur after the “deadline”. Assuming that the satisfaction of all the pre-conditions doesn’t occur until the deadline then the two dates will in effect be the same. There is provision in the agreement for extensions of time to the three year construction period to be agreed. Furthermore, the developer is only under an obligation to “use” its “reasonable endeavours” to comply with this time period.
  • The agreement contains both a “Long Stop date” and a “Construction Long Stop Date”. The “long stop date” has not been disclosed. In the original 2007 agreement it was to be 6 years from the date of that agreement, but the 2011 contract changed the date. If all the pre-conditions (i.e. including funding) have not been satisfied by the earlier of these two long stop dates, then the agreement can be brought to an end, although it is not a strict requirement. There is a suggestion in the redacted document that the long stop date is also to be calculated from the “effective date”. Note – it seems unlikely that the “construction long stop date” will occur before the undisclosed “long stop date”, because the “construction long stop date” concerns the practical completion of the buildings and works of the whole development, whereas the “long stop date” will be a specific date likely to be reached before any building is completed.
  • Expiry of the “long stop date” before the condition to which it applies has been fulfilled will terminate the agreement, although the parties can presumably revise this. It is possible that the “long stop date” is connected to the date by which the developer has to start construction. It may be 6 months after the deadline date.
  • The seeming absence of inviolable deadlines suggests that the two parties can agree changes; at the very least, the timings of the development are not clear, though the actual letter granting planning permission does state that “construction should start within three years” of 6th September 2013 (when written planning permission was granted). This is a requirement under planning legislation. It is only a “start date” and it gives no comfort as to when it will be completed.
  • In the contract the “construction long stop date” means the period of 6 years from the “effective date”. We calculate the latter to be 7 December 2013. Thus under the contract, if the development goes ahead, the construction has to be completed by 7 December 2019, provided the parties don’t revisit this and agree otherwise.

Pre-conditions

Viability assessment

Financial arrangements

Incentives

 

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