Urban development construction work

Tender description

Modification of a development agreement originally entered into on 13.10.2015 for development of a site located at Kingsmead/Sturry Road on the north eastern side of Canterbury to provide a mixed use development including leisure facilities and residential homes. Canterbury City Council (the Council) carried out a competitive public procurement procedure which was commenced though an OJEU Notice (ref: 2014/S 138-246919) for a public works contract in the form of a development agreement which was entered into with the successful bidder on 13.10.2015. The Council now wishes to vary the development agreement as a result of market changes in the leisure sector (such as the demise of high street retail businesses and food and beverage chains) and changes in the construction sector to address viability gaps in order to ensure that the mixed use scheme proceeds and also delivers the anticipated economic and regeneration benefits to the Council. An exhaustive process has been undertaken with the developer, BY Development Limited (trading as Linkcity), to explore potential solutions to reducing the viability gap in the scheme. Under the original Development Agreement the developer was under an obligation to ensure that development works were carried out on the site located in the Canterbury Urban Area (as defined in the Canterbury District Local Plan) to create a mixed use scheme comprising of a commercial and residential development. Upon performance of those public works, the Council was to grant two 999 year leases by the Council to the developer, 1 for the residential site and 1 for the commercial site. Under the original Development Agreement an investor (defined as an Approved Funder within the Development Agreement) was to forward fund the purchase of the commercial component of the scheme. Under the modified Development Agreement, the Developer remains under the same obligation to procure the development works. However, the Development Agreement as modified envisages that the site will be divided into 3 parts: 1) Three 999 year leases of the residential component to Linkcity’s residential partner; 2) A 999 year lease of the student accommodation component to an investor (which originally formed part of the commercial component of the scheme); and 3) The Council would retain ownership of the remaining commercial component of the development. Furthermore, under the modified Development Agreement and a separate Funding Agreement the Council will now be able to fund the development of the commercial part of the scheme i.e. the development comprising a multi-screen cinema, 8 bar/restaurant units (A3, A4, 3 retail units (A1, A2, A5) and a 217 space undercroft car park — as an Approved Funder. Linkcity will remain under an obligation to procure the development and construction of the commercial works, no land interest in respect of the commercial part of the scheme will be granted to Linkcity and the Council will fund the cost of the works (c 19 100 000 GBP) by staged payments to Linkcity during the construction period. The Funding Agreement will be made between the Council and Linkcity and the obligations will mirror those development obligations contained within the Development Agreement and oblige Linkcity to carry out the works to the commercial part of the scheme. The Council will fund the cost of those works through a payments schedule contained within the Funding Agreement.