Posted by: John Brace | 2nd October 2018

What’s in Wirral Council’s 96 page Hoylake Golf Resort contract (part 2)?

What’s in Wirral Council’s 96 page Hoylake Golf Resort contract (part 2)?

                                           

Earlier this year, as a result of a First-tier Tribunal case in which I was not a party (although I had made the original information request) I received a redacted copy of the 96 page Development Agreement between Wirral Borough Council and Nicklaus Joint Venture Group Limited that is for the Hoylake Golf Resort project (or Hoylake International Golf Resort as it’s referred to in the Development Agreement).

In February I published images of the first 25 pages, as well as the index and cover page. I also linked to a copy of the whole contract.

At there are questions about the Hoylake Golf Resort likely to be asked at the Wirral West Constituency Committee on Thursday evening, I thought it might be useful to publish images of some more of the pages of rest of the contract.

For the definitions in the contract please refer to the pages published in February which contains an alphabetical list.

The pages below continue after the pages published in that earlier blog post and cover pages 25 to 42 (I’ve included text of pages 25-30 as the text in the images can be hard to read). I use XXX to show parts that have been redacted.

Hoylake Golf Resort contract Page 26 of 93

Hoylake Golf Resort contract Page 26 of 93

“Development Rights” means all matters referred to in limb (b) of the definition of the Site Assembly Condition

XXXXX (around 18 lines redacted)

4.2 Developer’s Obligations

The Developer shall use all reasonable endeavours to enter into conditional sale and purchase agreements for the Additional Land and to secure the Development Rights as soon as reasonably possible after the date of this Agreement and in any event by the Condition Date provided that the Developer shall not be obliged in doing so to incur expense in excess of what it believes to be reasonable or incur land premiums in excess of XXXXXXXXX per acre in respect of any conditional sale and purchase agreements for the Additional Land before it is satisfied (acting reasonably) that the other Conditions Precedent will be capable of being met.

4.3 Negotiations

Negotiations with any third party in respect of the Additional Land will be dealt with by the Developer at the Developer’s cost. All contracts negotiated will be concluded in the name of the Developer as buyer of the third party interest in such a form as the Council shall have approved preciously (such approval not to be unreasonably withheld) and shall include provision for the land to be transferred to the Council at the direction of the Developer following an Event of Default.

4.4 Council’s Assistance

4.4.1 The Council will offer such reasonable assistance in support of the Developer as the Developer may reasonably require at the Developer’s Cost.

4.4.2 The Developer shall be responsible for the costs of fulfilling the obligations at Clauses 4.2 and 4.3 and 4.4.

4.5 Step in rights

4.5.1 The Developer will immediately upon completion of the acquisition of the freehold title in any part of the Additional Land grant the Council an option to purchase the relevant Additional Land at the Contract Price together with any such legal deeds easements and agreements as the Council shall reasonably and properly request and which are necessary to grant to the Council (as owner of the Council’s Land) all step-in rights and access rights as are reasonably necessary to and over the Additional Land to enable the

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Hoylake Golf Resort contract Page 27 of 93

Hoylake Golf Resort contract Page 27 of 93

Council as owner of the Council’s Land to step-in to procure the completion of the Project following an Event of Default.

4.5.2 In the event of Council exercising its rights under Clause 4.5.1 no administrative fees or costs shall be payable to the Developer.

4.6 The Council Title Condition shall be satisfied on the latest date on which all of the elements of the Council Title Condition have been satisfied to the reasonable satisfaction of the Developer.

4.7 The Developer may (at its absolute discretion) waive part or all of the Council Title Condition by serving notice of such waiver on the Council.

4.8 XXXXX (around 24 lines redacted)

5. PYLON WORKS CONDITION

5.1 The Developer shall as soon as reasonably practicable after the date hereof use all reasonable endeavours to negotiate and agree with Scottish Power the Electricity Pylon Works Agreement and will enter into such Agreement as soon reasonably practicable. The Developer will negotiate in good faith with Scottish Power.

5.2 The Council’s approval will not be required to the form of Electricity Pylon Works Agreement if such agreement satisfies all of the following criteria:-

5.2.1 It provides for the Electricity Pylon Works to be undertaken by an approved building contractor and professional team appointed by Scottish Power and collateral warranties are to be procured from the contractor and the professional team by Scottish Power for the benefit of the Developer and the Council in a form acceptable to the Developer (acting reasonably);

5.2.2 it is materially consistent with the terms of this Agreement; and

5.2.3 (if the Council is a party to it) it does not impose any additional liability on the Council beyond that of bare landowner.

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Hoylake Golf Resort contract Page 28 of 93

Hoylake Golf Resort contract Page 28 of 93

5.3 If the Electricity Pylon Works Agreement does not satisfy the criteria set out in Clause 5.3, the Council’s approval to its terms will be required which will not be unreasonably withheld.

5.4 If required and subject to Clauses 5.2 and 5.3 the Council will enter into the Electricity Pylon Works Agreement.

5.5 If the Council is not a party to the Electricity Pylon Works Agreement, the Developer will provide it with a certified copy of the completed agreement within 10 Working Days of the date of the agreement.

5.6 The Council and the Developer shall (having regard to the parties’ respective ownership in the Site at the relevant time) enter into any necessary wayleave agreements and deeds of easements with Scottish Power (in a form previously approved by the Council and the Developer both acting reasonably) which are required in order to carry out the Electricity Pylon Works.

6. FUNDING AND VIABILITY CONDITION

6.1 The Developer shall use all reasonable endeavours to satisfy the Funding and Viability Condition and shall prepare and submit to the Council (together with all such supporting evidence as the Council may reasonably require to properly consider the same) the Developer’s proposed Funding Strategy and Financial Appraisal within twelve months of the date of this Agreement or such longer date as the Council and the Developer may agree. The Funding Strategy and Financial Appraisal are to be consistent with the Approved Documents.

6.2 The Financial Appraisal is to contain:-

6.2.1 a residual appraisal for the Wider Development assuming no development return;

6.2.2 a detailed operating profit and loss forecast for the first five years of operation of the completed Development providing an income and expenditure breakdown;

6.2.3 a cash flow statement for the Wider Development;

6.2.4 a detailed breakdown of any funding gap and any request for prudential borrowing from the Council (subject to Clause 6.10) and intended repayment profits for such funding;

6.2.5 a reasoned assessment as to whether the Developer (acting reasonably and properly) considers that the Development is Viable and if it is not, what measures could be taken to make it Viable; and

6.2.6 any other relevant information in relation to the proposed financial appraisal.

6.3 The Funding Strategy is to contain:-

6.3.1 a phasing plan detailing the proposed phases of the Wider Development which will take account of, inter alia, the terms of the R&A Agreement including the timing of the Open Golf Championship;

6.3.2 details of the intended number of Residential Units (which are currently based on 160 houses plus 40 apartments) and the intended draw down dates of the land required for Residential Development;

6.3.3 a construction programme with target dates and long stop dates for the delivery of the Works;

6.3.4 details of the extent of the Core Requirements Land required for the Core Requirements Works and the applicable Council’s Premium;

6.3.5 details of the extent of the Core Requirements Land required for Wider Development and the applicable premium to be paid to the Council (the “Residential Phase Premium”;

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Hoylake Golf Resort contract Page 29 of 93

Hoylake Golf Resort contract Page 29 of 93

6.3.6 details of the proposed construction packages (including the identity of contractors and professional teams) and key terms proposed;

6.3.7 details of the proposed quantum and source(s) of funding to be provided for the Wider Development (by reference to the Financial Appraisal) including any request for prudential borrowing from the Council (subject to Clause 6.10);

6.3.8 the proposed interest rate(s) for the funding referred to in Clause 6.3.7;

6.3.9 full details of all proposed guarantor(s) to enable a proper assessment to be made of their financial standing, including details of the obligations and agreements that they will guarantee;

6.3.10 full details of the security package being offered in respect of any funding;

6.3.11 the identity of any proposed Funder(s) and terms sheet (or equivalent) of the proposed funding which must take account of the requirements of Clause 6.8;

6.3.12 full details of the Overage;

6.3.13 revised scheme layout;

6.3.14 detailed capital costs of the Wider Development;

6.3.15 details of any estimated costs relating to the Ground Works and Electricity Pylon Works;

6.3.16 details of the proposed operation and mechanics of the Development Account to be set up by the Developer in connection with the Project and which is to be documented in the Funding Agreement; and

6.3.17 any other relevant information in relation to the proposed funding strategy.

6.4 The Council shall as soon as is reasonably practicable following receipt of the Funding Strategy and the Financial Appraisal confirm to the Developer whether it requires (acting reasonably and properly) any further information to properly consider the Funding Strategy and Financial Appraisal and if so requested, the Developer shall provide such further information to the Council as soon as reasonably practicable.

6.5 The Council shall as soon as reasonably practicable following the later of the date of receipt of the Funding Strategy and the Financial Appraisal and (if any) such additional supporting information which the Council may have requested pursuant to Clause 6.4 confirm to the Developer whether the Council approves (at its absolute discretion) the Funding Strategy and Financial Appraisal, the Funder and that the Development is Viable.

6.6 If the Council does not approve all of the items referred to in Clause 6.5, the Council will provide reasons to the Developer for any such non-approval and the Developer will re-submit the relevant item for approval as soon as reasonably practicable, taking into account the Council’s comments. This process will be followed as many times as necessary until such time as the Council has approved each of the Funding Strategy, the Financial Appraisal, the Funder and that the Development is Viable (the “Outline Financial Package”). The Council and the Developer agree that any approval by the Council of the Outline Financial Package may be granted conditional upon such conditions as the Council may specify at its absolute discretion.

6.7 The Funding and Viability Condition will be satisfied on the Council approving the Outline Financial Package.

6.8 The Developer and the Council agree that any Funding Strategy is to afford to the Council the right (if the Council so requires) to step-in (or procure a nominated party to step-in as the case may be) to procure the completion of the Project following an Event of Default and the Developer shall in good faith seek to negotiate and agree with the Council (and any third parties who are required to be a party to the same) all relevant legal agreements and Step-In Agreements necessary to give

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Hoylake Golf Resort contract Page 30 of 93

Hoylake Golf Resort contract Page 30 of 93

legal effect to the same and which the Council requires as part of its approval of the relevant Funding Strategy including standard and institutionally acceptable appointments and construction documentation in accordance with the terms and conditions of this Agreement.

6.9 Once the Outline Financial Package has been approved, the Developer will use all reasonable endeavours to obtain in principle approval from a Funder (and/or from the Council subject to Clause 6.10) for the funding required pursuant to and in accordance with the Outline Financial Package.

6.10 The Developer and the Council acknowledge that the Council may receive a Funding Strategy from the Developer to be assessed pursuant to this Clause 6 which may include a request by the Developer for the Council to consider applying for prudential borrowing and subject to such Funding Strategy complying with the terms and requirements of this Clause 6 and being within reasonable parameters the Council hereby acknowledges that it will take/submit the Funding Strategy through/to the Council’s decision making process for a decision to be reached. If the Developer requests that the Council considers applying for and procuring prudential borrowing for the Project the Council may impose such conditions as the Council may choose. The Developer agrees that if the Council agrees to apply for prudential (or other) borrowing in connection with the Project, the Developer will pay to the Council an arrangement fee in respect of such borrowing.

6.11 Subject to the Council’s obligations under Clause 6.10 the Developer and Council agree that the Council will be under no obligation to procure prudential borrowing of any kind as part of any Funding Strategy proposed by the Developer.

6.12 Once the in principle approval(s) have been obtained pursuant to Clause 6.9 (and where the Council is a party the Council will provide a draft Funding Agreement to the Developer for negotiation) the Developer will use all reasonable endeavours to enter into the Funding Agreement. The Developer will provide a certified copy of any such Funding Agreement to the Council (unless the Council is a party). The Developer will use all reasonable endeavours to satisfy any conditions in the Funding Agreement as soon as reasonably practicable.

6.13 Within 20 Working Days of the grant of a Satisfactory Planning Permission, the Developer will re-submit to the Council the Post Planning Package, which will highlight any material differences from the Outline Financial Package as a result of the content of the Satisfactory Planning Permission and arising from final costings being obtained by the Developer for the Ground Works and the Electricity Pylon Works. The Post Planning Package will be accompanied by a written commentary from the Developer as to its progress in satisfying all of the conditions attached to the funding for the Project.

7. PLANNING CONDITION

7.1 Consultations

Within 1 month of the date of this Agreement and before submitting the Planning Application to the Local Planning Authority the Developer will commence consultations on the form of Planning Application with the Council in its capacity as landowner as to the form and content of the Planning Application.

7.2 Final Draft Planning Application

7.2.1 The Developer shall acting in consultation with the Council (acting in its capacity as landowner) prepare the Planning Application as soon as reasonably practicable after the date of this Agreement and shall have due regard to all comments made by the Council in relation thereto an shall incorporate all requests of the Council (as landowner) in relation to the Works where such requests have been reasonably made.

7.2.2 As soon as the Developer believes is has the final draft Planning Application (together with all supporting documents) the Developer will submit the draft Planning Application to the Council for the Council’s approval (as landowner). The Council will not unreasonably

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Hoylake Golf Resort contract Page 31 of 93

Hoylake Golf Resort contract Page 31 of 93

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Hoylake Golf Resort contract Page 32 of 93

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Hoylake Golf Resort contract Page 33 of 93

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Hoylake Golf Resort contract Page 34 of 93

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Hoylake Golf Resort contract Page 35 of 93

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Hoylake Golf Resort contract Page 36 of 93

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Hoylake Golf Resort contract Page 37 of 93

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Hoylake Golf Resort contract Page 38 of 93

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Hoylake Golf Resort contract Page 39 of 93

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Hoylake Golf Resort contract Page 40 of 93

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Hoylake Golf Resort contract Page 41 of 93

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Hoylake Golf Resort contract Page 42 of 93

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Responses

  1. So they are still going ahead with this white elephant?

    • As far as I know the Hoylake Golf Resort is still going ahead.


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