Brenchley School Redevelopment

MEETING ON B21/SCHOOL REBUILD PROJECT, 24 NOVEMBER 2018

Duncan Batty and Kevin Sparkhall, on behalf of Brenchley and Matfield Parish Council, met Andrew Cunningham, Nigel Woodward and Richard Beale from the Brenchley 21 Community Interest Company (B21). The main purpose was to hear what the latest plans are for rebuilding the School and the associated housing development.

This is a factual report back to the Parish Council from Duncan and Kevin, with bullet points on each of the agreed agenda items.

The Proposals

•     Plans for the development remain as in the recent Roundabout article, with a one-form entry school, 41 houses (but see below) and a Community building.
•    The new School is budgeted to cost £5m, including the Community Building. The design would allow adding an additional floor if, in future, the School needed to expand to a two form intake. Government sq.ft. funding formulae would suggest a cost of £2.5-3m but the proposal is to go for a higher specification as well as the Community Building. The £5m budget is seen as ample.
•    The Community Building would be used by the Pre-School (both they and the School want a degree of separation). Other facilities have not been decided but might include drop-in office facilities for home workers, offices for B21 or its successor and an online shopping collection point. The possibility of the Dental Practice coming into the development is being discussed, but the offer of including the doctors’ surgery has been declined.
•    The number and type of houses remains provisional; the latest breakdown, provided by B21 after the meeting, is at Annex 1. Given the need to generate enough to finance the School build, there is a trade-off between fewer, larger houses that generate more per plot and more, smaller houses. The current mix reflects B21’s understanding of community preferences; it could be adjusted and the CIC are agnostic about the precise mix provided it generates sufficient revenue to cover the School build. Finishes will be in Kentish Vernacular.

The State of the School

•    The School remain adamant that they will not release the report on the condition of the School but they were happy to show it at the meeting to DB who had not previously seen it.
•    The report was prepared by a third party surveyor. Whilst it contains no cost estimates, it concludes that the eventual cost of required repairs and replacements would be broadly equivalent to a basic rebuild (which might be £2.5 -3m). The discussion revealed differing interpretations on the period of time over which such costs might be incurred if the current building was retained.
•    £400,000 had been spent earlier this year on mandatory health and safety improvements; Tenax had found grant funding for this purpose.

Who will own what

•    The donor of the land would get one of the (probably) 3 bedroom houses free along with planning permission for a new house further down the valley from the new School and the enhanced value this brings. If permission is not granted for the latter he will not provide the land for the School rebuild. There would probably need to be clear evidence of community support for the overall project for TWBC to allow this house.
•    The Architect will also receive a free house as part-payment for his services. Architects RIBA-scale fees for the overall project would normally be 14% of total build cost.
•    The three promoters of B21 will not benefit. Their significant costs are being accrued as loans, to be repaid in due course.
•    The exact process for handling land ownership has not yet been decided. Current expectations are that the donor would gift the land for the new School to the Church Trust who in turn would transfer to B21 CIC. B21 CIC would engage the contractor for the new School and sign the financing arrangements. Once the School is built and operational, the land would be transferred back to the Church Trust. The Church Trust would then transfer the existing School site to B21 CIC and B21 would again engage the contractor to build the new housing and enter into the necessary financing arrangements. B21 CIC would then sell individual plots to the ultimate buyers of the housing and retain the remainder. At the end of the day the Church Trust would own the new School site, B21 would own the Community Building, rented housing and any other common facilities and the rest of the housing plots would have been sold. It is not clear what would happen about ownership of the part of the current School site that belonged to KCC and is presumed to have passed to the Tenax Trust (subject to Government control over any disposal).

Execution of the project

•    B21 do not want to pass the project to a developer for implementation, even though that would be simpler. They feel that their approach would better ensure that the project is of benefit to the community, would ensure enhanced control over the new housing (both number and design) and would retain profit within the community.
•    So far they have had grants of £10,000 and £40,000 from ‘My Community’ to develop proposals.
•    They now have possible matched external funding of up to £100,000 to get through planning. With the latter expected to cost £150,000, they are trying to raise £75,000 from the community. c£35,000 has already been committed and there are ongoing conversations with other potential village funders and grant bodies. Earlier thoughts of preparing a detailed prospectus as a basis for raising this money were abandoned, for lack of time, but they have had a proper loan agreement drawn up by solicitors, Cripps, Harries Hall.
•    They do not yet have finance for the main implementation phase. B21 believe that, once planning permission has been obtained the enhanced value of the land will facilitate obtaining finance. Possibilities include ‘Homes England’ who are a potential source of both revenue and capital funding, and Cornerstone Asset Management, who specialise in similar School/housing projects. Cornerstone, however, would want to exert more detailed control than B21 want. The precise details of how the financing would work with the land ownership arrangements have not been finalised.
•    For the construction phase, B21 would engage another company/ organisation like ‘E Corby’, alongside the Architects to provide such functions as Clerk of Works and Quantity Surveyor. They would not attempt to manage construction contracts themselves. Once they had planning permission they would go to at least three possible contractors for proposals. This might be on the basis of a fixed-price build contract but that has not been discussed in detail or decided. There might also be an element of self-build.
•    The form and governance of B21 after the construction phase have not yet been decided, other than the principle that the community in some form or other should have control. This is an area where B21 are open to ideas and keen to ensure that the Parish Council are appropriately involved.

Detailed financial analysis

•    There is a detailed financial spreadsheet, which B21 have subsequently supplied, providing the basis for modelling expected financial performance, including analysing the impact of changed assumptions. The current expectation is a surplus of c£1m and a continuing income stream from rents and alternative energy generation.
•    Income and Construction costs for housing are said to be industry standard and advice has been taken from estate agents on potential selling prices. Interest is included at 10%pa.
•    There would need to be clarity over what would happen if serious problems emerged during implementation, eg a substantial fall in the housing market that undermined the viability and cash flow of the project. Security for loans would lie in the development value of the land on the existing school site rather than the new school. There is no contingency plan as yet for a situation where funds ran out during housing construction, but building will be on fixed-price contracts. Discussions with potential financiers on the terms and conditions of financing would be initiated once planning permission was obtained.
General
•    B21 repeatedly emphasised that they want this to be a community project through engagement and support from the Parish Council and the community at large.
•    They emphasised their strong belief that the project offered significant benefits to the community over and above getting a new School.
•    They would welcome input/discussion on housing mix, uses of the Community building and use of expected surpluses.
•    In particular they welcome ideas about housing mix, use of surpluses and governance related to use of expected ongoing surpluses.

Agreed Action Points

•    B21 to provide the spreadsheet showing the financial analysis that has been done.
•    B21 to provide the latest (bit still provisional breakdown of the proposed housing.
•    PC to be asked to consider B21 request for further dialogue on the project and input into governance and ongoing management.

Annex
Breakdown of Current Housing plans:

5 Bedroom :   3
4 Bedroom :   15
3 Bedroom :   8
3 Bedroom Retirement :   2
3 Bedroom Affordable :   2
2 Bedroom :   6
2 Bedroom Affordable :   5
Total :   41