Agenda item

Report to follow

At this point (7.40 p.m.) the Council adjourned. The meeting reconvened at 8.34 p.m.

Following a report in November 2010, this report provided an update to allow the decisions to be communicated as part of a “Final Offer” to the Olympic Park Legacy Company (OPLC) on 21 January 2011.  The report highlighted:

·  The benefits of making a bid for a community stadium, including West Ham United (WHU) as the key tenant but offering the largest concert venue in London (91,000), a state of the art athletic venue and potentially the largest cricket facility in the world.

·  That there remain significant financial, community and regeneration policy reasons, and a sound business case for being part of a Stadium Company (Special Purpose Vehicle (SPV)).

·  There is also a sound business case for making a repayable loan of up to £40m to the SPV to pay for part of the stadium conversion costs, promising a significant return for Newham residents.

·  The repayable loan to the SPV is supported by a guarantee from the WHU owners, which along with other mechanisms such as a rent reserve, helps reduce the risks for Newham.

Decisions

The decision was put to the vote.  Six Councillors, by rising to their feet, indicated under Council Procedure Rule 4, Paragraph 21, that they wished for a recorded vote.

Agreed on a recorded vote of 49 For, with none Against and no Abstentions:

1.  to give delegated authority to the Chief Executive, in consultation with the Executive Director of Resources and the Divisional Director of Legal, Democratic and Human Resources, to submit, on behalf of the Council, as joint bidder with West Ham, the "final offer" to the OPLC on the basis of the terms set out in the report; and authority to make such changes as he considers appropriate to the terms, provided that such changes do not create a significant increased risk to the Council in respect of either the community benefits or ensuring that repayments are made to the Council's loan;

2.  that the Council should provide for a repayable loan of up to £40m in its Budget Strategy for a loan to the Stadium Company (SPV) in 2011/12 and repaid over a maximum of 25 years, based on the terms set out in the report and with no negative impact on the Council’s resources and no impact on the Council’s ability to draw on other funding;

The provision of the loan is subject to the Chief Executive, in consultation with the Executive Director of Resources and the Divisional Director of Legal, Democratic and Human Resources, deciding that the following terms have been satisfied:

a)  That the owners of West Ham United (WHU) enter into a guarantee with the Council;

b)  satisfactory conclusion on the loan agreements between the SPV and Newham;

c)  agreement on the details of the proposed terms and conditions of the lease from the OPLC;

d)  Agreement of the SPV-WHU heads of terms;

e)  The receipt of satisfactory financial and legal due diligence reports.

3.  to note that the Chief Executive has power to negotiate with WHU, central Government and the OPLC in respect of the Council's proposals contained in the stadium bid and that these powers extend to the commercial terms between the parties and the terms on which the SPV will be established and for the avoidance of doubt that such terms extend to agreeing the form of vehicle which the SPV or SPVs will be and to the setting up of such a vehicle or vehicles.  The membership of the SPV may evolve with organisations such as OPLC and Westfield joining the Company;

4.  that in the event that the Council and WHU’s joint bid is accepted as “preferred bidder", to delegate to the Chief Executive, in consultation with the Mayor, the Executive Director of Resources and the Divisional Director of Legal, Democratic and Human Resources, authority to enter into any appropriate agreements on behalf of the Council:

(a)  in relation to the SPV or SPVs including member agreements; shareholders agreements; memorandum of association and articles;

(b)  to enter into appropriate loan agreement or agreements with WHU and to enter into appropriate guarantee agreement or agreements with Messrs Sullivan and Gold and any other organisations to secure the protections for the Council as set out in the report;

(c)  to enter into such other agreement or agreements with WHU, the OPLC, Westfield and such other persons as may be considered appropriate in order to secure the objectives and protections for the Council in connection with securing the community and regeneration legacy for the Olympic Stadium as set out in the report;

(d)  agreement to receive £35m grant from OPLC towards the conversion cost works if receipt of this grant is on acceptable terms and does not increase the risks for the Council.

5.  that the Chief Executive report back to Council and/or Cabinet, as appropriate, should he consider that following further negotiations, there is, in his opinion, a significant increased risk to the Council to either the community benefits or in respect of ensuring that repayments will be made for the Council’s loan.