Brighton & Hove Council will abandon its partnership with Crest Nicholson on the £400m King Alfred regeneration project if the housebuilder fails to sign its development agreement by 30 March 2019.
The council said it will explore alternative options and may choose to take the development in-house.
The 4.5-acre regeneration will see 560 homes and the replacement of the old 1930s King Alfred Leisure Centre.
In a letter to the council, Crest Nicholson Regeneration’s managing director Scott Black said: “This commitment requires greater clarity on the form and timing of Brexit… as certain scenarios could yet undermine the project’s feasibility.”
Greater certainty
He added that if the government reaches a deal with a “known exit strategy” the project will continue.
Black said: “The current deadlock is most unhelpful and does not provide the basis for major investment decisions in the interim.”
He said once greater certainty over the deal and future trading relations with the EU is achieved the housebuilder will enter into the development agreement and progress the scheme.
Speaking after the council’s policy, resources and growth committee on Thursday, 24 January, council leader and committee chair Daniel Yates said that the council was left with no choice but to give Crest Nicholson a final deadline.
Yates said: “Whilst we recognise and have sympathy with the uncertainty that Brexit brings and how challenging this is for developers who are making investment decisions, we have to see progress on the delivery of a new leisure centre complex. The council – and the people of Brighton & Hove – must have serious and absolute commitment to this scheme.”
The committee resolved that if the development agreement is not signed by the end of January the council will explore alternative delivery options – including prudential borrowing and in-house delivery of the project.
The committee unanimously voted to give Crest Nicholson a final deadline of 30 March to enter a development agreement. After this point, the council will no longer enter into an agreement with Crest Nicholson and will evaluate these alternatives.
“Financially challenging”
The council relaunched plans to develop King Alfred in 2013, after the 2003 appointment of developer Karis fell through. Karis failed to secure funding for the planned 750 homes and was dropped in 2008.
In 2016, the council selected Crest Nicholson in partnership with Starr Trust as the preferred bidder, and the development agreement was due to be signed on Friday 25 January 2019. The £40m leisure centre revamp was previously set to be funded by Crest Nicholson’s housing delivery arm. The scheme includes an £8m contribution from Brighton & Hove Council.
However, Crest Nicholson has struggled with funding, projecting a £29m shortfall based on 20% profit and 20% affordable housing delivery. Following a report from Deloitte, the council acknowledged the project “remains financially challenging”.
In December, Yates said: “The council remains committed to delivery of a new sports centre in Hove.”
Yates said if it was not possible to continue in partnership with Crest Nicholson, the council would review options. He did not rule out selling the site.
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