The Director of Resources and Housing:
a) Approved the establishment of the Leeds District Heating PipeCo
Limited SPV on the terms set out in this report and its appendices
and request Addleshaw Goddard to enact that decision.
b) Ensured all agreements and documents are to be executed, signed
and despatched in accordance with the governance arrangements of
Leeds City Council including the constitution and sub-delegations
schemes.
c) Noted that the grant offer is £50k lower than our
application and therefore increase the supported prudential
borrowing to £3.243m.
d) Approved the award of a NEC3 option A contract to Vital Energi
Utilities Limited for the phase 2 works, based on a minor variation
of the existing Design and Build contract for phase 1, with a value
of £4.952m.
e) Gave permission to immediately novate the phase 2 contract with
Vital Energi to the Leeds District Heating PipeCo Limited SPV once
established and to sell the partially complete network to the SPV
at cost plus VAT and to provide a PCG to the benefit of Vital
Energi guaranteeing the SPV’s performance under the novated
contract, and grant authority to the Chief Officer, Sustainable
Energy and Air Quality to enter into all other agreements required
to give effect to this decision.
f) Agreed to passport the full grant value of £2.439m to the
Leeds District Heating PipeCo Limited SPV once received, with no
mark up or deductions, and through a funding agreement require the
SPV to meet the terms of the HNIP grant agreement.
g) Agreed that the council will loan the SPV £2.9m at 4.94%
fixed at the point leant over 38 years, the minimum state aid
compliant rate, in consultation with the Section 151 officer.
h) Agreed to pay the SPV an annual use of system charge of
£200,000 indexed for the right to transport heat through the
SPVs district heating network.
i) Approved the award of a contract to Ove Arup and Partners Ltd to
provide NEC3 PM and supervisor services during the construction of
phase 2, based on a minor variation of the District Heating Project
– Project Manager and Supervisor Services contract, with a
value of £100k.
j) Agreed to immediately novate the phase 2 contract with Ove Arup
and Partners Ltd to the Leeds District Heating PipeCo Limited SPV
once established and grant authority to the Chief Officer,
Sustainable Energy and Air Quality to enter into all other
agreements required to give effect to this decision.
k) Agreed to add the Leeds District Heating PipeCo Limited to the
council’s employer’s liability insurance and public
liability insurance.
l) Agreed the SPV should use the council’s bank account, with
appropriate FMS separation, subject to HMRC approval and to
cashflow losses in the early years up to an estimated £1.5m,
prior to the SPV turning a profit.
m) Enact the April 2019 Exec Board report decision to connect the
Town Hall, Civic Hall, Museum, St George House and Library/Art
Gallery to the district heating network via the phase 1 contract
with Vital, at a cost of £344k to be funded by general fund
prudential borrowing.
n) Noted that any construction cost overruns will be funded via
increased council lending to the SPV supported by an increased
service charge and to take this decision in consultation with the
Section 151 officer.