Decision ref
0066 2024/25
Decision date
05/12/2024
Portfolio
Transport and Environment
Wards
Bold and Lea Green, Eccleston, Moss Bank, Parr, Peasley Cross and Fingerpost, Sutton North West, Sutton South East, Thatto Heath, Town Centre, Windle
Title
Omega bus service legal agreement
Summary
Legal agreement between St Helens Borough Council and Merseytravel to enter into a funding agreement for the procurement of cross border bus services to Omega West.
Purpose
This report outlines the requirement of a legal agreement between St Helens Borough Council and Merseytravel in order to enter into a funding agreement for the procurement of cross border bus services.
Merseytravel is the executive body that provides professional, strategic and operational transport advice to the Liverpool City Region Combined Authority (including Local Authorities). It is also the delivery arm for making transport happen in tendering for bus service provision.
Background
This agreement allows section 106 funding secured by the Council for the Omega West development to be transferred over to Merseytravel who will procure, manage and help operate the Omega West bus service contract on behalf of St Helens Council.
The Omega bus service is planned to begin operation in late 2024 to serve the new units opening at Omega West. Entering into a contract with Merseytravel is crucial in getting the service operational. Additionally, the contract agreement will allow Council and Merseytravel to advertise the new service alongside the new jobs (recruitment campaigns) at Omega West providing St Helens residents with as much opportunity as possible to attend recruitment days and interviews to support residents attaining employment at Omega West.
The section 106 agreement for Omega West included a target for occupiers to recruit 30% of their staff from the St Helens Borough area. Despite the 30% target not being required legally, occupiers must show commitment to recruiting locally through engagement with local colleges, open days and liaising with council officers to ensure local residents are best placed to attain employment at Omega West. Notably, providing job opportunities for residents in more deprived areas of the borough which have lower rates of car ownership.
A section 106 agreement was signed by the Council and Omega West in 2021 which allocated £750,000 in developer contributions to public transport. improvements. The contribution was 'index linked' so at the time of payment this was calculated at £25045.13. Thus, the total £775,045.13 is to be used for the public transport improvements and the contribution is not subject to compound interest so this amount will not increase.
However, the £775,000 will have to be returned back to the developers with 3% interest if the contribution is not spent within 15 years of the legal agreement being signed.
Conclusion
The Council is seeking permission to enter into a legal contract with Merseytravel in order to progress and procure the Omega West bus service provision which is planned to commence operation by late 2024.
Funding for the bus services totals £775,045.13 which the Council has already secured in section 106 developer contributions. The funding is to be spent with Merseytravel via a funding agreement who will procure, manage and help administrate the service once in operation, whilst providing the authority with regular performance updates.
Risk Implications
The primary risk is having to return of the funds back to the developer if not spent by the date set in the agreement (by 2037). Failure to spend the contributions in the allocated time will result in the council losing all or part of the £775,000. Furthermore, the remaining balance will have to be returned back to the developers with 3% interest which will come at a cost to the council.
Additionally, there is a reputational risk to the Council of not delivering a bus service to residents seeking employment at Omega West which has no existing public transport links to St Helens Borough. Thus, residents without a car have difficulty attaining employment at Omega West in accordance with planning conditions.
The contract length has been determined as a minimum of two years assuming a worst-case scenario of minimal fare revenue. Therefore, having a minimum subsidy contract, reduces financial risk and liabilities to the authority awarding the contracts.
Measures to Redress Risk
SHBC legal have already engaged with legal representatives from Merseytravel with representatives from both organisations having regular dialogue to formulate the agreement to ensure funds are released to Merseytravel in accordance with the agreed contract.
Declarations Of Interest
None
Equality Impact Assessment
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More information
Please contact David Saville on 01744 676148
