A revised scheme worth about £33.8 million to build 93 affordable flats at a prime site in York is set for a decision.
Proposals to build 56 flats which would be rented at social rates and 37 sold through shared ownership deals have been drawn up for the Castle Mills site, in Piccadilly.
A City of York Council report stated the project would contribute to the local need for affordable housing and support the city’s economy.
It added challenging conditions at the site meant costs would be higher than normal, requiring a £10 million council investment including borrowing costs along with external grants and other cash.
It comes as the council’s executive will decide on how to move forward with the project to build the homes, which form part of the wider Castle Gateway Masterplan.
The latest proposals are set to go before the council’s executive on Tuesday (3 March).
The wider regeneration project also includes the Castle and Eye of York scheme, approved in December, to turn the area below Clifford’s Tower into a park and play area.
Previous plans approved in 2020 included building 106 apartments at Castle Mills and using the profits from market sales to fund public space improvements.
Those plans, drawn up under the previous Liberal Democrat and Green administration, also included a walking and cycling footbridge across the River Foss which has now been shelved.
The current Labour administration paused works on the previous version of the scheme in November 2023 after it became unviable, according to a council report.
Permission for the previous Castle Mills development which was granted in 2020 has since lapsed.
It also followed a Labour local elections pledge to build 100 per cent affordable housing developments on council-owned sites.
A viability review has since been done for the latest Castle Mills scheme after the only registered housing provider who expressed interest said they would no longer bring it forward.
The review found it would now be viable subject to the council getting more funding from Homes England and the York and North Yorkshire Combined Authority.
It will not be possible to build the flats to energy-efficient Passivhaus standards, according to the report which stated they would aim to meet council guidelines as much as possible.
Council officers stated that building the homes through the council’s own Housing Delivery Scheme was considered the least risky option to take the project forward.
Analysis found selling the site to either a housing provider or the highest bidder would be the most cost-effective but there was a risk the homes would not be built.
Officers have proposed funding the scheme through £10 million from the council’s Housing Revenue Account, £6.3 million from Right to Buy sales and the rest through external grants.
Some of the Housing Revenue Account money will have to be borrowed upfront, according to the report.
Secret business case
It added a business case which has not been made public presented a viable investment of funds for the project.
The report stated: “Whilst the abnormal site conditions of this site such as contamination, easement and flood attenuation, result in higher-than-average build costs, this is offset using subsidy to ensure delivery of a site that has previously been stalled, and which is part of the wider high profile Castle Gateway scheme.”
The executive will be asked whether to approve spending almost £2.4 million to take the project forward, with roughly £2.45 million already spent on the site.
Meanwhile, the development of designs for homes on the former Manor School site, in Acomb, is set to start later this year.
Bids for funding for three smaller sites, including Heworth’s 68 Centre, have also been accepted to help cover development costs including enabling works to prepare the site for construction.
Plans for 101 affordable homes at the Ordnance Lane site off Fulford Road were approved in August 2024 but work is yet to start on the development.
A total of 34 new Passivhaus homes at the Duncombe Square development, off Burton Stone Lane, were unveiled in September.
A further 78 energy-efficient homes at Burnholme Green are currently under construction.
Plans for those schemes were drawn up under the previous coucil administration.
