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Agenda item

Future High Streets Fund Bid

Summary:

 

This is a key decision as the Council could incur expenditure or savings beyond the threshold agreed by the Council.

 

The report provides the Cabinet with details of the Future High Streets Fund bid and sets out the next stages in the bidding process.

 

The Ministry of Housing, Communities & Local Government (MHCLG) is looking for ‘shovel ready’ schemes as part of the bidding process. They have now advised that to be considered as ‘shovel ready’, the scheme would need to have planning in place. In order to progress the Co-op project so that it can form a central part of the Council’s bid, the developer for this project now needs to push forward with the planning application. The developer would normally wait until any viability issues with the scheme have been addressed before submitting a planning application. Therefore, the Council will need to underwrite the planning fees to the sum of £1.4m to mitigate the developer’s risk in the event that the scheme is unable to proceed.

 

Recommendations:

 

1.    That progress on the Future High Streets Fund bid be noted; and

 

2.    That the Council underwrites the planning application fee(s), in the sum of £1.4M, in respect of the Co-Op scheme, in the event that the scheme does not proceed.

Minutes:

The Cabinet Advisory Panel received a report detailing progress with the Council’s bid for funding from the Future High Streets Fund in respect of the Co-Op development scheme and setting out the next stages in the bid process. The Council’s initial ‘Expression of Interest’ had been selected to go forward to the next assessment stage which would involve producing a full business case for submission to the Ministry of Housing, Communities & Local Government in November 2019 (MHCLG).  

 

The MHCLG was looking for schemes that were ‘shovel ready’ and could progress quickly and had advised that to be considered as ‘shovel ready’, the scheme would need to have planning permission in place. In order to progress the Co-Op project so that it could form a central part of the Council’s bid, the developer for this project now needed to submit a planning application. In normal circumstances the developer would wait until any viability issues with the scheme had been identified and addressed before submitting a planning application. Given the timescales involved this would not be possible and in order to submit an application the developer was therefore looking for the Council to underwrite the costs of moving the scheme to the planning stage to the sum of £1.4m to mitigate the developer’s risk in the event that the scheme was unable to proceed.

 

Members welcomed the scheme and the benefits that it offered for the vitality and development of the town centre. However some Members expressed concern that the Council was being asked to provide a guarantee to underwrite the developer’s costs, and ultimately their profits, to the tune of £1.4M when there was no certainty that the Council’s bid for Central Government funding would be successful. They were also concerned that the development should not experience the same problems previously encountered with the Lowfield Street development and questioned the impact if the Council had to pay the developer out of New Homes Bonus money.

 

The Strategic Director (External Services) explained that this was a key site and that the Council would work closely with the developer to ensure that it went ahead, including exploring other options to ensure that the scheme remained viable where appropriate. The project was substantially different from the Lowfield Street development where delays had been due to the approach taken by Tesco as the landowner. The payment of £1.4M to the developer would only be made if the scheme became unviable and could not progress and would be made to cover the costs incurred by the developer in progressing the scheme to the stage when it could be deemed to be ‘shovel ready’. This money would not come from revenue budgets but from New Homes Bonus money which was held as a reserve.  A Member also asked for an explanation of what viability issues might arise and was advised that this might cover anything which meant that the development was not cost effective for the developer to the point that the scheme then became commercially unviable for them. The Head of Regeneration explained that this would include the rising costs of construction and development and that mixed use schemes such as the one that the Council wished to put in place had quite low margins for developers. However the public benefits from the development, including the Health hub and the public space element would be significant, but that the Council was also seeking a high build quality which would also have viability implications for the developer. Officers were also working closely with the developer and the local Health Authority to explore other funding options, including the use of CIL, to support the sustainability of the scheme.

 

Other Members highlighted the fact that the commitment to underwrite the developers’ costs was necessary to stand a chance of attracting £7.7M funding from Central Government and that if the money needed to be paid it was come out of reserves rather than revenue budgets. Members felt that the Council’s track record on submitting successful funding bids was robust and that this bid stood a relatively good chance of being successful given the advanced stage of the current scheme proposals and was worthy of support. A Member wondered whether the bid might be a suitable item for consideration by the Scrutiny Committee and also asked whether the creation of the Health Hub would result in the closure of other local GP surgeries and the impact that this might have on elderly and vulnerable residents accessing GP services. The Chairman felt that these were matters to be addressed elsewhere when the matter was considered by the Development Control Board.  

 

Members welcomed the regeneration opportunities arising from the development and strongly supported the bid and endorsed the recommendations contained in the report. It was however suggested that the Cabinet might wish to caveat the underwriting of the developers costs to install a timeframe, or backstop, to the period during which it was prepared to underwrite these costs as well as capping the amount at £1.4M. 

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