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Decision details

West Bar Square JESSICA Loan

Decision Maker: Executive Director, Place

Decision status: Recommendations Approved

Is Key decision?: No

Is subject to call in?: No

Purpose:

The West Bar Square Update report was approved by Cabinet on 17th March in which approval was sought to approval the proposals within the report, one of which related to the rental loan from the JESSICA Fund.

 

The report also delegated authority to the Executive Director Place in consultation with the Executive Director Resources and the Director of Legal and Governance to finalise, agree and execute the terms of the agreements and the terms of any other documentation required to give effect to the proposals set out in this report and generally to protect the Council’s interests

 

This report summarises the terms of the Facility Agreement and seeks authority to enter into the Facility Agreement and a Back to Back Agreement.

 

Decision:

That the Executive Director of Place:

 

1.    Approves the Council entering into the JESSICA Facility Agreement on the terms set out in this report;

 

2.    Approves the Council entering into the Back to Back Agreement with Urbo (West Bar) Ltd on the terms set out in this report; and

 

3.    Approves formal confirmation being given to Urbo and Legal & General confirming that the Council is not going to terminate the April 2020 agreement.

 

 

Reasons for the decision:

  • The West Bar Square development is a transformational project that ties together the northern fringe of the City Centre and Fargate with Kelham and Castlegate and removes a physical and psychological barrier from Burngreave to the City Centre;

 

  • The initial phases of the development secures £150m of private sector investment from Legal and General which would be a much needed boost to the local economy in the current economic climate;

 

  • Planning applications have been submitted for the first phase and could start on site by the end of this year;

 

  • The first phase of the project can generate Business Rate and Council Tax growth for the Council of approx. £143m with further significant amounts in future years from the next phases;

 

  • The requirement for the Council to take a 40 year lease of Office 1 is not without risk, however this is mitigated by the very low rent payable to L&G;

 

  • The proposed JESSICA loan reduces the risk further and also reduces the short term CIF requirement;

 

  • If the Council serves the termination notice in April and does not take the lease then it is highly likely that L&G will not proceed and the scheme will be stalled for several years.

 

 

Alternative options considered:

  • The 2020 agreement with Urbo and L&G includes an option for the Council to terminate the agreement this month and pay compensation towards costs incurred by the other parties. If that was to happen it is very likely that L&G would also not proceed as the involvement of the Council is extremely important to their partnership approach on regeneration schemes such as this;

 

·       If this approach were to be taken then the significant economic, environmental and social benefits to the city set out in the report would take much longer to materialise. The same would apply to the financial benefits accruing to the Council from new business rates and Council Tax;

 

·       The Council could decide not to take up the JESSICA or SCR Brownfield Housing Fund monies which have been negotiated. However, the costs to the Council of securing that funding are low and in terms of what benefits the funding secures that would not seem a commercially sensible option.

 

Publication date: 21/04/2021

Date of decision: 13/04/2021

Accompanying Documents: