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Agenda item

West Bar Square Update

Report of the Interim Executive Director, Place

Decision:

16.1

To provide an update on this strategic regeneration project and seek approval for  the City Council to accept the new sources of external funding to support delivery outlined within the report.

 

West Bar Square is a long standing strategic project promoted by the Council which aims to extend the City Centre to the riverside, Kelham and Castlegate and reduce severance of Burngreave from the City Centre. The site is currently mostly vacant land and temporary car parks. Its development will create a vibrant new place including new ‘build to rent’ apartments and large-scale office development in high quality buildings set around new public realm. It is one of the few sites in the City Centre that can accommodate large floorplate offices and is particularly well suited to Govt/Public Sector relocations/consolidation due to existing occupiers nearby and lower rental values than in the prime core of City Centre.

 

 

16.2

RESOLVED: That Cabinet:-

 

 

1.    That Cabinet approve the proposals set out in the report and the terms of the proposed agreements. In so doing, Cabinet agree not to terminate the existing agreement with Urbo and Legal & General; and

 

2.    That Cabinet delegate 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.

 

 

16.3

Reasons for Decision

 

 

16.3.1

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.

 

 

16.3.2

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.

 

 

16.3.3

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

 

 

16.3.4

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.

 

 

16.3.5

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.

 

 

16.3.6

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

 

 

16.3.7

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.

 

 

16.4

Alternatives Considered and Rejected

 

 

16.4.1

The 2020 agreement with Urbo and L&G includes an option for the Council to terminate the agreement in April this year 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.

 

 

16.4.2

It would then be necessary for Urbo to find a new source of development finance. In the current economic circumstances that will not be straightforward, but it is possible that the scheme would still eventually be delivered in more phases over time. However there is no doubt that this would take considerably longer to achieve than what is being proposed.

 

 

16.4.3

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.

 

 

16.4.4

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.

 

 

16.5

Any Interest Declared or Dispensation Granted

 

 

 

None

 

 

16.6

Reason for Exemption if Public/Press Excluded During Consideration

 

 

 

None

 

 

16.7

Respective Director Responsible for Implementation

 

 

 

Executive Director of Place

 

 

16.8

Relevant Scrutiny and Policy Development Committee If Decision Called In

 

 

 

Economic and Environmental Wellbeing

 

 

Minutes:

16.1

The Executive Director - Place provided an update on this strategic regeneration project and seek approval for  the City Council to accept the new sources of external funding to support delivery outlined within the report.

 

West Bar Square is a long standing strategic project promoted by the Council which aims to extend the City Centre to the riverside, Kelham and Castlegate and reduce severance of Burngreave from the City Centre. The site is currently mostly vacant land and temporary car parks. Its development will create a vibrant new place including new ‘build to rent’ apartments and large-scale office development in high quality buildings set around new public realm. It is one of the few sites in the City Centre that can accommodate large floorplate offices and is particularly well suited to Govt/Public Sector relocations/consolidation due to existing occupiers nearby and lower rental values than in the prime core of City Centre.

 

 

16.2

RESOLVED: That Cabinet:-

 

 

1.    That Cabinet approve the proposals set out in the report and the terms of the proposed agreements. In so doing, Cabinet agree not to terminate the existing agreement with Urbo and Legal & General; and

 

2.    That Cabinet delegate 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.

 

 

16.3

Reasons for Decision

 

 

16.3.1

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.

 

 

16.3.2

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.

 

 

16.3.3

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

 

 

16.3.4

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.

 

 

16.3.5

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.

 

 

16.3.6

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

 

 

16.3.7

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.

 

 

16.4

Alternatives Considered and Rejected

 

 

16.4.1

The 2020 agreement with Urbo and L&G includes an option for the Council to terminate the agreement in April this year 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.

 

 

16.4.2

It would then be necessary for Urbo to find a new source of development finance. In the current economic circumstances that will not be straightforward, but it is possible that the scheme would still eventually be delivered in more phases over time. However there is no doubt that this would take considerably longer to achieve than what is being proposed.

 

 

16.4.3

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.

 

 

16.4.4

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.

 

 

16.5

Any Interest Declared or Dispensation Granted

 

 

 

None

 

 

16.6

Reason for Exemption if Public/Press Excluded During Consideration

 

 

 

None

 

 

16.7

Respective Director Responsible for Implementation

 

 

 

Executive Director of Place

 

 

16.8

Relevant Scrutiny and Policy Development Committee If Decision Called In

 

 

 

Economic and Environmental Wellbeing

 

 

Supporting documents: