Successes of the Cowes Waterfront Initiative
2.3 The Cowes Waterfront Initiative has already achieved a number of successes in the initial implementation phase.
·
Adoption of the Cowes Waterfront Strategic Development Framework
·
£15 million investment SEEDA in site assembly, remediation,
infrastructure works and services – including Three Gates Road, Cowes; West
Medina Mills; land at Whippingham; and East Cowes.
·
Partners support for GKN expansion at Osborne Works - including the
Composites Research Centre
·
Acquisition of a site for a Technology Park at Whippingham
·
£5 million investment by English Partnerships in the East Cowes Project
·
Launch of Venture Quays housing over 100 new jobs, including an
expansion by VESTAS Blades UK and Solent Composite Systems
·
Sponsorship and relocation of Offshore Challenges retaining the company
on the Island safeguarding 30 jobs
·
Sale of serviced land and approval of premises for the expansion of
local companies at Cowes Business Park off Three Gates Road - including a new
facility for Artigiano
·
Approval of mixed use development at Shepard’s Wharf
·
Successful support for the Island’s Olympic Sailing Athletes as part
of Team Isle of Wight
·
Sponsorship of Gipsy Moth IV through the Area Investment Framework
·
3 new inward investments
and support for 6 indigenous companies
·
The submission
of the East Cowes Project outline planning application which responds to the
extensive community consultation through the masterplanning stage
·
The
acquisition of the former Trinity House premises in East Cowes.
·
The submission
of a bid for the Big Lottery Fund’s Living Landmark programme.
·
Commissioning
of a hydrological model for the Medina Estuary to enable testing of development
proposals
2.4 The potential for further achievements is high in the Cowes Waterfront area because of the Council’s partnership with regional and national agencies. This approach is entirely consistent with the priorities of the Area Investment Framework and the emerging Local Area Agreement. These successes are perhaps looked at with some jealousy by other parts of the Island and this is one of the issues the Island Investment Company will seek to address.
Securing Regeneration for the Whole Island
2.5 The Local Strategic Partnership (LSP) has recently concluded work on its 2020 Vision for the whole Island and if we are to be successful in the longer term it will be imperative to balance investment around the island – when the time is right. The emerging Island Plan which went out for a second full consultation at the end of January supports the continued focus on the Medina Valley whilst also recognising the need to develop regeneration opportunities in Ryde, The Bay area and appropriate rural communities phased over the twenty year life of the plan.
2.6 It is clear from the existing knowledge about the Island that infrastructure investment is falling behind development needs and, in particular, employment related regeneration land is now at the point of being in short supply. It is this island gap which the Island Investment Company would help to address in the long term.
2.7 As part of the Cowes Waterfront Initiative SEEDA has assembled a number of key sites which will help to balance the needs of business, infrastructure, the community and the environment. The main sites are the former GKN North Works site in East Cowes, West Medina Mills, land adjoining Osborne Works at Whippingham and Cowes Business Park (formerly Three Gates Road).
2.8 Under normal circumstances when SEEDA disposes of assets following redevelopment the capital receipts generated are required to offset the costs of activities elsewhere in the region. Whilst SEEDA can bid for additional funding as part of future spending reviews the competing demands for funds from the northern regions, support for the planned growth areas and the 2012 Olympics means that less funding is likely to be available for re-investment in this region and potentially in the Isle of Wight. In the longer term, funding for SEEDA to support regeneration is becoming more difficult to secure due to the region’s perceived and actual success.
2.9 To focus and optimise the investment in the regeneration priority areas SEEDA has developed companies to deliver local regeneration working in close partnership with other local authorities where the receipts are recycled back into the company for re- investment in new projects.
2.10 A further and important benefit of this type of company is that, provided certain levels of ownership are not exceeded, it can borrow funds from commercial sources against the assets held. This can then be invested in infrastructure/development sites to help maximise the opportunities for regeneration that are more likely to match the pace of local needs.
2.11 Once the Island Investment Company mechanism is available it is then envisaged that when the Medina Valley is regenerated then the receipts from the Cowes Waterfront Initiative would be recycled to support investment in the other priority regeneration areas including Ryde, The Bay area, West Wight and subsequently appropriate rural regeneration projects. Currently there has been a significant investment (c. £15m) in development sites by SEEDA with a limited amount of receipts. If the Council is to secure the additional investment (c.£10m) to realise necessary opportunities though the Company it will need to seriously consider becoming an active partner by transferring some of its property assets into the company.
What is
the Island Investment Company?
2.12 The Council has powers to enter into this type of company under the auspices of Part 1 of the Local Government Act 2000 specifically in relation to the promotion of economic, social and environmental well being. These powers will be exercised as part of the community strategy and as such in support of the delivery of our 2020 Vision.
2.13 Recent guidance published by the Local Government Association confirms that companies of this nature can use land assembly, investment and planning powers to create confidence and stimulate private sector investment to enable the expectations of regeneration to be realised. This guidance recommends that local authorities should own and be key members of such companies, as without their ownership and involvement, local accountability and delivery will suffer. A number of studies have shown that local authorities involved in this type of company have been able to achieve success in support of the local leadership role in partnership with key stakeholders.
2.14 In view of the legal status of such a company the Council has taken specialist advice as part of the gateway review of options. The main objectives of the company have been established and are attached as Appendix A. These have been used to develop the Memorandum and Articles of Association which will govern the day-to-day activities of the Company.
2.15 SEEDA has indicated that it would like to establish the Company as soon as possible and officers have been working on a corporate basis to achieve early implementation in view of the advantages this gives to the Island.
The Nature of the Company
2.16 The initial partners will be restricted to the Council, SEEDA, EP and IWEP. Other public sector partners who have expressed an interest in the company are the Housing Corporation (provides funding for affordable homes) and English Heritage (potential funding through lottery bids). The Company Articles will be designed to allow partners from the public, private, community sector when this is expedient to deliver key objectives.
2.17 Legal advisors have confirmed that if the company structure is to satisfy central government rules a strong private sector involvement is needed and currently this will need to be IWEP. To achieve this balance two options for the creation of the Company have been reviewed and are:-
i A new company limited by guarantee; or
ii IWEP’s existing company structure with alterations to its Articles
2.18 An initial 5 year business plan for the Company with a detailed cash flow for the first three years is currently in preparation. The cash flow will identify the key projects to be delivered during the course of this period, the need for any borrowing and management fees involved is achieving the outputs. Income from the assets held within the Company, such as the substantial lettings at Venture Quays etc will be taken into account, and used to offset operational costs. As part of the preparation of the business plan a risk management register will be established.
2.19 In addition to the property assets from SEEDA it is intended that a small number of assets in East Cowes and Pan will be transferred into the Company by the Council. The value of assets being transferred by SEEDA and the Council will be valued independently.
3 STRATEGIC CONTEXT
3.1 As mentioned earlier the Island Investment Company will help to deliver the 2020 Vision for the Island, the Island Plan and the emerging Economic Development Strategy.
3.2 The regeneration of the Island will need to achieve three key outcomes. A continuation of the growth in GVA relative to the SE and the UK, improvements in average wages on the Island which are currently 19% below the UK average and sustainable development.
3.3 The Island Plan will be at the centre of these objectives which will rely on improved asset management, a strong recognition of the need to look after the environment whilst also investing in infrastructure. This approach will be underpinned by a joined up approach to investment by the Council, its partners and the private sector. For the Council this will mean that its capital programme, Local Transport Settlement and funds from Section 106 agreements will need careful programming, particularly if this is to be used to match fund lottery and other grant bids.
3.4 The Council’s public sector partners, SEEDA, English Partnerships (EP), the Housing Corporation (HC) and potentially English Heritage (EH) will need to be encouraged to align their spending to match agreed priorities. This planned approach to public sector investment in infrastructure and the environment will help the private sector to have confidence to invest. The Island Investment Company which is a type of Local Delivery Vehicle (LDV) will play an important role in the best use of assets. At the same time, the Council is bidding to the government to become a Rural Highway Maintenance pathfinder using Private Finance Initiative (PFI) to deliver the fundamental improvements needed to our roads in support of regeneration. The Minister for Transport has recently confirmed that the submission of an Expression of Interest should be submitted in September.
4 CONSULTATION
4.1 The proposal to establish an Island Investment Company has been discussed with key stakeholders over the past two years and has been well received as a potential enabling solution.
5 FINANCIAL AND BUDGET IMPLICATIONS
5.1 The Council’s assets will be used to help the Company to provide investment in infrastructure and development sites to achieve substantial regeneration projects. The assets to be transferred have yet to be formally agreed but are likely to be in the order of £1 million for the Council and £15 million for SEEDA (including £5 million of English Partnerships’ investment). The worst case scenario for all of the founding partners will be that the asset value and income from the original property will be forgone to achieve the regeneration programme.
5.2 The benefit for the Council in establishing the Company is to enable the future delivery of the regeneration of the key sites; to secure additional public and private sector investment in the Island; and to retain the value of SEEDA’s assets on the Island after disposal for development and the re-investment in agreed projects. If the Company is not established, these funds would return to SEEDA and the Island would need to compete with other regional priorities and the scale of SEEDA’s investment is likely to be scaled down.
5.3 The Strategic Asset Management Group will consider the business case for the transfer of assets including the capital value and any associated income. The income from SEEDA’s lettings in Venture Quays in East Cowes is currently in the order of £700,000 and will be available to invest and deliver the objectives of the Company.
5.4 The Memorandum of Association for the new Company will include terms which ensure that any of the Council’s assets which remain in the Company are returned together with a proportionate share of other assets in the event that it is wound up.
6 LEGAL IMPLICATIONS
6.1 The Council has powers to enter into this type of Company under Part 1 of the Local Government Act 2000 specifically in relation to the promotion of economic, social and environmental wellbeing.
6.2 Expert legal advice has been obtained to ensure that the Council’s involvement in the Company satisfies financial and legal regulations.
7 OPTIONS
7.1 (i) To establish a new Company limited by guarantee
(ii) To adjust the Isle of Wight Economic Partnership Company structure to meet the new objectives of the LDV
(iii) To defer becoming a member of the Island Investment Company until the business plan and management of the Company is operating successfully
(iv) Not to establish a Company.
8 EVALUATION/RISK MANAGEMENT
8.1 The delivery of the regeneration programme for the Island cannot be achieved by the Council on its own. Indeed, the successes achieved to date have very much relied on the active and additional investment by the main partners. If these investments are to benefit the Island in the long term, a Local Delivery Vehicle will be essential in view of decreasing public sector funding and consequently option (iv) is not appropriate.
8.2 It is clear from the legal advice that private sector involvement in the Company is paramount if the central government is to approve the transfer of assets by SEEDA and EP. Consequently, the involvement of IWEP in the Company is essential and whilst it is not able to contribute property assets it will provide essential private sector balance as well as advice, guidance and expertise which will greatly help the delivery of objectives.
8.3 The key issue on the selection of option (i), (ii) or (iii) relates to the drafting of the Memorandum and Articles of Association, the availability of a detailed business case, and a management structure to deliver the objectives of the Company. The current objectives of IWEP would allow the holding and managing of property and indeed, this has been successfully achieved at the Innovation Centre on St Cross Business Park
8.4 The primary objectives and scope of the LDV are very similar to IWEP and if the Island and its Partners are to benefit from economies of scale as well as joined up delivery it would be preferable if these were merged at the outset. This approach would avoid any duplication and give a clear lead to economic development and regeneration strategy priorities and delivery.
8.5 The development of the Business Plan for the Company is currently at an early stage and has not yet been fully tested for viability and risk. To address these points the financial advisors for the project will be holding a risk workshop in the near future to develop a risk register for the Company’s business plan. This will be intrinsic to the activities of the Company and will ensure that risks to members of the Company are managed at all times. Best endeavours are currently being made to complete these important documents in time for the early establishment of the LDV. It is recommended that option (ii) is adopted as this provides the best means of delivering the Council’s objectives for regeneration on the Island.
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RECOMMENDATIONS (i) The Cabinet is recommended to approve option (ii) subject to a revision of the objectives of IWEP and the acceptance of the business plan/management arrangements of the Company being agreed by the founder members. (ii) That the Strategic Director for Economic Development and Regeneration be authorised to negotiate the Memorandum and Articles of Association of the Company in consultation with the Cabinet member for Economy, Regeneration, Tourism and Leisure and Cabinet member for Resources, Auditing and Council Efficiency; Customer Champion and the Chairman of the Strategic Asset Management Group. (iii) That the Strategic Director for Economic Development and Regeneration be authorised to conclude the details of the Business Plan in consultation with partners of the new Company and the nominated members. (iv) That the property assets to be transferred into the Company be approved by the Strategic Asset Management Group subject to a business case which conforms with the emerging Strategic Asset Management Plan. (v) That once the Strategic Director for Economic Development and Regeneration in consultation with the nominated members is satisfied with the business case and management arrangements the Council becomes a member of the Company. |
BACKGROUND PAPERS
The Role of Local Delivery Vehicles in Creating Sustainable Communities (published by the Local Government Association – March 2005)
APPENDICES
The main objectives of the Company (Appendix A)
Contact details : Derek
Rowell, Strategic Director for Economic Development and Regeneration Tel: 01983
823146 email : [email protected]
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DEREK ROWELL Strategic Director for Economic Development and Regeneration |
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COUNCILLOR TIM HUNTER-HENDERSON Cabinet Member for Economy, Regeneration, Tourism and Leisure |
CLLR JILLY WOOD Cabinet Member for Resources, Audit, an Efficient Council and Customer Champion |
Appendix A
ISLAND INVESTMENT COMPANY
DRAFT OBJECTIVES
The
following draft Objectives have been prepared by the Isle of Wight Council
officers for discussion with its Partners for inclusion in any future Company
Memorandum of Association.
1.
To facilitate, co-ordinate and unify the flows of public and private
sector investment into the Isle of Wight in support of the renaissance and
regeneration of the Isle of Wight in accordance with requirements of the agreed
delivery plan and funding strategy.
2.
To co-ordinate and facilitate the acquisition of land and site assembly
in conjunction with the company’s lead partners and unlock key development
opportunities to facilitate development partnerships between the public and
private and/or voluntary sectors.
3.
To ensure that the type, quality and timing of investments proposed for
key areas on the Island are in line with the requirements of the delivery plan.
4.
To project manage major projects, including property development
initiatives to a successful conclusion in line with requirements of the
delivery plan.
5.
To effectively monitor the performance of implementing the renaissance
and regeneration of the Island set against agreed targets.
6.
To be fully briefed on all aspects of the Island’s regeneration needs
identified through the Community Strategy, Area Investment Framework, Local
Development Framework and to act as a catalyst in areas of activity outside the
company’s remit by prompting and facilitating action by others.
7.
To encourage the partners of the company to agree on an annual basis a
delivery plan to effectively procure the Renaissance and regeneration of the
Island by making best use of the funding streams available within and to the
company.