Report to: Strategic
Policy and Resources Committee
Subject: City Investment Framework
(Incorporating
Capital Programme,
City
Investment Strategy and N,S,E,W projects)
Date:
Reporting Officer:
Contact Officer:
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Purpose |
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The
purpose of this report is to begin to establish a firm Council agenda in
terms of what investment we can support within the limitations of budget,
people and political constraints. |
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Background |
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The
Council has stated ambitions of wanting to take a leadership role in the City
to improve the quality of life of citizens through place shaping and a number
of other measures as set out in our Corporate Plan 2008/11. The
physical aspects of place shaping are contained in some proposals within the
Councils Capital Programme; the commitments by Council to a City Investment
Strategy; the emerging priorities from the North, South, East, West debates
and the various discussions ongoing with other agencies both within and
outside of RPA discussions regarding assets and projects. As
always resources particularly money is in short supply and therefore a major
limitation on what can be actually be delivered. |
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Key
Issues Ambitions What does the City need or want |
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·
Capital Programme (see
appendix 1 for list of schemes) The Councils Capital Programme is a mixture of
basic facility replacement to enable service delivery e.g. depots or
crematoria; people based facilities e.g. centres, pitches and health and
safety or investment schemes e.g. Gasworks, North Foreshore, demolition of
Grove, Maysfield etc The
current financial position is that: Committee
has committed projects which require loans up to £56m. In addition, there are a large number of
uncommitted schemes which if they all went ahead would easily go beyond a
further £70m - £100m of expenditure. Some
of these uncommitted projects can make strong business cases e.g. a heat recovery
proposal on the North Foreshore with a short payback period; Woodvale and Regardless
of the merits of each case the bald fact remains that our affordability limit
in terms of borrowing is deemed by Financial Services as £45m and hence we
have an £11m shortfall on committed projects already. Never mind any further expenditure. The
advice from Financial Services is that there should be a moratorium on
further capital expenditure until finances recover. Members
however, have taken a different view in that they have asked for a review of
our Capital Financing Strategy to test the £45m affordability limit and see
if it can be stretched. The
bot Obviously
this will raise a political dilemma should any savings be found of where and
on what do the Members wish to allocate the ratepayers money. ·
City Investment
Fund/Strategy The
City Investment Fund/Strategy is a fund based on an annual % rate
contribution and capital receipts from asset realisation that is aimed at
supporting major iconic projects for the city. To date, commitment has been given to four
projects Titanic Signature Project; Lyric and Mac theatres and Connswater Community Greenway. The committed cost to Council for the next
four years is £16.2m of which so far we have raised £4.4m. The total expenditure on the four projects
is £153.5m but there is a Council funding gap of £11.8m. Although
we have recently received a £581,000 settlement for a land issue which should
be added to the fund. There
are a number of other ideas that have been suggested for funding within the
scheme but nothing is being moved forward until the current funding gap is
addressed. Details
of asset realisation are considered below under resources. ·
N, S, E, W emerging
Priorities N, S, E, W debates have occurred over the past few
months with some clear preferences emerging where Council should expend its
resources. Appendix 2 contains details of a written response
in regard to West Belfast has identified a number of projects
but has yet to propose a definitive list but wants doable projects such as St
Comgalls, Beechmount and
the Gaeltacht quarter to go ahead while others are
kept pending awaiting resources. The N, S, E, W projects obviously need prioritised
and there are some common themes such as tourism, sport, city gateways which
could perhaps be built into a programme with other government departments. Over and above the N, S, E, W debates there are
also important proposals and ideas for the city and city centre which need to
be at least considered. There are
various proposals for private office developments,
the Council will have more permanent office accommodation requirements post
RPA which will also bring demand from new boundary areas. There are also some business tourism ideas
such as a Convention Centre and new Welcome Centre and of course the Rapid
Transit proposal is beginning to take shape while the stadia
discussions remain ongoing. The key action emerging from the above is to get an
agreed City Investment Framework around what the Council can support relating
to our key place shaping and quality of life objectives. The framework must also be sufficiently
flexible to allow some projects to go ahead of others as finance, opportunity
and other partners permit. In other words we need an overall plan for the city
but we also need to action those projects that are immediately doable. In the long run most new investment is
rateable and so can build the city taxbase. |
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Key
Issue Resources what can the Council bring |
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In
broad terms the Council can bring a number of things to the table both now
and post RPA as set out below Council
Contribution Soft
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Political mandate for the city ·
Planning Support/community gain ·
Land assembly ·
International city marketing/branding ·
Community planning/convening role Hard ·
Money ·
Land ·
Skills and experience ·
Long term commitment The most pressing question at present is money and
this is addressed below. There are four basic sources of funding for
investment loan, capital receipt, grant and public private partnership. (i) Loan As mentioned above Council is currently over
committed in terms of loan and unless the mini budget review can squeeze
further revenue to support new loans the de facto position will be as advised
by Financial Services of a moratorium on any loan based investment or capital
programme. Even if money is found there will be a hard choice
of whether to allocate such monies to four key areas to keep the rate down; renew reserves; invest in capital or service
enhancement. Any such decision
will have to be mindful of potential medium term costs such as waste fines or
penalties, requirements for carbon reduction, major building maintenance
issues and of course RPA impact. Until the budget review is complete in October it
is difficult to move projects forward on a loan basis. (ii) Capital
Receipt Realising assets is slow and difficult and the poor
state of the economy and property market makes it difficult to get value for
money. However, we are progressing a
number of disposals as detailed in the tables below: Agreed Disposals:
Proposed Disposals Negotiations/Discussions
underway:
Total: Approx £20m Note: This assumes
however that all above sales proceed at current values, but given the current
economic conditions and volatile property market these sale prices and
potential for all sales to complete at these figures must be treated with
caution. Further Potential
Disposals Include:
The receipts from these sales are currently
allocated to the City Investment Fund which as mentioned has a shortfall if
£11.8m over the next few years. Depending on what can be agreed on an overall city
investment basis further consideration may need to be given to using such
funds to capital programme schemes and/or other projects or indeed the other
financing choices as stated. (iii) Grant Grants are a welcome source of income but they have
specific criteria that may not suit council projects or objectives; they
often require match funding and are front loaded in that the Council must
fund the expenditure upfront. A
further complication is that they are process heavy in that they are often
accompanied by a huge bureaucracy and the ratio of process expenditure to
actual project delivery is often poor. Having said that we must continue to seek out grant
and tailor our proposals accordingly. Grant aid may be a key factor in moving some
projects ahead of others especially as we have limited loan options. In a separate paper on todays
agenda are proposals for a Peace III bid which is 100% grant aided and if
successful could address some of the ideas coming from the N, S, E, W
debates. (iv) Public
Private Partnerships (PPP) Core Cities in GB are increasingly turning to PPP
models to take forward capital investment.
Included among these are Local Asset Backed Vehicles (LABV),
Accelerated Development Zones (ADZ) and JESSICA Urban Development
Funding. There are pros and cons to
all of these but in essence they all involve matching Council assets (money
or land) with private money to create investment opportunity or else are
another way of Council borrowing money. Council officers have been exploring these but they
could be risky, difficult to set up, require new legislation and so on. However, they may be the only option for
things like the North Foreshore. The key to any of these schemes is
knowing what you want to deliver before agreeing to any of these as
delivery options. Council officers will continue to keep abreast of
these options as we further develop a City Investment Framework. |
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Recommendations |
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It
is recommended that officers pull together an overall framework of investment
projects based on Capital Programme proposals, City Investment Fund schemes
and N, S, E, W outcomes and correlate that with a Capital Financing Strategy which
is a piece of work Committee have authorised together with the mini budget
review. It
is further proposed that officers prioritise the projects in terms of
strategic fit to Council objectives; wholelife
costs; funding; invest to save etc and then test that with the SP&R
Committee to agree a way forward. |
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Decision
Tracking |
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It
is proposed to bring an overall affordable programme of work for
consideration in October/November. |
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Documents
Attached |
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Appendix
1: Capital Programme - List of Schemes Appendix 2:
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