Minutes:
The
Executive Member for Regeneration, the Executive Member for Environment and
Finance & Governance, the Director of Regeneration and Culture and the
Director of Finance submitted a report for the Executive’s consideration. The
purpose of the report was to propose that to facilitate the development of 6
Centre Square, Middlesbrough Council provided Tees Valley Combined Authority
(TVCA) with:
i.
a
capital grant of £2,000,000; and
ii.
retained business rates in respect of 6 Centre
Square to TVCA, ceasing the earlier of a 15-year term, or, when the Government
changes the business rates mechanism.
In
anticipation of relocating businesses and further inward investment enquiries, Ashall Developments secured planning approval for Building
6 Centre Square (see appendices 1 and 2 of the submitted report) in March 2021;
following which a revised masterplan (see appendix 3) for the remaining plots
received planning approval in July 2021.
Ashall Developments owned the site of the
former Melrose House Building and had cleared the site in preparation for
development of 6 Centre Square. Ashall led on the
development of phase one at Centre Square in Middlesbrough, demonstrating the
demand and quality for the facilities.
In
May 2021, the Executive had approved a report entitled ‘Towns Fund and Future
High Streets Fund’, which had allocated £2m towards an “additional 40,000 sq.
ft. office”. Therefore, the proposals
within the submitted report provided an opportunity to realise the previously
agreed objective.
TVCA
had also approved a sum in excess of four times that of the Council to provide
a full development budget for the construction of 6 Centre Square. TVCA aimed
to secure a long-term return on investment which could support the delivery of
major investments into the future.
TVCA’s
investment was also subject to the transfer of retained business rates (49% of
the levy) outlined in Part B of the report. It should be noted that the
proposals contained within the report did not result in the Council losing
business rates income, as without the proposed funding package and resultant
construction of 6 Centre Square, there would be no such income to collect.
OPTIONS
Options |
Strategic Fit |
Achievability |
Affordability |
Value for Money |
Conclusion |
Do nothing |
No |
Yes |
No |
No - would lead to
significant job loss in the local community. |
Discard |
Middlesbrough Council
covers entire development cost |
No – high leverage for
Middlesbrough Council at Centre Square. |
No |
No |
No - high risk for
Middlesbrough Council to proceed with scheme as sole liable party. |
Discard |
TVCA act as lead investor
with supporting grant funding from Middlesbrough Council |
Yes |
Yes |
Yes |
Yes - significant Value
for Money return in event of prudent occupancy assumptions. |
Proceed |
ORDERED
1.
That the information
contained in Part A of the report be noted.
2.
That the decision be
taken once all the financial or exempt information contained in Part B of the
report had been considered.
REASON
Economic Growth - In
addition to significant job retention, the prospective anchor tenant was
planning the creation of an additional 100-220 jobs in Middlesbrough.
Costs - Provided all
jobs were safeguarded, the Towns Fund grant of £2m, by itself, equated to a
cost per job of £4,167. That was considered good value for money in line with
existing capital grant schemes.
Benefits - The
retention of a significant town centre employer would be critical to the
recovery of the high street in the post pandemic period, protecting 480 jobs.
Stakeholders - Heads of
Terms had been agreed with the prospective anchor lessee at Centre Square. The success of the first phase was
demonstrative that the development met the accommodation requirements of
professional businesses. Residential
stakeholders were engaged as part of the planning process which approved both
the revised masterplan and 6 Centre Square specifically.
Supporting documents: