Democracy

Agenda item

Centre Square Investment Opportunity - Part A

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: