Bridgend County Borough Council s2

BRIDGEND COUNTY BOROUGH COUNCIL

REPORT TO COUNCIL

19 SEPTEMBER 2012

JOINT REPORT OF THE ASSISTANT CHIEF EXECUTIVE – PERFORMANCE AND THE CORPORATE DIRECTOR COMMUNITIES

REVISED CAPITAL PROGRAMME 2012/13 AND 2013/14 – PORTHCAWL REGENERATION : SEVEN BAYS PROJECT

1. Purpose of the report

1.1 The purpose of this report is to update Members in relation to the Porthcawl Regeneration Seven Bays project and to obtain approval from Council for a revision to the capital programme for 2012/13 and 2013/14.

2. Connection to Corporate Improvement Objectives/Other Corporate Priorities

2.1 Capital investment in our assets is a key factor in meeting the Improvement Objectives required to achieve the Strategic Themes set out in the Council’s Corporate Plan. The regeneration of Porthcawl is a key priority in relation to the Improvement Objective ’to support and invest in our communities to promote economic growth, physical renewal and sustainability’.

3. Background

3.1 On 22nd February 2012, Council approved a capital programme for the Authority for the years 2011/12 to 2021/22. This report proposes an amendment to that programme in order to accommodate changes that have occurred since the programme was approved.

4.0 Current situation / proposal

4.1 Members will be aware that the proposals for phase 1 of the regeneration of Porthcawl have been predicated upon the sale of land for retail development. The conditions of this sale required the developers Chelverton Deeley Freed (supported by Tesco) to undertake significant infrastructure works, which would also allow for additional sites to be developed in due course, along with the payment of a substantial capital receipt. An element of this receipt will be used to cover the match funding for the harbour works, which also incorporates an element of key maintenance work to the flood defences.

1 4.2 On 5th July 2012, the Council was formally notified that the developer no longer wished to proceed with this purchase which means that at the present time, neither the capital receipt nor the infrastructure works will be delivered. A number of options have been considered by officers as detailed below.

Option 1 – Re-market site with existing conditions This option reflects the one that was undertaken initially which resulted in the proposed sale to Chelverton Deeley subject to certain conditions being agreed. It therefore has the advantage of realising the anticipated capital receipt and for the developer to undertake the infrastructure works at no cost to the Council. The main disadvantage to this option is that the cost of the infrastructure work is likely to make this undeliverable in current market conditions as proven by the Chelverton Deeley case. Regeneration work could therefore be considerably delayed pending an upturn in the economic outlook.

Option 2 – Retain site pending an improvement in economic situation This has the advantage of potentially realising a more significant capital receipt in the future but would significantly delay the regeneration proposals for Porthcawl.

Option 3 – Remarket site with Council to carry out infrastructure works This has the advantage that regeneration works could proceed much more quickly and has the potential to realise a more significant capital receipt. In order to protect the Council’s financial position, infrastructure works would not start until a developer has been identified and a formal contract entered into. The current Owner’s Agreement would need to be revised to reflect the up front investment made by the Council.

4.3 Preferred way forward Having considered these options, it is considered that option 3 is the one that would deliver the best outcome for Porthcawl. The cost of the required infrastructure works has been estimated at £4.7m. The value of the site, once these works have been completed, will need to be sufficient to cover the cost of the infrastructure works and provide a capital receipt for both owners. It is proposed that a marketing exercise will be carried out prior to awarding any works contracts to ensure that this condition will be met. The works would also provide access to other development sites which could generate further capital receipts.

4.4 It is proposed that the capital programme for 2012/13 – 2021/22 be revised to allow these works to proceed, subject to agreement being reached with a new developer for the sale of the site and a revised

2 Owners Agreement to reflect the increased financial risk being taken by the Council.

4.5 A revised capital programme allowing for the proposed changes along with slippage from 2011/12, additional external funding approvals and changes to expenditure profiles is attached as Appendix 1 to this report.

5. Effect upon Policy Framework and Procedure Rules

5.1 Paragraph 2 of the Budget and Policy Framework procedure rules requires that the budget approved by Cabinet must be referred to Council for decision.

5.2 Paragraph 3 of the Financial Procedure Rules requires that the budget approved by Council shall include a capital budget for the forthcoming year incorporated within a three year indicative capital programme.

6. Equality Impact Assessment

6.1 Projects within the capital programme will be subject to the preparation of equality impact assessments before proceeding. An Equality Impact Assessment has been undertaken in respect of the Porthcawl Regeneration scheme and overall the scheme will have a positive impact.

7. Financial Implications

7.1 The costs of the proposed works will be funded by Prudential Borrowing pending the sale of the land.

7.2 No works contracts will be entered into until agreement has been reached for the sale of the site at a value that is sufficient to cover the cost of the works and a minimum capital receipt for both owners. A revised Owner’s Agreement will also need to be signed before works contracts are confirmed.

8. Recommendations It is recommended that :  Council approves the revised Capital Programme as set out in Appendix 1 of this report.

Ness Young Assistant Chief Executive - Performance Louise Fradd Corporate Director - Communities

3 September 2012

Contact Officers

Janet Smith – Head of Finance & Performance Ext 3302 email: [email protected]

Fiona Blick – Group Manager- Property Services Ext 2702 email : [email protected]

Andrew Jones – Manager Regeneration Projects Ext 5204 email : [email protected]

David Sutherland – Head of ICT & Property Ext 2110 email : [email protected]

Background Papers Report to Council 22nd February 2012 Report of Corporate Director Communities 18th September 2012 Owners Agreement