EAST AYRSHIRE COUNCIL
COUNCIL 27 JUNE 2013
SCOTTISH GOVERNMENT REGENERATION CAPITAL GRANT FUND
Report by Acting Executive Director of Neighbourhood Services
PURPOSE OF REPORT
1. The purpose of this report is (i) to provide Council with details of the recently launched Scottish Government Regeneration Capital Grant Fund (RCGF); (ii) to seek agreement on the projects for which the Council should submit grant applications under the fund; (iii) to seek agreement in principle as to the level of financial support from the Council for each project to be submitted and (iv) to seek agreement as to the priority that should be given to each grant application.
BACKGROUND
2. The Scottish Governments (SG) Achieving a Sustainable Future: Regeneration Strategy was launched in January 2012. It sets out as its vision:-
“A Scotland where our most disadvantaged communities are supported and where all places are sustainable and promote well-being.”
3. Achievement of the vision relies on a wide range of supporting outcomes being delivered. The supporting outcomes are not unique to regeneration and many cross over into wider government policy, including economic development, policy and place making, education and skills etc. It is where there is a persistent and concentrated absence of these outcomes being delivered that additional intervention is required.
4. The vision points to a need for a coordinated approach across the public, private and third sectors, alongside community led action. The Regeneration Capital Grant Fund (RCGF), has subsequently been developed in partnership with local authorities‟, and will provide financial support to projects that will deliver large scale positive improvements to deprived areas. It will focus on projects that engage and involve local communities and those that can demonstrate the ability to deliver sustainable regeneration outcomes.
SCOTTISH GOVERNMENT REGENERATION CAPITAL GRANT FUND
5. The Scottish Government opened its Regeneration Capital Grant Fund on the 31 May 2013. In the first year, April 2014 to March 2015, £20.5m is available to support projects from eligible organisations. Subject to the budget review process it is anticipated that up to £21.5m will be available for 2015/16. The fund is open to all 32 Scottish Local Authorities individually or whether they exercise their functions through Urban Regeneration Companies (URC‟s) or other Special Purpose Vehicles (SPV‟s). First stage applications must be submitted by 5:00pm Friday 28 June 2013. The fund is primarily aimed at providing new and/or improved infrastructure to enhance the economic, social, and physical environment of communities. The applicant must demonstrate that any submitted project fits with the aims and objectives of the fund and can demonstrate clear regeneration outcomes in line with Achieving a Sustainable Future: The Regeneration Strategy. The fund will focus on projects that:
. Address areas with high levels of deprivation and disadvantage . Will deliver large scale transformational change . Can lever in private sector investment . Demonstrate clear community involvement
6. Key features of the fund comprise:
There is no limit to the number of bids that may be submitted by any organisation. Multiple bids must however be prioritised. . A two stage application process is being operated. It is anticipated that the outcome of stage 1 will be issued to applicants in August 2013. . The money must be spent between 1 April 2014 and 31 March 2016. Projects must be on-site during 2014. . 100% of the project cost may be applied for. However, leverage will be considered in the assessment of applications, in terms of either contribution to a wider programme or within the project itself. . It is primarily a capital expenditure fund, however direct project management costs may be considered on a case by case basis.
7. The assessment process will involve:
i. Stage 1 – 28 June 2013 applications must meet the basic aims of the fund, but will not be formally scored. The final list of projects progressing to stage 2 will be determined by the Regeneration Capital Grant Fund Investment Panel.
ii. Stage 2 – October 2013 applications that progress to stage 2 will be assessed against: 1. Viability (10%); 2. Community involvement (15%) 3. Regeneration outcomes – physical (30%), economic (25%), social (20%)
8. Stage 1 applications require:- Project start date –on site during 2014 Project completion date – prior to April 2016 Project priority, if submitting multiple projects Total estimated cost of any wider regeneration activity to which it contributes Total spend on the specific activity to which this grant will contribute Sources of other funding, grant, loan investment contributing to spend on the project. How much RCGF is requested. Breakdown of proposed grant spend – consistent with start and completion dates. Identification of an identified Project Officer plus one additional contact. Project summary to cover - what the project will deliver, timescales, objectives, target groups, geographical coverage, partnership, community involvement, economic, social and physical regeneration outcomes, any additional financial contributions and the potential for wider regional impact. The project must also identify how it will benefit disadvantaged communities.
9. It is suggested that two distinct projects should be considered for support under the fund. These are Hill Street (the former Diageo Bottling Plant site) and Glaisnock Centre, Cumnock. Both projects fully meet the eligibility criteria of the fund as detailed in paragraph 5 above and in particular will provide new and improved infrastructure to “pump prime” the sites for further transformational development. In addition both projects will also help to deliver key elements of the Council‟s strategies for Kilmarnock and Cumnock town centres. In particular the re-development of the Hill Street site is highlighted in the Kilmarnock Integrated Urban Development Plan as a crucial component to revitalising the town economically, socially and physically. Finally both projects are consistent with the Council‟s comments on the third National Planning Framework Main Issues Report. Details of both projects recommended for submission under the RCGF to unlock their redevelopment are provided below.
HILL STREET, KILMARNOCK
10. Planning Permission In Principle (ref 11/0242/PPP) for a „Mixed use development inclusive of further education college, residential, care home, business, small scale retail, hotel, public house, restaurant, cafe and crèche/nursery‟ was approved, with conditions, for the overall former Johnnie Walker site at Hill Street, by Full Council on 23 June 2011 following consideration by the then Northern Local Planning Committee on 15 June 2011.
11. Planning Permission in Principle (ref 12/0883/PPP) for „Proposed college campus development and detailed approval for upgraded access road from Hill Street to College site, location of College building zone and sports pitch/car parking zone, and maximum height of College building‟ was approved with conditions for part of the Hill Street, Kilmarnock site by full Council on the 16 May 2013, following consideration by the Planning Committee on the 19 April 2013.
12. The Klin Group has an exclusivity agreement with Diageo PLC over the ownership and intended redevelopment of the 23-acre town centre site at Hill Street, adjoining the proposed new Kilmarnock College. Their proposed “Halo” Project comprises the development of two areas of ground to the North & South of Balmoral Road extending to approximately 10 and 13 acres respectively. Local consultations on Klin‟s proposals commenced on 5 June 2013 to explore the feasibility and detail of what the Klin Group propose for the site.
13. The Klin Group‟s preliminary vision for the site is a dynamic new hub that will extend and complement Kilmarnock with an emphasis on linking education, health, community sports and culture. The anchor element will be a 7000-8000 seat arena that would provide a year round, all weather, venue for sporting, conferencing and entertainment events. The arena would include a range of retail/commercial/leisure facilities to ensure its sustainability and drive a new economy for Kilmarnock, serving a much wider area with facilities unique in Scotland.
14. The hub would include an Enterprise Gateway to provide premises and facilities for enterprise, entrepreneurs and start-up businesses. There will be a strong focus on developing key international business links. As well as stimulating employment generation and trade the international dimension would also provide unique linkages with the education, health, tourism, sport and culture elements of the development.
15. The Klin Group has identified demand for a 100 bed 4 star hotel, and a need for a football based regional youth facility. With this in mind a hotel and community facility accommodating one all-weather and one grass pitch and associated ancillary building are included in the proposals. Improved links to the railway station and Kilmarnock town centre are also proposed.
16. Everything Klin have in mind would link into the work of Kilmarnock College, in particular, and local schools in general and would seek to inspire and support local sports and cultural groups. 17. The Klin Group have established a not-for-profit company to take forward the development (Landmark Projects Ltd.) and have recently appointed lead architects to develop design proposals. The following is an indicative programme of anticipated timescales:
Exclusivity agreement with Diageo 16 April 2013 Appointment of Architects 31 May 2013 Start of consultation exercise 5 June 2013 Submission of outline planning application 30 September 2013 Submission of detailed planning application 2nd Quarter 2014
18. Alternative options for the Hill Street site to the north of the proposed College include the development of a new secondary school to replace Kilmarnock Academy and James Hamilton Academy. The school merger proposals are currently out to public consultation.
19. Whatever option is taken to redevelop the Hill Street site it is clear from the work undertaken for preparation of the Integrated Urban Development Plan and subsequently by the “Make it Kilmarnock” team that “pump priming” works to make it ready and commercially attractive for re-development are required. In this regard grant support from the RCGF is considered essential to prepare the site for future redevelopment.
20. The “pump priming” infrastructure works that will be included in the RCGF submission with initial cost estimates are as follows
Grubbing out existing foundations and decontamination - £2.7m
Mineshaft and shallow mine working stabilisation - £0.6m
Access and junction improvements - £1.15m
Pedestrian access improvements - £0.45m
Improving access to Kilmarnock town centre (particularly via the railway underpass) – £0.64m
21. In total it is estimated that the “pump priming” costs will be in the region of £5.54m It is proposed that these works would be undertaken over a two year period with the removal of foundations, decontamination and mine workings being carried out first and the various access improvements following on. Given that only £20.5m is available in the fund for financial year 2014/15 for all of Scotland and, subject to the budget review process £21.5m in financial year 2015/16, it is suggested that the Council‟s contribution should be capped at a maximum of £2 million over the 2 financial years and that the gap funding required to complete the “pump priming” infrastructure should be requested from the Regeneration Capital Grant Fund (i.e. £3.54m). This contribution will only be required if the application for the RCGF is successful.
22. Given the exclusivity agreement between Diageo and the Klin Group an agreement between all parties will be required before submission of the grant application to show that there are no impediments to the works being carried out. Additionally given the pipeline nature of the proposed infrastructure works there is potential for the Council to establish a „RCGF partnership agreement‟ with the Klin Group. Financial leverage will be an important consideration by the RCGF Investment Panel.. In this regard it should be noted that the estimated costs to complete the redevelopment of the Hill Street site as detailed in paragraphs 12 to 15 above is estimated at £36.46m, a leverage ratio of approximately 7 to 1.. Consideration will also need to be given to State Aid issues prior to any detailed submission and to the Council‟s relationship with the Klin Group beyond the RCGF project.
GLAISNOCK CENTRE, CUMNOCK
23. At Cabinet on the 19th June 2013 it was agreed following an options appraisal exercise on the Glaisnock Shopping Centre, Cumnock that the Council should proceed with Option 5 which will involve (i) the reacquisition of the privately owned shop units within the Centre; (ii) the development and disposal of new alternative retail units; (iii) the demolition of the existing Centre and (iv) the carrying out of environmental improvements to the remaining cleared site whilst making it ready for subsequent redevelopment. This may include the realignment of the existing car park access road together with the provision of additional car parking spaces.
24. Estimated costs for the Council to pursue Option 5 are £4m. Demolition costs are estimated at £0.5. It is recommended that a RCGF application be made to support the demolition of the Glaisnock Centre and the subsequent works that will be necessary to make ready the site for future re-development to support the Council‟s efforts to regenerate Cumnock town centre.
FINANCIAL IMPLICATIONS
25. The Capital Investment Programme 2013-2023 includes an allocation of £5M through the creation of a Kilmarnock Town Centre Regeneration Fund, an element of this could be allocated to assist in tackling the redevelopment of the Hill Street site provided an appropriate partnership arrangement / development agreement can be established.
26. The Capital Investment Programme 2013-2023 approved by Cabinet on 27 March 2013 includes an allocation of £4M in respect of regeneration proposals associated with the Glaisnock Shopping Centre and adjoining land. An additional £50,000 has been allocated for repairs / refurbishment of the footbridge linking the existing Shopping Centre with Rothesay House.
LEGAL IMPLICATIONS
27. All projects will need to comply with all relevant legislation relating to the implementation of projects, including procurement, state aid, environmental impact, equalities impact assessment, planning permission, building regulations, and any other appropriate legislation.
28. As the Hill Street development is currently a private development if the Council are to consider becoming a partner to this development and to invest in this proposal, and are to bid for Scottish Government funding a Special Purpose Vehicle (SPV) or development agreement will require to be established formalising the relationship between the developer and the Council. The establishment of an SPV/Development agreement may require to be prioritised prior to the submission of any Stage 2 application in October 2013. Particular consideration will be required in relation to State Aid.
29. The proposals relating to the Glaisnock Centre contained within this report take full account of the Council‟s interest in, and its legal rights and responsibilities relative to the Centre and, Option 5 should serve to protect and promote those interests as the Council continues its efforts to deliver an effective solution in respect of the Centre. The proposed development of new retail facilities will be subject to the statutory planning requirements and the design of the building will require to meet all the necessary legislative standards.
POLICY IMPLICATIONS
30. In principle, the re-development of the Hill Street site, signifies a commitment to remediate a contaminated brownfield site, and promotes a Masterplan approach for a new Kilmarnock Arena, which will be of benefit to the residents of Kilmarnock and the wider East Ayrshire community as a whole. Under the Ayrshire Joint Structure Plan, as a major town within the Core Investment Area, Kilmarnock is an appropriate location for a large scale mixed use development such as is being proposed for the Hill Street site and the application therefore complies with policy STRAT2.The sites proximity to the town centre means that the redevelopment of this site will have a major positive impact on the regeneration of the town centre itself. It is considered that the proposed development is supportive of the regeneration of both the site itself and the wider town centre community and complies with Policy COMM1 of the Structure Plan. The proposals are also consistent with the Integrated Urban Development Plan for Kilmarnock and the aims and objectives outlined in the Main Issues Report for third National Planning Framework. 31. In relation to the Glaisnock Centre, Cumnock is recognised as the service centre for the southern part of East Ayrshire in the Ayrshire Structure Plan. It is identified as one of five key town centres in the Local Plan. The local plan takes a very flexible approach to town centre developments and as such promotes the development of a wide variety of uses to help create town centres that are dynamic and vibrant. The proposals would not conflict with the National Planning Framework as expressed through the recently issued Main Issues Report.
COMMUNITY PLANNING IMPLICATIONS
32. Both proposals are in accordance with the Delivering Community Regeneration Thematic Action Plan under Local Outcome 1 “Our Town Centres and Villages are sustainably regenerated.”
33. Under Local Outcome 1, the Glaisnock Centre proposals will further develop and improve Cumnock as the second main town in East Ayrshire.
CONCLUSIONS
34. The Scottish Government’s Regeneration Capital Grant Fund provides an opportunity to assist the Council to achieve its vision where:
‘East Ayrshire will be a place with strong vibrant communities where everyone has a good quality of life and access to opportunities, choices and high quality services which are sustainable, accessible and meet people’s needs’.
35. Investment in the two proposed developments outlined above will clearly help achieve this vision and regenerate Kilmarnock & Cumnock. There are issues outlined above relating to the eligibility of the Glaisnock Centre proposals and the added value an application to the RCGF could bring to this proposal. However, given the significant opportunity this represents grant applications can be made for both proposals.
RECOMMENDATIONS
36. It is recommended that Council :-
(i) approves the submission of two Regeneration Capital Grant Fund applications for the following projects, prioritised as listed below:-
a) Hill Street, Kilmarnock – “pump priming” infrastructure projects aimed at bringing forward the site for development in support of Kilmarnock‟s regeneration, b) Glaisnock Centre, Cumnock – development of the preferred option in line with the Future Cumnock consultation but in particular demolition of the Glaisnock Centre;
(ii) agrees in principle to the contribution of £2m towards the development of the Hill Street site, from the Kilmarnock Town Centre Regeneration Fund, subject to the success of the bid to the RCGF;
(iii) remits the Head of Planning and Economic Development to conduct discussions with the Klin Group to establish provisional terms of agreement which would form the basis of a development/partnership agreement to facilitate the development of the Hill Street, Kilmarnock site in the event that the bid proceeds to Stage 2;
(iv) thereafter, remits the Solicitor to the Council to conclude a formal development/partnership agreement with the Klin Group to be submitted along with the Stage 2 bid in the event that the Stage 1 application is successful;
(v) otherwise note the content of this report.
Chris McAleavey Acting Executive Director of Neighbourhood Services 20 June 2013 (CMcK/KD) FV
LIST OF BACKGROUND PAPERS Guidance on Regeneration Capital Grant Fund
Implementation Officer –Alan Neish