Item 9(a) 11th October 2017 Glasgow City Region City Deal Cabinet Report by Director of Regional Economic Growth Contact: Kevin Rush Tel: 0141 287-4613 PMO Evaluation: Inverclyde Council – Outline Business Case Inverkip Purpose of Report: To report on the PMO evaluation of Inverclyde Council’s Outline Business Case for Inverkip. The Business Case has been considered by the Chief Executives’ Group who agreed that it should be submitted to Cabinet for approval. Recommendations: It is proposed that the Cabinet: 1. agree that Inverclyde Council be invited to develop a Full Business Case; 2. note the Executive Summary at Appendix 1 and the Project Risk Register in Appendix 2; and 3. note that no funding is requested at this stage. 1 Purpose 1.1 To inform the Cabinet of the results of the PMO evaluation of Inverclyde Council’s Outline Business Case September 2017 for the Inverkip project. The Business Case has been considered by the Chief Executives’ Group who agreed that it should be submitted to Cabinet for approval. 2 Review 2.1 The submission of this business case for appraisal is considered as confirmation that Inverclyde Council approves the inclusion of this business case as part of the City Deal programme as stated in the current Glasgow and Clyde Valley City Deal Assurance Framework (10 March 2015) in section 4.1.1. 2.2 The project has been reviewed against the business case criteria outlined within Assurance Framework dated March 2015. 2.3 The Cabinet approved Inverclyde’s Strategic Business Case in October 2015 with a funding allocation of £260,000. 2.4 The Executive Summary for the project is attached as Appendix 1. The business case seeks funding for upgrading transport network A78 in four locations which will be an enabler to the development of a key site in Inverclyde, the former Inverkip Power Station. 2.5 Inverkip is an Outline Business Case and as such Inverclyde is now invited to prepare a Full Business Case. 2.6 The development of the full business case, monitoring and evaluation of the Inverkip project will continue to inform the overarching Programme Business Case. 3 Financial 3.1 The total cost of the project is £3.25m. At the SBC stage £0.260m was previously awarded and £4k has been spent to date. A full financial analysis has been carried out as part of the evaluation of the business case for the project funding. 3.2 This is an Outline Business Case for the Inverkip Project and is not seeking any further funding at this stage. 3.3 The drawdown of funding will be completed on the basis of actual and eligible expenditure, in association with the grant drawdown principles outlined within the Assurance Framework. 4 Benefits Realisation 4.1 The Inverkip OBC provides details of the anticipated project outputs and outcomes that will be delivered by the project, including land remediated, housing units, private sector investment, and commercial floorspace. 5 Recommendations 5.1 It is recommended that Cabinet 1. agree that Inverclyde Council be invited to develop a full business case; 2. note the Executive Summary of the Business Case at Appendix 1 and the Project Risk Register in Appendix 2; and 3. note that no funding is requested at this stage. APPENDIX 1: Executive Summary Introduction This document sets out the Executive Summary from the Outline Business Case for Inverclyde Council’s project under the Glasgow City Region City Deal. The project involves: Upgrading of key transport network capacity on the A78 at four locations in and around Inverkip (See Fig1) The provision of development of a Major Area of Change site identified within the Local Development Plan whilst also securing access and safety improvements Investment in vacant and derelict land assets and land incapable of utilisation for economic purpose without infrastructure investment and support. The site of the former Inverkip Power Station is identified within the current Local Development Plan as a Major Area of Change, Whilst the owners of the site, Scottish Power Generation Limited have removed a significant element of the built infrastructure on the site, floor slabs and below ground infrastructure still exist on the site along with berthing infrastructure in the Clyde. Transport Scotland have indicated that for the project to proceed on the site, four elements of road infrastructure require to be upgraded and this renders in the Major Area of Change site unviable. City Deal funding will act as an enabler to site development including 650 houses and 6000m2 of commercial space, through the provision of the 4 roads elements. The outline business case confirms to Cabinet that project funding of £3.25m is required to support infrastructure investment in excess of £100million, re-develop the brownfield site and providing business space, leisure and housing. No additional release of funding is sought beyond that approved at SBC with the submission of this business case. Off-site roads Infrastructure constraints impact adversely on the capacity to advance the development of a Major Area of Change site restricting economic investment capable of supporting sustainable settlement growth of the two local centres at Wemyss Bay and Inverkip. TABLE 1 Investment Strategic Outline Business Costs Business Case Case Stage (OBC) Stage (SBC) City Deal £3.250 £3.250 million Funding / IC million Scottish £0.00 £100m+ leverage Power/Iberdrola development investment ScottishPower/Iberdrola TOTAL £3.250 £3.250 million million The project demonstrates a strong fit with national, regional and local economic policies and is a major element within Inverclyde’s Economic Strategy as a Major Area of Change. The site is specifically identified within the Inverclyde Economic Development and Regeneration Single Operating Plan 2014-2017 Spatial Focus (Section 4.4) and as a key strategic site (Section 4.4.1) highlighting the re-development opportunity to create potential for additional housing and limited commercial accommodation. In the absence of network improvements to the A78 development will not proceed. The project will make a significant contribution to economic growth, remove the most significant vacant and derelict land site from the V&DL Register, secure third-party investment and support growth across the City Region. The project delivers important outcomes within the Inverclyde Economic Development & Regeneration Single Operating Plan and Local Development Plan and is supported by all key stakeholders. Development of the site is currently constrained by significant cost abnormalities that impact adversely on the viability of development. The existing A78 roads infrastructure and specifically the existing junctions and merge/diverge slip roads constrain the ability of the development to proceed. Off-site Infrastructure constraints impact adversely on the capacity to advance the development of a Major Area of Change restricting economic investment capable of supporting sustainable settlement growth of the two local centres at Wemyss Bay and Inverkip. Inverclyde is confronting the challenges of deprivation and economic exclusion that result from long-term changes to Inverclyde’s industrial base and industrial re-structuring. The loss of major industries and support services/supply chains has resulted in constrained capacity and limited economic opportunity with resultant low levels of employment, a small business base and lower than average earnings. There are high levels of public sector dependency for employment as well as significant out- commuting to the wider Glasgow city region. These are positive and welcome but a sustainable economy needs local jobs and economic drivers that can support the demand for local goods and services and sustain the local business base. The underlying structure of the Inverclyde economy remains weak and over reliant on the public sector to generate employment. Based on available forecasts there is a real danger that the long-term growth rate of the Inverclyde economy will remain below that of Scotland unless significant restructuring of the economy takes place. The Economic Strategy identifies a clear need to diversify the business base and to stimulate greater economic activity in Inverclyde to sustainably increase levels of employment, income and Gross Value Added (GVA) and to build economic resilience. A Memorandum of Agreement between the Council and developer will ensure a coordinated approach to investment and: secure the redevelopment of a large, strategic brownfield site and Major Area of Change (Local Development Plan) address constrained housing availability, extend housing choice and promote mixed use wider community facilities deliver small enterprise / commercial facilities that support area regeneration. Strategic Need for the Project Inverclyde Council and its economic development partners within the Single Operating Plan are focussed on delivering investment and development in the area that addresses: Economic disadvantage and inclusive growth within communities (National Regeneration Strategy 2011 / Inverclyde Single Operating Agreement 2014) Sustainable Economic Investment with strong focus on SME’s (Inverclyde Economic Regeneration Strategy (2014-2017) Regenerating Key Economic Sites and Communities (Inverclyde Economic Regeneration Strategy (2014-2017) Inverkip is identified as a Major Area of Change (LDP). Inverclyde Council has been seeking to facilitate investment at Inverkip through active economic engagement and positive land-use planning. These include: Mixed Use Development Zoning in the Local Plan