(14) 9. Funding and delivery

This section provides an overview of funding opportunities which could potentially be available in helping to deliver the Hockley Area Action Plan options, along with the key delivery issues which would be considered.

Funding opportunities

The indicative nature of the urban design proposals, the early stage the project is currently at, and the pace with which national government continues to cut programmes and create new ones with associated funding pots makes assessing viable funding sources at this moment relatively difficult.

The platform of programmes and policies designed to support urban regeneration projects such as this are currently being comprehensively overhauled as a result of the change in national Government in May 2010, the resultant emergency budget and more recent comprehensive spending review. As part of this for example, agencies and structures established to deliver regeneration and administer funds such as Regional Development Agencies have been abolished and are in the process of being replaced by Local Economic Partnership’s who’s remit and resource remains unclear. The regeneration and associated funding landscape therefore remains cloudy and real clarity and stability is unlikely to arise until well into 2011.

Notwithstanding the above, it is increasingly clear that there are a number of options or emerging options that the council might wish to consider to support the delivery of the centre area action plan as follows:-

Tax Increment Finance (TIF)

This approach is based on public authorities borrowing monies to fund infrastructure projects that will support economic development. The borrowing is secured against increases in forecast future business rates or business rates resulting from new enterprises for a fixed time period, that have arisen as a result of the infrastructure investment. This approach is being heavily supported at all levels but is reliant upon Treasury relinquishing control of non-domestic business rate collection and devolving it to local authorities or other sub-regional agencies. A limited number of TIF pilots are currently being considered but the ultimate extent of such a mechanism remains unclear. For example, it is possible that TIF will be limited to major economic development and infrastructure projects and that there may be floors or ceilings to the amount of funds that can be borrowed. There is also some discussion of a similar approach being applied to residential development where local authorities could borrow against future forecast council tax income.

Regional Growth Fund

The Regional Growth Fund is designed to replace funding that in the past would have been distributed by the recently abolished Regional Development Agencies. The fund amounts to some £1.4bn over the next three years. The fund was opened on 28/10/10 and is now inviting bids from a broad range of agencies.

New Homes Bonus

This approach is based on central government match funding council tax revenues that arise from new residential development over a fixed period. The programme will be delivered over the next four years and has a pool of match funding totalling around £900m. It is designed to support and incentivise the delivery of new housing in a market that continues to stall and where there is still considerable uncertainty resulting from the abolition of Regional Spatial Strategies.

Asset backed vehicles

This approach is based on councils (and other public agencies) pooling a sufficiently large and valuable portfolio of sites and procuring a long-term private sector partner to deliver development and regeneration in return for an equity share. The approach is simply based on the public sector providing land and the private sector providing funding to deliver projects. The long-term nature of these arrangements and ability to work in partnership with a local authority and utilise its statutory powers such as local authority assistance in land assembly makes this an attractive option and one of the few that is based principally on private as opposed to public investment. The model remains relatively new although vehicles are now established in Croydon and Tunbridge Wells.

We note that the developer market currently has improved confidence for the right opportunities but there is still a subdued market and access to finance is still more limited than prior to the financial crisis. Therefore, it is necessary to have regard to the attractiveness of opportunity to the private sector, in terms of both the developer and the funder. On this basis careful consideration must be given to creating an appropriate and attractive scheme which can be better achieved by addressing issues such as land control, planning and timescales prior to procurement to have regard to the attractiveness of opportunity to the private sector, in terms of both the developer and the funder.

Delivery issues

The key delivery issues associated with each of the spatial options have been identified here.These are taken on an option by option basis, with some issues spanning each of the options and others unique to a particular option.

These will be carefully considered, along with community feedback to the options, when refining the spatial options for the Hockley Area Action Plan and moving forward to a preferred option for the AAP.

Initial review of the options with regard to viability and deliverability indicates that options 2 and 2a are likely to be the most economically viable.

Option 1

• This option proposes the development of only two relatively small plots. These should be non-contentious from a planning perspective whilst site assembly would also be relatively easy to achieve (subject to existing tenancies).
• Demand for retail space in Hockley remains strong although units of less than 140 sq m (1,500 sq ft) are less desirable for national retailers and units in excess of this should be incorporated into future development.
• The minimal intensification of land use will prove challenging in terms of economic viability, once site acquisition costs are considered.

Option 2

• This option proposes intervention on the north side of Spa Road, to connect to Eldon Way
• This proposal includes the replacement of light industrial land with office space, retaining the employment use but with a shift in focus, which might be contentious.
• Demand for retail space in Hockley remains strong although units of less than 140 sq m (1,500 sq ft) are less desirable for national retailers and units in excess of this should be incorporated into future development.
• Demand for office space on the scale would require a guaranteed pre-let to be economically viable and would not be included in a scheme going forward if this was not the case.
• An organisational strategy will need to be considered for implementing the improvements to the ‘consolidated leisure’ units to the north of the scheme, to enable exchange of space.

Option 2a

• This option slightly greater intervention on the north side of Spa Road, connecting to Eldon Way
• This proposal may be contentious from a planning perspective as it requires the loss of some employment land to replace it with retail.
• Site assembly would need to be considered here, with a range of freehold ownerships and occupiers to relocate, if only on a temporary basis. Given the multiple private land ownership, local authority assistance in land assembly may be required.
• The existing large convenience retailer would need to balance the benefits of a high street frontage and a larger store
• Demand for retail space in Hockley remains strong although units of less than 140 sq m (1,500 sq ft) are less desirable for national retailers and units in excess of this should be incorporated into future development.
• Demand for office space on the scale would require a guaranteed pre-let to be economically viable and would not be included in a scheme going forward if this was not the case.
• An organisational strategy will need to be considered for implementing the improvements to the ‘consolidated leisure’ units to the north of the scheme, to enable exchange of space.

Option 3

• This option proposes greater intervention on the northern side of Spa Road, and the western section of Eldon Way
• This proposal may be contentious from a planning perspective as it requires the loss of one employment building land to replace it with residential. However, leisure is relocated and office space is provided to replace the light industrial space.
• Alternative accommodation would need to be identified for existing business owners.
• Site assembly would need to be considered here, with a range of freehold ownerships and occupiers to relocate, if only on a temporary basis. Given the multiple private land ownership, local authority assistance in land assembly may be required.
• The option would require a gap in trading for the Coop, whilst building work is going on
• Demand for retail space in Hockley remains strong although units of less than 140 sq m (1,500 sq ft) are less desirable for national retailers and units in excess of this should be incorporated into future development.
• Demand for office space on the scale would require a guaranteed pre-let to be economically viable and would not be included in a scheme going forward if this was not the case. Access to the two residential units proposed in the church yard will need to be clarified.

Option 3a

• This option proposes greater intervention on the northern side of Spa Road, and on the north side of the train satation
• This proposal may be contentious from a planning perspective as it replaces light industrial space with office space
• Alternative accommodation would need to be identified for existing business owners.
• Site assembly would need to be considered here, with a range of freehold ownerships and occupiers to relocate, if only on a temporary basis. Given the multiple private land ownership, local authority assistance in land assembly may be required.
• The option would require a gap in trading for the Co-op, whilst building work is going on
• Demand for retail space in Hockley remains strong although units of less than 140 sq m (1,500 sq ft) are less desirable for national retailers and units in excess of this should be incorporated into future development.
• Demand for office space on the scale would require a guaranteed pre-let to be economically viable and would not be included in a scheme going forward if this was not the case. Access to the two residential units proposed in the church yard will need to be clarified.
• The two residential units at the churchyard entrance would need to be without parking facilities, but are close to the rail station.
• Provision of residential use along the railway line and station car park will require negotiations with Network Rail to release operational land and require compliance with the Office of Rail Regulation.