OUTLINE BUSINESS CASE TEMPLATE LGF3 : Crewe High Speed-ready Heart Regeneration Programme

Transcription

1 OUTLINE BUSINESS CASE TEMPLATE LGF3 : Crewe High Speed-ready Heart Regeneration Programme CHESHIRE & WARRINGTON ENTERPRISE PARTNERSHIP LOCAL GROWTH FUND BUSINESS CASE TEMPLATE The Local Growth Fund is awarded on a competitive basis and as such the LEP has to ensure that it is presenting a compelling case to Government and that the projects it submits show a clear rationale and well defined benefits. Further guidance on the Local Growth Fund is available at: - In order for the LEP Executive and others to appraise proposals, all Promoting Organisations are required to complete this Local Growth Fund Business Case Template. In addition to headline project details, the form comprises five sections: - A: Strategic Case B: Economic Case C: Commercial Case D: Financial Case E: Management Case Delivery F: Evidence and Supporting Information Please complete the form as fully as possible ensuring that all information requested is included. If there are elements that you are not yet in a position to complete please indicate clearly when this information will be available. Where additional information is requested, such as location maps or Gantt charts, please supply these as separate documents or files, rather than attempting to embed them within this form. Please note that questions B13 and C3 are only applicable to Transport Schemes. Additional information may be requested for projects seeking funding from specific streams of LGF (e.g. FE Skills Capital). Note that all project proposals must align to the priorities identified within the LEP s Strategic Economic Plan. On completion, please return the form to Kerry Billington at: kerry.billington@871candwep.co.uk BY NOON WEDNESDAY 1st JUNE Page 1 of 30

2 Section A: Project Details This section asks you for basic information on your scheme, including a brief description, type of scheme, scheme location and contact details for further information. A1: Project Name Crewe: High-Speed-ready Heart regeneration programme A2: Project Type Town centre regeneration programme A3: Promoting Organisation/Lead Applicant A4. Accountable Body Cheshire East Council Please provide details of the project s Accountable Body (if different from the Promoting Organisation) N/A Please provide full contact details of the person who should we contact for further information on your project A5: Main Point of Contact Jez Goodman, Regeneration Programme Manager Jez.goodman@cheshireeast.gov.uk Please give a brief description of your scheme (in no more than 100 words) A6: Project Description The High Speed-ready Heart programme focuses on ensuring that Crewe s heart - its town centre is primed to deliver regeneration and growth ahead of the development of the HS2 Hub Station. A hybrid public-private approach is crucial to facilitate mixed-use redevelopment that includes leisure and retail uses. The programme comprises several elements on key town centre sites which would not otherwise come forward for development in the near future. By delivering these early, confidence will be given to investors and residents that HS2 is already delivering prosperity for the tows. A7: Total Project Cost (Capital) Approximately 68.6m in current phase of the Crewe Town Centre Regeneration Programme. Additional costs anticipated in future years. A8: LGF Requested 10.0m Page 2 of 30

3 A9: Rational for LGF request Public sector investment is crucial to de-risking delivery of key projects and accelerating their delivery. As part of its regeneration programme, the Council has already committed significant capital in the town centre (Lifestyle Centre, UTC, acquisition of Royal Arcade site), and its wider infrastructure. LGF funding contributions are requested to increase the deliverability of key components of town centre redevelopment including a new bus interchange, new public realm and the implementation of a vision and delivery plan for Crewe s markets. Please detail any constraints, dependencies or risks on the other funding sources The Council s Medium-term Financial Plan s Addendum includes allocations for capital contributions towards town centre regeneration, much of which relates to sites within this programme proposal (specifically Royal Arcade) A10: Other Funding Sources, including % Private Sector Private sector funding will be required to deliver the overall programme - Royal Arcade scheme, which is estimated to be xxxxxx based on delivering the full scope of the potential scheme currently being negotiated with the Council s intended development partner. This amounts xxxxxx of the programme s overall costs. Additional private sector investment is expected but this is not yet confirmed. The Council has committed/allocated xxxxxx (xxxxxx of total cost), with 10.0m LGF funding required (xxxxxx of total costs). Please provide a short description of area covered by the Scheme (in no more than 100 words) A11: Geographical Area Please supply a location map and where possible a map showing the site boundary (and Mapinfo Table(s) where available). If possible please highlight existing transport infrastructure and other points of particular interest to the bid e.g. development sites, areas of existing employment, constraints etc. Location Plan: Refer to Appendix 1 The High Speed ready Heart programme covers Crewe Town Centre. Its principal foci include the Royal Arcade Development site (and adjacent pedestrianised area/streets), the Northern Edge (area to the south of West Street), the Civic & Cultural Quarter (including Crewe Market) and the Southern Gateway (north of Vernon Way). Page 3 of 30

4 Summary Form only Planning: Low risk the scheme proposals are compliant with current and emerging Council planning policy for the town centre. Political Low risk the scheme proposals accord with both strategic and local political priorities, and will serve to enhance the town centre offer. Commercial Medium risk the Council has taken the position of being the project lead by acquiring some key sites, utilising existing sites and de-risking project delivery in order to facilitate commercial redevelopment. It is recognised that current levels of occupier demand are such that there is pressure for development at other out-of-centre locations, which pose a significant risk to the regeneration programme, if further retail and leisure occupiers are drawn out of the town centre. Whilst the investment market and occupier requirements do change over time, the Council monitors investment trends and occupier requirements s to assess whether there is a change to the level of risk. A12: Key Risks and Mitigations Land ownership Low risk the Council controls most of the assets required for its redevelopment programme, and where some aspects are to be delivered by a commercial occupier, negotiations will be undertaken to help ensure their delivery. One site will require multiple acquisitions, but relate to properties that are derelict, vacant or otherwise underutilised. If the Council determines to take the lead on the regeneration of this area, delivery will be mitigated through negotiations with individual landowners. The contingency is that individual sites may be withdrawn from the programme this will impair the delivery of the programme s overall ambitions, and will lead to fewer economies of scale and reduce scheme impact, but will not directly prevent the development of other sites. Legislative Low risk Procurement Low risk. Following a technically robust procurement process, the Council has selected its intended development partner for the redevelopment of Royal Arcade and is currently in post-tender negotiations in relation to the development agreement, etc. It expects to award a contract in September Policy Low risk - the scheme proposals are compliant with Council planning policy for the town centre and will support other strategic proposals relating to HS2. Management - Low risk. The Council has the appropriate in-house resources, supported by external technical advice and capacity within its Council-owned businesses, to deliver the scheme with minimal risk. Page 4 of 30

5 A13: Start Date Key elements of the town centre regeneration programme have already commenced/been completed but the overall programme continues forward. In terms of the Royal Arcade element of the High-Speed-ready Heart programme, it is expected that a development partner will be formally contracted in September 2017, with works expected to commence on site in late Summer/Autumn Inception, option selection, feasibility, detailed design, implementation A14: Practical Completion Date A15: Project Development Stage A16: Proposed Year of Completion of Outputs: A17: Links to other CWLEP projects, if applicable Different elements / phases will complete and different points, but in terms of the LGF funding requirements the key components of the High-Speed-ready Heart programme will be completed by end March 2020, with the final components completed in early However, it is anticipated that further regeneration activity will extend beyond this, benefitting from the enhanced outcomes of the LGF and other investments. Following a technically robust procurement process, the Council has selected its intended development partner for the redevelopment of Royal Arcade and is currently in post-tender negotiations in relation to the development agreement, etc. It expects to award a contract in September Other elements of the scheme are at earlier stages in terms of feasibility and formal approvals. In terms of LGF expenditure and the Royal Arcade element of the programme, most outputs will be achieved by end March 2021, although some outputs (in terms of increased footfall, subsequent investment) are likely to arise in subsequent years after the development. The town centre regeneration programme is directly linked to the HS2 Hub station programme and the strategic programme for the Constellation Partnership. Page 5 of 30

6 B: Strategic Case This Strategic Case determines whether the scheme presents a robust case for change, and how it contributes to delivery of the CWLEP and CWLEP s wider policy ad strategic objectives What are the current problems or market failures to be addressed by your Scheme? (Describe any economic, transport, skills, environmental, social problems or opportunities which will be addressed by the scheme). Present an overview of the evidence supporting this and the impact of not progressing the scheme. (Limit: 1 side of A4). Why now? The transformation of Crewe Town Centre is vital to support and deliver the objectives and aspirations of Crewe High Growth City. Crewe is described within the current SEP for Cheshire and Warrington as a Gateway to the North and Crewe High Growth City is identified as Intervention Priority 3 which strives for a Constellation new city with a rail superhub at its heart. However it will be in excess of 10 years before HS2 is operational in Crewe and in this time it is essential that the town is made HS2 ready. B1: Current LEP Challenges / Market Failures / Opportunities Addressed by Scheme Without a thriving town centre the delivery of Crewe High Growth City will be challenged and undermined in advance of the siting of the HS2 hub station. Investment in the town centre to provide an appropriate leisure and retail destination has been initiated by Cheshire East Council s investment in the Lifestyle Centre and securing the delivery of the new Crewe University Technical College. The acquisition and subsequent procurement of a development partner for the Royal Arcade development site is well advanced, and commercial interest in other town centre development opportunities has arisen as a result. The High Speed-ready Heart programme is expected to directly deliver 300 new jobs, over 13,000 sq m of new/enhanced floorspace, over 14,000 sq m of new public realm, a new bus interchange and new multi-storey car park. This programme and its component parts will present a new proposition to investors for Crewe and contribute towards a step-change in both perception and investment, which is expected to result in town centre residential investment over subsequent years, will contribute towards a centre that is active both during the day and in the evening. The SEP also identifies pockets of worklessness in Crewe where some Lower Super Output Areas have over 30% of working age residents claiming out of work benefits. The proposed development would deliver 300 jobs and would seek to attract local labour through the construction phases and ultimately within the delivered scheme. Last year s Autumn Statement confirmed the Government s commitment to a HS2 Hub Station and its location at the existing station site. By September 2017 it is anticipated that a more definitive commitment will be given regarding the specification for the frequency of high speed rail services, and with it the potential for economic growth. The Hub Station will be operational by 2027 so it is vital that Crewe Town Centre is primed to capitalise on this, through the regeneration and assembly of key sites in advance of the arrival of HS2 i.e. making the Heart of Crewe HS2-ready is the immediate priority. Page 6 of 30

7 Are there any problems you have identified that will occur in the future that your Scheme is intended to address? (e.g. congestion, road safety, access to services and opportunities etc.). (limit: 1 side of A4) A high level development appraisal of the Royal Arcade site has been undertaken by commercial agents that highlights that significant public sector funding will be needed to ensure delivery of a bus interchange and any necessary car parking required to ensure the scheme s commercial viability. Delivery of the Royal Arcade redevelopment is likely to require a multi-storey car park in order for it to be commercially attractive and financially viable. Funding of this car park may be required by the public sector, however it is unlikely that the Council will have the necessary resources to meet this full requirement. B2: Future LEP Challenges / Opportunities Addressed by Scheme An on-site enhanced multi-storey car park will be attractive to customers and visitors to the Royal Arcade and will add to the appeal and attractiveness of the offer to the whole town centre which is currently without a multi-storey car park. A well designed multi-storey car park will help to assist the perception of safety and security for customers and visitors of Crewe, especially in the evening. The Cheshire and Warrington SEP identifies the need to invest in facilities to support employer led skills provision such as the UTC in Crewe. Investment in Crewe Town Centre will assist the UTC and the wider transformational change that is required within Crewe Town Centre. Major public realm improvements are essential to the future of the town centre, to provide a quality setting for visitors that enhances key assets (both existing and new) and increases the sense of civic pride, bringing in more footfall (both daytime and evening) and triggering further commercial investment. Other investments in the regeneration programme will ensure that a mix of key attractions will be created or enhanced, aligned to our objective in extending the stay of visitors and capturing the interest of a far larger geographical catchment, thereby increasing retail and leisure spend. Page 7 of 30

8 Please outline primary aims and objectives Please present the SMART benefits and outcomes on the local economy that will arise following delivery of the scheme in terms of numbers of jobs, new homes, GVA B3: Description of project aims and SMART objectives The programme will significantly enhance the visual appearance of the town centre and revive confidence in it as a place both to visit and to do business. The programme will encompass an improved public realm and, through increased investment and footfall, will significantly improve the sense of security and natural surveillance within the town centre, facilitating the cycle of increased footfall, increased investment and increased commercial confidence. The implementation of a new market vision and delivery plan will play an important role in making the town centre more attractive and bring in new visitors. Upon completion, it is estimated that the programme will have directly levered an additional xxxxxx private sector investment and xxxxxx CEC funding. Additional investment by the private sector and other public funding sources is expected, but cannot be confirmed at this time. In terms of measurable outputs, it will have created: Please refer to Appendix 2. Please select which strategic priorities the scheme aims to support. Please select all categories that apply. Atlantic Gateway Cheshire Science Corridor Crewe High Growth City Enablers Other(s), Please specify Please provide evidence of how your proposal also aligns with and supports relevant National policies or initiatives. B4: Alignment to Strategic Economic Plan and National Policies The Council advocates a clear town centre first approach to Crewe. The National Planning Policy Framework states that planning policies should be positive, promote competitive town centre environments and set out policies for the management and growth of centres over the plan period. It also states authorities should, recognise town centres as the heart of their communities and pursue policies to support their viability and vitality. Planning Practice Guidance also states Authorities should take a positive approach to town centres and should include seeking to improve the quality of parking in town centres. The Local Plan, which is well advanced and at examination stage, states that the delivery of major regeneration in Crewe Town Centre, to provide an enhanced retail and leisure offer and improved environmental quality, is a strategic priority of the Plan. The Cheshire Retail Study has also stated that In summary, it is considered that the health of Crewe town centre has declined in recent years and therefore intervention is required to ensure that the health of the town does not reduce further. The Strategic Aims of Crewe High Growth City, that this scheme also aligns to, includes; Aim 2, Facilitate more sustainable transport movements within and around Crewe Aim 3, Deliver a vibrant and competitive town centre and Aim 5, Change outdated and negative perceptions of Crewe. The Sir David Higgins report Rebalancing Britain states that the proposed North West hub Page 8 of 30

9 should be at Crewe because that is the best way to serve not just the local region, but also provide services into the rest of the North West, North Wales and Merseyside. 2017/ / / /21 Post 20/21 TOTAL New jobs B5: Summary Outputs (More details provided later) New / enhanced commercial floorspace (sq m) ,263 13,021 New public realm (sq m) 14,400 14,400 Bus interchange 1 1 Additional car parking spaces (MSCP) xxxxxx xxxxxx xxxxxx xxxxxx xxxxx B6: Wider Geographic Impact Please provide information on any potential impacts the project may have outside of Cheshire and Warrington, for instance does it involve partnership working with another LEP or organisation. You should indicate those areas that will directly benefit, areas that will indirectly benefit and those areas that will be impacted adversely. Please provide as Map info layer if possible. As part of the Constellation Partnership area (formerly known as Northern Gateway Development Zone), areas of North Staffordshire will benefit from HS2 and the related redevelopment and growth of Crewe Town Centre through an enhanced leisure offer and transport links. A significantly enhanced transport facility will increase the scope for more and better bus services, significantly enhancing the customer experience and therefore increasing levels of patronage by an estimated 20%. Page 9 of 30

10 Please include timeline where appropriate Within the Local Plan Strategy Submission the regeneration and development of Central Crewe will be achieved through actions such as; A large scale Leisure Use within the Town Centre Boundary and support for 24 hour town centre uses, including restaurants and cafes/bars and support of multi-use facilities that drive footfall generation and introduce a diversity of uses within the town centre. Projected milestones relating to the programme include: B7: Planning policy, context, consents and permissions Royal Arcade Development Partner contract awarded September 2017 Planning process commences for scheme September 2017 Planning consent sought for scheme April 2018 Redevelopment commences for scheme Autumn 2018 Redevelopment scheme completed Winter 2020/21 Crewe Market Identify preferred delivery option, subject to consultation Sept 2017 Public consultation October 2017 Seek planning consent(s) March 2018 Commence works May 2018 Public Realm Secure commitment to Phase 1b specification and procurement route September Commence Phase 1b works - Autumn Complete all public realm works Winter 2020/21. High level constraints or other factors which may present a material risk to delivery B8: Delivery Constraints There are a series of Key Decision by the Council (and as the Local Planning Authority) in relation to funding, procurement and delivery of the different elements of the programme. These are all being addressed through a project management process for each element within the overall regeneration programme. The key material risk relating to the programme is that of further out-of-town retail and leisure floorspace being created outside of the town centre, as this is likely to significantly undermine the objectives of the regeneration programme. Page 10 of 30

11 Please provide details of any related or dependent activities that is not resolved to a satisfactory conclusion would mean that the full economic benefits of the scheme would not be realised B9: Scheme Dependencies Dependencies are limited, with most of the sites in the control of Cheshire East Council. Whilst a development partner will exert a significant degree of influence on the Royal Arcade scheme, these will be the subject of both the development agreement with the Council and its planning consent. There is a clear link between the delivery of the RA scheme and the adjacent public realm that the Council is seeking to implement. Please summarise what the scope of the scheme is. Provide details of whether here is potential to reduce the costs but still achieve the desired outcomes or increase projects costs for much improved outcomes B10: Scope of scheme and scalability The physical scope of High Speed-ready Heart programme is indicated in Appendix 1. There is very limited scope to reduce cost, as this would have a significantly detrimental impact on overall viability and the outputs and outcomes identified. The programme may be capable of being scaled up, which could improve the quality, pace and deliverability of the scheme. It could also be extended further to other sites within close proximity, but these would require additional investigation and planning consent in order to be delivered. Please describe what alternative options and funding sources have been considered and why these have been rejected. Include information on the likely implications of the intervention not happening. How have you prioritised the options considered in order to reach an optimal solution? B11: Alternative Options Considered Delaying the securing of LEP funding would significantly extend the timeline for development and may ultimately lead to it being undelivered before HS2 is operational in Crewe. Alternatively, the Council could look to borrow funding and enter in subsequent JVs / DAs to secure additional funding, but this is likely to be unaffordable. If the Council does nothing investment will be drawn to other towns and out-of-town locations, and Crewe town centre, nor its residents, would derive optimum benefit from a HS2 Hub station. If Local Growth Fund monies are not available for your Scheme, would an alternative solution be implemented, and if so, how would it differ from the proposed scheme and how would it be funded? B12: Options if funding is not secured A more limited programme would deliver reduced outcomes and be more limited in scale and may not be capable of being delivered at all, subject to funding within Cheshire East Council. It is likely this scheme will be limited to the existing Royal Arcade site. Doing nothing is not considered an option for the future of Crewe Town Centre. The Centre has suffered from significant period of under investment and without transformational change and investment it will not be fit for purpose or HS2 ready. Page 11 of 30

12 For transport schemes please provide a description for how your Scheme will meet the LTB objectives (in no more than 100 words against each objective): B13: Policy Fit with LTB Policy Objectives (Transport Schemes Only) Reduce congestion and improve the efficiency of the network to support economic growth and regeneration Reduce the impact of traffic on the environment, reduce carbon emissions and take steps to adapt the transport network to the effects of climate change; Maintain large transport structures; Contribute to safe and secure transport and promote types of transport that are beneficial to health; Improve accessibility to jobs and key services, particularly for disadvantaged communities or groups. A significantly enhanced town centre bus interchange facility will increase the scope for more and better bus services, significantly enhancing the customer experience and therefore increasing levels of patronage by an estimated 20%. This will drive both further footfall and spend in the town centre, benefiting existing and new businesses and increasing both levels of employment in the town centre and increasing the labour pool available for town centre businesses to recruit from. Page 12 of 30

13 C: Economic Caseqw This economic case determines whether the scheme demonstrates value for money. It should set out the case for the scheme in supporting and accelerating the economic growth of Cheshire & Warrington. It is important that the benefits provided by the proposed project take account of issues including deadweight and displacement and as such benefits and outputs should be shown as net. C1: Job and Wealth Creation and Impact on Skills Across Cheshire & Warringto n C2: New Homes Please indicate (where possible) the scale of direct and indirect employment opportunities being created as a result of implementing this Scheme The High-Speed-ready Heart scheme will directly create: 300 new jobs (direct); 13,021 sq m of new commercial floorspace (leisure/retail mix); 14,400 sq m of new public realm (in Phase 1a and b) and xxxxxx new car parking spaces. Please indicate (where possible) what new homes will be created as a result of implementing this scheme. No new homes are directly proposed in the regeneration programme, but it is expected that new homes may be delivered : -indirectly by private sector, as a result of an enhanced town centre and evening economy - directly by the Council and its partners (e.g. HCA, Guinness Partnership/other RSLs, Engine of the North), potentially including car parks which may no longer be required as a result of new capacity provided at the multi-storey car park. Please provide an estimate of the impact of your Scheme in growth of Gross Value Added. Indicate how this estimate has been arrived at including details of any impact assessment model that you have used. Please provide an estimate of the impact of your Scheme in growth of Gross Value Added. Indicate how this estimate has been arrived at including details of any impact assessment model that you have used. Estimated 14.9m GVA pa (2015 prices) C2: Growth in GVA This is based on the direct outputs of the investment in tertms of floospace, jobs, etc anticipated at this stage. Sources are detailed in Appendix 3. Calculations assume the proposed floorspace figures are the Gross External Area, rather than GIA or NIA. Figures take account of how employment densities vary according to the use class, and of vacancy rates. Figures assume that the gym is a mid market/ family gym, not a budget one. Jobs and GVA figures shown are rounded, but were calculated using unrounded data. Page 13 of 30

14 Please describe how the Scheme will improve travel times, accessibility changes to business, unlocking land for development etc. The High-Speed-ready Heart programme will feature at its centre a new bus interchange for Crewe. This already generates 1.6m passenger movements pa. A significantly enhanced facility will increase the scope for more and better bus services, significantly enhancing the customer experience and therefore increase levels of patronage by an estimated 20%. This will: - drive both further footfall and spend in the town centre, benefiting existing and new businesses - increase both levels of employment in the town centre AND increase the labour pool available for town centre businesses to recruit from. C3: Productivity Benefits to Business The High-Speed-ready Heart scheme will significantly enhance the visual appearance of the town centre and revive confidence in it as a place both to visit and to do business. The project will encompass an improved public realm and, through increased investment and footfall, will significantly improve the sense of security and natural surveillance within the town centre, facilitating the cycle of increased footfall, increased investment and increased commercial confidence. Acquiring the freehold and/or leasehold interests of key sites will contribute towards this, but will also enable the Council to take back more direct control of buildings that are considered major eyesores, and enable an accelerated programme of renewal and redevelopment. The increased footfall that will be generated through the mix of uses a balanced blend of leisure, retail, employment, residential uses will drive significant benefits for existing businesses within the town centre, and those businesses in the local economy that supply and support them. Please provide evidence of how your proposal offers value for money, e.g.: Cost per job Cost per housing unit Leverage ratio against CWLEP investment and as a percentage of the total scheme cost C4: Value for Money For a transport scheme please provide a BCR of the scheme using monetised impacts in line with WebTag guidance. If no BCR available please provide explanation of when it may be available or other justification (of return on investment or unit costs). Overall cost per job per of LGF investment for overall scheme: xxxxxx per job. Each 1 of LGF funding will lever 5.86 of other investment over the lifetime of the programme. It is important to note that this scheme will deliver many other indirect benefits aside from jobs and commercial development, including lifting the value of land and property in Crewe town centre and adjacent areas. Page 14 of 30

15 Please quantify any other benefits or outputs arising from the project, stating whether these are direct or indirect. You will need to provide evidence of how you have arrived at your benefit and output figures. Directly, the project will lever: - an additional xxxxxx private sector investment and xxxxxx CEC funding invested in the town centre regeneration programme. C5: Other Outputs Please refer to Appendix 2 and Appendix 4. Other outputs / benefits will include: New commercial floorspace (13,021 sq m) New public realm (14,400 sq m) Increase town centre footfall Increased dwell time Increased % of local residents consumer expenditure within Crewe. Additional business rates income Provide a brief description of a modelling and appraisal methodology including details of data source. Show sufficient information to demonstrate the analysis supporting the economic case fitness for purpose. C6: Scheme Assessment Financial calculations and outputs delivered are based upon high level development appraisals undertaken in relation to the Royal Arcade scheme (undertaken by Cushman & Wakefield on behalf of the Council). These are subject to further review as proposals are advanced, particularly in relation to the position of the development partner for Royal Arcade to be appointed by the Council. If an Appraisal Summary Table (AST) or other Assessment Summary is available for this Scheme, please append to this Form. Please note that the level of detail in the appraisal summary table should be proportionate to the scale of expected impact. Page 15 of 30

16 D: Commercial Case This section determines whether the scheme is commercially viable. It presents evidence on risk allocations and transfer, contract timescales, implementation timescales and details of capability and skills of the team delivering the project Please provide details of the procurement route and strategy that will be used for the project. This should include details of the procurement mechanism to be used, details of whether it is an existing framework and contract, the timescales associated with the procurement and details of other routes that were considered for delivery and reasons why these were rejected. D1: Procurement The High-Speed-ready Heart programme comprises several key elements. The first of these the Royal Arcade redevelopment is well advanced with a development partner procured. The Council is in post-tender contract negotiations in relation to a development agreement, and expects to award this contract in September In relation to the public realm and market projects within the programme, the Council expects to make a decision on the funding and delivery of these in September D2: Commercial Dependencies When appointed, the Council s development partner will exert a significant degree of influence on the Royal Arcade scheme element of the programme. This will be subject to both the development agreement with the Council and its planning consent, but also to securing pre-lets for the scheme from commercial (leisure and retail) occupiers. Please can you identify how the project will be commercially sustainable? Will the project require on going revenue support? If so, how will it be funded? Please verify the project s sustainability by including cash flow projection post completion D3: Commercial Sustainability The Royal Arcade site will be a commercially led operation managed by the Council s appointed development partner or its successor, and is expected to be financially sustainable. The only on-going commitments to the Council relate to the operation of the bus interchange and car park which it will own (but the basis of their operation is subject to further negotiations). Detailed cash-flow projections have not been developed as yet, but it is anticipated that income from these elements will generate a yield that satisfies Council requirements. Page 16 of 30

17 Does funding this scheme constitute state aid? If so, what regulations are being applied and what advice has been received to date to demonstrate compatibility? Are you eligible to receive grant aid at the level requested within the State Aid Regulations? D4: Compatibility with State Aid rules The Council has already obtained legal advice in relation to the procurement of a development partner for the Royal Arcade site and is awaiting specific advice in relation to the State Aid implications for the bus interchange and car park elements. Initial advice suggests that, providing the Council retains the freehold of these assets, there is a low risk of State Aid challenge. Please provide: 1. Evidence to show the risk allocation and transfer between the promotor and contractor and timescales identified in procurement and/or contractor management strategy 2. Definition of approach taken to assess commercial viability 3. Arrangements for cost overruns 4. Letter from Local Authority S151 officer D5: Commercial Viability An initial high level development appraisal has been undertaken by the Council s development advisers, Cushman & Wakefield, in relation to the deliverability of the Royal Arcade redevelopment scheme, which has informed the Council s overall strategy in relation to the procurement of a development partner. A development appraisal has also been undertaken by Council s intended development partner. Upon securing pre-lets, the developer will be obligated to take forward development of the scheme. Marketing has already commenced. The delivery of the bus station and car park will be the responsibility of the development partner; the Council will pay for these elements upon their completion, but the developer will be liable for any cost over-runs over and above what they have specified in their final tender. The other elements of the project will be the subject of separate appraisals by the Council and development partners/funders at the appropriate point. The Council s s151 officer is cognisant of the Royal Arcade approach, and will be consulted in the development and delivery of this and the wider scheme. Page 17 of 30

18 E: Financial Case This section is asking you to set out the financial case for your Scheme. Before putting forward a Scheme proposal for potential funding, Scheme promoters should ensure they understand the financial implications of developing the Scheme (including any implications for future resource spend and ongoing costs relating to maintaining and operating the asset), and the need to secure and underwrite any necessary funding outside the Local Growth Fund contribution. Please provide details of a funding profile (by year) for the Scheme in terms of: Total annual cost Local Growth Fund funding sought; Promoting Organisation contributions; Third Party contributions (public and private). E1: Scheme Costs Please also include table showing elements of the project cost in terms of: Feasibility Detailed design Construction Contingency Other cost elements Irrecoverable VAT if applicable If applicable please show capital and revenue costs as separate lines. You may attach the funding profile as a separate annex if required. Please see Appendix 4 which breaks down project costs by the elements of the project and by type of cost. Further details in relation to contingency and VAT are to be developed through further stages of feasibility and viability assessment. Page 18 of 30

19 Please provide a commentary on your commitment to spend. Scheme promoters must demonstrate that they can commit a minimum contribution fund of at least one third of the total scheme cost and any cost increases incurred after Final Approval will be borne in full by the promoting authority. E2: Promoting Organisation Contributions Cheshire East Council s Medium Term Financial Plan and its addendum ( ) makes provision for expenditure on Crewe Town Centre Regeneration (High Speed-ready Heart). Additionally, the Council has a separate budget for site acquisitions and as part of discussions with other partners in relation to the proposed HS2 Hub station will be seeking other public sector funding commitments to wider town centre regeneration objectives. The Council has already committed significant resources to this regeneration programme, as evidenced by investment in the Crewe Lifestyle Centre ( 15m) and the acquisition of the Royal Arcade site ( 6m). Further phases of work will require other Council funding (e.g. Public Realm Phase 2, Crewe History Centre). Please provide further details on any third party contributions for your Scheme. This should include evidence to show how any third party contributions are being secured, the level of commitment and when they will become available. Please include contributions of cash and in-kind (e.g. land and buildings). Also provide information on any additional resources that your project will leverage in as a result of the initial investment. E3: Third Party Contributions and Leverage Third party contributions comprise the expected value of financial outlay by the development partner appointed by the Council to deliver the Royal Arcade redevelopment element of this proposal. Further private sector investment will be generated indirectly by this project, in the form of wider town centre regeneration and growth. The Council has also committed approximately 30m towards the costs of the town centre regeneration programme, which includes the value of sites that form part of this project, and - Crewe Lifestyle Centre - Crewe Engineering & Design UTC - Town Centre Regeneration Framework - Central Crewe Masterplan Page 19 of 30

20 How resilient is your proposal to changes in financial circumstances? What risk allowance has been applied to the project cost (e.g. QRA / Optimism Bias, Contingency)? How will cost overruns be dealt with? How will these costs be shared with any third party funding partners? E4: Affordability and Financial Risk A 5% allowance has been made within the proposed costs, which would cater for most circumstances which could have a detrimental impact on the programme s deliverability. For the Royal Arcade redevelopment, cost overruns will be the responsibility of the development partner. On other sites, the Council will review the apportionment of cost over-runs with selected delivery partner(s). Please provide information on any legacy benefits of your Scheme. E5: Legacy Benefits The High-Speed-ready Heart programme will drive many wider inter-related benefits which will have a lasting impact on Crewe: - Increase in number of active uses within the town centre, both during the day and in the evening. - Increase in footfall within the town centre, driven by a mix of a larger resident population within the town centre, more employees working in the town centre, and more visitors to the new facilities being delivered (cinema, restaurants, etc) - Increased confidence in the town centre, driving further investment in other parts of the town centre and wider Crewe, providing a bedrock of support as Crewe prepares for a HS2 Hub Station. - Increased bus station patronage and bus usage, reducing congestion and increasing transport sustainability. F. Management Case - Delivery This section is asking you to demonstrate how you intend to assess whether your Scheme is deliverable in the next spending round or at some future date as well as providing assurance that you have the capacity and capability to deliver the project as proposed. F1: Governance and Project Management Please provide details of who will be the Senior Responsible Officer for delivering the scheme. Please also detail the governance structure for the project identifying how key decisions have or will be made, how the scheme will be monitored and details of contract management arrangements. Please provide an organogram if available The SRO for the High-Speed-ready Heart town centre regeneration programme is Andy Kehoe, Head of Assets & Regeneration, Cheshire East Council. Reporting to him are: Jez Goodman, Project Manager for the Royal Arcade redevelopment The Programme Team includes: Page 20 of 30

21 CEC Regeneration CEC Legal (Property) CEC Legal (Procurement) CEC Procurement CEC Highways + Ringway Jacobs CEC Assets CEC Planning CEC Communications External development advice Cushman & Wakefield External legal advice (including procurement, contract, state aid) Browne Jacobson The wider project team for the Royal Arcade procurement competitive dialogue stage includes other technical experts from within the Council including legal (planning and highways), strategic planning, cultural economy, environmental protection, car parking, etc as well as inputs from the Council s ASDVs, Engine of the North, Skills & Growth Company, ANSA, Transport Service Solutions and Civicance. The Council s Cabinet had already delegated responsibility to proceed in procuring a development partner, with the final appointment scheduled on the Council s Forward Plan for September Please state what level of commitment there is to develop the Scheme to a provisional Business Case and what funding is required for scheme development/ Business Case preparation? F2: Commitment to Fund Scheme development The Council has already developed a Business Case in relation to the Royal Arcade element of the scheme, utilising internal and external resources. This business case has been updated as the Council has moved forward to the selection of its intended development partner. Other elements of the High-Speed-ready Heart programme will have linked business cases developed. Internal resources have been made available for this, but these are expected to be supplemented by those of other development partners, as appropriate. F3: Scheme Programme Please provide a scheme programme and phasing showing key activities and milestones. Ensure a Gantt chart has been attached to this form, clearly identifying the milestones for the project, the key construction stages, the critical path and all independencies. Please refer to Appendix 5 (Indicative GANNT chart). F4: Other Partners Involved in Scheme Delivery Please provide details of the partnership bodies (if any) you plan to work with in the design and delivery of the proposed scheme. This should include a short description of the role and responsibilities of the partnership bodies. Please provide specific information on any private sector partners. Cheshire East Council is the lead partner. In relation to the Royal Arcade redevelopment, a development partner will be Page 21 of 30

22 appointed following an OJEU-compliant procurement process. The new bus station and car park will be owned by Cheshire East Council, but the operating model for this is yet to be determined. The commercial elements of the Royal Arcade redevelopment will be leased to the selected development partner for 200 years. Other stakeholders will have a role in the delivery of the programme and its components, but they are not formal partners. Please provide a summary of the stakeholder management plan for the scheme, include any governance arrangements which ill materially impact on the scheme delivery. Provide details of how the key statutory stakeholders will be manged and engaged, in line with the Communications and Stakeholder Management Strategy. The Project Board for the existing Royal Arcade project will be extended to include other services/parties with a role in relation to the delivery of the overall High-Speed-ready Heart programme. F5: Stakeholder management and governance Stakeholder mapping has already been undertaken for the Royal Arcade project, with a supporting communications plan to be implemented as the developer procurement progresses. Key stakeholders include: - Current leaseholders and licensees - Town centre businesses - Crewe Town Council - South Cheshire Chamber of Commerce (including the South Cheshire Business Council board) - Local media - Guinness Trust - Homes & Communities Agency - London & Continental Railways - HS2 Growth Partnership Please confirm the proposed arrangements for delivery of the project, providing evidence that there is appropriate capacity, capability and experience within the organisation. Once completed who will be responsible for operating the project? F6: Operational Issues Project resources are already in place for the delivery of the Royal Arcade element of the scheme, including SRO, Project Manager, Project support and administration as well as the wider Project Team, which includes those internal and external technical specialists identified in Section F1. Most of the above resources are currently in-place, utilising funding from the Council s capital programme. Where additional resources are required, provision has been made for them within the capital programme. F7: Scheme Please comment on any community support for this Scheme. Page 22 of 30

23 Acceptability Has public consultation on the Scheme demonstrated its public acceptability? Is the scheme likely to invoke objections or involves damage to the local environment? For example use of greenbelt land, destruction of heritage of cultural landscape including listed buildings, or development in an area with special landscape designations e.g. SSSI, AONB The Royal Arcade element of the scheme was identified as a project within the draft Crewe Town Centre Regeneration Delivery Framework that was consulted upon with residents and wider stakeholders in July 2015 as part of the Council s Your Town Your Choice consultation. Analysis s of responses indicated that: - 83% agree that there should be flexibility for different uses within the town centre - 76% agree that more / better places to east / socialise would encourage them to use the town centre more with respondents suggesting that this would increase the night-time economy. Further consultation will be undertaken in relation to other elements of the proposed scheme as details are developed, including proposals related to the future of Crewe markets. Please describe the principal risks (and risk mitigation) associated with your Scheme, including: Planning e.g. likelihood of a public inquiry Political Commercial Land acquisition Legislative if additional legislative powers are required to deliver the Scheme, please state. Have legislative powers being awarded (yes/no) Procurement Policy Management F8: General Risks to Scheme Delivery How will any identified risks be managed between Scheme deliver partners? Planning: Low risk the scheme proposals are compliant with current and emerging Council planning policy for the town centre. Political Low risk the scheme proposals accord with both strategic and local political priorities, and will serve to enhance the town centre offer. Commercial Medium risk the Council has taken the position of being the project lead by acquiring some key sites, utilising existing sites and de-risking project delivery in order to facilitate commercial redevelopment. It is recognised that current levels of occupier demand are such that there is pressure for development at other out-of-centre locations, which pose a significant risk to the regeneration programme, if further retail and leisure occupiers are drawn out of the town centre. Whilst the investment market and occupier requirements do change over time, the Council monitors investment trends and occupier requirements s to assess whether there is a Page 23 of 30

24 change to the level of risk. Land ownership Low risk the Council controls all of the assets required for its regeneration programme. Legislative Low risk Procurement Low risk. Following a technically robust procurement process, the Council has selected its intended development partner for the redevelopment of Royal Arcade and is currently in post-tender negotiations in relation to the development agreement, etc. It expects to award a contract in September Policy Low risk - the scheme proposals are compliant with Council planning policy for the town centre and will support other strategic proposals relating to HS2. Management -Low risk. The Council has the appropriate in-house resources, supported by external technical advice and capacity within its Council-owned businesses, to deliver the scheme with minimal risk. Risk identification and management will be undertaken in accordance with the Council s project governance protocols, including through the existing Royal Arcade Project Board and, when the selected developer takes on responsibility for the Royal Arcade site, joint project governance and reporting arrangements will be put in place. Please indicate proposed arrangements for monitoring progress of the project and evaluating its impact. The LEP would expect such evaluations to be made publicly available as part of its transparency and accountability agenda. F9: Monitoring and Evaluation F10: Post Completion The Council will undertake monitoring and evaluation through its project board, and more strategically through its internal corporate governance (Executive Leadership Team, Executive Management Board). When the selected developer takes on responsibility for the Royal Arcade site, joint arrangements will be put in place in relation to monitoring and evaluation in accordance with the requirements of the Council and LGF. What are the plans for the project on completion? Will there be a change of ownership? Will the project be refinanced? How will this be managed? Most commercial elements of the Royal Arcade site will transfer to the selected development partner on the basis of a long lease (200 years), with the freehold retained by the Council. The bus interchange and car park elements will be retained by the Council, and may either operated by the Council directly, through its wholly-owned companies, or through an alternative management or leaseholder arrangement. Page 24 of 30

25 G: Evidence and Supporting Information G1: Evidence Please list here and provide copies of all technical reports documenting the evidence base for the Scheme and the Scheme s performance Please include any additional facts which may assist the Local Enterprise Partnership to assess this Scheme against strategic fit and deliverability. G2: Supporting Information HS2 Rebalancing Britain: From HS2 towards a national transport strategy (2014). Sir David Higgins. Northern Gateway Development Zone: A Collaboration for Growth and Prosperity (2016). Cheshire and Warrington Matters: A Strategic and Economic Plan for Cheshire and Warrington (2014). All Change for Crewe: High Growth City (2013). Cheshire East Council Crewe Town Centre: Regeneration Delivery Framework for Growth (2015) Cushman & Wakefield. Cheshire East Local Plan: Local Plan Strategy Proposed Changes Consultation Draft (2016). Cheshire East Council Cheshire Retail Study Update (2016). White Young Green Page 25 of 30

26 Appendix 1 Spatial Plan of Crewe Town Centre (Referenced in section A11 and B10) Page 26 of 30