Agenda item

Creation of a Property Development Framework


The Strategic Investment and Partnerships Manager presented the report of the Strategic Director Regeneration and Environment that updated the Committee on the Property Development Framework supporting the development of new commercial floor space in Wirral, initially presented to the Cabinet at its meeting held in March 2015.


The report informed that the industrial and office property market in the Liverpool City Region faced challenges with end values remaining relatively low and grant funding still being required to enable developments to take place. That is, the total cost of constructing speculative and bespoke accommodation being greater than its value on completion.


The Strategic Investment and Partnerships Manager advised that the issue was further compounded by banks often refusing to lend against any kind of speculative development and limiting their lending against bespoke schemes, with a known end user, to a maximum of 60% of the projected end value. Members were told that one of the other constraining factors was that the availability of external grant funding from organisations including the UK Government and the European Union was reducing significantly.


Members were informed that the Council had been reviewing the current models that were available to it in terms of supporting private sector development and company growth, and exploration of new ways of supporting such developments.


The Strategic Investment and Partnerships Manager explained the three primary Development Models and the constraints associated, summarised below:






1. Site/ Acquisition Land Assembly

To strategically intervene in the marketplace to address constraints causing barriers to the private sector. This may include land assembly to create developable parcels of land.


Lack of available funding to support this type of option. Little or no return on the outlay.

2. GAP Funding

To address viability gaps by bridging the ‘gap’ between development costs and end values.

Again, the lack of available funding for this option presents a problem. However, the LCR LEP has been allocated some resources through the Growth Deal.


3. Council Head Lease

Covenant strength allows a developer to secure higher levels of funding for a development, strengthening the yield of a development and addressing viability in a different way from GAP funding.


The Council taking the head lease for a new developing significantly increases the viability of a development from the point of view of securing funding.

Using the Council’s covenant strength in this way brings opportunities and risks. It exposes the Council to potential costs if  the sub lease ends and there are void periods. However, mitigating actions can be put into place and the risk depends on the development plus the potential return for the Council.



He further informed the Committee that all efforts to make Wirral attractive to investors had to be assessed against the financial risk to the Council, adherence to policy and effective due diligence.


Members expressed full support to any initiatives that encouraged investment in the Wirral, and promoted business growth and employment.


The Committee discussed a range of projects, past and current, funding sources including the Growing Places Fund and international funding / city region investment.  A member questioned the sustainability of some of the funding models, but acknowledged along with others that some of the land areas covered by the enterprise zone had been unused for 30 to 40 years, and noted the successes arising from ‘pump priming’ similar schemes elsewhere.


A question was asked that given the topic, whether members of the Planning Committee should declare an interest at this point. The attending solicitor informed that the discussion was considered general, and not specific to any particular application, and as such no declaration was required. 


Members noted the value of investing in the clearance of contaminated land, thereby making it more attractive to investors.


The Head of Regeneration and Planning informed the Committee that as the economy picks up, the number of people looking to invest, or talking about investment opportunities was growing. The Strategic Investment and Partnerships Manager also pointed out that state aid shouldn’t distort the market and that the Council must remain innovative in its efforts to attract investors and new businesses.


Resolved: That the report be noted.


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