Agenda item

[Report of the Director for Housing, Regeneration and Planning. To be introduced by the Cabinet Member for Strategic Regeneration.]

Award of funding from the Strategic Investment Pot.

The Cabinet Member for Strategic Regeneration introduced the report which sought approval to accept a grant of £5 million from the City of London Corporation, and to subsequently enter into funding agreements. A grant agreement of £2million would allow the delivery of a workspace intensification scheme in South Tottenham and a further grant agreement of £3 million would allow the delivery of a sub-regional small business loan fund.

The Cabinet Member outlined that taking a pro-active approach to employment and business growth was essential to the successful future of the borough and was placed  at the core of the Council’s plans for the regeneration of Tottenham.

It was noted that Tottenham has an increasingly diverse business portfolio and as the number of businesses continue to rise, they would contribute to Tottenham becoming a more prosperous and resilient place.

The Cabinet Member outlined that it is becoming increasingly hard for businesses, especially SMEs, to reach their full potential. The Council was therefore committed to seeking out opportunities, such as the grant funding approval put forward, to support the borough’s businesses to flourish and grow.

In response to a written question from Cllr Gordon, the following information was noted:

Part of Mayor’s Regeneration Fund package agreed by Cabinet in 2012 was to initiate projects and bring forward schemes and developments in Tottenham that otherwise could not happen either due to viability issues or lack of funding.

The OIF loan fund was formally established under a grant agreement with the GLA in 2015.

The OIF loans were designed to generate jobs and commercial floor space growth in Tottenham.

The Full grant from GLA (£2.674M) claimed represented a bulk of the spend to date. There were 20 loans given to date.

It was noted that 289 Jobs and 146,000 sq.ft. of refurbished/new commercial floorspace had been achieved/committed by the end of the agreed loans (i.e. by c2024) – exceeding the original targets agreed in 2015

The Repaid loan sums now totalled c£400k (to be used again for subsequent loans)

Noted that the lessons learnt from setting up the fund in 2015 included:

It was noted that loan applications were accompanied by a business plan and an assessment carried out, including on financial cash flow projections for the term of the loan.

It was noted that businesses (and all employment, floorspace and other outputs) are monitored at least quarterly and all repayments tracked on a monthly basis.

It was further noted that PVF has the same job and floorspace focus, plus the requirement to result in an increase in business rates through more intensive use of commercial space.

RESOLVED

1. That pursuant to Contract Standing Order 17.1 to agree to the receipt of a grant of £2,000,000 from the City of London Corporation, subject to the Council entering into funding agreement, in order to deliver a workspace intensification scheme in South Tottenham.

2. That pursuant to Contract Standing Order agree to the receipt of a grant of £3,000,000 from the City of London Corporation, subject to the Council entering into funding agreement, in order to establish and deliver the Productive Valley Fund.

3. To delegate authority to the Director of Housing, Regeneration and Planning, after consultation with the Cabinet Member for Strategic Regeneration, to approve the final terms of the funding agreements.

Reasons for decision

Tottenham is a major regeneration area for the borough and for London. The Tottenham Strategic Regeneration Framework (SRF), approved by Cabinet on 18th March 2014, identifies an ambitious vision for the transformation of this area.

With an aim to deliver 4,000 jobs by 2020, the SRF and its supporting documents set out an ambitious vision for economic and employment growth in Tottenham. In order to achieve this vision, it is imperative that businesses are encouraged to locate and grow in the area, and that local employment land is fully maximised.

With a substantial demand for workspace in Tottenham and limited vacancies, the cost of commercial premises are rising. As a result, businesses are finding it increasingly difficult to secure suitable and affordable workspace in the area. This is most notably the case for light-industrial and maker space, which has a vacancy rate of less than 1% in Tottenham. Developers and Landlords are failing to respond to the low vacancy levels, largely due to the relative infancy of the light industrial and intensification market.

The rising demand for workspace in Tottenham reflects the wider London landscape, where based on average take-up, it is predicted that there are just eight months of supply remaining. The requirement for both residential and commercial uses are driving up the pressure on London’s land and its values. Protecting the affordability and availability of workspace is a key aim of the Draft London Plan, which strives to protect the city’s economic and employment activities.

The Upper Lea Valley (ULV), which incorporates Tottenham, has been identified by the Mayor of London as having significant potential for economic growth. The area encompasses land in the boroughs of Haringey, Enfield, Waltham Forest and Hackney. With a total of 40,000 jobs within Strategic Industrial Land alone, the ULV is a unique economic asset made up of a range of vibrant and diverse business sectors.

Despite its value, the ULV is not reaching its potential, and has the capacity to significantly intensify its employment and business activities. Consequently, the Mayor of London has set an ambitious target to achieve a further 15,000 jobs by 2031.

In 2017, the Greater London Authority (GLA) and the relevant boroughs jointly commissioned a report which sets out an action plan for the ULV’s economic growth. The following recommendations within the action plan were used to underpin the two projects set out this report;

Recommendation 1: Develop a project and funding strategy to deliver one or more employment space demonstration projects, which provide confidence to the market that new intensified typologies can be successful on broadly commercial terms.

The limited supply of workspace in the borough gives significant strategic rationale for the Council to consider means of accelerating the delivery of workspace. The Council is able to positively contribute to the supply and suitability of workspace through the use of Council-owned assets.

The ULV action plan recommends that the Local Authority should play a key role in delivering workspace intensification schemes which accommodate high employment densities. These demonstrator projects will provide important workspace in themselves, but also give confidence to developers and landlords that these typologies are able to be both viable and attractive to the market.

Recommendation 2: Establish a revolving Investment Fund for the Valley as mechanism to pilot ideas and highlight best practice, which can e.g. invest in new employment space typologies and other economic infrastructure to ensure the area delivers a next generation range of high density and high quality places of work.

A revolving investment fund for the ULV will provide a mechanism to invest in new business space, encourage business growth, lever in further business investment where possible and provide further employment opportunities.

Alternative options considered

Option 1: ‘Do Nothing’

An option would be for the Council to not accept the grant funding from the City of London Corporation, and therefore not enter into funding agreements. This would prevent the Council from securing significant funds from the SIP which are required in order to deliver the workspace intensification scheme and the Productive Valley Fund.

The Council would also not be taking up the significant opportunity to lead on the sub-regional Fund programme for which it would receive management and administration costs to deliver the programme.

Both projects provide a significant opportunity for the Council to positively support and strengthen the borough’s business base, a priority identified in the draft Borough Plan. Without Council intervention, there is a risk that businesses will find it increasingly challenging to locate themselves and grow within the borough.

Option 2: ‘Accept Funding’

The recommended option is to accept the grant funding from the City of London Corporation, and to subsequently enter into funding agreements. The funding secured from the SIP will allow the delivery of the two projects which will address significant barriers to business growth.