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Agenda Item No

 

The Vale of Glamorgan Council

 

Cabinet Meeting: 13 April, 2015

 

Report of the Cabinet Member for Regeneration

 

Welsh Government’s Town Centre Repayable Funding Scheme for the year 2015/16

 

Purpose of the Report

1.          To advise Cabinet that the Council has been notified that it is eligible to submit an application for funding from the Welsh Government's Town Centre Repayable Funding Scheme for the year 2015/16.

2.          To consider the priority actions for inclusion in the application and the options for delivering and administering the scheme were the application to be approved by the Welsh Government.

Recommendations

1.          That the information in this report is noted.

2.          That the priority actions being proposed in paragraph 10 of this report are approved as the basis for submitting an application for funding from the Welsh Government's Town Centre Repayable Funding Scheme for the year 2015/16.

3.          That the Director of Development Services in consultation with the Managing Director and the Cabinet Member for Regeneration be authorised to use delegated powers to finalise details of the application in time for submission to comply with the Welsh Government's deadline of Friday 1st May 2015.

4.          That, subject to Welsh Government approval of the Council's application, the Director of Development Services adopts a suitable approach to delivering and administering the scheme.

5.          That, subject to Welsh Government approval of the Council's application, the Director of Development Services in consultation with the Managing Director and the Cabinet Member for Regeneration be authorised to use delegated powers to approve loans to third parties for repayment within an agreed timeframe as part of the scheme.

6.          That, subject to Welsh Government approval of the Council's application, the Head of Legal Services in conjunction with the Managing Director be authorised to prepare, complete and execute the required legal documentation to enable loans to be provided to third parties for repayment within an agreed timeframe.

Reasons for the Recommendations

1.          To advise Cabinet that the Council has been notified that it is eligible to submit an application for funding from the Welsh Government's Town Centre Repayable Funding Scheme for the year 2015/16 (copy of the Welsh Government's letter and general guidance is attached at Appendix 1).

2.          To endorse the scope of the scheme being developed.

3.          To allow an application to be submitted within the timescale required.

4.          To enable the Repayable Funding Scheme to be managed effectively (subject to Welsh Government approval of the Council's application).

5.          To enable loan applications from third parties to be processed and determined effectively (subject to Welsh Government approval of the Council's application).

6.          To enable loan applications from third parties to be processed and determined effectively (subject to Welsh Government approval of the Council's application).

Background

3.          The Council was notified on 18th February 2015 (copy of the Welsh Government's letter and general guidance is attached at Appendix 1) that it is eligible to submit an application for funding from the Welsh Government's Town Centre Repayable Funding Scheme for the year 2015/16.  The deadline for submitting the application form and any supporting documentation is 5pm, Friday 1st May 2015.

4.          The total amount available for this scheme is £5 million, to be released to participating local authorities in 2015/16 for spend within the year.  There is no carry forward to future years.  The proposal for the scheme is that the funding is to be split equally between the seven local authorities that are within the Welsh Government's Vibrant and Viable Places, Tackling Poverty Fund programme.  This will provide the local authorities with circa £700k each, subject to a successful application.

5.          The Vale of Glamorgan Council is one of the seven participating local authorities.  The settlement of Barry was put forward in the Council's Vibrant and Viable Places Stage 1 Strategic Outline Programme bid (Barry: A Centre of Growth and Opportunity) in July 2013 and it is the focus of this investment should the Welsh Government approve the Council's application.

6.          The Welsh Government's general guidance states that the scheme will provide repayable funding to support town centre regeneration.  The loan may be used:

·       Directly by local authorities to acquire and unlock sites and premises with the intention of packaging and selling a proposal on the open market within an agreed timeframe;

·       Directly by local authorities to redevelop or refurbish sites and premises within an agreed timeframe; and 

·       By local authorities to provide loans to third parties for repayment within an agreed timeframe.

 

7.          The Welsh Government's general guidance also states that the funding may be recycled over a 15 year period and the Welsh Government will require it to be returned in full after 15 years (i.e. in the year 2030/31).  The maximum time frame for each loan is 5 years and local authorities are expected to ensure that the funding available is recycled a number of times.

Relevant Issues and Options

8.          The Council's Vibrant and Viable Places Stage 1 Strategic Outline Programme bid (Barry: A Centre of Growth and Opportunity) made the case for targeted investment in Barry's traditional shopping areas, namely Holton Road, High Street/Broad Street and Main Street/Vere Street.   Since the Welsh Government's guidance was issued, property owners, housing associations and private landlords have been approached to gauge interest in the option of providing loans to third parties in the above mentioned areas.  At the time of writing this report, discussions are continuing with interested parties.

9.          In view of the timetable for submitting the application and spend, i.e. within the year 2015/16, the Council is not in a position to bring forward proposals which can fully align to the Welsh Government's guidance.  However, the application should allow for such an option to be utilised if specific circumstances dictate that such an approach is appropriate and necessary. 

10.       It is therefore recommended that the Council's application is based on providing loans to third parties i.e. property owners, housing associations and private landlords, in the Holton Road, High Street/Broad Street and Main Street/Vere Street areas.  In addition the application should allow the Council the option of bringing forward proposals should circumstances dictate that the Council's involvement would be necessary.

Resource Implications (Financial and Employment)

11.       There is no additional revenue funding from Welsh Government for the Town Centre Repayable Funding Scheme.  Where the Repayable Funding is used to provide a loan to third parties, the Council will be allowed to charge a fee of up to 15% which can be retained to contribute to the Repayable Funding administration costs.  Once lending stops to individual loan applicants, there will be no fee income generated.  However, there will still be a revenue cost to administer the repayment of individual loans and take action against non-repayment.

12.       Cabinet will recall receiving a report at the meeting on 23rd March 2015 entitled Home Improvement Loan Funding and an earlier report at the meeting on 30th July 2012 entitled Welsh Government House to Homes Scheme.  Delivery options for the Town Centre Repayable Funding Scheme, including an appraisal of cost implications, will be considered in the light of the cost implications of delivering and administering these other loan schemes.

Sustainability and Climate Change Implications

13.       A core aim of the Welsh Government's scheme is to support the diversification of town centres and encourage more sustainable uses for empty sites and premises, such as residential, leisure and for key services.

Legal Implications (to Include Human Rights Implications)

14.       Should the Welsh Government approve the Council's application, the award of repayable funding will be made on and subject to the conditions and under the authority of the Minister for Communities and Tackling Poverty, acting pursuant to sections 70 and 71(1) of the Government of Wales Act 2006 and sections 126-128 of the Housing Grants, Construction and Regeneration Act 1996. 

15.       It will be necessary to ensure that all terms and conditions attached to the external funding offer are complied with and that the Council’s Procedure Note on Grant Funding is followed.  The Welsh Government has circulated an example of a draft offer letter with the scheme guidance and application form.  A copy of the draft offer letter is attached at Appendix 2.

16.       To ensure compliance with the European Commission's State Aid Rules, checks will be undertaken as part of the loan application process.

17.       The Financial Services and Market Act 2000 (Exemptions) (Amendment) (No2) Order 2003 exempts local authorities from regulation by the Financial Conduct Authority but they must offer a comparable service.  This is detailed in guidance issued by Department of Communities and Local Government in 2005.

18.       There is a risk that the loans will not be recoverable and so all loan applicants will be required to agree to a registered charge against their property to protect the Council's financial interest.  However, unless those charges are first charges, which they very often will not be, they will not give real security as most first charges always secure priority for any additional advances made by that lender so a second charge is often a worthless security.  There is a high risk, therefore, that recovery action will not be successful for defaulting borrowers.

19.       By securing the loan on the Land Register, this exempts the Local Authority from the Consumer Credit Act 1974.

Crime and Disorder Implications

20.       Work to return vacant or underutilised property to beneficial use may assist in reducing crime and disorder associated with vacant or underutilised property.

Equal Opportunities Implications (to include Welsh Language issues)

21.       As the scheme that may be delivered is an interest free loan, there are no known implications for third parties of different religious backgrounds.

22.       Promotional material produced in association with the scheme will be bilingual in accordance with Council policy.

Corporate/Service Objectives

23.       The core aims of the Welsh Government's scheme are:

·       To reduce the number of vacant, underutilised and redundant sites and premises in town centres;

·       To support the diversification of town centres and encourage more sustainable uses for empty sites and premises, such as residential, leisure and for key services.

 

24.       Corporate and Service Plan priorities such as the Council's Vibrant and Viable Places Stage 1 Strategic Outline Programme bid (Barry: A Centre of Growth and Opportunity) over the three financial years 2014/15, 2015/16 and 2016/17 and the Town Centre Framework are aligned to the above mentioned aims.

Policy Framework and Budget

25.       This is a matter for Executive Decision by Cabinet.

Consultation (including Ward Member Consultation)

26.       No specific Ward Member consultation has been undertaken as the report is not related to any specific wards at this time.

Relevant Scrutiny Committee

27.       Economy and Environment.

Background Papers

Appendix 1: Welsh Government's Town Centre Repayable Funding Scheme, notification letter and general guidance.

 

Appendix 2: Welsh Government's Town Centre Repayable Funding Scheme, draft award letter.

 

Contact Officer

Dave Williams - Principal Regeneration Officer

Tel. 01446 704753

 

Officers Consulted

Principal Lawyer, Legal Services

Accountant, Resource Management

Finance Support Manager, Resource Management

Operational Manager (Countryside & Economic Projects)

Principal Housing and Pollution Officer, Public Protection

 

Responsible Officer:

Rob Thomas - Director of Development Services  

 

 

 

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