Agenda Item No
The Vale of Glamorgan Council
Cabinet, 3rd November 2014
Cabinet Member for Regeneration, Innovation, Planning and Transportation
Proposed Penarth Business Improvement District
Purpose of the Report
1. To inform Cabinet of the current position in relation to the development of a Business Improvement District (BID) for Penarth and to instruct the Returning Officer, to manage and operate a BID ballot. The report also seeks endorsement by Cabinet in respect of allocating funding from the Regeneration Scheme capital allocation, and revenue in each of the financial years 2016/17-2019/20 subject to the terms, spending priorities and precise boundary of the BID being agreed with the Council.
1. That the Returning Officer, manage and operate the BID ballot following receipt of formal notice and an acceptable BID proposal as set out in this report and required by regulation.
2. That Cabinet endorses the proposed financial commitment of £4 500 from the Regeneration Scheme capital allocation, up to £5 000 ballot costs, and up to £4 000 in revenue in respect of each of the financial years 2016/17 to 2019/20, subject to the terms, spending priorities and precise boundary of the BID being agreed with the Council.
3. That the Head of Legal Services be authorised, in consultation with the Managing Director, Director of Development Services, Leader of the Council and Cabinet Member for Regeneration, Innovation, Planning and Transportation, to prepare and execute a Baseline Agreement and Operating Agreement as set out in this report.
4. That the Director of Development Services be granted delegated authority, in consultation with the Managing Director and Cabinet Member for Regeneration, Innovation, Planning and Transportation, to agree amendments and/or additions sought by the BID proposer to the terms, funding priorities and precise boundary of the proposed BID.
Reasons for the Recommendations
1. To comply with the Council's statutory duty.
2. To ensure that the Council as a key partner provides a source of support and funding to Penarth Town Council and the BID in the development and implementation of the proposed Penarth BID.
3. To ensure formal approval by the Council of the proposal documents in compliance with its statutory duty.
4. To permit amendments/additions as required to the proposal documents and to safeguard the Council's interests as a key partner in the project.
2. A Business Improvement District (BID) is a mechanism that has been widely recognised as being successful in bringing local businesses and other stakeholders together with the aim of improving their trading environment and enhancing their profitability. The Welsh Government is supporting the development of some BIDs in Wales to encourage economic development and to help deliver its regeneration framework, Vibrant and Viable Places.
3. A BID is a legally and geographically defined partnership for area improvement and service delivery, over and above what is required by statute by a local authority, and is funded by National Non Domestic Rate (NNDR) paying businesses within the agreed boundary. It is managed and operated by a BID Company - a not for profit company run by and for its members. Once established, all qualifying NNDR payers within a BID boundary pay an additional levy which is ring-fenced for expenditure within the BID area in the furtherance of regeneration aims identified by the BID.
4. All qualifying NNDR payers in a proposed BID area have an opportunity to vote on whether to progress to forming a BID, and to be successful the vote must meet two tests: more than 50% of votes cast must be in favour of the BID, and a 'yes' vote must represent more than 50% of the aggregate rateable value of votes cast.
5. A BID would normally last 5 years, after which a new ballot would be required.
6. The development of a BID follows the following stages:
- consulting with stakeholders to assess and secure support and to agree local needs and priorities
- scoping the area, assessing feasibility, defining the levy payers and how the levy will be calculated
- establishing governance, control and leadership arrangements (BID steering group)
- developing a proposal and business plan and canvassing support.
- balloting potential levy payers
- delivering the programme, reviewing and developing the BID.
7. A local authority is a key partner in this process for:
- arranging the ballot
- collecting the levy
- providing many of the services in the baseline agreement (this is an agreement between the Council and BID setting out what the Council already does in a proposed BID area in order to ensure the BID levy does not replace normal expenditure)
- a source of support and potential funding
- a statutory consultee
- ensuring the BID proposal is aligned with Council policies.
8. There are specific rules in relation to running the BID ballot and a strict timetable which has to be adhered to, including a timescale for the publication of a notice of ballot, provisions relating to the day of the ballot and the declaration of the result.
9. The Council previously submitted an application to Welsh Government for a grant to fund the development of a BID in Penarth Town Centre. (Minute C2088 refers). This application, which was intended to fund the employment of a BID Development Officer, was unsuccessful. It was considered that Penarth could be a trial to gauge success for possible further BIDs.
Relevant Issues and Options
10. Penarth Town Council has since employed an external consultant to progress a town centre based BID and has invited businesses to form a BID steering group. After a period of consultation, that group is currently at the point of finalising a proposal and business plan.
11. Officers of this Council have engaged with the stakeholders involved and guided the development of the BID proposal to ensure that it contains proposals which are deliverable, and which do not conflict with policies of this Council.
12. The Draft BID proposal now being finalised embraces the following key principles -
- most businesses within the specified BID boundary will pay a 2% levy over their normal NNDR, within specified criteria
- all businesses and charities in premises which have a non domestic rateable value in excess of £5 000 will pay the levy
- Council premises will be charged the levy, and would receive votes at ballot accordingly
- the Tesco superstore at Penarth Haven will only pay a levy of £5 000 based on a negotiated agreement that disproportionately large units will benefit from a ceiling.
- it is expected that the BID could realistically raise a net approximate £67 000 per year
- Penarth Town Council will recover up to £10 000 from the levy in the first year only to reflect part of its investment in the development process for the BID
- a ballot is likely in 2015, with up to 3 months then needed to establish the BID and start collection of the levy
- Appendix A shows the proposed BID area which focusses around Penarth Town Centre and linkages to the sea front and Penarth Haven area.
13. The BID steering group's priorities for expenditure are identified as follows -
- improving Parking and accessibility, including providing funds to implement new parking opportunities, additional signage and encouraging use of public transport.
- additional marketing and promotion, including events, public realm improvements, Christmas lights.
- exploration and implementation of business to business trading opportunities
- collective procurement of products or services needed by businesses within the BID area in order to reduce costs.
14. The Council could at this point comply with its legal obligations only. Once correctly served with notice, based on an acceptable BID proposal, the Council will be obliged to hold a ballot, and if that ballot is successful, to administer the collection of the levy and distribution to the BID.
15. However the Council, as a key partner has options to do more than this.
16. In respect of the holding of a bid ballot, the Council is obliged to fund the costs of this ballot in most circumstances. If however, the number of persons voting in the ballot who have voted in favour is less than 20 per cent of the number of persons entitled to vote in the ballot and the proposals were not approved in the ballot, the Council as the relevant billing authority has the option to recover from the BID proposer the costs of arranging and holding the ballot. It is not however obliged to recover these. It is estimated that the costs of arranging and holding the ballot will be up to £5 000, and this can be funded from within existing revenue budgets.
17. Normal costs for collection of the levy include purchase and annual licensing of additional software to enhance the current NNDR system. There will also be staff implications, and it is estimated that costs in total will be in the region of £15 000 in the first year, followed by £10 500 in subsequent years. These costs could potentially increase if there are, for instance, unrecovered legal costs associated with non-payment. Penarth Town Council has offered to make a contribution to these overall costs of up to £5 000 per year. The BID could top-slice the remainder of costs from the collected levy in due course. There is no obligation on the Council to contribute to these costs, although in other areas where BIDs have been implemented it is common practice for the local authority to make a contribution.
18. This Council's role therefore needs to be considered in the context of whether it wants to support the development of BIDs in principle, as a mechanism to direct additional regeneration funds into specified areas. Lessons learnt from one BID, and the success of a ballot could lead to success in other areas to adopt this approach. It is also relevant that, once additional NNDR software is purchased it will be suitable for collection in respect of other BIDs, with only an increase in licensing costs.
19. With this in mind, it is recommended that the Council offers to support the collection costs. This will send a message of cooperation and partnership to businesses and other stakeholders and will potentially assist in securing a positive vote. This should be conditional on the BID proposal remaining acceptable to the Council.
20. Should a ballot be successful, the initial purchase of software at a cost of £4 500 could be funded from the existing 'Regeneration Fund Scheme' Capital Programme allocation. This would represent a contribution of nearly a third of total collection costs for 2015/16. Total costs for future years are estimated to be £10 500 per year, and it is recommended that the Council offers to fund one third of these costs for each of the following 4 years, leaving an equal contribution for the BID and the Town Council, subject to the BID's terms and boundary remaining as currently proposed or subsequently agreed with the Council.
21. As stated above, there are some risks associated with collection, so a suggested cap on the annual one third contribution at £4 000 is recommended.
22. Once the statutory process begins, the Council will be required to enter into a Baseline Agreement with the BID. This is essentially an agreement relating to existing service provision to ensure that the Council will not withdraw from delivery of services or reduce expenditure in a particular location in response to the presence, and activities, of a BID. This is a matter more easily dealt with when budgets are stable or rising, but presents more significant issues at a time when budgets are largely decreasing. In response to this, it is proposed to include in the agreement a schedule of services which fall within the scope of the Council relevant to the role of a town centre location, and to include a guarantee that funding of such services will not be reduced disproportionately in Penarth Town Centre by comparison to other town centres in the Vale, whilst the BID is in operation.
23. Similarly, the Council as the relevant billing authority will need to enter into an Operating Agreement with the BID which sets out the arrangements for collection, and in particular the distribution of the funds collected. This will set out the timing of the distribution of funds after collection. It is envisaged that the levy would be demanded as a single payment from ratepayers, and transferred to the BID approximately bi-monthly as funds are received, primarily in the early months of each financial year.
24. The Council will be in a position to work with the BID to supplement proposed investments using its own or grant funds, or 'Section 106' planning gain monies, where there are common objectives. In this respect, the Council has recently been successful in securing Town Partnership Grants of £35 000 from Welsh Government for each of Llantwit Major and Penarth Town Centres.
25. Once established, the Council's Town Centres Development Officer would act as the key point of liaison between the Council and the BID company, attending the BID Board meetings. The BID will require ongoing staff resource to support its development and administration, and it may be appropriate for these two roles to be integrated, as happens in other successful BID areas. This will require further careful consideration, and the agreement of the BID, and will be further reported to Cabinet if appropriate.
Resource Implications (Financial and Employment)
26. There is an existing Capital programme Allocation which can be used for the initial capital payment proposed. Revenue in future years will be found from within the Development Services Directorate's existing budgets.
27. Except in specific circumstances related to the outcome of a BID ballot, the Council is obliged to fund the ballot costs, estimated at up to £5 000, and at this stage these are the costs expected to be incurred in 2014/15.
28. The amount of additional NNDR payable for Council properties within the BID area is not expected to be more than £640 per annum based on the current proposed terms and geographical boundary.
Sustainability and Climate Change Implications
29. A BID could generate a revenue stream to support, for example, public realm improvements and promote local investment which could lead to further employment opportunities in the area.
Legal Implications (to Include Human Rights Implications)
30. The Business Improvement Districts (Wales) Regulations 2005 make provision in relation to business improvement districts (BID's).
31. The Council, as billing authority, has specific legislative duties:
- upon receipt of a request made in accordance with the relevant provision of the Regulations from a BID proposer (Penarth BID steering group in this instance), the billing authority must prepare a document showing the name of each non-domestic ratepayer, the address and rateable value of each hereditament which is occupied, or (if unoccupied) owned in the geographical area of the proposed BID and supply a copy of the information in the document to the person concerned in data form
- the person who holds the BID ballot (the Ballot holder) shall be the person whom the billing authority has appointed under section 35 of the Representation of the People Act 1983 as the returning officer for elections to that authority
- on receipt of instruction from the BID proposer, the ballot holder must make arrangements for conducting a BID ballot. The billing authority may require the BID proposer to pay the costs of arranging and holding the ballot where the number of persons voting in the ballot who have voted in favour is less than 20 per cent of the number of persons entitled to vote in the ballot and the proposals were not approved in the ballot and may recover this amount as a civil debt due to it
- the billing authority must supply information from its non-domestic rates record for the purpose of canvassing in relation to a ballot. The billing authority may impose a charge (reasonably incurred) in respect of dealing with this request for information
- all expenditure properly incurred by the ballot holder in relation to the holding of a ballot must be paid by the relevant billing authority
- if a BID is successfully agreed then the billing authority must ensure that a separate BID Revenue Account is created for the BID
- the Council will be required to enter into a Baseline Agreement in relation to services it provides in the BID area
- the Council will be required to enter into an Operating Agreement with the BID proposer to cover collection and distribution of the levy income.
Crime and Disorder Implications
32. Improvements could be made to the town centre that could reduce crime (e.g. lighting) but this would be the decision of the BID.
Equal Opportunities Implications (to include Welsh Language issues)
33. There are no equal opportunities implications.
34. Development Services Directorate, Service Plan 2013/17 - Objective 2
"The opportunities afforded by investment and regeneration
are maximised, for the benefit of local people and businesses."
Policy Framework and Budget
35. This is an Executive decision for Cabinet.
Consultation (including Ward Member Consultation)
36. Penarth Ward Members have been consulted on this proposal.
Relevant Scrutiny Committee
37. Economy & Environment
Welsh Government Business Improvement District Handbook
Bob Guy, Operational Manager for Countryside & Economic Projects
Operational Manager for Customer Relations
Operational Manager for Legal Services
Operational Manager for Accountancy
Operational Manager for Leisure & Tourism
Principal Officer for Business & Employment
Principal Officer for Urban Regeneration
Town Centres Development Officer
Committee reports, Legal Services
Revenues & Benefits Manager
Rob Thomas - Director of Development Services