Minutes:
The Committee considered the undernoted report:
“1.0 Purpose of report
1.1 Members will recall that at the Shadow SP&R meeting on 16th January they were presented with a detailed report in relation to the Capital Programme which outlined a number of key issues for Members to consider in terms of progress and also projects which require additional monies to progress and the impact of these decisions. Members at that stage were asked to consider the issues outlined in the report further and a series of party group briefings have been held. It was agreed that the final recommendations would be presented to Shadow Committee on 30 January. Members are asked to note that it is important that decisions in relation to these projects are taken at Committee today as any delays will have further financial implications for the Council.
1.2 The Council’s Capital Programme is a rolling programme of investment which either improves existing Council facilities or provides new facilities. This report provides –
· an update on the Capital Programme 14/15 which was presented to SP&R in February 14
· an update on the capital financing for 2015/2016 and an update on the capital financing implications of the Leisure Transformation Programme
· specific project updates – Innovation Centre, North Foreshore, Waterfront, Creative Hub and Council Accommodation which require decisions at today’s meeting.
1.3 Members are asked to note that it is important that this paper is read in conjunction with the Rate Setting and the Non-Recurrent Update reports which are also on the agenda for discussion at today’s meeting.
2.0 Relevant Background Information
Update on 2013/14 Capital Programme
2.1 Significant progress has been made in the delivery of the capital programme since it was agreed by SP&R Committee last February. The Property & Projects Department is happy to arrange site visits for Members/ Party Groups to any Council funded capital project.
2.2 Key highlights since the Capital Programme was agreed last February include-
General
· the Investment Programme set a target of levering in £50m of external funding up to March 2015. This target has now been surpassed and nearly doubled with nearly £100m of external funding levered in or secured for a range of projects including Girdwood, CCG and the East Belfast Flood Alleviation works, Super-connected, the pitches strategy, Tropical Ravine. While this is good news it also puts pressure on the Council’s match funding requirement and on completion timeframes
Projects completed (since February 14)
· the new Adventurers Learning Centre at the Zoo; the new pavilion at Suffolk; the £4m Phase 1 of the Connswater Community Greenway project; the roll-out of Phase 3 of the Alleygating Programme; new 3G pitch at Marrowbone; MUGA refurbishments at six sites across the city
Projects currently on the ground
· construction works are continuing on the extension to the Waterfront to provide dedicated conference and exhibition facilities, Phase 2 of the Connswater Community Greenway, the £11.7m Girdwood Hub; the new £1.7m 3G pitch at Cliftonville; upgrades and refurbishments at Half Moon Lake and Drumglass Park and an extension at Roselawn
· work will begin this month on the new Olympia leisure facility within the new Windsor stadium, the installation of the 30 docking stations across the city centre for the Public Bike Share Scheme and the new pavilions at Dixon and Waterworks as part of the £15m pitches strategy
· Super-Connected – Nearly 950 applications have been received for connection vouchers and wi-fi will be installed in 119 public buildings including the City Hall by the end of the March
Projects at tender preparation stage
· Preparatory work is continuing on a wide range of projects including the remaining sites under the pitches strategy at Musgrave, Woodlands, Victoria, Ballysillan, Ormeau, Cherryvale and Falls; new MUGAs at Annadale, Clarendon and Springfield Avenue; the £3.7m upgrade of the Tropical Ravine; new boxer statues, new accommodation, the Whiterock Community Corridor
2.3 Members are also asked to note that over and above the Capital Programme, substantial work is continuing on the management and delivery of the Council’s £5million Local Investment Fund.
· 62 projects have been allocated in principle funding of which 57 projects worth over £4m have been through the rigorous due-diligence process with 20 projects completed, 9 currently on the ground with another 28 at tender preparation stage which will go on ground this year.
· Due-diligence work is continuing on the other projects which have been approved in principle and officers are working closely with the groups to ensure all necessary information is being forwarded to the Council.
A breakdown of these projects is attached, has been circulated. A detailed update report on LIF and BIF will be brought to Committee in February.
3.0 KEY ISSUES - Capital Programme
Capital Programme and Capital Financing – Impact of Members’ decisions
3.1 Members are asked to note that the Council incurs both capital expenditure and capital financing costs in the delivery of its Capital Programme.
· Capital Expenditure is the expenditure incurred in the actual delivery of contracts e.g. the actual payments to the contractor for a construction contract.
· Capital Financing is the method the council uses to fund the capital expenditure. The capital financing costs include loan repayments (principle and interest); revenue contributions (cash payments to repay or avoid taking out loans); capital receipts and external funding. This is an important area for Members to understand as the level of capital financing is intrinsically associated with the rate setting process and has an impact on how much money the Council has available to deliver capital projects.
3.2 Members therefore need to be aware that each decision they take in relation to progressing a capital project or agreeing additional money towards any one project has a consequential impact on the level of financing that is available for other capital projects and each individual decision therefore subsequently limits the capacity of the Council to progress other capital projects thereby potentially necessitating some difficult decisions for Members in terms of prioritisation.
3.3 Table 1 below summarises the capital financing budget currently available for the capital programme 15/16 which shows that £1.05m of the capital financing budget remains unallocated to support emerging projects already on the Capital Programme and any future additional proposals.
Table 1- Existing Capital Financing Budget 2015/16
|
Existing Capital Financing Budget |
£10,137,676 |
|
|
Plus Increase for Transferring Loans Lisburn/Castlereagh (From Rate Base) |
£677,319 |
£10,814,995 |
|
Less: Capital Programme Commitments |
£7,172,252 |
|
|
Existing BCC Loans |
£1,909,896 |
|
|
Lisburn / Castlereagh Transferring Loans |
£677,319 |
£(9,759,467) |
|
Balance Remaining |
£1,055,528 |
3.4 Members are asked to consider the above in the context of the issues which are laid out in this report as there are a number of current projects which require additional capital monies –
· The Innovation Centre (£1.86m) and the North Foreshore (£952k) which are part funded by the Council, ERDF and InvestNI. The explanation for these additional requirements is set out in detail below but is primarily due to delays in receiving the Letters of Offer (LOOs) and differences in amounts allowed for certain aspects of the work in those LOOs.
· To accelerate the essential planned maintenance and upgrade works to the existing Waterfront to bring it up to an acceptable standard to complement the extension and new use at a cost of £2.9m.
Combined these projects require an additional £5.67m of capital expenditure which requires £418k of annual capital financing. This would reduce the available capital finance to £637k and therefore limit the availability of capital finance for future projects.
Specific Project Issues requiring additional monies
3.5 Members will be aware that there are a range of projects under the Investment Programme which are subject to EU funding. Members have previously been updated on a number of occasions on the issues and risks associated with these projects including two key issues:
- Impact of the delays in receipt of LOOs – All EU (ERDF) funded projects are subject to an immovable deadline of 31st Dec 2015 for expenditure (set by the EU). Therefore, whilst INI will continue to provide its match funding post December 2015, the Council is required to meet the remaining cost of any expenditure post this date. However whilst this is an immovable deadline the front end start dates for these projects have been continually changed due to the delays in receiving LOOs.
- Reductions in LOO amounts (Innovation Centre)- This has a financial impact for the Council as the overall projects costs have not changed however the reductions in LOO amounts for the Innovation Centre means that the project is facing a shortfall in funding above what the Council has already approved.
3.6 Members are asked to note that draft LOOs have now been received for the Innovation Centre and the North Foreshore projects. A LOO has not yet been received for the Creative Hub. These LOOs have not yet been signed by the Council as there were a number of onerous funding conditions which the Council wished to renegotiate which have now been resolved. The letters are also now being redrafted by InvestNI to reflect the change in their funding conditions to allow the InvestNI match funding contribution to run until the 30th June 2016. The ERDF deadlines remains as the 31st December 15. It is expected that these new LOOs will be with the Council within 10 days.
Innovation Centre
3.7 The Innovation Centre is a 55,000 sq ft capital build project designed to act as a catalyst for the development of the Forthriver Industrial Estate which has been vacant since its development over a decade ago and to help address the levels of unemployment in the neighbouring wards. It is anticipated that the Innovation centre will provide support to over 100 companies and 5 collaborative networks, will support at least 167 jobs in the operation of the Centre by 2020 as well as encouraging local and foreign direct investment. The Council had previously agreed a commitment of £2.275m towards this project on the basis of receiving £6.825m of funding from ERDF and InvestNI. Committee previously agreed (Nov 2012) that up to £250k can be spent at risk on this project and to date £200k has been spent.
3.8 Members are asked to note that the funding amount in the LOO received for the project is less than the Council applied for (£6,153,255 compared to £6,825,000). This reduction in funding was primarily because the land acquisition costs were deemed to be ineligible (due to ownership issues) along with some professional fees. However the overall project costs have not changed. The Council has discussed this funding shortfall with InvestNI but it has been confirmed by their officials that there is no opportunity for this shortfall to be addressed. Therefore if the project is to proceed this £671,745 deficit must be filled by the Council.
3.9 The delay in receiving this LOO has also had a consequential impact on the programme. The construction programme for this project shows a 16 month build and assumes a start date of this month. Work could not be started before this without a signed LOO in place. On this draft programme the project will not be completed until April 16 (i.e. 4 months past the eligible expenditure date for ERDF). The Council is working closely with the integrated design team to look at ways that this programme can be expedited to bring this back as close to the 31st Dec timescale. However the Innovation Centre is a ‘design and build’ project and therefore the overall programme will not be known until the contractor is appointed which can only happen once a LOO is signed. InvestNI have confirmed that their match funding contribution will run until 30th June 2016 which lessens the financial impact for the Council. However this will still necessitate a further additional cost above the current Committee approval to cover the funding shortfall. The cost of the delay in receiving the LOO is £1.2m as the Council will not be able to reclaim any ERDF funding for this 4 month period. Efforts will continue to bring this deadline forward as far as possible.
3.10 Members are asked to note that this project therefore now requires commitment to an additional £1.86m to proceed. This cost increase has been outside of Council’s control and despite intensive discussions with InvestNI it has been confirmed that they cannot address the shortfall. If agreed, this would bring the Council’s overall contribution to this project to £4.1m. Members are further asked to note that if this project does not progress this month then the overall costs to the Council will continue to increase as it will mean that a further month(s) of ERDF grant cannot be claimed.
North Foreshore - Giant’s Park Environmental Resource Park
3.11 This is an innovative regeneration project which will create a 65 acre Cleantech business cluster as part of the proposed Environmental Resource Park. The components of the ERDF project, representing the 1st phase of the project, comprise 1,734m of access roads and preparation works to create 30 acres of development sites. This project is also critical to unlocking the potential of the wider site. The Council had previously agreed a commitment of £2m towards this project on the basis of receiving £6m ERDF funding. The LOO is for this amount. Committee previously agreed (Nov 2012) that up to £150k can be spent at risk on this project and to date £110k has been spent.
3.12 The delay in receiving this LOO has had a consequential impact on the programme. The construction programme for this project shows a 12 month build and assumes a start date of March 2015 which is the earliest that it can be started given that the LOO has not yet been signed off. On this draft programme the project will not be completed until March 16 (i.e. 3 months past the eligible expenditure date). The Council is working closely with the integrated design team to look at ways that this programme can be expedited to bring this back in line with the 31st Dec timescale. InvestNI have confirmed that their match funding contribution will run past the 31st December deadline which lessens the financial impact for the Council. However this will still necessitate a commitment to further additional cost above the current Committee approval to cover the funding shortfall. The cost of this overrun is £592k as the Council will not be able to reclaim any ERDF funding for this 3 month period.
3.13 In addition Members will be aware the North Foreshore is a former landfill site and is therefore a unique and complex site to develop. Detailed site investigation and design work has now shown that the extent of fill material and site preparation works are greater than initially estimated, due primarily to the site topography and ongoing differential settlement due to the non homogeneous nature of the underlying waste. The additional costs of this are £360K. Members should note that as detailed site investigation work is costly, it is not carried out until the Council has agreed to commit to proceed with the application and to spend money at risk. Therefore this could not have been foreseen at an earlier stage. It should also be noted that with such a complex site, more clarity on the detailed site works required will not be clear until the tender exercise is complete.
3.14 Members are asked to note that this project therefore now requires commitment to an additional £952k to proceed to the tender stage. The majority of this cost increase has been outside of the control of the Council caused by the delay in receipt of the LOO. If agreed this brings the Council’s overall contribution to the project to £2.952m. As with the Innovation Centre Members are further asked to note that if this project does not progress this month then the overall costs to the Council will continue to increase as it will mean that a further month(s) of ERDF grant cannot be claimed. Given the complex and unique nature of the site, a further report will be brought back to Committee on completion of the tender exercise. Only at this stage will Members be asked to give the final go ahead for this project.
3.15 Members are asked to note however that the North Foreshore project can be considered an ‘Invest to Save’ project as it is intended to dispose of the development sites created by way of lease with an annual rental return or capital premium to the Council (similar to Balmoral, Gasworks etc). The completed developments will also provide additional rates income, private sector investment and jobs. There are also important environmental benefits and, dependent on the nature of future occupiers, this could also contribute towards the NI renewable energy and recycling targets. It is estimated that the Phase 1 30 acre Environmental Resource Park and the 3 Renewable Energy Sites will yield an annual rental and rates income of £1.5m, lever in £112m of private sector investment and create 406 jobs. (These figures are based on a KPMG Economic Appraisal commissioned by INI.) Without the infrastructure to be provided under this project, none of this development will be possible.
Belfast Waterfront (Existing Venue)
3.16 One of the flagship projects under the Investment Programme is an extension to the Waterfront to provide dedicated exhibition and conference facilities which will enhance the city’s economic and tourism/conference infrastructure. £18.5m of external funding has been secured for this £29.5m project (£14.5m ERDF and £4m NITB) together with the Council’s investment of £11m. Works are continuing and the extension works are due to be completed by end of December 2015. An update report on the operator model will be presented to the Shadow SP&R committee in February.
3.17 The existing Waterfront was built in the 1990’s and opened in 1997. At this time the building was considered state of the art. A detailed condition survey has highlighted that substantial upgrade works will be required in order to bring the existing facility into line with current regulatory standards, levels of technology and fit-out in the new extension to achieve the required venue customer experience and to effectively market the entire venue as world class. Much of this upgrade and maintenance work would be required in future years even if the extension was not happening. Detailed work has been undertaken on working up the costs of these enhancements and examining how this work can be progressed in parallel with the existing works in order to ensure that any synergies and efficiencies are realised. This has shown that £2.9m will be required in order to upgrade the existing facility as outlined below -
1. Existing building and services - the most significant area which requires upgrading is in relation to the existing mechanical & electrical plant and equipment, specialist auditorium equipment, including outdated dimmer replacement, CCTV installation and general building finishes – the majority of which have not been upgraded since the venue’s opening. A significant failure in one of these areas (lighting, plant) would force the closure of the entire venue resulting in significant disruption and loss of income. Over the past 12 months it has become increasingly difficult and inefficient to keep some of the equipment operational as in many instances product support is no longer available from the supplier due to technology being outdated. In addition this allows for a general upgrade to the overall ‘look and feel’ of the building to ensure a seamless transition from the new extension into the current facility to deliver world class customer satisfaction and economic results – the costs of these upgrade works is £2m.
2. Security upgrades - The PSNI have recently examined the Waterfront as part of a national policing initiative that seeks to reduce the vulnerability of ‘Crowded Place’. They have recommended that the Waterfront’s glazing, security, CCTV, security control room, access and alarm facilities are all significantly upgraded in accordance with the recommendations of the PSNI CTSU CONTEST Strategy Recommendations Report – October 2014 The costs for this work are approx. £286k. It should be noted that the Council is not obliged to progress these recommendations however, the Waterfront is categorised as a Tier 2 building and on occasions Tier 1 which reflects the highest rating of security risk in terms of the risk.
The budget also includes for statutory and planning fees, professional fees and risk allowance which are standard parts of any project budget (approx. £600k). A breakdown of these costs is attached at Appendix D.
3.18 Members are asked to note that if this work is not progressed then the Waterfront will effectively become a building of two halves (the old and the new) and will be more difficult to market as a world class destination. The Waterfront’s main auditorium will continue to be the key focal point for any conference/exhibition and currently there is a risk that if this is not upgraded in line with the new extension that the venue will not attract the type of conferences required. These works will essentially ‘future proof’ the venue to ensure it can become a 21st century, world class leading conference and visitor centre capable of delivering a seamless customer experience and realising the funding conditions outlined in the LOO.
3.19 Members are asked to note the requirement for £2.9m to upgrade the existing Waterfront as part of a parallel project. This would mean the Council’s contribution to the Waterfront extension remains at £11m but that £2.9m is also required to upgrade the existing facility. Members are asked to note that any works to the existing venue are outside the scope of ERDF funding and would not have received funding under this. The Council has had in-depth discussions with NITB to investigate if there are any other alternative funding streams available for this work however this has not proved possible and therefore these costs will need to be covered by the Council.
3.20 If Members agree that additional monies are allocated to this project then it is recommended that this work is progressed while the extension works are ongoing in order to maximise any efficiencies and to ensure minimal disruption to the building. Therefore it is recommended that this is added as a sub-set of the existing Stage 3 approved Waterfront project on the Capital Programme. Members are asked to agree that the appropriate procurement strategy for this project is progressed with authority delegated to the Director of Property & Projects in respect of any tenders etc. required.
Summary of impact
3.21 As outlined above the combined annual financing cost of the additional expenditure required for these projects (£5.67m) will reduce the capital finance available from £1.05m to £637k. In light of this Members are asked to:
· Innovation Centre - agree if this project should be progressed and a contractor appointed for the design and build phase and that if so, if an additional £1.86m is allocated to cover the reduced funding amount and the funding shortfall caused by the delay in receiving the LOO. This brings the Council’s contribution to the project to £4.1m.
· North Foreshore - agree if this project should be progressed to tender stage and that if so, if an additional £952K is allocated to this project to cover the funding shortfall caused by the delay in receiving the LOO and increased project costs. This brings the Council’s contribution to the project to £2.952m.
· Belfast Waterfront – agree to allocate the £2.9m required to upgrade the existing Waterfront
Lessons Learned – EU funded projects
3.22 As highlighted in 2.2 above the Council has levered in or secured almost £100m of external funding for a range of projects including over £30m in ERDF funding for the projects above and over £11m for other EU funded projects including Girdwood Hub, the relocation of the Welcome Centre and the new Adventurers Learning centre at the Zoo which represents a massive investment in the city. However Members will appreciate from the issues outlined above that externally funded projects, particularly EU funded projects, are complex, lengthy and bureaucratic processes which are resource intensive. All of the Council’s EU funded projects experienced significant delays in getting through the appraisal/approval processes (it took on average 18mths/2yrs for the ERDF projects to receive a LOO from an application being submitted with the Girdwood project taking approx 4years to receive a final LOO). Many of the projects also experienced other issues including changes in requirements from the funding authorities during the process (e.g. CPD being brought in late in the process) or lack of flexibility over spend profiles all of which impacted the Council .
3.23 Members will be aware that new rounds of ERDF and PeaceIV funding are opening soon and these will continue to be significant funding streams for the Council in terms of levering external money into the city. However there are a number of key lessons which the Council can take from the current round of funding both internally in terms of project scoping and development and externally in terms of the processes, timescales and requirements of funding authorities. Members are asked to note that a detailed ‘lessons learned’ session will be undertaken internally to ensure learning is put in place for the next rounds of EU funding. Externally however it will also be key that the Council works closely with central government and the funding managing authorities (SEUPB and InvestNI) to see how the application, appraisal and claims processes for EU funded projects could be better managed and streamlined going forward to ensure that the current situation is not repeated and the amount of funding can be maximised.
4.0 Capital Financing - Leisure Transformation Programme
4.1 Table 2 below shows the profile of capital financing agreed to be ring-fenced as part of the Leisure Financing Strategy. This was agreed by the Strategic Policy and Resources Committee on the 21 June 2013 to support the £105m capital investment in the Leisure Estate. This is separate to the financing for the capital programme as outlined above.
Table 2- Leisure Capital Financing Budget 2015/16
|
Andersonstown / Olympia (Committed Exp £38m –from BIF) |
£3,230,000 |
|
|
New Boundary Rate Base (See Table in 4.3 below) |
£2,000,000 |
|
|
Year 1 LTP Savings (See Appendix G) |
£765,000 |
|
|
Total Commitment 2015/16 |
£5,995,000 |
|
|
Balance of LTP Savings (2016/17) |
£1,235,000 |
|
|
Total Financing Secured (will deliver £85m capital expenditure) |
£7,230,000 |
|
|
Financing still to be delivered (by 2017/18) (to met £105m) |
£1,700,000 |
|
|
Total Leisure Financing Required |
£8,930,000 |
4.2 Members are asked to note that £765k of the Year 1 leisure savings has been allocated towards financing non-recurring planned maintenance works to the leisure estate. A breakdown of these works is attached at Appendix G and includes current facilities and those transferring under LGR. These works will all be carried out during 15/16.
4.3 As part of the Leisure Capital Financing Strategy, the SP&R Committee agreed to ring fence £2m of the additional income from the new rate base for investment in the leisure estate. Given the profile of leisure capital expenditure this element of financing is not required for leisure in 2015/16 it is recommended that the £2m from the new boundary rate base is applied to projects in the new boundary area which are shown in Table 3 below. All of these projects can be completed during 2015/16.
Table 3 - Allocation of £2m New Boundary Capital Financing
|
Brooke Playground Replacement |
£230,000 |
|
Mount Eagles Playground Replacement |
£230,000 |
|
Areema Drive Playground Replacement |
£230,000 |
|
New playground (Poleglass) |
£230,000 |
|
Twinbrook Wildlife Park |
£80,000 |
|
Roddens Crescent Playground Upgrade |
£70,000 |
|
Lisburn Bridges Repairs |
£150,000 |
|
Prince Regent Road Depot |
£480,000 |
|
Sally Gardens |
£300,000 |
|
Total Financing |
£2,000,000 |
* Members are asked to read this in conjunction with the Non Recurrent report which is also on the agenda for consideration at the Committee meeting
4.4 Members are asked to note that an asset planning report on Phases 2 and 3 of the Leisure Transformation Programme will be brought to Committee next month.
5.0 Capital Programme – Update on other projects
Creative Hub
5.1 As outlined in 3.6 above a LOO still has not been received for the proposed Creative Hub project, which involved the refurbishment of a property located at 19-21 Donegall Street to support the city’s creative and digital media industry. This application was submitted in June 2013. Council officers have worked hard with officials from InvestNI on supplying additional information in support of this project however it is currently still being economically appraised. The construction programme for the Creative Hub is estimated at 9 months.
5.2 The Council has discussed the current status of this project with InvestNI and it has been proposed that this project should be withdrawn from the current ERDF programme and resubmitted under the ‘Investment for Jobs and Growth’ programme which has a longer timescale. Members are asked to note that this does not change the scope of the project but eliminates any potential loss of EU funding due to the December 2015 deadline for ERDF. The projected cost of the project remains at the level previously approved by the SP&R Committee.
5.3 The project does remain at risk however as a LOO has not yet been secured and is dependent upon the property in Donegall Street remaining available for purchase at the agreed price when a LOO is finally received. The SP&R Committee (Feb 14) has previously approved the acquisition of the premises in Donegall Street subject to receipt of a LOO for funding from InvestNI.
Council Accommodation
5.4 Members approved in June 2014 the commencement of a tendering exercise to procure new build office accommodation in the city centre on the basis of a ‘design and build’ contract. Members are asked to note that this has now entered a competitive dialogue process.
5.5 The building of the new accommodation will be self-financing as this will be secured through savings from the occupational costs including rents currently incurred on leased accommodation across a number of sites. However there will be a cost for the land acquisition for the site. It is proposed that these costs will be funded via capital receipts and a proposal will be brought back to Committee regarding the use of capital receipts for the acquisition of the site subject to the successful conclusion of the competitive dialogue process.
6.0 Physical Programme 15/16 and beyond – conclusion
6.1 The Council’s Investment Programme outlined a target of investing £150miilion in terms of physical investment in the city. We have already delivered, or are in the course of delivering, more than £120m of physical projects under our capital programme (see detailed update at Section 2) and Members are asked to note that the Council will actually spend over £330m on capital projects in a decade, with schemes for all parts of the city, including our new boundary. This includes £105m to transform our leisure estate and modernise services, including provision for new areas. In addition over £4m of projects have already gone through under Local Investment Fund and we are continuing to work on a range of BIF projects. The SP&R Committee has already agreed to reconsider BIF and LIF in the context of the changing role of the Council given LGR. There will also be a need to reconsider the Maintenance Programme in terms of transferring assets and the LTP.
6.2 However as evidenced by the detail in this report this level of investment cannot be sustained at this rate in the future given the budgetary pressures facing the Council and the wider public sector. Members should also note that this massive investment into the city’s physical infrastructure is inconsequential if physical projects are simply seen as the stand-alone development of a facility/asset. As noted above, many of our major physical projects are now at construction phase with the ensuing demands that this places upon resources, both in terms of project management, community engagement and establishing effective revenue budgets to deliver the programmes that will make a difference on the ground. This is likely to require future growth in the revenue budgets. Communities are the lifeblood of our city and assets will only succeed if they are properly planned and programmed from the outset in order to ensure that they meet the needs of local communities and the city and to deliver real and tangible community and economic benefits. It is therefore vital that assets and facilities are intrinsically linked to the social, community and economic outcomes of the Council with associated programming and input from the Council and other partners/agencies. The emerging Belfast Agenda and the development of Area Plans will provide the opportunity to do this.
6.3 Members are asked to note that the financing of the Council’s capital financing budget in the context of LGR and other financial pressures is discussed in the rates report which will be presented to Committee at this meeting.
7.0 Recommendations
7.1 Members are asked to note the content of this report and –
Capital Programme
· Levered in monies - note that with the external funding that will be secured for both the Innovation Centre and the North Foreshore project that the Council has now levered in nearly £100million in external funding towards capital projects – this has exceeded the target outlined in the Investment Programme.
Capital Financing – Update and impact of decisions
· note that each decision taken in relation to progressing a capital project or agreeing additional money towards any one project has a consequential impact on the level of financing that is available for other capital projects.
· note that the ‘Rates Setting’ report which is also on the agenda at today’s Committee includes an increase to the capital financing budget of £677,319 to cover the annual loan repayments transferring from Lisburn and Castlereagh.
· note that the capital financing budget currently available for the capital programme for 2015/16 is £1.05m .
· note that there are a number of projects which require additional capital monies - combined these projects require an additional £5.67m of capital expenditure which requires £418k of annual capital financing. There is £637k of capital finance available. In this context Members are therefore asked to consider the individual projects as set out below -
· Innovation Centre - agree if this project should be progressed and contractors appointed for the design and build phase and that if so that an additional £1.816million is allocated to this project to cover the reduced funding amount and the funding shortfall caused by the delay in receiving the LOO. This brings the Council’s contribution to the project to £4.1m.
· North Foreshore - agree if this project should be progressed to tender stage and that if so that an additional £952k is allocated to this project to cover the funding shortfall caused by the delay in receiving the LOO and increased project costs. This brings the Council’s contribution to the project to £2.952m. Members are asked to note that an update on the outturn of the tender process for the project will be brought to Committee.
· Belfast Waterfront (existing) – agree to allocate £2.9m to upgrade the existing Waterfront to bring it into line with the new extension and ensure a seamless customer experience and ensure that the facility can deliver the funding conditions as outlined in the LOO. If agreed, Members are also asked to agree that the appropriate procurement strategy for this project is progressed with authority delegated to the Director of Property & Projects in respect of any tenders etc. required and that this is added as a sub-set of the existing Stage 3 approved Waterfront project on the Capital Programme.
· note the profile of capital financing agreed to be ring-fenced as part of the Leisure Financing Strategy as outlined in Table 2 and note that £765k of the Year 1 savings from the LTP will be used for non-recurring planned maintenance works to the leisure estate as previously agreed.
· agree the allocation of the £2m new boundary capital financing as laid out in Table 3 at Paragraph 4.3 above.
Other project updates
- Creative Hub -– agree if this project should proceed under the new ‘Investment for Growth and Jobs’ Programme at the net cost of £1.2m already agreed by the Council and that in line with the previous SPR Committee decision of February 2014 that the Council moves to acquire the building at 19-21 Donegall Street on receipt of a letter of offer.
- Council Accommodation – note that an update will be brought back to Committee regarding the use of capital receipts for the acquisition of the site for the new accommodation to include an update on the award of the tender subject to the successful conclusion of the competitive dialogue process which is currently underway .
8.0 Call In
This report is subject to call-in.”
The Committee noted the contents of the report and approved the additional capital monies for those projects as outlined, namely, the Innovation Centre, the North Foreshore and the Belfast Waterfront Hall; the allocation of the £2 million New Boundary Financing as set out in Table 3; and agreed that the Creative Hub Project should proceed to an application under the new “Investment from Growth and Jobs” Programme at the net cost of £1.2 million.