Developing interest - appendix: March 2013 Appendix 1: Introduction to European Commission Funding: ERDF and JESSICA European Regional Development Funding (ERDF) aim[s] to strengthen economic and social cohesion in the European Union by correcting imbalances between its regions. ERDF finances: Direct aid to firms to support sustainable jobs Infrastructure Financial instruments to support regional and local development Technical assistance. JESSICA (Joint European Support for Sustainable Investment in City Areas) is a special support instrument within the ERDF. It is developed in cooperation with the European Investment Bank (EIB) and supports sustainable urban development and regeneration through financial engineering mechanisms. JESSICA promotes sustainable urban development by supporting projects in the following areas: Urban infrastructure including transport, water and energy Heritage or cultural sites for tourism or other sustainable uses Redevelopment of brownfield sites including site clearance and decontamination Creation of new commercial floor space for SMEs, IT and/or R&D sectors University buildings medical, biotech and other specialised facilities Energy efficiency improvements. There is potential for technical assistance support through the EIB s JASPERS (Joint Assistance to Support Projects in European Regions) programme. JASPERS targets assistance on major infrastructure projects costing more than 50 million supported by the EU funds for example, roads, rail, water, waste, energy and urban transport projects. 1
Developing interest: - appendix March 2013 Appendix 2: Identified pipeline by city (millions) PUA Type Overall spend Urban Core Transport spend Green spend Housing Broadband Other Unaccounted for Aldershot Buoyant 375 250 125 Birkenhead Struggling 4,531 4,524 7 Birmingham Vulnerable 17,000 1,150 441 1,300 4,097 10 10,002 Blackpool Vulnerable 270 220 50 Bolton Struggling 750 300 48 4 398 Bournemouth Robust 378 350 17 11 Bradford Vulnerable 712 315 140 250 7 Brighton Buoyant 213 128 50 35 Bristol Buoyant 3,057 800 1,106 140 1,000 11 Burnley Struggling 159 100 9 50 Cambridge Buoyant 1,057 57 1,000 Coventry Vulnerable 2,760 300 1,900 360 200 Crawley Buoyant 200 200 Derby Stable 214 100 4 100 10 Doncaster Vulnerable 605 300 87 218 Hull Struggling 600 300 300 Leeds Robust 8,317 1,580 5,250 1,480 7 Leicester Stable 598 140 30 100 15 313 Liverpool Vulnerable 9,565 6,185 500 245 535 2,100 Manchester Stable 5,999 2,292 1,622 170 935 12 968 Middlesbrough Struggling 351 120 1 230 Milton Keynes Buoyant 1,518 40 270 1,208 Newcastle Stable 1,619 800 92 715 12 Nottingham Stable 1,203 460 657 86 Oxford Buoyant 789 330 332 77 50 Peterborough Robust 971 450 43 478 Portsmouth Robust 1,000 270 77 255 112 286 Preston Stable 1,800 700 1,100 Reading Buoyant 1,907 787 850 20 250 Southampton Robust 3,000 3,000 Stoke Struggling 470 350 5 115 Sunderland Vulnerable 413 200 118 95 Swindon Stable 989 600 370 19 Warrington Stable 1,385 130 5 1,250 York Robust 644 200 29 415 2
Developing interest - appendix: March 2013 Map of pipeline deveopments Pipeline developments ( millions) Urban Core Transport spend Newcastle Green spend Housing Sunderland Broadband Other Unaccounted for Middlesbrough Total size of investment York Leeds Preston Bradford Blackpool Bolton Hull Largest investment: 17,000 million (Birmingham) Burnley Doncaster Birkenhead Smallest investment: 159 million (Burnley) Manchester Liverpool Warrington Stoke Derby Nottingham Leicester Peterborough Cambridge Coventry Birmingham Milton Keynes Oxford Bristol Swindon Reading Aldershot Crawley Southampton Brighton Bournemouth Source: Contains Ordnance Survey data Crown copyright and database right 2013. 3 Portsmouth
Identified pipeline by LEP (millions) LEP Overall Urban Core Transport spend Green spend Housing Broadband Other Unaccounted for Black Country 14.5 1.1 13.4 Cheshire & Warrington 0 Coast to Capital 23.7 5.2 0.163 9 9.337 Coventry & Warwickshire 0 D2N2 0 Dorset 0 Greater Birmingham & Solihull 22.5 4.045 5.78 1.5 0.75 10.425 Greater Cambridge & Peterborough 0 Greater Manchester 0 Humber 0 Lancashire 19.4 4 6 2.75 6.65 Leeds City Region 0 Leicester & Leicestershire 0 Liverpool City Region 19.5 1.4 7.9 10.2 North Eastern 0 Oxfordshire 0 Solent 18.1 12.9 5.2 South East Midlands 18.8 3 0.3 2 13.5 0 Stoke-on-Trent & Staffordshire 0 Swindon & Wiltshire 0 Thames Valley Berkshire 0 West of England 56.7 20.85 35.85 York & North Yorkshire 0 Totals 193.2 13.245 36.73 0.3 4.9 0.163 46.8 91.062 6.86% 19.01% 0.16% 2.54% 0.08% 24.22% 47.13% Developing interest - appendix March 2013 4
Developing interest - appendix: March 2013 Appendix 3: Market testing To gain a better understanding of the estimated project pipeline and potential investment opportunities for UDFs in the next funding round, market testing with property development and investment experts was undertaken. Though anecdotal, their evidence provides insight into planning for and interpreting the development pipeline in UK cities. Interviewees noted that there are no set rules for determining project pipeline viability at the city level - every city has potential for viable projects. That said, they did express concern about the quality of information available about projects as well as the quality of projects themselves. For example, many of the city centre redevelopment projects are seen as trophy spending that provide good publicity but are impractical. 1 For this reason, the pipeline around city centre redevelopment should be examined with particular scrutiny to judge each project s viability. Centre for Cities previous research 2 found that developers and investors are less likely to take on a development project if: Occupier demand is uncertain Development terms, charges and returns are set at pre-recession levels A city cannot offer a reliable, efficient planning service A city is not united behind a project, making political or public opposition likely. Thus choosing projects is rarely a clear cut process. The partners in a potential deal need to have a good understanding of the priorities and motivations of each party. In doing so, developers, investors, and the public sector understand where risks can be minimised or trade-offs can be made with risk and return. Contextual factors: being a good partner Willingness of the public sector to make tradeoffs around risk and reward Cooperation of planning departments and the council Expertise of the public sector partners in developing plans Political stability of councils Project factors: having good projects Likelihood of being able to sell the project upon completion and so make an exit Size of pre-development costs, representing up-front costs and risks Source: Interviews 1. Research has found similar biases in infrastructure spending too. See Flyvbjerg B (2009),Survival of the unfittest: why the worst infrastructure gets built and what we can do about it, Oxford Review of Economic Policy, Volume 25, Number 3, 2009, pp.344 367 2. Bolton T and Wilcox Z (2011), Investing in Growth Cities: Fulfilling the economic potential of the Greater South East cities, London: Centre for Cities 5
Developing interest - appendix: March 2013 Appendix 4: Size of Local Enterprise Partnerships Local Enterprise Partnership Population London 8,204,400 South East 3,987,700 Leeds City Region 2,954,700 Greater Manchester 2,685,400 Derby, Derbyshire, Nottingham and Nottinghamshire 2,110,300 Greater Birmingham and Solihull 1,946,500 North Eastern 1,933,400 Coast to Capital 1,926,700 Sheffield City Region 1,735,700 South East Midlands 1,715,600 Heart of the South West 1,667,100 Enterprise M3 1,633,900 New Anglia 1,589,600 Solent 1,547,200 Liverpool City Region 1,506,500 Lancashire 1,461,300 Greater Cambridge & Greater Peterborough 1,371,300 Black Country 1,141,700 York, North Yorkshire and East Riding 1,133,700 Hertfordshire 1,119,800 Stoke-on-Trent and Staffordshire 1,098,300 West of England 1,070,100 Greater Lincolnshire 1,042,000 Leicester and Leicestershire 980,800 Humber 918,000 Cheshire and Warrington 903,000 Thames Valley Berkshire 863,900 Coventry and Warwickshire 863,500 Dorset 745,300 Northamptonshire 694,000 Swindon and Wiltshire 684,000 Tees Valley 663,000 The Marches 657,600 Oxfordshire 654,800 Gloucestershire 598,300 Worcestershire 566,600 Cornwall and Isles of Scilly 536,000 Buckinghamshire Thames Valley 506,600 Cumbria 499,800 6