Agenda item

Report of the Deputy Chief Executive (Place)

The Cabinet considered a report of the Deputy Chief Executive (Place), that would also be considered by the Council at its meeting on 16^th January 2018, on proposals for the City Council to enter into a joint venture partnership with Friargate LLP.

A corresponding private report detailing confidential aspects of the proposals was also submitted to the meeting for consideration.

The Friargate masterplan was conceived by CannonCannon Kirk, the founders of Friargate LLP, who assembled the majority of the land required to regenerate the area around Coventry Railway Station. In 2013, the Council approved starting the Friargate Business District to regenerate the City, transform the Council and deliver savings, through the purchase of the first building on Friargate for occupation by the City Council (Cabinet minute 13/13 and Council minute 30/13 referred).

As part of the West Midlands Combined Authority investment programme, £150m was identified to fund regeneration in Coventry. In January 2017 £98.8m was approved for City Centre South and it was proposed circa £51.2m was allocated to Friargate to build Number two Friargate. (Cabinet minute 104/17 and Council minute 102/17 referred).

Approval was sought to enter into a 50/50 joint venture partnership with Friargate LLP across the whole Friargate development to bring forward the speculative second building as quickly as possible. Approval was also sought, subject to approval of the Full Business Case, to accept the grant for £51.2m from the West Midlands Combined Authority (WMCA) and use it to provide a loan to the joint venture company to construct number Two Friargate.

RESOLVED that the Cabinet:

1)  Approves (following the approval and the acceptance of the grant funding from the West Midland Combined Authority) the creation of a joint venture limited liability company (LLP) between the City Council and Friargate LLP to accelerate a programme of building at Friargate,

2)  Delegates authority to the Deputy Chief Executive (Place) and Director of Finance and Corporate Services, following consultation with the Cabinet Member for Jobs and Regeneration and Cabinet Member for Strategic Finance and Resources, to agree the final terms of the necessary agreements, provided that all the necessary due diligence in order to finalise and complete the process of entering into the joint venture contract with Friargate LLP have been carried out successfully.

3)  Notes that the LLP arrangement requires the establishment of an LLP Members Shareholders Panel with equal City Council and Friargate LLP representation, supported by a Board of Directors for officers.

4)  Recommends that the Council:

i)  Approves that the City Council accept a grant funding of £51.2 million from the West Midlands Combined Authority and delegates to the Deputy Chief Executive (Place) and the Director of Finance and Corporate Services, in consultation with the Cabinet Member for Jobs and Regeneration and the Cabinet Member for Strategic Finance and Resources, the authority to enter into the necessary grant funding agreement to secure the grant.

ii)  Approves (following completion of Recommendation 1 above)  the capital investment, in the sum as highlighted in the private version of this report, funded from corporate capital resources, to purchase a 50% equity stake in all of the land within the Friargate Masterplan and to delegate authority to the Deputy Chief Executive (Place) and the Director of Finance and Corporate Services, following consultation with the Cabinet Member for Jobs and Regeneration and the Cabinet Member for Strategic Finance and Resources, to enter into the Shareholder agreement, on the basis that the Council will see a commercial return on this investment over the medium term.

iii)  Approves a loan, in the sum as highlighted in the private version of this report to Friargate LLP on commercial market terms to enable them to complete the necessary actions required to effect the release of charges over the land within the Friargate Masterplan.

iv)  Approves the creation of a budget for £0.5 million per annum for the first three years (total commitment of £1.5 million), funded from capital receipts, to match Friargate's contribution to fund the LLP, promote the scheme to investors and secure development.

v)  Approves that £51.2 million is added to the Council’s capital programme, all funded from the West Midlands Combined Authority grant.

vi)  Approves the Council representation on these Boards be agreed by the Deputy Chief Executive (Place) and the Director of Finance and Corporate Services, following consultation with the Cabinet Member for Jobs and Regeneration and the Cabinet Member for Strategic Finance and Resources, once the format of these Boards is established as part of the final terms of the agreement; and that the Council representation on the LLP Members Shareholders Panel will be from members of the Cabinet.