It is easy to be cynical about urban regeneration companies. A largely publicly funded body bringing together other publicly funded bodies can easily be seen as just another layer of bureaucracy. The URC’s aim is to attract investors to regenerate some of the country’s most blighted areas, but with no compulsory purchase order powers, no land holdings and no powers to secure long-term funding, are they really anything more than talking shops?
The government’s regeneration body, English Partnerships, developed the URC model following Lord Rogers’ Urban Task Force review in 1999, and launched three pilot companies in Liverpool, east Manchester and Sheffield. It has now established 16 companies – enough to prompt a number of questions.
Can long-term commitments really be made for projects spanning decades using budgets set every three years? Does an overriding body add yet another layer of bureaucracy or can it really improve co-ordination? Should URCs’ masterplans be vague and visionary schemes, such as Bradford’s city-centre pool or Barnsley’s Tuscan hillside, or more mundane, detailed and deliverable? In short, do URCs deliver development or delay it?
Behind the scenes and the opinions
Though URCs generate cynicism, they also attract praise. Most in the property industry seem to like their involvement and praise the broad-brush benefits. Many URCs are still in the early stages, having just gone through the gargantuan task of publishing a masterplan. And as in many development projects, what appears to be moving at a snail’s pace from the outside is often a hive of activity inside.
But ask for hard evidence backing up the praise and there is silence. “URC status is a badge but it doesn’t gain us access to anything,” says Stephen Phillips, a lawyer with Burness. Phillips is involved with five regeneration projects that are considering URC status, but he says “apart from a tiny tax relief related to running business costs, it is just a badge”.
That is not to say Phillips is opposed to URCs. “They are a useful layer that keeps local government at arm’s length from the private sector, and the private sector likes that,” he adds.
Atam Verdi, a partner at King Sturge, believes the URCs’ co-ordination role on large projects is vital. “Co-ordination is needed not just on the consultancy work and the masterplan but also on issues such as planning and funding. And while one entity could do this, when there are three, there is a lot less risk and a lot more certainty.”
One justification for URCs was their role as a gateway channelling queries to the appropriate bodies. But some commentators remain unconvinced that this has happened.
“A lot of the work hasn’t achieved maturity,” says Ian Marris, partner at Knight Frank. “The real value is determined down the line. If there is too much bureaucracy, or if a URC serves to frustrate or is just another layer in the development process, then the project could backfire,” he says.
Others in the regeneration field are quick to dismiss this. But EP is clearly worried about the URCs’ image. Under the high-profile auspices of MIPIM last month, the agency launched the first urban regeneration index to “shatter the myth that property markets in regeneration areas are more volatile and less productive”.
The results were surprising. Between 1995 and 2003, commercial property in urban regeneration areas registered returns of 11.2%, against 11.4% for the UK as a whole. Over the past two years, returns from property markets covered by URCs overtook total returns in every sector bar retail (see graph, p79).
Part of the purpose of the study was to prove that public money was being used appropriately, says Vicky Havard, senior regeneration manager at EP. “Now I think the private sector is far clearer about what is happening,” she says.
This will be helped further by an EP review into the wider economic effect of URCs. Liverpool Vision will be the first to undertake this, and has appointed consultants to do a five-year study of its operations. But Havard admits that it is difficult to measure qualitative improvements. “It is very difficult to see what regeneration work would have been done if URCs had not been around. Take away the local authority, take away the regional development agency, and you start to get an unreal situation.”
Using Liverpool Vision’s experience as a benchmark, the review process will be rolled out across the country with each URC asked to find strategic indicators appropriate to their area to measure their success – these could include a rise in planning applications, an increase in private sector investment or an expansion in the housing market.
Astoundingly, URCs themselves have little data on their achievements, and many are beginning the process of collecting them from scratch. One notable exception is Catalyst Corby. The URC says that, over the past three years, planning applications have risen by 56%, housebuilding has grown by 40% and £89m of public sector investment has been committed.
Catalyst chief executive Bob Lane believes having this data is essential. “I need to know those numbers myself. There is a lot of scepticism locally, and I needed to show numbers to demonstrate improvements and also to show the potential to investors so I can build confidence,” he says.
But just how important are these numbers? Surely, delivering is more crucial than bean counting? There are plenty of good examples of delivery out there.
Heather Hancock, a partner at consultant Deloitte, points to the tenacious battle that Sheffield One URC fought to push through moving the city’s station. “Its millennium work was a good foundation, and it’s built on that and taken it forward with some really difficult nuts-and-bolts issues. It just kept banging on with it.”
But there have also been bad moments. Take Liverpool Vision’s Fourth Grace debacle. After two years and project costs that topped £324m, the development was scrapped – a collapse blamed on poor public leadership and on “delay and duplication”, said an independent scrutiny panel.
John Gill, chief executive at Liverpool Vision, admits the failure of the Fourth Grace was a “disappointment”, but adds that the incident has moved the spotlight onto the deliverability of some of the URC’s other plans.
What now for the future?
Nora Galley, partner at Roger Tym & Partners, says: “The question has to be asked about the future of these places.” Galley advises against staking the future of a place on a development that cannot be achieved. “We need to be getting rid of market failures and rebuilding, not plastering over with pretty new developments,” she adds.
Gill defends Liverpool Vision’s actions, saying the Fourth Grace was brought forward by the private sector. “It was a development opportunity created by the private sector. It was conceived by some fairly hard-nosed developers who said they could develop it. It was not some whacky scheme.”
But Liverpool Vision is not the only one guilty of this charge. Bradford’s URC has had its own share of criticism for another Alsop-designed masterplan, which includes a sensory garden, a “business forest” and a lake right in the centre of the city.
David Harrop, a director at Bradford Centre Regeneration, believes the masterplan is more a vision than a blueprint. Many structures may never get off the drawing board but are there to attract global attention and put Bradford in investors’ minds, he says. “No masterplan ever launched gets delivered as it is drawn on the sheet. Alsop’s had a particular purpose, and it raised the city’s profile.”
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Catalyst Corby, incorporated 2001 High points ●Planning applications up 56% in the past three years ● Housing enjoys a 40% rise in capital values ●” 5,600 planning applications for affordable housing ● £89m of public sector investment Low point ● Much depends on the railway station becoming a reality. Bradford Centre Regeneration, incorporated 2003 High points ● Four-point Alsop masterplan ●270 apartments built over the past 18 months versus nil in 2001 ● 1,374 applications in the planning pipeline Low point ● The Broadway retail scheme, which after six years and three developers is now in the hands of Westfield. |
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Liverpool Vision, incorporated 1999 High points ● Completion of Beetham’s 140,000 sq ft office ● Securing £65m additional Objective 1 funding at mid-term review ● Construction under way of Grosvenor’s 1m sq ft Paradise Street project ● Planning permission won for £390m King’s Waterfront scheme, plus £83m public funding ● Graduate retention up 2% over the past four years to 36% in 2004 ● City centre unemployment down from 7% in March 2003 to 6.7% in 2004 Low point ● Scrapping of the Fourth Grace after spiralling costs and local outrage. Sheffield One, incorporated 2000 High points ● Heart of the City on site ● £100m budget secured with Yorkshire Forward, English Partnerships and Sheffield city council ● Work under way on £50m investment programme to revamp the city’s railway station ● Site assembly under way on 915,000 sq ft retail quarter ● Outline planning secured for 1 St Paul Place – the first office building in the Heart of the City project Low point ● Slow progress on 323,000 sq ft e-campus. New East Manchester, incorporated 1999 High points ● Unemployment at record low (8.2% in March 2003) ● 56% rise in property prices between 2003-2004, compared with falling prices pre-1999 ● Preferred developer selected on Central Business Park (1.4m sq ft) and Openshaw Business Centre (172,000 sq ft) ● £106m Sportcity opened July 2003 Low points ● Government funding reduced for Big Bang phase 3 of Metrolink tram system ● January 2005: a 7ft spike plummets from a 180ft public artwork commissioned by NEM. |
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When it comes to delivery, Heather Hancock, a partner at consultant Deloitte, believes some urban regeneration companies could find their hands tied. “These URCs have not been set up as Lord Rogers envisaged,” she says. “He envisaged URCs having a lot more freedom as well as powers to direct funding.” Hancock believes that, to make a difference, URCs need a guaranteed pool of £40m-£60m over their lifetime. And that should be net, not gross, she adds. They also need serious binding partnership agreements for published delivery plans. “Without that, they are seriously handicapped,” says Hancock. These sentiments are echoed throughout the industry, and informal advances have been made to the ODPM, who has been paying attention, says David Hogg, director at consultant Turner & Townsend. “Part of the issue is that URCs are competing for funds without any guarantee of long-term availability,” he says. The consequent risk of project collapse puts off the private sector. Hogg believes he has the answer. “Ringfencing or some way of securing a single pot of money is the only way forward,” he says. URC leaders are not as sure this is a problem. Liverpool Vision chief executive John Gill believes good relationships with partners provide sufficient protection. “Broad programmes are set 10 years ahead, and things change. So, with a three-year planning framework, your programme should roll forward on a three-year basis that is pretty robust in public funding terms.” Regeneration companies left to their own devices have tended to go down the development agreement and guaranteed funding path. For example, Liverpool Land Development Company has delivered £330m of private and public investment, building 2.5m sq ft of floorspace and creating 56,000 jobs. Graham Pink, LLDC’s project director, believes the ability to enter agreements directly has given the company its edge. “A URC sets strategy and relies on its partners for action,” says Pink, adding, “It’s one of the reasons we are quite pleased not to be a URC. It terms of producing ideas, they do work, but they need additional powers to actually deliver.” |
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“Holding land assets. By being able to pool the land assets, it may be possible to have innovative structures for levering in private finance and developer interest.” Atam Verdi, King Sturge “The power to determine major planning applications. Although the council’s emerging local plan and our regeneration frameworks are aligned, this would give added surety.” Rosemary Wells, New Swindon Company “Full tax exemption, like a charity. Now they get some tax relief towards running costs, but does this go far enough?” Stephen Phillips, Burness “A innovative approach to funding using public money and leverage in private sector.” Heather Hancock, Deloitte |
