Executive Member for Regeneration and Economic Development Minutes

Executive Member for Regeneration and Economic Development Minutes

Date:
Thursday 28 February 2013
Time:
1:30 p.m.
Place:
Oberhausen Room,Town Hall, Middlesbrough
 

Attendance Details

Present:
Councillor C M Rooney
Officers:
Richard Horniman and Sharron Brown
Item Number Item/Resolution
PUBLIC
13/12 BOHO FIVE

The Executive Director of Neighbourhoods and Communities submitted a report that highlighted the need for a business incubation facility within the Boho Zone to continue the growth of the digital and creative sector, and proposed that the Council led on the development of such a facility.

 

In recent years, the area of Middlesbrough known as the Boho Zone had been developed into a significant business hub, based around the digital sector and the economic activity generated through the DigitalCity initiative - a successful partnership between Middlesbrough Council and Teesside University.

 

Inspired by the Soho areas in New York and London, the most successful creative centres of the past forty years, the Boho Zone sought to provide an environment where people/business came together, collaborated and thrived. Achieving this vision would have ultimately required a mix of incubation and managed workspace for start-ups, accelerating companies, spinouts and established businesses; cafes, restaurants and shops and facilities for exhibitions and networking events.

 

Since 2007, the area had seen significant public and private sector investment that delivered key elements of the vision, including:

 

  • Boho One - 3,200 sq m of new build provided workspace for digital media companies;
  • Boho Two (Platform Arts) - 300 sq m of refurbished Victorian buildings in the Middlesbrough Rail Station precinct housing artists’ business units;
  • Boho Three (Bohouse) - 3,300 sq m of new build live-work accommodation designed specifically for digital and creative professionals; and,
  • Boho Four (Gibson House) - 1,000 sq m of refurbished Victorian building that provided space for growing digital and creative companies.

A further refurbishment of space in the New Exchange Buildings was due to be completed in 2013 would also offer space for growing digital companies.

 

This investment in the Boho Zone had contributed significantly to the physical regeneration of the area, which now formed a key routeway linking the town centre to Middlehaven. The impact of the physical regeneration had also been recognised through a number of awards, including Boho One and Bohouse becoming joint winners of the Royal Town Planners Institute North East Buildings of the Year in 2011.

 

The report outlined in detail further information on;

  • Success
  • Occupancy
  • Demand
  • Property Offer
  • Securing Private Sector Investment
  • Previous Incubation Proposals
  • Funding
  • Proposal
  • Economic Benefit
  • Design

The next steps if the final costs are approved would be submitting the full business case for ERDF formally in February 2013, with a decision to likely be made in May 2013. A decision from the HCA was anticipated within similar timescales, which would have enabled construction to commence some time in late 2013 for completion in 2014.

 

The report outlined that there were four options available;

  1. Private Sector Led Project - Private sector investment in genuine incubation was rare and unlikely to be achievable in the current climate. Discussions had taken place with a number of key local developers, who whilst interested in potential follow-on space, had no interest in delivering or funding incubation space. No private sector companies were investing in this type of provision in the area, and none had expressed any interest in doing so in the future. The option to pursue a purely private sector project had therefore been rejected.
  2. Joint Public and Private Sector Project - As part of the discussions with key local developers, the options around joint investments were explored. Although sound in principle, the incompatibility of ERDF funding regulations and private sector profit expectations render this option as undeliverable. None of the developers consulted would have invested in any project involving ERDF financing and controls.
  3. Different Sources of Funding - The option to pursue alternative funding sources, such as the Growing Places Loan Fund had been explored, but all required the Council to accept a significant amount of financial risk. As the proposed funding package was based on two sources of grant funding, the longer-term liabilities for the Council were less significant.
  4. Refurbishment Rather Than New Build - The option to refurbish space within the Boho Zone had been explored, and buildings outside of the Council’s ownership such as Deltic House and New Exchange Buildings had been identified as potential convertible spaces. Although the cost of refurbishment versus the cost of new build could vary, the suitability of Victorian style buildings for such flexible workspace was very limiting. They could also have incurred significant ongoing costs in meeting the changing needs of multiple occupiers, meaning that those spaces were better suited to meeting the demands of larger, longer-term occupants. To have provided certainty on cost (and in particular ongoing costs), the new build option was more attractive - even without the necessary purchase costs having been factored in.

ORDERED

 

It is recommended that:

  1. the Council’s leadership of the project be endorsed;
  2. the potential funding package for the project be agreed; and,
  3. the responsibility for progressing the scheme to its conclusion be delegated to the Director of Neighbourhoods and Communities, subject to a further report confirming construction costs, operational plan and funding availability.

REASONS

 

The decision was supported by the following reason:

 

The benefits of securing such a facility in Middlesbrough are significant. The continued growth of the digital sector would enable Middlesbrough to attract further high value jobs and secure the catalytic benefits of the physical regeneration of the Boho Zone. The flow of new start businesses would also add significant value to the existing stock of business accommodation in the area.

The decision(s) will come into force after five working days following the day the decision(s) was published unless the decision becomes subject to the call in procedures.
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