local authority finance

 

Cardiff City Council

City Centre Regeneration

 

CardiffThe Assignment

The Council is considering entering into a heads of terms agreement with a private developer to progress the regeneration of 33 acres of brownfield city-centre land at Dumballs Road.


The proposal was for a comprehensive regeneration of the area through a mixed use development scheme including delivering circa 1,500 new homes, including 775 affordable units and other commercial & community uses. The project is aiming to create up to 3,000 construction jobs and 500 additional long-term jobs for the area.


It was proposed that the Council enters into a long-term lease agreement for the use and management of the affordable housing element of the regeneration scheme, thereby unlocking the whole development site.

Our Role

Chris Shepherd from 31ten Consulting provided the Council with advice regarding the proposal, including:

• Benchmarking the costs: a review of the capital cost of the project to the Council;
• Affordability: an assessment of the affordability of the project to the Council over the 45 year lease period and the risk to the Council of changes to operational assumptions and inflation rates through sensitivity testing against key inputs;
• Heads of Term: financial advice on the implications of the HoT and risk and sensitivities that the Council should explore during its negotiations with the developer;
• Accounting advice on the accounting issues arising from the proposed structure; and
• Tax advice on the tax issues arising from the proposed structure and the ways of optimising tax efficiency in respect of Stamp Duty Land Tax (SDLT), VAT and Corporation Tax.

 

Key Outcomes
The work provided Council officers with a report and model that allowed it to adjust a number of the assumptions to assess the key risks to the project. Our advice and robust challenge allowed the Council to fully assess the project and the proposed lease structure – as a result the Council chose not to proceed.


Our role was further developed to look at alternative opportunities to support the development and through negotiation with the developer a new funding route has been found that will bring forward development and the desired regeneration of the site.