Poole Bridge Regeneration Initiative and Central Area Masterplan Development Updated Cost

AGENDA ITEM 9

BOROUGH OF POOLE

CABINET

29 JULY 2003

POOLE BRIDGE REGENERATION INITIATIVE AND CENTRAL AREA MASTERPLAN DEVELOPMENT UPDATED COST AND FUNDING PLAN

PART OF THE PUBLISHED FORWARD PLAN – Yes

STATUS – EXECUTIVE POLICY

1.Purpose & Policy Context of Report

1.1To consider the Council’s updated financial plan and strategy required to deliver the Poole Bridge Regeneration Initiative and the Central Area Masterplan Development.

2.Decisions Required

2.1Cabinet are asked to agree:

1. The allocation of £1.030 million of the Council’s capital contingency to support delivery of completion of Phase 1 design works for the new Poole Bridge together with further preliminary works associated with bringing forward the Central Area Masterplan Development.

1. To recognise that the Poole Regeneration Scheme will be a commitment to the capital programme over the years 2004/05 to 2007/08 and that further reports will be made to Members for consideration as part of the Council’s medium term financial strategy.

1. To manage the financial risks associated with the projects development by implementing the following:

a.To ask the Policy Director to put a report to the next meeting of the LEOG and to the Cabinet outlining the project plan and the project management arrangements for delivery of the Poole Bridge Regeneration Initiative and Central Area Masterplan Development. This will include details of how progress will be reported to Members and also include a programme of milestone reports to be presented to the Overview Group, Cabinet or other Committees as necessary.

1. To authorise the Policy Director to have responsibility for the implementation and budget for the Poole Bridge Regeneration Initiative and Central Area Masterplan Development.

c.To authorise the project management proposals, including the appointment of a Project Manager and administrative support for the duration of the overall scheme (at least 3 years) on terms to be agreed by the Head of Personnel and Training.

3.Background

3.1The Poole Bridge Initiative and Central Area Masterplan Development is the largest and most ambitious project undertaken by the Council. The construction of a stunning new bridge which will provide a much needed second lifting bridge will enable the development of around 30 acres of under-used or derelict waterfront land to extend the town centre and provide a new urban heart to the town. In addition to the transportation benefits in easing congestion during busy periods and providing reliable journey times to the port, the scheme will provide a range of benefits including:

1. Provide a major contribution to bridging the affordability gap on housing through providing a significant number of new affordable homes.

1. Provide better accesses and linkages between Hamworthy and the town centre.

1. Provide an improvement in bus services and their reliability.

1. Create new high quality public space and a new circular waterfront walkway between the bridges.

1. Provide a significant number of new jobs and leisure facilities within easy reach of residential areas.

1. Raise the profile of Poole within the sub region and the region as a whole.

1. Enhance Poole as a destination for visitors and for business.

1. Lever an estimated £400 million of investment into the town and the local economy, both in terms of direct investment and acting as a catalyst for further investment.

3.2In fact, the initiative has already contributed towards significant benefits into the town including the development by the RNLI and Asda and at the Pitwines and Seldown sites. It has also acted as a catalyst for the proposed investment by Grosvenor in the Dolphin Centre.

3.3The public sector investment in this scheme is provided by the Government through the Department for Transport and from the Council’s own resources. This investment is the lever for bringing in the substantial private sector investment, which will provide for much needed new facilities for the town.

3.4In July 2001 Members of the Council received a financial plan in support of the Local Transport Plan (LTP) bid for the Poole Harbour Crossing project. The bid resulted in the provisional award of £14.1 million towards the Poole Bridge Regeneration Initiative and Central Area Masterplan Development subject to consideration of PFI.

3.5At the time the cost of the transport infrastructure scheme included within the LTP was £34.093 million (£27.6 million at current cost), of which the Council’s financial contribution towards the bridge and related infrastructure was estimated in the region of £1 million to £5 million.

3.6The financial plan at the time envisaged a delivery mechanism for the project that was a combination of public and private funding. The level of public funding to be shared between the Government and Council was envisaged to deliver preliminary works and a contribution towards the initial infrastructure requirements, including the new bridge.

3.7Private funding would deliver the remainder of the transport infrastructure requirements, such as the new roads connecting the bridge and the existing roads network, together with a significant financial contribution towards public gain as outlined in the Masterplan. This includes affordable housing, new mixed employment opportunities and high quality streetscape.

3.8The scheme has developed significantly since the original LTP submission and the financial plan and the strategy to support this scheme have been updated as outlined in this report.

4.Revised Funding Plan

4.1The overall scheme for the development of the Poole Bridge Regeneration Initiative described as “do something 2021” within the LTP proposal (attached plan - Appendix A), is now presented in two phases.

4.2The first phase is the achievement of the construction of the new bridge by 2006/07 and the bringing forward of the overall Masterplan sites. (Attached infrastructure plan- Appendix B). It is envisaged that the completion of the overall Masterplan will run alongside and follow the delivery of this infrastructure phase. The timing of this Phase will be governed by the pace of developments alongside West Quay Road and West Street.

Phase 1 Core Scheme – Cost Plan (Including bringing forward the Masterplan)

4.3Known and indicative costs for Phase 1 Core Scheme delivery of the project are summarised in the following table. Members should note it is not possible to fully estimate the costs of the scheme beyond the work currently planned and delivered within this financial year. Further reports will be presented for future approvals.

Phase 1 Core Scheme– Estimated Costs £M
Bridge Design works / 3.006
New Bridge Construction / 12.000
Land Requirement for infrastructure / 3.809
Roads & Junctions Infrastructure / 4.173
Infrastructure & Land Contingency / 6.000
Preliminary Costs (including fees) / 6.316

Infrastructure Costs

/ 35.304
Additional Streetscape costs (inc Land) / 8.450
Total / 43.754

4.4The project as now presented has moved on significantly from that originally envisaged. It is difficult to compare directly the costs within the LTP submission and the scheme now being developed. The LTP was purely a transportation bid to the Department for Transport, and excluded the full costs of developing the Masterplan. These costs are now included and remain a commitment to both the Council and future developers. The costs submitted with the original LTP submission and those currently estimated are set out as follows:

Original LTP
Submission
Bridge & Infrastructure
£M / Estimated
Phase 1 Core Scheme
Costs
£M / Comments
Bridge Design works / 2.141 / 3.006 / As now estimated.
New Bridge Construction / 12.000 / 12.000 / Design contract sets out a fixed cost.
Land requirement for infrastructure / 0.000 / 3.809 / Land values are now included as they will impact upon the overall Masterplan delivery
Roads & Junctions infrastructure / 8.575 / 4.173 / Original LTP Submission included Sydenham’s link road, now included within completion phase
Infrastructure & Land Contingency / 0.000 / 6.000 / Based on national guidance.
Preliminary Costs (including fees) / 1.774 / 6.316 / Original LTP did not include costs associated with bringing forward the Masterplan.
Completion Phase 2 Costs / 9.603 / 0.000 / Schedule now includes phase 1 cost only
Infrastructure Costs / 34.093 / 35.304
Streetscape costs (inc Land) linked to main transport infrastructure needs. / 0.000 / 8.450 / A provisional sum is included prior to Special Planning Guidance to be confirmed in September 2003.
Total / 34.093 / 43.754

4.5The Strategy for funding Phase 1 Core Scheme remains as in the Council’s original plans and is based on LTP funding of £14.14M, a Council contribution currently estimated in the region of £7-8M and contributions from developers toward the infrastructure in the region of £20M including streetscape.

4.6To complete the overall project “do something 2021, costs have not currently been updated. However, it is envisaged that Developer contributions will be used to deliver all of the remaining Masterplan infrastructure needs.

4.7It should be noted that until the delivery mechanism is in place, the precise allocation of costs between the partners cannot be specified. The basic principles, however, are considered sound as there will be a total sum available from the developers towards the “planning gain” costs, which will include infrastructure, affordable housing, public realm etc. The precise allocation of developer costs will be matter for negotiation between the council and developers. It is anticipated that the first call will be on the essential transport infrastructure to get the bridge and connecting highways into place. At this stage, the split of costs outlined above is based on our best assumptions.

Phase 1 Core Scheme - Borough of Poole Resources

4.8In accordance with the financial strategy outlined above, the Council’s total financial commitment is currently estimated to be approximately £7.660 million of which about £5.140 million is still to be provided for over the next 5 years. A budget requirement for 2003/04 and indicative needs for later years is set out as follows.

Total
£M / Spend to Date
£M / 2003/04
£M / 2004/05
Est
£M / 2005/06
Est
£M / 2006/07
Est
£M / 2007/08
Est
£M
Estimated Cost / 7.660 / 1.532 / 2.018 / 1.045 / 1.035 / 1.015 / 1.015
Existing Budget Provision / 2.520 / 1.532 / 0.988 / 0.000 / 0.000 / 0.000 / 0.000
New Budget Provision / 5.140 / 0.000 / 1.030 / 1.045 / 1.035 / 1.015 / 1.015

Budget Requirement 2003/04 (Updated)

4.9The Council’s contribution has increased from that originally envisaged due to:

1. A significant proportion of Bridge Design work has to be carried out in order to submit the Transport and Works Order, which will give the necessary permissions to allow the bridge to be built. The LTP funding can only be drawn down once the LTP has been agreed. In addition the delivery mechanism with the developers is not yet in place and even then, it is debatable whether the mechanism could be used to meet up-front design costs for the bridge. The Council’s current commitment has been limited to Phase 1 of design stage at a cost of £1.194 million and £0.150m for any initial work on Phase 2.

1. Inclusion of up – front and other costs associated with the delivery of the Masterplan, such as project management, legal fees to get the delivery mechanism in place, streetscape, exploratory PFI work etc.

iii.A longer preliminary lead in period than was originally envisaged due to the range and complexity of different work streams and in particular studies relating to the environment impact of the works, maritime studies and the extent of work required to achieve a permission being more extension than originally envisaged.

4.10The need for additional resources to be made available in this financial year was highlighted in a report to the then Executive in December 2002. The budget addition for 2003/04 is set out in detail below.

£000s
Phase 1 Bridge Design Costs / 1026
External Fees / 553
Project Management / 100
Internal Fees / 339
Total Funding Requirement / 2018
Previously Approved / (880)
SWRDA Grant / (75)
Project Management Grant / (33)

Total Funding Available

/ (988)

Budget Addition for 2003/04

/ 1030

4.11Funding of the additional resources required in 2003/04 can be met from the existing Capital programme contingency (not yet committed resources), which together with additional resources generated in 2002/03 is approximately £2.5 million (As reported to Cabinet 8th July 2003 - Provisional 2002/03 outturn).

Project Management

4.12This is a highly complex scheme due both to its scale and to the inter-relationship of the bridge and the site development in terms of funding and land issues. An in-house project team has been formed to take the project forward assisted by a number of external experts and has performed well to bring the project to its current stage.

4.13However, it is now considered that a dedicated Project Manager should be in place because of the complexity of the project and the fact that a number of the activities being carried out are beyond the experience and skills set of the authority. Having considered a number of options, it is considered most cost effective to appoint a direct employee of the council. This option would both be more cost effective and give the Council greater control. The full year costs of this post will be around £70,000 per year.

4.14The Project Manager will need administrative support. The option of providing this in-house is currently being investigated, but if this is not possible, an additional new post will have to be created which will cost around £25k per annum, involving total costs of around £95k per annum for these appointments.

4.15It may sometimes be necessary to bring in additional project management skills or to commission discrete pieces of work, such as around risk management. It is proposed to put in place an arrangement with a specialist project management consultancy for specific ad-hoc pieces of work (for example a retainer arrangement).

4.16Taking all of these into account, the indicative budget includes an allocation of £100k for 2003/04 and £150k thereafter for project management support.

4.17Funding for the scheme in subsequent years will be both a priority for and a commitment on the capital programme. Consideration of financial needs for 2004/05 and beyond will be approved in the context of the Council’s overall capital strategy. This will be determined during the 2004/ 2005 budget process as part of the consideration of the Council’s medium term financial strategy.

5.Financial Risk Management

5.1The benefits that the community will receive from the scheme are great but the Council’s financial exposure related to this project is potentially significant. Management of these risks is therefore crucial.

5.2The financial risks as now identified result from the fact that:

1. The Council is funding all preliminary works as Government LTP monies are not yet fully approved, and available for draw down until the investigation of PFI and the approval of TWA.

1. The Government have stated that their resources are fixed, consequently any costs over budget need to be shared between the Council and developers.

1. The urban design led nature of the scheme and the fact that quality is an important consideration adds to costs.

1. Major Highways infrastructure projects can be difficult to predict and are often affected by unforeseen circumstances which result in higher costs. A 30% contingency has been provided within the budgets now presented.

1. Commitment from the council to deliver the project is high profile.

5.3These risks can be best managed by the Council adhering to a structured project plan and organisation that ensures commitments are made only against agreed budgets and plans. The employment of a project manager should support this disciplined approach.

5.4Clear accountability and responsibility of a senior manager for the project is essential. A Policy Director as a member of the Council’s senior management team will undertakes this role. The same level of accountability and responsibility from the appropriate portfolio holder, responsible to Cabinet, supports this approach.

5.5The financial risks to the Council will be at their greatest during the construction phase of the project. Once a project has been completed and the risks of additional costs, because of the inherent risks of development projects has passed, the liabilities reduce. Therefore, it is important that the Council ensures a contractual and financial mechanism which will require the appropriate contributions and sharing of risks by all parties who will be taking part in and benefiting from delivery of the project. No construction works should take place prior to a fully detailed and authorised mechanism being in place which clearly allocates in a legally binding agreement responsibilities, liabilities and development and financial risk. No agreements should be reached with any parties that do not address these issues and finally also the appropriate sharing of any benefits/profit to reflect the investment/ contributions made.

BERNIE TOPHAM

POLICY DIRECTOR

BOB JACKSON

HEAD OF FINANCIAL SERVICES

JIM BRIGHT

HEAD OF TRANSPORTATION SERVICES

Background Papers

Nil

Name and Telephone Number of Officer Contact

R L Jackson, Head of Financial Services, Tel: 01020-633105

3 July 2003

Poole Bridge Funding Plan01072003

APPENDICES A & B – NOT AVAILABLE ELECTRONICALLY

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