Government "super quango" the Homes and Communities Agency (HCA), retail giants Tesco and John Lewis along with Birmingham, Liverpool, Manchester and Newcastle city councils have backed plans to support regeneration through the downturn.
With the property industry marooned by lack of funding, councils and property chiefs want to pay for regeneration schemes by securing local government bonds against new tax revenue generated by development.
The bond issue – known as tax increment financing (TIF) – was pioneered in the US in Barrack Obama’s home city of Chicago. The idea is being worked up across the country, with the iconic Battersea Power Station in south London mooted as one scheme that could benefit.
Treasury Holdings and Grosvenor are both looking at proposals, with CB Richard Ellis and Cushman and Wakefield advising.
HCA chief Sir Bob Kerslake has welcomed the BPF report and will attend its launch tomorrow. Council heavyweight Sir Richard Leese, leader of Manchester city council, welcomed the BPF’s iniatives.
The five suggestions in the report are:
* Pay for infrastructure by using the American TIF model;
* Expand equity sharing – encouraging councils donate land to make development viable;
* Use funding for school and hospital building to lever in more investment;
* Reform EU red tape which means councils waste time and money ticking boxes to appear ‘democratic’ when selecting a developer;
* Encourage a professional rented housing sector.
The Chancellor signalled in the Budget that the Government would explore TIFs and with development at its lowest point for a generation, ministers and property leaders will be keen to explore any ways that can
Cash set aside for school building could be used more efficiently though. The BPF wants councils include housing or retail units above schools, or use land nearby for other uses.
BPF chief executive Liz Peace said: "The property industry doesn’t want a bail out, it simply wants to work in partnership with the public sector. We need to get better value from our investments but that will mean that the public sector will have to put more into the pot and take less out. Making regeneration viable from a developer’s point of view isn’t about using public money to enhance the private sector’s profits, it is about enabling partnerships and allowing the public to benefit from what developers do best."
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