• First featured in Construction News, November 2015

    At one end of the spectrum, there are projects designed to rejuvenate entire town centres or transform redundant industrial sites into new housing or mixed use developments. At the other end of the spectrum, there are smaller schemes for the redevelopment of individual buildings.

    Examples of both can be found at the former royal navy dockyard at Chatham.

    The redevelopment of the dockyard itself was one of the largest urban regeneration projects in the country, spanning many years. The proposal for the conversion of Pump House No.5 , which was built in the Victorian era to pump out the dry docks, is a good example of how smaller schemes can also be brought to fruition through public and private sector cooperation.

    The scheme, which was granted planning permission by Medway Council earlier this year, will see the grade II listed pump house converted into a distillery. A contribution to the costs has been provided by the Thames Gateway Innovation, Growth and Enterprise fund, known as the Tiger Fund, part of the government’s Regional Growth Fund (RGF).

    What are the key issues for a business to consider when seeking public sector involvement in a scheme?

    • A business seeking finance from the RGF will need to put forward a viable business case. The availability of RGF funding is usually conditional upon being able to demonstrate that the proposal will preserve existing jobs or deliver new jobs by strengthening or growing the business. Applicants will usually be expected to invest some of their own capital into the business.
    • The scheme must not fall foul of State Aid rules. These rules prevent public money being used to support non-viable investments in non-viable businesses.
    • The business will be required to enter into a legally binding agreement with the funder. Whilst these contracts are usually in a standard form they should still be reviewed by a lawyer to check that they are suitable for the particular scheme and that any necessary changes can be agreed.
    • Businesses should also be aware of the difference in the approach to monitoring where public sector funding is involved. Whilst private sector lenders are generally only concerned that the loan is repaid and that they have adequate security, public sector lenders are also keen to ensure that the regeneration objectives are achieved. As such there are usually strict reporting and monitoring obligations in such agreements.

    The redevelopment of Pump House No.5 is a good example of how public sector involvement can help to bring forward a scheme which will also see regeneration benefits. Bringing the building back into productive use will help to preserve it as a heritage asset. It will also add to the local economy and create jobs.

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