thinking laterally to unlock your assets and enable development in hard times

PURCELL MILLER TRITTON

a presentation by ................................. THINKING LATERALLY TO UNLOCK YOUR ASSETS & ENABLE DEVELOPMENT IN HARD TIMES NIALL PHILLIPS, HEAD OF DESIGN & REGENERATION, PURCELL

UNLOCKING OPPORTUNITIES FOR ARTS & HERITAGE PROJECTS

PENARTH PIER PAVILION 16th SEPTEMBER 2014

UNLOCKING OPPORTUNITIES FOR ARTS & HERITAGE PROJECTS

THINKING LATERALLY TO UNLOCK ASSETS & ENABLE DEVELOPMENT IN HARD TIMES

NIALL PHILLIPS

HEAD OF DESIGN & REGENERATION PURCELL



TYPICAL FUNDING SCENARIO

HLF/ACE/SC/BL 40-50%

Local Authority 10-15%

ERDF/RDA 20-30%

EH/Cadw/HS 5-10%

CAT/CAFG/CB & others 10-15%

Grant Giving Charities 5-10%

Public Appeal 2-5%

Commercial Sponsors 2-5%

Soft Loans (AHF/CB)



TYPICAL THIRD SECTOR FUNDING SCENARIO

2008 Lottery 40-50%

EU WEFO/ERDF 20-30%

Local Authority 10-20%

Central Government 10-15%

EH/ CADW /HS 5-10%



Public Appeal 2.5%

Volunteers 8-10%



2014 Lottery 55-60%

EU WEFO/ERDF 15-20%

Local Authority 10%

Central Government 8-10%

EH/ CADW /HS 5-10%



Public Appeal 2.5%

Volunteers 15-18%

TYPICAL THIRD SECTOR FUNDING SCENARIO



Heritage Lottery Fund 9 Funding Schemes New Heritage Enterprise Arts Council Lottery Fund 15 Funding Schemes Coming… Autumn 2014 Strategic Funding Programme Big Lottery 23 Funding Schemes Current…Coastal Communities Fund

LOTTERY FUNDING



In common they:

• Require a minimum proportion of matched funding – as little as 5%

• Require the applicant to be local authority, non-profit or charitable organizations – but partnerships with commercial companies are possible

• Are oversubscribed with bids

• Change constantly – many funding programmes are time limited

• Have complex application processes – many two stage

S d t k t k f

LOTTERY FUNDING



Heritage Grants £255m

Parks for People £24m

Landscape Partnerships £22m

Townscape Heritage Initiative £14m

Places of Worship repair Grant £30m Your Heritage £26m

Young Roots £4m

Total 2013 / 14 Grants £375m

Heritage Lottery Fund Programmes 2013/14

LOTTERY FUNDING



LOTTERY FUNDING

Arts Council Lottery Fund - Matrix



• Community Amenity & Facilities Grant

• Programme • Social Investment Business • WEFO / ERDF • Aggregates Tax • Homes & Community Agency • Triodos Bank • Community Builders • Challenge Fund • Architectural Heritage Fund

• Natural England • WAG • Regional Growth Funds • English Heritage, CADW, Historic

Scotland • Adventure Capital Fund • Grant Giving Charities • Land Fill Tax • Social Enterprise Fund • Capital Growth Fund • Local Charities

NON-LOTTERY FUNDING SOURCES

Google



• Research

• Landscape Work

• Archaeology

• Graphic Design

• Education Work

• Soft Furnishings

• Gardens & Horticulture

• Metal Working

• Paper Conservation

VOLUNTEERS



• Retail Assistants

• Audio Recording

• Learning Activities

• Decorating

• Tour Guiding

• Catering

• Building

Construction

• Reception

• Artwork

• Archiving

• Publicity

• Fund Raising

• Exhibition Research

& Design

• Administration

• Husbandry

• Translation

• Book Keeping

VOLUNTEERS

Probably anything else you can think of & might need…



In England, Wales and Scotland, Buildings at Risk Registers shows 2500 grade 1 & II* buildings are at risk. For nearly all these buildings the equations:

END VALUE = COSTS - GRANT or

GRANT = COSTS – END VALUE applies but grants sources are reducing for charities and very few are available to other developers.

WHAT TO DO?

ENABLING DEVELOPMENT




An enabling development is a development with adopted local planning policies that are waived for a specific development. This means the profit or surplus from the specific development can be applied to the conservation of a historic building where the conservation costs exceed the building’s value – the difference is the conservation deficit.



Enabling developments assist by:

• Creating additional financial input to close viability gap

• Creating additional accommodation necessary to make the reuse of a historic building viable

• Avoiding inappropriate uses within a historic building and are necessary to the functional viability of its reuse.

• Providing long term revenue income




BUT… • They can significantly increase the

overall cost and funding requirement • They are often extremely

controversial • Obtaining consents is difficult and

expensive • They may reduce levels of grant aid • They can increase programme length

and project risk • They do not always produce the

anticipated contribution – particularly financially




Enabling Development and the Conservation of Significant Places (June 1999 Revised September 2008) PPS5 Planning for the Historic Environment

• Very high burden of proof for applicant

• Emphasis on design quality Importance of building’s listing

• All other options have to be explored first including grant aid

• Sign off by Government Office after planning authority decisions

• Importance of consultations

• Planning Agreement (Section 106)

Statutory Basis




Application Requirements

• Costed Condition Survey • Historic Landscape Appraisal • Archaeological Appraisal • Heritage Impact Assessment • Ecological Survey • Full elemental project cost plan • Development Appraisal • Valuations • Design to RIBA Stage D (E/F) • Design & Access Statements

Development Appraisal • Nominal acquisition costs • Allowance for all

development costs including legal & sales costs

• Allowance for profit (15%)




BANK HALL



Trust Issues (HTNW) • Significant Resources • Shortfall • High Capital Funding Requirement • High Development Risks • Lack of Development Experience

Options • Further Fundraising • Enabling Development • Commercial Partnership

BANK HALL



Solutions • Shell repairs by trust (HTNW) • Enabling development to meet conservation

deficit/residual shortfall • Partnership with Urban Splash – Commercial

Developer • Urban Splash fund balance of shell repair costs

advancing land receipt • Trust lease to Urban Splash on completion of shell • Trust run management company

BANK HALL



ARTSPACE SPIKE ISLAND



Issues • Voluntary sector client with no

resources • Very large building on an urban site • Lease of site owned by Brooke Bond • Freehold owned by City of Bristol

with restrictive covenant • Limited value without planning

consent • Zoned for light industrial use • Value assuming residential consent -

£1.4m • No funds available for purchase

Warehouse Main Tea Packing Plant




Revenue enabling

• Artspace retained 120,000 sq ft of space

• 80,000 sqft occupied by artists in studio groups at low rents

• Remaining space let on commercial terms to tenants in related activities

• Let space averages 85% occupancy and generates income of over £220,000 per annum

• Artspace uses surpluses to hold studio costs low, fund residencies and education activities




• Planning obtained on part of site for residential development

• New lease granted to Brooke Bond on residential site for sale,

development and maximum retained premium of £1m

• Lease of main site to Artspace with any excess sale receipt over

maximum premium donated to Artspace by Brooke Bond (£400k)

• Brooke Bond sell lease on residential site to achieve premium and make

donation of £400k to Artspace

• Artspace undertake development using donation as matching funding for

ACE & RDA Grants – 100% funded

Solution




Nearly all funding agencies require business plans – they want to know their investment will result in a long term benefit & return – survival.

Many Third Sector organisations have very marginal business plans often requiring ongoing fundraising to stay solvent

Many historic buildings struggle to find an income generating use which meets maintenance and running costs.

The problem therefore may not be meeting the capital costs but the revenue costs – the revenue needs enabling.

REVENUE ENABLING



• Develop surplus space for income – 100% capital funding

• Develop activities that generate income

• Build in freeholder maintenance responsibilities to leases – LA buildings

• Revenue grants

• Build start-up costs into capital bids

• Build endowment funds into capital development funding plans – NT

• Use volunteers to minimise operational staffing costs

Options

REVENUE ENABLING



ARNOS VALE CEMETERY



Opportunities • Strong candidate for HLF

support • Good other capital funding • Very strong community interest • Extremely vigorous campaigning

local press • Strong individual commitment • Concerned City Council • Private Act provisions

Capital Funding HLF £4.95m EH £0.45m RDA (SWERDA) £0.9m Grant Giving Charities £0.55m Public Appeal £0.35m Volunteer Input £0.6m Total 7.6m

ARNOS VALE CEMETERY



• 45 acre disused cemetery

• 6 Grade 2* listed buildings

• 72 Grade 2* & Grade 2 listed monuments

• Grade 1 historic landscape

• Valuable wildlife habitat

• Private ownership

• Complete dereliction of buildings & landscape

• Contamination

• Shared boundary walls

• Major costs of conservation - £7.6m

• Local authority reluctance to be involved

• Private Act Cemetery

• Strong public concern

Issues

ARNOS VALE CEMETERY



Revenue Problems

• High maintenance costs

• Landscape maintenance problems

• Limited opportunities to change building uses

• Limited income generation

• Need to persuade funding agencies of viability

Solutions

• City make endowment grant to support revenue costs £2m

• City retain boundary wall maintenance responsibilities under lease

• Use of volunteer staffing

ARNOS VALE CEMETERY



CARDIGAN CASTLE

Issues

• High capital costs £9.2m • Limited local economy • 4 acre gardens • Redundancy of structure/walls • Complex site • No vehicle access • Ongoing viability problems • Local use sensitivity • Site ecology • Limited income generation • Need to persuade funding

agencies of viability

• Small unitary authority • Strong public concern



Opportunities

• Strong HLF candidate • Good Welsh funding

sources • Local trust willing to be

partner and operate on completion

• Local authority ownership • Local authority capacity

shortfall • Important historic

associations

Capital Funding HLF £4.95m WAG (WEFO) £4.2m Cadw £0.45m Trusts & Appeal £0.12m Trust fundraising £0.48m Volunteer input £0.3m Total £10.5m

CARDIGAN CASTLE



Revenue Problems • Large elements of redundant

structure – Castle Walls • Limited & seasonal local market • Limited trust experience &

capacity • Need to convince funders of

viability

CARDIGAN CASTLE

Solutions • Partnership with Ceredigion • Ceredigion to support as bankers &

project enablers • Ceredigion retain freeholder

responsibility for Walls, external fabric & plant maintenance

• User partnerships – Vivat, WFA, Hanes Aberteifi

• Use of volunteers



Revenue Options

Operating Costs (Trading)

AccomodationCosts 8%Surplus 12%

Operating Costs18%Cost of Sales 21%

Staff 41%

Overall Costs

Ceredigion 12%

Volunteers 15%

OperatingCosts 73%

CARDIGAN CASTLE



Expenditure

DevelopmentCosts 8%Staff Costs 7.5%

Volunteers 9.5%

Capital Work72%

Funding Others 5.5%

Volunteers9.5%

CADW 10%

WEFO (EU)31%

HLF 43%

Capital Costs

CARDIGAN CASTLE



Earned Trading Income Room Hires 7%

Events andFunctions 8%Retail 10%

Visitors Charges11%Workspace Lets11%LearningActivities 12%Café 20%

Holiday Lets21%

Overall Income Volunteer Input15%

Cardigan SilkyFund Contribution19%

Earned Income67%

Revenue Options

CARDIGAN CASTLE



LEDBURY PLACES



ISSUES

• Six Grade I & II* of 2 listed buildings

• Three owners – Civil Society, Town & County Council

• Difficulties in meeting maintenance costs

• Duplication of use – 3 large meeting spaces

• Important heritage visitor asset function

• Income generation potential not developed

• Difficulty in accessing capital funds

LEDBURY PLACES



LEDBURY PLACES



SOLUTIONS • Single ownership/management structure

• Strong collective capital funding to meet 100% costs of £2m

• Hard decisions – alternative uses for duplicated space

• Reduction in extent that heritage assets open to public

• Realistic approach to long term costs -£65,000 per annum

• Focus on shared objectives

• Response to key local issues – Tourism ‘welcome’ of ‘Local Engagement’

• Consultation

LEDBURY PLACES



• Investigate feasibility, market and viability

• Measures Survey/Survey of Fabric/Structural Condition

• Pursuit of Ownership LA/CPO

• Planning and Listed Building Consents

• Archaeological Evaluation

• Funding Applications/Fundraising

• Confirmation of Consents and funding

• Implement acquisition

• Detailed design by consultants

• Tender

• Contract works

• Use dispose

Entirely speculative (10-15%) Semi speculative (85-95%)

THE DEVELOPMENT PROCESS



Feasibility 3 - 4

Consents

• Preparations 3 - 4

• Determination 6 - 9

Funding Applications

• Preparations 3 - 4

• Determination 6 - 9

Acquisition 6 - 12

Confirmation of Consents and

Funding • Implement acquisition 2 - 3

• Detailed design by consultants 6 - 9

• Tender 1- 2

• Contract works 1- 2

Speculative (18-24 months) Semi speculative (18-24 months)

TIMESCALE EFFORT



• Substantial potential for making a financial contribution through development – both capital and revenue

• Often underused and in poor condition

• Frequently in a sympathetic ownership – local authority or a realistic owner

• Can be a maintenance and security burden and often with an “unknown” cost

• Lack of “vision” often a constraint

• Likely to have “conservation deficit”

WHY DEVELOP PROPERTY ASSETS – HISTORIC BUILDINGS



• Very high levels of capital funding can be achieved – especially if on a Building at Risk Register

• Long term asset / value growth if retained • Funders accept elements of commercial revenue generation to

support project operational & maintenance costs • In initial years when long term cyclical costs are low

commercial revenue can support mortgage payments • Recognised “enabling” process to help project funding

WHY DEVELOP PROPERTY ASSETS – HISTORIC BUILDINGS



GOOD LUCK WITH YOUR PROJECTS!

NIALL PHILLIPS HEAD OF DESIGN & REGENERATION

PURCELL

thinking laterally to unlock your assets and enable development in hard times

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