To seek approval to proceed to conclude negotiations and enter into the Edgar Street Grid (ESG) Retail Quarter Development Agreement between Herefordshire Council, ESG Herefordshire Ltd, and Stanhope following an initial European procurement process and subsequent detailed financial and programming negotiations. 

The Cabinet Member Economic Development and Community Services presented the report on the ESG Retail Quarter Development Agreement.  Members were provided with a summary of the detail provided in the report, of which the following points were highlighted:

• The signing of the Development Agreement would tie both Herefordshire Council and Stanhope into the development process and would provide greater certainty for the progress of the mixed-use scheme within a structured timeframe.
• The current Herefordshire UDP and the ESG SDP identified that the entire Retail Quarter site be considered for re-development as a mixed use site.
• Of the land outlined for the Retail Quarter, the Council’s ownership amounted to approximately four hectares.
• Stanhope had been in negotiations with Herefordshire Council, ESG Herefordshire LTD and AWM with regard to; the final development mix, the designs for the site and over detailed financial considerations.  During this time (15 months), the economy had deteriorated and the terms of the Development Agreement had been amended to reflect the requirements of both principal parties. These amendments included the consideration of a phased approach in order to deliver the retail development part of the project on a staged basis.
• Following negotiations, and subject to Cabinet approval to the recommendations within the report, it was anticipated that the Development Agreement would be in a position to be signed shortly and would comprise the following elements:

·         Development Agreement with around 20 appendices and over 10 schedules;

·         CPO Indemnity Agreement (to be concluded at a later date following agreement of the phased scheme); and

·         250 year Head Lease (this would not be granted to Stanhope until the scheme has been practically completed)

·         The infrastructure for the development programme would consist principally of: off-site flood mitigation, the Link Road, on –site flood alleviation and re-alignment of Widemarsh Brook, and the new livestock market construction.  The major development projects to support the wider ESG programme would include the individual development projects of the Retail Quarter, Urban Village, Transport Hub and New Area.

·         In relation to funding arrangements, the Development Programme identified elements of the redevelopment which were unfinanced by either Herefordshire Council or AWM.  Discussions were being held between the  Council, ESG Herefordshire Ltd, and the Homes and Communities Agency (HCA) regarding the HCA providing appropriate financial contribution.

·         Further benefits of the wider scheme, both economic and social were outlined, these included a multi-screen cinema, restaurants, car parking, high quality pedestrianised streets (together with substantial improvements to current provision) and a department store.  Members were advised that Ben Hamilton Baillie had been retained to ensure that the design would join together both the old and new parts of the city to ensure a single city centre.

·         Members attention was drawn to the legal, financial and risk management considerations as contained in the report.

The Leader advised Members that a recommendation to Cabinet was to approve the Development Agreement as negotiated to date, and that this included recognition of the proposed phased approach whilst retaining the integrity of the overall scheme.  Cabinet were reminded of the preconditions needed to be satisfied by the end of the conditionality agreement, which included the condition relating to the livestock market relocation.  The Leader emphasised the importance of the ESG development for Herefordshire and stated that the City should aspire to the great potential it had to offer as a vibrant retail centre, however this vision was not deliverable within the existing retail footprint.  The City Centre should positively embrace the complementary vision of independent stores and major signature retailers, and the development of the Retail Quarter provided a window of opportunity which was partly funded by other public sector financing.  The Leader expressed concern regarding the possible detrimental consequences should the opportunities as currently presented not be grasped and delivered.

Responding to a comment regarding concerns that the development of the Retail Quarter fell outside the curtilage of the existing area, and the possible detrimental effect to established retail outlets, the Cabinet Member Economic Development and Community Services emphasised the point that the current retail footprint was not appropriate to support the mix of national brands and independent stores which were being sought.  Members were advised that the City Centre was currently heavily dependent on value led stores.

The Cabinet Member Economic Development and Community Services, responding to a query regarding the designs undertaken by Ben Hamilton Baillie, advised Members that together with the Cabinet Member Highways and Transportation, he had met with Mr Hamilton-Baillie and considered the initial draft on the Hereford        Streetscape Design Strategy, which the Cabinet Member considered to be a consummate piece of work and which crucially considered commonality of design and identity of the street scape within Hereford.

Following consideration during the confidential session of the restricted appendices which outlined as Synopsis of the Retail Quarter Development Agreement and the ESG Programme Finance, Cabinet agreed the following recommendations.

RESOLVED That:

(a)         The substantive terms of the Development Agreement so far negotiated as described in the report be approved; and that

(b)         Approval be given for negotiations to be finalised on the basis of those substantive terms and for the finalised Development Agreement to signed under the authority of the Director of Regeneration.