Developers behind Arena Central, one of Birmingham’s largest regeneration schemes, will be allowed to delay making a £5 million payment to the city council after concerns about cash-flow.
Companies masterminding the £500 million city centre project, with the iconic 50-storey V Building as its centrepiece, signed a legal agreement eight years ago promising to make a substantial cash contribution to public transport improvements as soon as work began on constructing the 150 metre-high tower and leisure complex, at the bottom of Broad Street on the site of the former Central Television studios.
But Arena Central Developments, a joint venture between Miller Developments and Bridgehouse Capital, asked the council planning committee for the deal to be changed, allowing the £5 million to be handed over in three phases.
Councillors agreed after being told the revised arrangements would increase the likelihood of the project proceeding “in the current circumstances”.
Members also said the agreement could be altered to allow ACD to clear the 7.6 acre site, undertake preparatory work and build access roads without triggering payment.
Asked by one councillor whether handing over all of the money in a lump sum could threaten the future of the project at a time of national economic hardship, central area planning officer Richard Goulborn said: “That could be one interpretation.”
The £5 million, which was originally intended to go towards the Midland Metro extension along Broad Street, has now been earmarked by the council to help pay for the Gateway scheme to redevelop New Street Station.
ACD pointed out that its initial agreement with the council involved paying the money in stages to coincide with progress of building work. But this was changed in 2005, requiring the developers to make a single payment of £5 million as soon as work on the scheme gets underway.
The first part of Arena Central to be constructed is likely to be the V Building, which is the responsibility of ACD development partners Dandara.
Dandara said the planning gain payment was the responsibility of ACD, and would not affect the progress of the project from their point of view.
Development director Steve Evans said: “Absolutely nothing’s changed from our point of view, I can say that quite categorically. It has no impact on us whatsoever.”
Planning officer Simon Hodge told the committee in a written report ACD had informed the council that an up-front payment of £5 million would “have a significant impact on their cash flow arrangements compared to the originally anticipated staged payment process”.
The report adds: “They also state that there is a strong disincentive to undertake substructure works, which would currently trigger the payment of the transport contribution, so far in advance of securing the financing of the office construction or agreeing office tenants.
“The request for these amendments is a response to changes in circumstances since the original grant of consent in 2000.
“Whilst it would result in the receipt of the first payment at a later stage than is required by the current agreement, the £5 million overall requirement would still be secured.
“The revised payment trigger arrangements would also increase the likelihood of this major city centre regeneration project proceeding in the current circumstances.”
Mr Goulborn added: “This scheme has evolved to a different set of circumstances. This is a restructuring of the finances but the same amount of benefit would accrue. This is a very important investment in the city and we believe these are sensible changes.
“We are playing a part in attempting to make sure this actually happens. We have to be sensible in terms of taking account of the market in determining this application.”
Planning permission for the Arena Central development was first granted in 2000, following a public inquiry.
Last year the council approved designs for the V Building, described by the planning committee as “stunning”.
The tower, with a unique scissor-like roof, will have 706 luxury apartments, bars, coffee shops, a restaurant and a viewing area on the top floor.
Council leader Mike Whitby said in October last year that the V Building would underline private sector confidence in the Birmingham economy and act as a catalyst to further development in and around the city centre.