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Warwickshire Cricket Club developers batting on tough wicket

Warwickshire Cricket Club developers batting on tough wicket

🕔18.Jun 2012

Developers behind the £32 million refurbishment of Warwickshire County Cricket Club’s Edgbaston stadium have admitted they cannot meet a deadline to pay Birmingham City Council almost £900,000 in planning gain money.

MCD Regeneration is asking for extra time to deliver an agreement on Section 106 cash, which the firm promised to hand over in return for obtaining planning permission.

The company will attend a meeting of the city council planning committee this Thursday (June 21) to plead for deferral of part of the payment schedule.

Under the deal signed by MCD, a total of just under £1.5 million is payable to the council to be used to improve public transport and provide social housing as soon as work begins on a mixed-use development on land off the Pershore Road.

The mixed-used scheme, consisting of houses, flats, offices, a multi-storey car park, hotel, bars and restaurants, is a vital ingredient required to raise income for the cricket club and pay for the refurbishment and expansion of the Edgbaston stadium which was completed last year.

Birmingham City Council has already agreed to lend the club £20 million to help fund the development.

MCD will argue that a fragile housing market and the speculative nature of the scheme means that it is impossible to pay any more than £600,000 Section 106 money as soon as work begins on the mixed-use scheme. The housing scheme will not be financially viable and work will be unable to begin  this summer if deferral of the payments cannot be agreed, according to MCD.

Council planning officer Simon Turner is backing MCD’s application to defer payments.

He stated in a written report to the committee: “Appraisals show that of the £1,463,975 due this summer, only £600,000 can be afforded by RM1 – 41 per centof the total.

“The applicant requests that no Section 106 payments are made with the first sub-phase of 15 houses – the development will be built-out in small phases like this to ensure income is generated from sales from an early point, to then fund the next, small sub-phase.

“This reduces the exposure to risk from an excessively large construction phase in the current difficult housing market and wider economic context.

“Officers support this initial payment deferral, to ensure development commences in the first place. The first sub-phase will demonstrate to the market that the development is underway, with the standard of construction and site character on-show, to kick-start the remainder of the scheme.”

Mr Turner continued: “Given the importance of supporting the successful start of the wider mixed-use development under difficult financial and economic circumstances, officers support the applicant’s request for this proposed payment mechanism.

“A fundamental part of officers’ position is being satisfied that the deferred payments will still realistically be affordable and so come forward in due course with the later phases.

“The applicant has shown that the financial context of developing the housing is likely to be tougher and riskier than the future phases where most of the commercial are concentrated.

“Key differences between the housing and the future commercial phases are that the housing is mostly speculative and with a lower anticipated profit, while the commercial uses would be non-speculative and are predicted to yield a higher profit.”

 

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